High Tide Inc. (Form: 40FR12B/A, Received: 04/01/2021 17:22:14)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 40-F

(Amendment No. 1)

☒ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

☐ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended _____________

Commission File Number: _____________

High Tide Inc.
(Exact name of Registrant as specified in its charter)

Alberta, Canada		5990		N/A
(Province or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code)		(I.R.S. Employer Identification No.)

Unit 112, 11127 – 15 Street N.E.
Calgary, Alberta
Canada T3K 2M4
(403) 770-9435
(Address and telephone number of Registrant’s principal executive offices)

CCS Global Solutions, Inc.
530 Seventh Avenue, Suite 508
New York, New York 10018
(800) 300-5067

(Name, address (including zip code) and telephone number (including
area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Shares		HITI		The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

☐ Annual Information Form

☐ Audited Annual Financial Statements

Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the period covered by the annual report: Not applicable.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐

No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes ☐

No ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

EXPLANATORY NOTE

High Tide Inc. (the “Company” or the “Registrant”) is a Canadian issuer eligible to file its registration statement pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F pursuant to the multi-jurisdictional disclosure system of the Exchange Act. The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.The Company filed a Registration Statement on Form 40-F (the “Registration Statement”) on March 21, 2020.

The Company is filing this Amendment No. 1 to the Registration Statement to (i) revise Exhibit No. 99.26 to include the required auditor’s report therein, (ii) include additional exhibits, each of which is incorporated by reference in this Registration Statement on Form 40-F and (iii) amend the exhibit references under the heading “Principal Documents” and other sections. No other amendment to the Registrant’s Registration Statement on Form 40-F is being effected hereby.

FORWARD LOOKING STATEMENTS

The Exhibits incorporated by reference into this Registration Statement of the Registrant contain forward-looking statements that reflect management’s expectations with respect to future events, the Registrant’s financial performance and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of the words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “would”, “could”, “likely”, “potential”, “proposed” and other similar words (including negative and grammatical variations), or statements that certain events or conditions “may” or “will” occur, and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking information includes, among other things, information regarding:

●

the competitive and business strategies of the Registrant;

●

the intention to grow the business, operations and potential activities of the Registrant;

●

the intention to maximize the utilization of the Registrant’s existing assets and investments;

●

the expected production capacity of the Registrant;

●

the expected demand for the Registrant’s products;

●

the expected category growth of the Registrant’s products;

●

the expected number of licensed cannabis stores in Canada and its Provinces;

●

the success of the entities that the Registrant acquires and the Registrant’s collaborations;

●

the market for the Registrant’s current and proposed products, as well as the Registrant’s ability to capture market share;

●

the anticipated timing for the release of expected product offerings;

●

the development of affiliated brands, product diversification and future corporate development;

●

expectations with respect to the Registrant’s product development, product offering and the expected sales mix thereof;

●

the ability of the Registrant to source components, products and inventory;

●

the Registrant’s satisfaction of international demand for its products;

●

the Registrant’s plans with respect to importation and exportation;

●

the Registrant’s expectations with respect to harvest;

●

the competitive conditions of the industry and the Registrant’s market expertise;

●

whether the Registrant will have sufficient working capital and its ability to obtain financing required in order to develop its business and continue operations;

●

the applicable laws, regulations, licensing and any amendments thereof related to the cultivation, production and sale of cannabis product in the Canadian, U.S and other international markets;

●

the applicable laws and regulations, and the potential time frame for the implementation of such laws and regulations, to legalize and regulate medical and adult-use cannabis (and the consumer products derived therefrom) internationally;

●

the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;

●

the anticipated future gross sales and margins of the Registrant’s operations and the potential for significant growth or losses;

●

the potential for the Registrant to record future impairment losses;

●

the performance of the Registrant s business and operations;

●

the Registrant’s ability to capitalize on the U.S. market;

●

future steps to be taken in response to COVID-19; and

●

the ability of the Registrant to continue to attract, develop, motivate and retain highly- qualified and skilled employees.

Readers are cautioned that the above list of cautionary statements is not exhaustive.

These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements. Applicable risks and uncertainties include, but are not limited to, those identified under the heading “Risk Factors” on page 37 of the Annual Information Form for the year ended October 31, 2020, attached as Exhibit 99.149 to this Registration Statement and incorporated herein by reference, and under the heading “Risks Assessment” on page 16 of the Registrant’s Management’s Discussion & Analysis for the year ended October 31, 2020, attached as Exhibit 99.141 to this Registration Statement and incorporated herein by reference, and in other filings that the Registrant has made and may make with applicable securities authorities in the future.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Importantly, forward-looking statements are estimates reflecting Management's current expectations and beliefs, and are based upon certain assumptions that Management believes to be reasonable based on the information currently available to Management, including, but not limited to, the assumptions that:

●

current and future Management will abide by the business objectives and strategies from time to time established by the Registrant;

●

the Registrant will retain and supplement its Board and Management, or otherwise engage consultants and advisors, having knowledge of the industries (or segments thereof) within which the Registrant may from time to time participate;

●

the Registrant will have sufficient working capital and the ability to obtain the financing required in order to develop its business and continue operations;

●

the Registrant will continue to attract, develop, motivate and retain highly qualified and skilled employees;

●

no adverse changes will be made to the regulatory framework governing cannabis, taxes and all other applicable matters in the jurisdictions in which the Registrant conducts its business from time to time, and any other jurisdiction in which the Registrant may conduct its business in the future;

●

the Registrant will be able to generate cash flow from operations, including, through the retail sale of cannabis and cannabis products, and the manufacture and distribution of smoking accessories and cannabis lifestyle products;

●

the Registrant will be able to execute on its business strategy, as in place from time to time;

●

the Registrant will be able to meet the requirements necessary to obtain and/or maintain its governmental authorizations and permits;

●

general economic, financial market, regulatory and political conditions in which the Registrant operates will remain the same;

●

the Registrant will be able to compete in, and remain competitive within, the cannabis industry;

●

cannabis prices will not decline materially;

●

the Registrant will be able to effectively manage anticipated and unanticipated costs; and

●

the Registrant will be able to maintain internal controls over financial reporting and disclosure, and procedures in order to ensure compliance with applicable laws and regulations.

No assurance can be given that these expectations will prove to be correct and such forward-looking statements in the Exhibits incorporated by reference into this Registration Statement should not be unduly relied upon. The Registrant’s forward-looking statements contained in the Exhibits incorporated by reference into this Registration Statement are made as of the respective dates set forth in such Exhibits. Such forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. In preparing this Registration Statement, the Registrant has not updated such forward-looking statements to reflect any change in circumstances or in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof. Nor does the Registrant assume any obligation to update such forward-looking statements in the future. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Registration Statement in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant has historically prepared its consolidated financial statements in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, which differ in certain respects from United States generally accepted accounting principles (“US GAAP”) and from practices prescribed by the SEC. Therefore, the Registrant’s financial statements filed with this Registration Statement may not be comparable to financial statements prepared in accordance with U.S. GAAP.

PRINCIPAL DOCUMENTS

In accordance with General Instruction B.(1) of Form 40-F, the Registrant hereby incorporates by reference Exhibits 99.1 through 99.166, inclusive, as set forth in the Exhibit Index attached hereto.

In accordance with General Instruction D.(9) of Form 40-F, the Registrant has filed the written consent of the experts named in the foregoing Exhibits as Exhibits 99.153 and 99.154 as set forth in the Exhibit Index attached hereto.

TAX MATTERS

Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this registration statement on Form 40-F.

DESCRIPTION OF COMMON SHARES

The required disclosure is included under the heading “Description of Capital Structure” in the Registrant’s Annual Information Form for the fiscal year ended October 31, 2020, attached hereto as Exhibit 99.149.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant has no off-balance sheet arrangements (as that term is defined in paragraph 11(ii) of General Instruction B to Form 40-F) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

CURRENCY

Unless otherwise indicated, all dollar amounts in this Registration Statement are in Canadian dollars. The exchange rate of Canadian dollars into United States dollars, on October 31, 2020, based upon the daily average closing rate as quoted by the Bank of Canada, was U.S.$1.00 = Cdn$1.3745. The exchange rate of Canadian dollars into United States dollars, on March 10, 2021, based upon the daily average closing rate as quoted by the Bank of Canada, was US$1.00 = Cdn$1.2637.

CONTRACTUAL OBLIGATIONS

The following table summarizes the undiscounted contractual obligations of the Registrant as of October 31, 2020:

	Total		Less than 1 year		1-3 years		3-5 years		Greater than 5 years
	(Cdn$000)		(Cdn$000)		(Cdn$000)		(Cdn$000)		(Cdn$000)
Accounts payable and accrued liabilities	$	6,421	$	6,421		-		-		-
Notes payable	$	4,730	$	3,660	$	180	$	890		-
Convertible debentures	$	32,790	$	16,463	$	10,106	$	6,221		-
Lease obligations	$	21,554	$	3,564	$	6,892	$	4,022	$	7,076
Total	$	65,495	$	30,108	$	17,178	$	11,133	$	7,076

NASDAQ CORPORATE GOVERNANCE

A foreign private issuer that follows home country practices in lieu of certain provisions of the listing rules of the Nasdaq Stock Market LLC (the “Nasdaq Stock Market Rules”) must disclose the ways in which its corporate governance practices differ from those followed by domestic companies. As required by Nasdaq Rule 5615(a)(3), the Registrant will disclose on its website, https://www.hightideinc.com/, as of the listing date, each requirement of the Nasdaq Stock Market Rules that it does not follow and describe the home country practice followed in lieu of such requirements.

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form 40-F or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Registrant has concurrently filed a Form F-X in connection with the class of securities to which this Registration Statement relates.

Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of the Registrant.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	HIGH TIDE INC.

	By:	/s/ Raj Grover
		Name: Raj Grover
		Title: President and Chief Executive Officer

Date: April 1, 2021

EXHIBIT INDEX

The following documents are being filed with the Commission as Exhibits to this Registration Statement:

Exhibit No.		Description

99.1*		MD&A dated for the year ended October 31, 2019
99.2*		News Release dated November 7, 2019
99.3*		News Release dated November 15, 2019
99.4*		News Release dated November 21, 2019
99.5*		Report of exempt distribution excluding Schedule 1 of 45-106F1
99.6*		News Release dated November 27, 2019
99.7*		News Release dated December 5, 2019
99.8*		Share Purchase Agreement dated December 9, 2019
99.9*		News Release dated December 10, 2019
99.10*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated December 19, 2019
99.11*		News Release dated December 27, 2019
99.12*		Loan Agreement dated January 6, 2020
99.13*		News Release dated January 7, 2020
99.14*		News Release dated January 7, 2020
99.15*		Early Warning Report dated January 9, 2020
99.16*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated January 16, 2020
99.17*		News Release dated January 27, 2020
99.18*		News Release dated January 28, 2020
99.19*		News Release dated January 31, 2020
99.20*		Condensed Interim Consolidated Financial Statements for the three months ended January 31, 2020 and 2019
99.21*		MD&A for the three months ended January 31, 2020 and 2019
99.22*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated February 6, 2020
99.23*		News Release dated February 14, 2020
99.24*		News Release dated February 21, 2020
99.25*		ON Form 13-502F1 (Class 1 and 3B Reporting Issueers – Participation Fee) dated February 28, 2020
99.26*		Audited Annual Financial Statements dated February 28, 2020
99.27*		AB Form 13-501F1 (Class 1 and 3B Reporting Issuers – Participation Fee) dated February 27, 2020
99.28*		51-109FV1 – Certification of annual filings – CFO (E) dated February 28, 2020
99.29*		51-109FV1 – Certification of annual filings – CEO (E) dated February 28, 2020
99.30*		News Release dated March 2, 2020
99.31*		News Release dated March 31, 2020
99.32*		52-109FV2 – Certification of Interim filings – CFO (E) dated March 30, 2020
99.33*		52-109FV2 – Certification of Interim filings – CEO (E) dated March 30, 2020
99.34*		News Release dated April 6, 2020
99.35*		News Release dated April 8, 2020
99.36*		News Release dated April 13, 2020
99.37*		News Release dated April 20, 2020
99.38*		News Release dated April 22, 2020
99.39*		Condensed Interim Consolidated Financial Statements for the three and six months ended April 30, 2020 and 2019
99.40*		MD&A for the three and six months ended April 30, 2020 and 2019
99.41*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated May 1, 2020
99.42*		News Release dated May 4, 2020
99.43*		News Release dated May 8, 2020
99.44*		News Release dated May 14, 2020
99.45*		Notice of the meeting and record dated, dated May 21, 2020
99.46*		News Release dated May 25, 2020
99.47*		News Release dated June 9, 2020
99.48*		News Release dated June 15, 2020
99.49*		News Release dated June 17, 2020
99.50*		52-109FV1 – Certification of Interim filings – CFO (E) dated June 16, 2020

99.51*		52-109FV1 – Certification of Interim filings – CEO (E) dated June 16, 2020
99.52*		Notice of Meeting dated June 19, 2020
99.53*		Management Information Circular dated June 19, 2020
99.54*		Form of Proxy
99.55*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated July 2, 2020
99.56*		Security Agreement dated July 22, 2020
99.57*		Debt Restructuring Agreement dated July 22, 2020
99.58*		News Release dated July 24, 2020
99.59*		News Release dated July 31, 2020
99.60*		Letter from former auditor dated July 31, 2020
99.61*		Notice of Change of Auditor dated July 31, 2020
99.62*		Condensed Interim Consolidated Financial Statements for the three and nine months ended July 31, 2020 and 2019
99.63*		MD&A for the three and nine months ended July 31, 2020 and 2019
99.64*		Letter from Ernst & Young regarding Change of Auditor Notice dated July 31, 2020
99.65*		News Release dated August 7, 2020
99.66*		News Release dated August 10, 2020
99.67*		Arrangement Agreement dated August 20, 2020
99.68*		Support and Voting Agreement dated August 20, 2020
99.69*		News Release dated August 21, 2020
99.70*		Material Change Report dated August 28, 2020
99.71*		Amended and Restated Asset Purchase Agreement dated September 1, 2020
99.72*		News Release dated September 1, 2020
99.73*		News Release dated September 1, 2020
99.74*		News Release dated September 8, 2020
99.75*		News Release dated September 14, 2020
99.76*		52-109FV2 – Certification of Interim filings – CFO (E) dated September 16, 2020
99.77*		52-109FV2 – Certification of Interim filings – CEO (E) dated September 16, 2020
99.78*		News Release dated September 16, 2020
99.79*		News Release dated September 16, 2020
99.80*		News Release dated September 22, 2020
99.81*		Management Information Circular dated September 23, 2020
99.82*		Report of exempt distribution excluding Schedule 1 of 45-106F1 (amended) dated October 19, 2020
99.83*		News Release dated October 28, 2020
99.84*		News Release dated November 3, 2020
99.85*		First Supplemental Warrant Indenture dated November 16, 2020
99.86*		First Supplemental Debenture Indenture dated November 16, 2020
99.87*		News Release dated November 17, 2020
99.88*		News Release dated November 17, 2020
99.89*		Support and Voting Agreement dated November 18, 2020
99.90*		Articles of Arrangement dated November 18, 2020
99.91*		News Release dated November 23, 2020
99.92*		News Release dated November 25, 2020
99.93*		Material Change Report dated November 25, 2020
99.94*		News Release dated November 30, 2020
99.95*		News Release dated December 3, 2020
99.96*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated December 4, 2020
99.97*		News Release dated December 8, 2020
99.98*		News Release dated December 9, 2020
99.99*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated December 10, 2020
99.100*		News Release dated December 14, 2020

99.101*		News Release dated December 29, 2020
99.102*		News Release dated January 4, 2021
99.103*		News Release dated January 7, 2021
99.104*		NI 44-101 Notice of Intent to Qualify dated January 6, 2021
99.105*		News Release dated January 10, 2021
99.106*		Report of exempt distribution excluding Schedule 1 of 45-106F1 dated January 13, 2021
99.107*		Business Acquisition Report dated January 15, 2021
99.108*		News Release dated January 22, 2021
99.109*		News Release dated January 25, 2021
99.110*		News Release dated February 1, 2021
99.111*		News Release dated February 1, 2021
99.112*		News Release dated February 2, 2021
99.113*		Amended and Restated Bought Deal Offering of Units dated February 2, 2021
99.114*		Cover Letter from Newsfile Corp. dated February 2, 2021
99.115*		Letter from Foreign Issuer dated February 2, 2021
99.116*		Term Sheet dated February 1, 2021
99.117*		Amended and Restated Term Sheet dated February 2, 2021
99.118*		Qualification Certificate dated February 5, 2021
99.119*		Preliminary Short Form Prospectus dated February 5, 2021
99.120*		Decision Document dated February 5, 2021
99.121*		Marketing materials dated February 9, 2021
99.122*		Other material contract(s) dated February 9, 2021
99.123*		News Release dated February 10, 2021
99.124*		News Release dated February 16, 2021
99.125*		Undertaking to file documents and material contracts dated February 16, 2021
99.126*		Government of Alberta Certificate of Amendment and Registration of Restated Articles
99.127*		Consent letter of underwriters' legal counsel dated February 16, 2021
99.128*		Consent letter of issuer's legal counsel
99.129*		Auditors' consent letter dated February 16, 2021
99.130*		Auditors' consent letter dated February 16, 2021
99.131*		Underwriting or agency agreement dated February 16, 2021
99.132*		Final short form prospectus dated February 16, 2021
99.133*		Decision Document dated February 17, 2021
99.134*		News Release dated February 18, 2021
99.135*		News Release dated February 22, 2021
99.136*		2021 Warrant Indenture dated February 22, 2021
99.137*		News Release dated February 23, 2021
99.138*		ON Form 13-502F1 (Class 1 and 3B Reporting Issuers – Participation Fee) dated March 1, 2021
99.139*		Consolidated financial statements for the years ended October 31, 2020 and 2019
99.140*		AB Form 13-501F1 (Class 1 and 3B Reporting Issuers – Participation Fee) dated March 1, 2021
99.141*		MD&A for the year ended October 31, 2020
99.142*		52-109FV1 – Certification of annual filings – CFO (E) dated March 1, 2021
99.143*		52-109FV1 – Certification of annual filings – CEO (E) dated March 1, 2021
99.144*		News Release dated March 1, 2021
99.145*		News Release dated March 4, 2021
99.146*		News Release dated March 5, 2021
99.147*		News Release dated March 8, 2021
99.148*		News Release dated March 10, 2021
99.149*		Annual Information Form dated March 5, 2021
99.150*		52-109F1 – AIF – Certification of filings with voluntarily filed AIF – CFO (E) dated March 11, 2021
99.151*		52-109F1 – AIF – Certification of filings with voluntarily filed AIF – CEO (E) dated March 11, 2021
99.152*		News Release dated March 15, 2021
99.153*		Consent of Independent Registered Public Accounting Firm dated March 19, 2021 from MNP LLP
99.154*		Consent of Independent Registered Public Accounting Firm dated March 19, 2021 from Ernst & Young LLP
99.155		News Release dated March 19, 2021
99.156		News Release dated March 22, 2021
99.157		News Release dated March 24, 2021
99.158		Agreement and Plan of Merger By and Among High Tide Inc. and Smoke Cartel
99.159		News Release dated March 25, 2021
99.160		News Release dated March 26, 2021
99.161		News Release dated March 30, 2021
99.162		Condensed Interim Consolidated Financial Statements for the three months ended January 31, 2021 and 2020
99.163		MD&A for the three months ended January 31, 2021 and 2020
99.164		52-109FV2 - Certification of Interim Filings - CFO (E)
99.165		52-109FV2 - Certification of Interim Filings - CEO (E)
99.166		News Release dated March 31, 2021

Previously Filed.

EXHIBIT 99.26

Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

Independent Auditor’s Report

To the Shareholders of High Tide Inc.:

Opinion

We have audited the consolidated financial statements of High Tide Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at October 31, 2019 and October 31, 2018, and the consolidated statements of loss and other comprehensive loss, changes in shareholders’ equity (deficiency) and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at October 31, 2019 and October 31, 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated 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.

Other Information

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

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits 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. We have nothing to report in this regard.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 generally accepted auditing standards 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 consolidated financial statements.

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

●

Identify and assess the risks of material misstatement of the consolidated 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 oneresulting 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 Company’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 Company’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 consolidated 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 Company to cease to continue as a going concern.

●

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

●

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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.

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

Calgary, Alberta

February 28, 2020

Chartered Professional Accountants

High Tide Inc.

Consolidated Statements of Financial Position

As at October 31, 2019 and 2018

(Stated – In thousands of Canadian dollars)

	Notes	2019			2018
		$			$
Assets
Current assets
Cash and cash equivalents			806			8,198
Restricted marketable securities			50			-
Accounts receivable	22		2,385			855
Inventory	9		6,719			3,463
Prepaid expenses, deposits and other receivables	8		2,518			4,931
Current portion of loans receivable	10		261			62
Total current assets			12,739			17,509

Non-current assets
Loans receivable	10		878			-
Property and equipment	6		12,382			3,598
Long term prepaid expenses, deposits and other receivables	8		1,380			1,200
Long term accounts receivable			-			706
Deferred tax asset	16		1,190			1,975
Intangible assets and goodwill	7		12,174			934
Total non-current assets			28,004			8,413
Total assets			40,743			25,922

Liabilities
Current liabilities
Accounts payable and accrued liabilities	22		4,402			2,515
Notes payable current	13		3,570			-
Income taxes payable			-			33
Current portion of finance lease obligation	12		6			6
Shareholder loans	26		701			36
Derivative liability	11		2,121			-
Total current liabilities			10,800			2,590

Non-current liabilities
Notes payable	13		62			-
Convertible debentures	15		19,664			-
Long term contract liability			89			-
Finance lease obligations	12		11			17
Deferred tax liability	16		710			-
Total non-current liabilities			20,536			17
Total liabilities			31,336			2,607

Shareholders’ equity
Share capital	17		26,283			35,695
Contributed surplus	18		2,119			-
Convertible debentures – equity			1,637			-
Warrants	20		6,609			905
Special warrants	19		-			16,904
Accumulated other comprehensive income			(366	)		-
Accumulated deficit			(26,696	)		(30,176	)
Equity attributable to owners of the Company			9,586			23,328
Non-controlling interest	26		(179	)		(13	)
Total shareholders’ equity			9,407			23,315
Total liabilities and shareholders’ equity			40,743			25,922

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

(Signed) “Harkirat (Raj) Grover”		(Signed) “Nitin Kaushal”
President and Chairman of the Board		Director and Chairman of the Audit Committee

High Tide Inc.

Consolidated Statements of Loss and Other Comprehensive Loss

For the year ended October 31, 2019 and 2018

(Stated – In thousands of Canadian dollars)

	Notes	2019			2018
		$			$
Revenue
Merchandise sales			29,445			7,676
Royalty revenue			1,516			835
Interest and other revenue			333			238
Net revenue	5		31,294			8,749

Cost of sales			(19,978	)		(5,639	)

Gross profit			11,316			3,110

Expenses
Salaries, wages and benefits			(10,447	)		(2,938	)
Share-based compensation	18, 24		(2,209	)		-
General and administration			(8,094	)		(2,012	)
Professional fees			(6,463	)		(970	)
Advertising and promotion			(2,252	)		(698	)
Depreciation and amortization	6, 7		(1,401	)		(86	)
Interest and bank charges			(324	)		(140	)
Total expenses			(31,190	)		(6,844	)
Loss from operations			(19,874	)		(3,734	)

Other income (expenses)
Fair value change in conversion feature and warrants liability			-			28
Revaluation of derivative liability	11		732			-
Impairment loss	6, 7		(4,820	)		-
Reclassification of available for sale reserve upon settlement of marketable securities			-			29
Related party balances written off	24		(34	)		(1,419	)
Discount on accounts receivable			-			(475	)
Finance and other costs	14		(3,089	)		(499	)
Foreign exchange gain (loss)			(44	)		42
Gain on extinguishment of financial liability	17(x), 24		129			-
Total other income (expenses)			(7,126	)		(2,294	)
Loss before taxes			(27,000	)		(6,029	)
Deferred tax recovery	16		708			1,496
Net Loss			(26,292	)		(4,533	)
Other comprehensive loss
Translation difference on re-valuation of foreign subsidary			(366	)		-
Unrealized loss on available for sale marketable securities			-			(22	)
Reclassification of available for sale reserve upon settlement of marketable securities			-			(29	)
Total comprehensive loss			(26,658	)		(4,584	)
Net loss and comprehensive loss attributable to:
Owners of the Company			(26,492	)		(4,571	)
Non-controlling interest	26		(166	)		(13	)
			(26,658	)		(4,584	)
Loss per share
Basic	21		(0.13	)		(0.04	)
Diluted	21		(0.13	)		(0.04	)

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

Commitments and Contingencies (Note 25)

Subsequent Events (Note 27)

High Tide Inc.

Consolidated Statements of Changes in Shareholders’ Equity (Deficiency)

(Stated– In thousands of Canadian dollars)

	Note	Share capital			Special warrants			Warrants		Contributed surplus		Equity portion of convertible debt		Accumulated other comprehensive income (loss)			Accumulated deficit			Attributable to owners of the Company			NCI			Total
			$			$			$		$		$		$			$			$			$			$
Balance, October 31, 2017			667			-			-		-		-		51			(10,375	)		(9,657	)		-			(9,657	)
Shares issued for cash	17(i)		445			-			-		-		-		-			-			445			-			445
Shares issued on debt conversion	17(ii)		852			-			-		-		-		-			-			852			-			852
Shares issued for services rendered	17(iii)		146			-			-		-		-		-			-			146			-			146
Shares issued - convertible debentures	20(i)		669			-			-		-		-		-			-			669			-			669
Shares and warrants issued on reorganization	17(v)		31,987			-			241		-		-		-			(10,789	)		21,439			-			21,439
Eliminated on corporate reorganization	17(v)		(2,779	)		-			-		-		-		-			-			(2,779	)		-			(2,779	)
Dividends on corporate reorganization			-			-			-		-		-		-			(4,492	)		(4,492	)		-			(4,492	)
Shares issued on High Tide incorporation	17(iv)		20			-			-		-		-		-			-			20			-			20
Private placement	17(vi)		3,705			-			-		-		-		-			-			3,705			-			3,705
Share issue costs – cash	17(vii)		(263	)		-			-		-		-		-			-			(263	)		-			(263	)
Broker warrants	17(vi)		(158	)		-			158		-		-		-			-			-			-			-
Unrealized (loss) gain on marketable securities			-			-			-		-		-		(22	)		22			-			-			-
Marketable securities upon settlement			-			-			-		-		-		(29	)		29			-			-			-
Intangible assets acquisition	17(vii)		290			-			-		-		-		-			-			290			-			290
Special warrants	19		-			18,364			-		-		-		-			-			18,364			-			18,364
Warrant issue costs			-			(2,000	)		506		-		-		-			-			(1,494	)		-			(1,494	)
Tax effect of share issue costs			114			540			-		-		-		-			-			654			-			654
Net loss			-			-			-		-		-		-			(4,571	)		(4,571	)		(13	)		(4,584	)
Balance, October 31, 2018			35,695			16,904			905		-		-		-			(30,176	)		23,328			(13	)		23,315
Transition adjustment – IFRS 9	3d		-			-			-		-		-		-			(26	)		(26	)		-			(26	)
Transition adjustment – IFRS 15	3d		-			-			-		-		-		-			(67	)		(67	)		-			(67	)
Conversion of special warrants	19		13,051			(16,904	)		3,853		-		-		-			-			-			-			-
Warrants issued December, 2018	15(i)		-			-			93		-		-		-			-			93			-			93
Acquisition - Grasscity	4a		3,047			-			-		-		-		-			-			3,047			-			3,047
Share-based compensation	18, 24		71			-			-		2,119		-		-			-			2,190			-			2,190
Equity portion of convertible debentures	15		-			-			-		-		1,637		-			-			1,637			-			1,637
Cumulative translation adjustment			-			-			-		-		-		(366	)					(366	)		-			(366	)
Interest payment paid in shares	15		1,156			-			-		-		-		-			-			1,156			-			1,156
Warrants issued April, 2019	15(ii)		-			-			883		-		-		-			-			883			-			883
Acquisition - Dreamweavers	4b		1,147			-			295		-		-		-			-			1,442			-			1,442
Acquisition - Jasper Ave.	4d		205			-			-		-		-		-			-			205						205
Warrants issued June, 2019	15(iii)		-			-			342		-		-		-			-			342			-			342
Reduction is share capital	17(ix)		(29,699	)		-			-		-		-		-			29,699			-			-			-
Fee paid in shares & warrants	17(x), 20(ii)		1,607			-			132		-		-		-			-			1,739			-			1,739
Warrants issued September, 2019	13		-			-			105		-		-		-			-			105			-			105
Warrant exercise			3			-			-		-		-		-			-			3			-			3
Comprehensive loss for the year			-			-			-		-		-		-			(26,126	)		(26,126	)		(166	)		(26,292	)
Balance, October 31, 2019			26,283			-			6,609		2,119		1,637		(366	)		(26,696	)		9,586			(179	)		9,407

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

High Tide Inc.

Consolidated Statements of Cash Flows

For the year ended October 31, 2019 and 2018

(Stated – In thousands of Canadian dollars)

	Notes	2019			2018
		$			$

Operating activities
Net loss			(26,292	)		(4,533	)
Income tax recovery	16		(708	)		(1,495	)
Accretion	14		1,476			8
Depreciation and amortization	6,7		1,401			86
Impairment loss on goodwill	7		4,600			-
Impairment loss on fixed assets	6		220
Revaluation of derivative liability	11		(732	)		(28	)
Gain on financial liability			-			-
Share-based compensation	18, 24		2,209			146
Inventory Obsolesence			-			182
Related party balances written-off			-			1,419
Provision for impairment on accounts receivable			-			19
Expected credit loss allowance	22		1,142			475
			(16,684	)		(3,721	)
Changes in non-cash working capital
Accounts receivable			(1,920	)		(673	)
Inventory			(1,811	)		(102	)
Loans receivable	10		(1,077	)		313
Prepaid expenses and deposits			3,536			(5,898	)
Accounts payable and accrued liabilities			2,461			1,715
Income tax payable			(33	)		-
Contract liability			30			-
Shareholder loans	26		665			(413	)
Net cash used in operating activities			(14,833	)		(8,779	)

Investing activities
Purchase of property and equipment	6		(8,074	)		(3,581	)
Purchase of intangible assets	7		(2,333	)		(646	)
Loans receivable			-			-
Cash paid for business combination, net of cash acquired	4		(6,515	)		-
Net cash used in investing activities			(16,922	)		(4,227	)

Financing activities
Repayment of finance lease obligations			(6	)		(31	)
Proceeds from convertible debentures net of issue costs	15		22,419			566
Notes Payable	13		2,000			-
Net proceeds from share issuance			-			3,887
Net proceeds special warrant issuance			-			16,870
Restricted marketable securities			(50	)		-
Payment of dividends			-			(1,155	)
Net cash provided by financing activities			24,363			20,137

Net (decrease) increase in cash and cash equivalents			(7,392	)		7,131
Cash and cash equivalents, beginning of the year			8,198			1,067
Cash and cash equivalents, end of the year			806			8,198

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

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

1. Nature of Operations

High Tide Inc. (the “Company” or “High Tide”) is a downstream focused retailer of cannabis products, distributor, and a seller of smoking accessories. The Company’s shares are listed on the Canadian Stock Exchange (“CSE”) under the symbol “HITI”, the Frankfurt Stock Exchange (“FSE”) under the securities identification code ‘WKN: A2PBPS’ and the ticker symbol “2LY”, and on the OTCQB Market (“OTCQB”) under the symbol “HITIF”. The address of the Company’s corporate and registered office is # 120 – 4954 Richard Road SW, Calgary, Alberta T3E 6L1.

High Tide does not engage in any U.S. cannabis-related activities as defined by the Canadian Securities Administrators Staff Notice 51-352.

2. Basis of Preparation

2.1 Statement of Compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”). These consolidated financial Statements were approved and authorized for issue by the Board of Directors on February 28, 2020.

2.1 Basis of measurement

The consolidated financial statements, presented in thousands of Canadian Dollars, have been prepared on a historical cost basis, except for stock options, warrants and certain financial instruments which are measured at fair value. The accounting policies set out below have been applied consistently by the Company and its wholly owned subsidiaries for the periods presented. For comparative purposes, the Company has reclassified certain immaterial items on the comparative consolidated statement of financial position and the consolidated statements of loss and other comprehensive loss to conform with current period’s presentation.

2.2 Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is the Company’s presentation currency.

The functional currency of the Company’s Canadian subsidiaries is the Canadian dollar (“CAD”), and of the Company’s United States (“U.S.”) subsidiaries is the USD, and of the Company’s European subsidiaries is the Euro (“EUR”). Translation gains and losses resulting from the consolidation of operations in Canada, USA and Europe, are recognized in other comprehensive income in the statement of loss and other comprehensive loss and as a separate component of shareholders’ equity on the consolidated statement of changes in equity.

2.3 Basis of consolidation

Subsidiaries

Subsidiaries	Percentage Ownership	Functional Currency
Canna Cabana Inc.	100.00%	Canadian Dollar
RGR Canada Inc.	100.00%	Canadian Dollar
Famous Brandz Inc.	100.00%	Canadian Dollar
Canna Cabana (SK) Inc.	100.00%	Canadian Dollar
Smoker’s Corner Ltd.	100.00%	Canadian Dollar
KushBar Inc.	50.10%	Canadian Dollar
Kush West Distribution Inc.	100.00%	Canadian Dollar
HT Global Imports Inc.	100.00%	Canadian Dollar
High Tide BV (Grasscity)	100.00%	European Euro
Valiant Distrbutions Inc.	100.00%	U.S. Dollar

Subsidiaries are entities controlled by High Tide. Control is achieved where the entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statements of loss and other comprehensive loss from the effective date of acquisition and up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Company. Intra-group balances and transactions, and any unrealized gains or losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

3. Accounting Policies

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements, and have been applied consistently by the Company and its subsidiaries.

Use of estimates & accounting judgements

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities and shareholders’ equity at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

A. Use of estimates

Critical accounting estimates are those that require management to make assumptions about matters that are highly uncertain at the time the estimate or assumption is made. Critical accounting estimates are also those that could potentially have a material impact on the Company’s financial results where a different estimate or assumption is used. The significant areas of estimation uncertainty are:

Expected credit losses

The Company’s accounts receivables are typically short-term in nature and the Company recognizes an amount equal to the lifetime expected credit losses (“ECL”). The Company measures lifetime ECLs based on historical experience and including forecasted economic conditions. The amount of ECLs is sensitive to changes in circumstances of forecast economic conditions.

Inventory valuation

Inventory is carried at the lower of cost and net realizable value; in estimating net realizable value, the Company makes estimates related to obsolescence, future selling prices, seasonality, customer behaviour, and fluctuations in inventory levels.

Estimated useful lives, residual values and depreciation of property and equipment

Depreciation of property and equipment is dependent upon estimates of useful lives and residual values, which are determined through the exercise of judgement.

Estimated useful lives of Intangibles

Amortization of intangible assets is dependent upon estimates of useful lives, lease terms and residual values which are determined through the exercise of judgement.

Fair value of financial instruments

The individual fair values attributed to different components of a financing transaction are determined using valuation techniques. The Company uses judgement to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine; (a) the values attributable to each component of a transaction at the time of their issuance; (b) the fair value measurement for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgement and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use (“VIU”). The fair value less costs of disposal calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The estimated future cash flows are derived from management estimates, budgets and past performance and do not include activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

A. Use of estimates (continued)

Business combinations

In a business combination, all identifiable assets, liabilities and contingent liabilities acquired are recorded at their fair values. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management develop the fair value, using approximate valuation techniques, which are generally based on a forecast of the total expected future cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and the discount rate applied. Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process. When provisional values are used in accounting for a business combination, they may be adjusted retrospectively in subsequent periods. However, the measurement period will last for up to one year from the acquisition date.

Taxation

The calculations for current and deferred taxes require management’s interpretation of tax regulations and legislation in the various tax jurisdictions in which the Company operates, which are subject to change. The measurement of deferred tax assets and liabilities requires estimates of the timing of the reversal of temporary differences identified and management’s assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income before they expire, which involves estimating future taxable income.

The Company is subject to assessments by various taxation authorities in the tax jurisdictions in which it operates, and these taxation authorities may interpret the tax legislation and regulations differently. In addition, the calculation of income taxes involves many complex factors. As such, income taxes are subject to measurement uncertainty and actual amounts of taxes may vary from the estimates made by management.

Deferred tax assets

Deferred tax assets, including those arising from tax loss carry-forwards, require management to assess the likelihood that the Company will generate sufficient taxable income in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

Measurement of share-based payments, warrants and stock options

In calculating the value of share-based payments, warrants and stock options, key estimates such as the value of the common shares, the rate of forfeiture, the expected life, the volatility of the value of the Company’s common shares and the risk-free interest rate are used.

B. Judgements

Judgement is used in situations when there is a choice and/or assessment required by management. The following are critical judgements apart from those involving estimations, that management has made in the process of applying the Company’s accounting policies and that have a significant effect on the amounts recognized in the consolidated financial statements.

Going concern

Determining if the Company has the ability to continue as a going concern is dependent on its ability to achieve to raise additional financing and/achieve profitable operations. Certain judgements are made when determining if the Company will achieve profitable operations. At each reporting period, management assesses the basis of preparation of the consolidated financial statements. The assumption that the Company will be able to continue as a going concern is subject to critical judgements of management with respect to assumptions surrounding the short and long-term operating budget, expected profitability, investment and financing activities and management’s strategic planning.

Determination of CGUs

For the purposes of assessing impairment of non-financial assets, the Company must determine CGUs. Assets are allocated to CGUs based on the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Determination of what constitutes a CGU is subject to management judgement. The asset composition of a CGU can directly impact the recoverability of assets included within the CGU. The determination of the Company’s CGUs was based on management’s judgement in regard to shared infrastructure, geographical proximity and similar exposure to market risk and materiality.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

B. Judgements (continued)

Business combinations and asset acquisitions

Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgement. Where an acquisition is classified as a business combination or an asset acquisition can have a significant impact on the entries made on and after the acquisition. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using approximate valuation techniques, which are generally based on a forecast of the total expected future cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process.

Consolidation

The determination of which entities require consolidation is subject to management judgement regarding levels of control, assumptions of risk and other factors that may ultimately include or exclude an entity from the classification of a subsidiary or other entity requiring consolidation.

Segmented information

Operating segments are determined based on internal reports used in making strategic decisions that are reviewed by the Chief Operating Decision Makers (CODMs). The Company’s CODMs are the Chief Financial Officer, Chief Executive Officer and Chief Operating Officer.

Contingencies

Management uses judgement to assess the existence of contingencies. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Management also uses judgement to assess the likelihood of the occurrence of one or more future events.

Derivative liability

Management applies judgement in determining the fair value of the derivative liability of its put option on Grasscity acqusition by applying assumptions and estimates using the Black-Scholes valuation model. These assumptions and estimates require a high degree of judgement and a change in these estimates may result in a material effect to the consolidated financial results.

C. Summary of significant accounting policies

Cash and cash equivalents

Cash and cash equivalents consist of bank balances and highly liquid short-term investments with a maturity date of 90 days or less which are convertible to known amounts of cash at any time by the Company without penalties.

Marketable securities

Marketable securities comprise of the Company’s investments in money market mutual funds held through a large commercial bank in Canada and are disclosed as restricted marketable securities. Such securities are measured at fair market value in the consolidated financial statements with unrealized gains or losses recorded in other comprehensive income. Fair values for marketable securities are estimated using quoted market prices in active markets, obtained from securities exchanges. At the time securities are sold or otherwise disposed of, gains or losses are included in consolidated statement of loss and other comprehensive loss.

Inventory

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated on a weighted average cost basis and includes expenditures incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory are written down to net realizable value. Any write-downs of inventory to net realizable value are recorded in consolidated statement of loss and other comprehensive loss of the related year.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

C. Summary of significant accounting policies (continued)

Property and equipment

Property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. During the construction of leasehold improvements, items are classified as construction in progress. When the asset is available for use, it is transferred from construction in progress to the appropriate category of property and equipment and depreciation on the item commences.

Depreciation is provided using the following methods at rates intended to depreciate the costs of the assets over their estimated use lives:

Asset	Method	Useful life
Office equipment and computers	Straight-line	3 to 5 years
Leasehold improvements	Straight-line	Term of lease
Vehicles	Straight-line	5 years
Buildings	Straight-line	25 years

When a property and equipment asset includes significant components with different useful lives, each significant component is depreciated separately.

The estimated useful lives and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in consolidated statement of loss and other comprehensive loss of the related year.

Assets under construction are not ready for use and are not depreciated.

Repairs and maintenance costs that do not improve or extend productive life are recognized in the consolidated statement of loss and other comprehensive loss in the year in which the costs are incurred.

Intangible assets

Intangible assets acquired separately are measured initially at cost and consists of software and lease buy-outs. Following initial recognition, intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. The cost of intangible assets acquired in an asset acquisition are initially measured using an allocation of the purchase consideration using a relative fair value approach.

The useful lives of intangible assets are assessed as either finite or indefinite. The Company does not have any indefinite life intangible assets. Amortization of finite life intangible assets is provided, when the intangible asset is available for use, on a straight-line basis over their estimated useful lives, which for leases is the lower of the useful life of the asset, or the primary lease term, including renewals at the Company’s option, if any, as follows:

Intangible asset	Method	Useful life
Software	Straight-line	5 years
Lease buy-outs	Straight-line	Remaining term of the lease
Licenses	Straight-line	Remaining term of the lease
Brand names	-	Indefinite life

The estimated useful lives and amortization methods are reviewed at each year-end, and any changes in estimates are accounted for prospectively. Intangible assets not yet available for use are not subject to amortization.

Goodwill

Goodwill arises on business combinations and is tested for impairment annually or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Goodwill is initially recognized as the excess of the purchase price over the fair value of the net assets acquired in a business combination. Subsequently, goodwill is measured at cost less accumulated impairment losses.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

C. Summary of significant accounting policies (continued)

Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Foreign currencies

The Company’s functional currency is the Canadian dollar. Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains or losses are recognized in consolidated statement of loss and other comprehensive loss in the period in which they arise.

The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive (loss) income and accumulated in equity.

Revenue recognition

The Company has adopted IFRS 15 on November 1, 2018. Revenue recognition is based on a 5-step approach which includes identifying the contract with the customer, identifying the performance obligations, determining the individual transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the relevant performance obligations are satisfied. Revenue is recognized when the entity satisfies the performance obligation upon delivery and acceptance by the customer. Revenue in the consolidated financial statements is disaggregated into retail, wholesale and royalty revenue.

Recognition

The nature, timing of recognition of satisfied performance obligations, and payment terms for the Company’s goods and services are described below:

For performance obligations related to retail and wholesale contracts, the Company typically transfers control, completes the performance obligation, and recognizes revenue at the point in time when delivery of the items to the customer occurs, with the exception of bill and hold arrangements as noted below. Upon delivery the customer can obtain substantially all of the benefits from the items purchased.

For performance obligations related to franchise contracts, the Company typically satisfies its performance obligations at a point in time, or over time as services are rendered, depending on the obligation and the specifics of the contract.

The Company recognizes a contract asset or contract liability for contracts where only one party has satisfied its performance obligations. A contract liability is recorded when the Company receives consideration before the performance obligations have been satisfied. A contract asset is recorded when the Company has rights to consideration for the completion of a performance obligation before it has invoiced the customer. The Company recognizes unconditional rights to consideration separately as a receivable. Contract assets and receivables are evaluated at each reporting period to determine whether there is any objective evidence that they are impaired.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

C. Summary of significant accounting policies (continued)

Revenue recognition (continued)

The Company recognizes a significant financing component where the timing of payment from the customer differs from the Company’s performance under the contract and where that difference is the result of the Company financing the transfer of goods and services. For the majority of the contracts, revenue excludes the impact of a significant financing component since, the Company expects at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Identification of performance obligations

Where contracts contain multiple promises for goods or services, management exercises judgement in determining whether goods or services constitute distinct goods or services or a series of distinct goods that are substantially the same and that have the same pattern of transfer to the customer. The determination of a performance obligation affects whether the transaction price is recognized at a point in time or over time. Management considers both the mechanics of the contract and the economic and operating environment of the contract in determining whether the goods or services in a contract are distinct.

Transaction price

In determining the transaction price and estimates of variable consideration, management considers the history of the customer in estimating the goods and services to be provided to the customer as well as other variability in the contract.

Allocation of transaction price to performance obligations

The Company’s contracts generally outline a specific amount to be invoiced to a customer associated with each performance obligation in the contract. Where contracts do not specify amounts for individual performance obligations, the Company estimates the amount of the transaction price to allocate to individual performance obligations based on their standalone selling price, which is primarily estimated based on the amounts that would be charged to customers under similar market conditions.

Satisfaction of performance obligations

The satisfaction of performance obligations requires management to make judgement as to when control of the underlying good or service transfers to the customer. Determining when a performance obligation is satisfied affects the timing of revenue recognition. Management considers both customer acceptance of the good or service, and the impact of laws and regulations such as standard shipping practices, in determining when this transfer occurs.

Wholesale revenue

Revenue from sales to customers through the Company’s wholesale distribution arm are recognized when control of the goods has transferred to the customer. Where the Company arranges the shipping of goods, revenue is recognized on the date of delivery of goods to the customer’s location (FOB destination). Where the customer arranges for the pickup of goods, revenue is recognized at the time the goods are transferred to the customers carrier (FOB shipping point). Costs to ship orders to customers are included as an expense in cost of goods sold.

Retail revenue

Revenue consists of sales through the Company’s network of retail stores and includes sales through the Company’s ecommerce platform. Merchandise sales through retail stores are recognized at the time of delivery to the customer which is generally at the point of sale. Merchandise sales through the Company’s e-commerce operations are recognized upon date of receipt by the customer.

Royalty revenue

The Company earns fixed and variable royalty income from its franchisees. The fixed royalty income is earned based on an agreed fixed amount per month whereas the variable royalty income is calculated at an agreed rate on the revenue earned by franchisees. Royalty revenue is recognized in consolidated statement of loss and other comprehensive loss when earned.

Sales returns

The Company does allow returns. Defective products or products that get damaged upon shipping by the Company are considered for exchanges. Due to negligble amount of returns the Company does not record any provision for returns.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

C. Summary of significant accounting policies (continued)

Taxes

Tax expense is comprised of current and deferred tax. Tax is recognized in the consolidated statement of loss and other comprehensive loss except to the extent that it relates to items recognized in other comprehensive income (loss) or equity on the statement of financial position.

Current tax

Current tax is calculated using tax rates which are enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to taxation authorities.

Deferred tax

Deferred tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates which are enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

Deferred tax liabilities are generally recognized for all taxable temporary differences, except for temporary differences that arise from goodwill, which is not deductible for tax purposes. Deferred tax liabilities are also recognized for taxable temporary differences arising on investments in subsidiaries except where the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future.

Deferred tax assets are recognized to the extent it is probable that taxable profits will be available against which the deductible balances can be utilized. All deferred tax assets are analyzed at each reporting period and reduced to the extent that it is no longer probable that the asset will be recovered. Deferred tax assets and liabilities are not recognized with respect to temporary differences that arise on initial recognition of assets and liabilities acquired other than in a business combination.

Share-based payments

The fair value of stock options issued to directors, officers and consultants under the Company’s stock option plan is estimated at the date of issue using the Black-Scholes option pricing model, and charged to consolidated statement of loss and other comprehensive loss and contributed surplus over their relevant vesting period. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. On the exercise of options, the cash consideration received and the fair value of the option previously credited to contributed surplus are credited to share capital.

The fair value of options issued to advisors in conjunction with financing transactions is estimated at the date of issue using the fair value of the goods and services received first, if determinable, then by the Black-Scholes option pricing model, and charged to share capital and contributed surplus over the vesting period. On the exercise of agent options, the cash consideration received and the fair value of the option previously credited to contributed surplus are credited to share capital.

Where stock options are cancelled, it is treated as if the stock options had vested on the date of cancellation and any expense not yet recognized for the award is recognized immediately. However, if a new option is substituted for the cancelled option and is designated as a replacement option on the date that it is granted, the cancelled and the new options are treated as if they were a modification of the original option.

Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s share purchase options. Forfeitures are estimated for each reporting period and adjusted as required to reflect actual forfeitures that have occurred in the period.

Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of common shares outstanding during the year.

Diluted earninsgs (loss) per share is calculated by dividing the losses of the Company by the weighted average number of common shares outstanding, adjusted for the effects of all dilutive potential common shares. The weighted average number of common shares outstanding is increased by the total number of additional common shares that would have been issued by the Company assuming exercise of all convertible equity instruments with exercise prices below the average market price for the year.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

C. Summary of significant accounting policies (continued)

Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. The operating results of all operating segments for which discrete financial information is available are reviewed regularly by executive management to make decisions about resources to be allocated to the segments and assess their performance. Segment results that are important to executive management generally include items directly attributable to a segment.

Leases

Payments made under operating leases are recognized in the consolidated statement of loss and other comprehensive loss on a straight-line basis over the term of the lease. Lease incentives/inducements received are deferred and amortized over the primary term of the lease, or the contractual term if the lease provides for renewals at the option of the Company which management intends to utilize. Operating lease payments are recognized as an operating expense in the consolidated financial statements of loss and comprehensive loss on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which the economic benefits are consumed.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and indefinite life intangible assets are tested annually for impairment by comparing the carrying value of each CGU to which goodwill has been allocated to its recoverable amount.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair-value less costs of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. The fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Asset acquisitions

Acquisitions that do not meet the definition of a business combination are accounted for as an asset acquisition. Consideration paid for an asset acquisition is allocated to the individual identifiable assets acquired and liabilities assumed based on their relative fair values. Asset acquisitions do not give rise to goodwill.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

D. Current Accounting Policy Changes

IFRS 9 Financial Instruments:

Effective November 1, 2018, the Company adopted IFRS 9, which introduces new requirements for:

The classification and measurement of financial assets and liabilities,

ii)

The recognition and measurement of impairment of financial assets, and

iii)

General hedge accounting

In accordance with the transition provisions of the standard, the Company has elected to not restate prior periods. The impact of adopting IFRS 9 was recognized in Accumulated Deficit at November 1, 2018 and related to the recognition of additional expected credit losses. The net impact resulted in an increase in the expected credit losses allowance of $36, an increase in deferred income tax assets of $10, and a $26 increase in Accumulated Deficit.

The Company’s accounting policies under IFRS 9 are outlined below. For more information on the Company’s accounting policies under IAS 39, refer to Note 4 of the Company’s consolidated financial statements for the annual period ended October 31, 2018.

a. Classification and Measurement

IFRS 9 introduces the requirement to classify and measure financial assets based on their contractual cash flow characteristics and the Company’s business model for the financial asset. All financial assets and financial liabilities, including derivatives, are recognized at fair value on the consolidated statements of financial position when the Company becomes party to the contractual provisions of a financial instrument or non-financial derivative contract. Financial assets must be classified and measured at either amortized cost, at fair value through profit or loss (“FVTPL”), or at fair value through other comprehensive income (“FVTOCI”).

Financial assets with contractual cash flows arising on specified dates, consisting solely of principal and interest, and that are held within a business model whose objective is to collect the contractual cash flows are subsequently measured at amortized cost. Financial assets measured at FVTOCI are those which have contractual cash flows arising on specific dates, consisting solely of principal and interest, and that are held within a business model whose objective is to both to collect the contractual cash flows and to sell the financial asset. All other financial assets are subsequently measured at FVTPL.

Derivative instruments, when utilized, would initially be recognized at the fair value at the date the derivative contracts were entered into, and would be subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss would be recognized in net loss immediately, unless the derivative was designated and effective as a hedging instrument, in which case the timing of the recognition in net earnings would be dependent on the nature of the hedging relationship.

Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (i.e. financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts, and the host contracts are not measured at FVTPL. Derivatives embedded in hybrid financial asset host contracts that are within the scope of IFRS 9 are not separated and the entire contract is measured at either FVTPL or amortized cost, as appropriate. The Company’s management reviewed and assessed the classifications of its existing financial instruments as at November 1, 2018, based on the facts and circumstances that existed at that date, as shown below.

*Financial Instrument*	IFRS 9 Classification	IAS 39 Category
Cash and cash equivalents	Amortized cost	FVTPL
Loans receivable	Amortized cost	Loans and receivables
Marketable securities	FVTPL	Available for sale
Loans payable and other liability	Amortized cost	Other financial liabilities
Shareholder loans	Amortized cost	Other financial liabilities
Convertible debt	Amortized cost	Other financial liabilities
Accounts receivable	Amortized cost	Loans and receivables
Accounts payable and accrued liabilities	Amortized cost	Other financial liabilities
Notes payable	Amortized cost	Other financial liabilities
Derivative liability	FVTPL	FVTPL

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

D. Current Accounting Policy Changes (continued)

b. Impairment of Financial Assets

IFRS 9 introduces a new impairment model for financial assets measured at amortized cost as well as certain other instruments. The expected credit loss model requires entities to account for expected credit losses on financial assets at the date of initial recognition, and to account for changes in expected credit losses at each reporting date to reflect changes in credit risk. IFRS 9 introduces a new impairment model for financial assets measured at amortized cost as well as certain other instruments. The expected credit loss model requires entities to account for expected credit losses on financial assets at the date of initial recognition, and to account for changes in expected credit losses at each reporting date to reflect changes in credit risk.

The loss allowance for a financial asset is measured at an amount equal to the lifetime expected credit loss if its credit risk has increased significantly since initial recognition, or if the financial asset is a purchased or originated credit-impaired financial asset. If the credit risk on a financial asset has not increased significantly since initial recognition, its loss allowance is measured at an amount equal to the 12-month expected credit loss.

IFRS 9 states that an entity must measure trade receivables at their transaction price (as defined in IFRS 15 Revenue from Contracts with Customers) if the trade receivables do not contain a significant financing component (or when the entity applies the available practical expedient). This ’simplified approach’ permits the use of a provision matrix model for measuring the loss allowance for trade receivables, contract assets and lease receivables at an amount equal to lifetime expected credit losses under certain circumstances. The Company measures its trade receivables using the simplified approach. Expected credit losses measurement takes into consideration historical customer default rates, adjusted by forward-looking information including household consumption and consumer price indices, as well as real gross domestic product. The Company also contemplates the grouping of receivables into various customer segments that have similar loss patterns (e.g. by geography). The Company uses the general approach to measure the expected credit loss for certain loans receivable and lease receivables.

The Company’s management reviewed and assessed its existing financial assets for impairment using reasonable and supportable information in accordance with the requirements of IFRS 9 to determine the credit risk of the respective items at the date they were initially recognized and compared that to the credit risk as at November 1, 2018. There was an increase in credit risk determined upon application of IFRS 9 and therefore an additional loss allowance of $26 was recognized.

c. General Hedge Accounting

IFRS 9 retains the three types of hedges from IAS 39 (fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation) but increases flexibility as to the types of transactions that are eligible for hedge accounting. The effectiveness test of IAS 39 is replaced by the principle of an “economic relationship”, which requires that the hedging instrument and the hedged item have values that generally move in opposite directions because of the hedged risk. Additionally, retrospective hedge effectiveness testing is no longer required under IFRS 9. As the Company does not engage in hedge accounting, the application of IFRS 9 hedge accounting requirements has had no impact on the results and financial position of the Company.

IFRS 15 Revenue from Contracts with Customers

The Company has adopted IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) with an initial adoption date of November 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition, which is outlined below. The Company has elected to adopt IFRS 15 retrospectively with the modified retrospective method of transition practical expedient and has elected to apply IFRS 15 only to contracts that are not completed contracts at the date of initial application. Comparative information has not been restated and is reported under IAS 18 Revenue (“IAS 18”). For more information on the Company’s accounting policies under IAS 18, refer to Note 4 of the Company’s consolidated financial statements for the annual period ended October 31, 2018.

The Company recognized the cumulative impact of the initial application of the standard as a reclassification on the consolidated statement of financial position as well as an increase in Accumulated Deficit as at November 1, 2018. Applying the significant performance obligation requirements to specific contracts resulted in an increase in Accumulated Deficit of $67.

The impact to Accumulated Deficit related to franchise arrangements. IFRS 15 requires that, in determining the timing of revenue recognition, that if there is a reasonable expectation that the franchisor will undertake activities that will significantly affect the brand name to which the franchisee has rights, and the franchisee is directly exposed to any positive or negative effects of that brand and image throughout the franchise period, that the performance obligation is satisfied over the period of the franchise agreement, or in the case of specific brand development activities, deferred as a contract liability until such time as the related activity and associated costs are incurred. There were no impacts to the consolidate statement of cash flows as a result of adopting IFRS 15.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

D. Current Accounting Policy Changes (continued)

IFRS 15 Revenue from contracts with customers

The majority of the Company’s revenues from contracts with customers are derived from the wholesale and retail sale of smoking accessories and cannabis products, and from franchise arrangements.

The Company evaluates whether the contracts it enters into meet the definition of a contract with a customer at the inception of the contract and on an ongoing basis if there is an indication of significant changes in facts and circumstances. Revenue is measured based on the transaction price specified in a contract with a customer. Revenue is recognized when control of the goods or services is transferred to the customer. For certain contracts, revenue may be recognized at the invoiced amount, as permitted using the invoice, if such amount corresponds directly with the Company’s performance to date. The Company excludes amounts collected on behalf of third parties from revenue.

Performance Obligations

Each promised good or service is accounted for separately as a performance obligation if it is distinct. The Company’s contracts may contain more than one performance obligation.

Transaction Price

The Company allocates the transaction price in the contract to each performance obligation. Transaction price allocated to performance obligations may include variable consideration. Variable consideration is included in the transaction price for each performance obligation when it is highly probable that a significant reversal of the cumulative variable revenue will not occur. Variable consideration includes variability in quantity and pricing as well as the right of return in certain distribution agreements. The consideration contained in the majority of the Company’s contracts with customers is primarily non-variable.

When multiple performance obligations are present in a contract, transaction price is allocated to each performance obligation in an amount that depicts the consideration the Company expects to be entitled to in exchange for transferring the good or service. The Company estimates the amount of the transaction price to allocate to individual performance obligations based on their relative standalone selling prices, which is primarily estimated based on the amounts that would be charged to customers under similar market conditions or is based on details of the respective agreements.

Other Items

Contract acquisition costs (including commissions)

Contract acquisition costs related to sales order and service type contracts are expensed immediately. The Company elects to use the practical expedient that permits immediate expensing of all contract acquisition costs where that contract is anticipated to be complete within one year.

Warranties

The Company does not offer an option to purchase additional warranties and does not provide any additional services as part of any warranty. The warranties provided relate to product compliance to agreed-upon specifications and are considered an assurance type warranty. Warranties will continue to be accounted for under previous IFRS guidance.

Consignment and principal verse agent considerations

The new revenue standard focuses on recognizing revenue as an entity transfers control of a good or service to a customer. This could affect how an entity evaluates its position in a transaction as either a principal or an agent. The new revenue standard provides that an entity is a principal in a transaction if it controls the specified goods or services before they are transferred to the customer. The Company has entered into an arrangement whereby assets are transferred by the Company to another party (a “Consignee”) for storage. The Company continues to act in the capacity of the principal as evidenced by the Company’s ability to control the assets until the sale of the product to an external customer.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

D. Current Accounting Policy Changes (continued)

Right of return

The Company has entered into distribution agreements whereby the Company provides for a right of return to the distributor (reseller) of the Company’s products. The Company recognizes revenue based on the amount to which it expects to be ‘entitled’ through to the end of the return period (considering expected product returns). The Company recognizes the portion of the revenue subject to the right of return constraint once the amount is no longer constrained. The Company continually assesses the position that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration related to the right to return has been resolved.

Bill and hold arrangements

In some sales transactions, the Company fulfils its obligations and bills the customer for the work performed but does not ship the goods until a later date. These transactions are designed this way at the request of the customer and are typically due to the customer’s lack of available storage space for the product, or due to delays in the customer’s retail location construction schedules.

E. New Accounting Pronouncements

IFRS 16 Leases

In January 2016, the IASB issued IFRS 16 Leases, which will replace IAS 17 Leases. This standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term greater than twelve months, unless the underlying asset’s value is insignificant. 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. Lessors will continue to classify leases as operating or finance, with lessor accounting remaining substantially unchanged from the preceding guidance under IAS 17, Leases.

Management is currently executing its implementation plan. The most significant impact of IFRS 16 will be our initial recognition of the present value of unavoidable future lease payments as right-of-use assets under property, plant and equipment and the concurrent recognition of a lease liability on the consolidated statement of financial position. Majority of our property leases, which are currently treated as operating leases, are expected to be impacted by the new standard which will result in lower rent expense, higher depreciation expense and higher finance costs related to accretion and interest expense of the lease liability. IFRS 16 will also impact the presentation of the consolidated statement of cash flows by decreasing operating cash flows and increasing financing cash flows.

The standard will be effective for the Company for the fiscal year commencing November 1, 2019. The Company will measure the right-of-use asset at an amount equal to the lease liability on November 1, 2019, apply a single discount rate to leases with similar remaining lease terms for similar classes of underlying assets and will not separate non-lease components from lease components for certain classes of underlying assets.

Definition of a Business

In October 2018, the IASB issued “Definition of a Business (Amendments to IFRS 3)”. The amendments clarify the definition of a business, with the objective of assisting entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendment provides an assessment framework to determine when a series of integrated activities is not a business. The amendments are effective for business combinations occurring on or after the beginning of the first annual reporting period beginning on or after January 1, 2020. The Company is currently evaluating the potential impact of these amendments on the Company’s consolidated financial statements.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

4. Business Combinations

In accordance with IFRS 3, Business Combinations, these transactions meet the definition of a business combination and, accordingly, the assets acquired, and the liabilities assumed have been recorded at their respective estimated fair values as of the acquisition date.

A. Grasscity Acquisition

Total consideration	$
Cash paid		4,732
Share consideration		3,047
Put option (Note 11)		2,853
		10,632
Net identifiable assets acquired (liabilities assumed)
Cash		44
Accounts receivable		80
Prepaid expenses and deposits		125
Inventory		1,274
Property and equipment		63
Intangible assets
Software - Webstore		742
Software - Forums		82
Brand name		1,539
Grasscity Forums		312
		4,261
Accounts payable and accrued liabilities		(704	)
Deferred tax liability		(498	)
		3,059
Purchase price allocation
Net identifiable assets acquired		3,059
Goodwill		7,573
		10,632

On December 6, 2018, the Company entered into a share purchase agreement to acquire all of the issued and outstanding shares of three entities, SJV B.V., SJV2 B.V. and SJV USA Inc. that together operate under the name Grasscity. The transaction closed on December 19, 2018. Based in Amsterdam, Netherlands, Grasscity is an online retailer of smoking accessories and cannabis lifestyle products that has been operating for over 20 years. The Company acquired Grasscity to increase its customer base, establish an international presence, and to leverage synergies to further enhance High Tide’s vertically integrated supply chain and distribution networks. These synergies resulted in goodwill being recognized. Grasscity’s existing e-commerce channel will allow the Company to quickly establish an online presence and to expand its retail platform beyond the exisitng bricks-and-mortar locations. For the year ended October 31, 2019, Grasscity accounted for $4,349 in revenues and $1,285 in net loss since December 19, 2018. If the acquisition had been completed on November 1, 2018, the Company estimates it would have recorded an increase of $621 in revenues and an increase of $183 in net loss for the year ended October 31, 2019.

The Company acquired all of the issued and outstanding shares of Grasscity for aggregate consideration of $10,632 which included 8,410,470 common shares with a fair value of $3,047.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

4. Business Combinations (continued)

B.	Dreamweavers Acquisition

Total consideration	$
Cash paid		1,550
Notes Payable		102
Share consideration		1,147
Warrants		295
Total		3,094
Net identifiable assets acquired
Prepaid expenses and deposits		4
Inventory		131
Property and equipment		272
Intangible assets - licenses		2,594
Deferred tax liability		(700	)
Total		2,301
Purchase price allocation
Net identifiable assets acquired		2,301
Goodwill		793
Total		3,094

On May 23, 2019, the Company, entered into a share purchase agreement to acquire all of the issued and outstanding shares of Dreamweavers Cannabis Products Ltd. (“Dreamweavers”). Based in Swift Current, Saskatchewan, Dreamweavers is a retailer for cannabis products and smoking accessories. The Company acquired Dreamweavers to increase its retail footprint, and to establish a presence in the province of Saskatchewan, it also allows the Company to sell cannabis through e-commerce and provides an opportunity to operate a wholesale cannabis operation. The Company acquired all of the issued and outstanding shares of Dreamweavers for aggregate consideration of $3,094 which included 3,100,000 common shares with a fair value of $1,147, 1,550,000 purchase warrants exercisable at $0.75 per common share of High Tide and notes payables of $300 repayable over five years with zero interest rate due at each aniversary date. The fair value of warrants were calculated as $295 using Black-Scholes model with the following assumptions: stock price of $0.37; expected life of 2 years; $Nil dividends; 130% volatility; and riskfree interest rate of 1.60%. The note payable has been recorded at its fair value of $102 by discounting it over five years at a market interest rate of 22%. The Company incurred various legal and due diligence related fees totalling $38; these costs have been included as professional fees in the consolidated financial statements. For the year ended October 31, 2019, Dreamweavers accounted for $841 in revenues and $7 in net loss since May 24, 2019. If the acquisition had been completed on November 1, 2018, the Company estimates it would have recorded an increase of $572 in revenues and an increase of $89 in net loss for the year ended October 31, 2019. Goodwill has been recognized as a result of the synergies between Dreamweavers and the Company’s retail business.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

4. Business Combinations (continued)

C.	MK Light Acquisition

Total consideration	$
Cash paid		202
Settlement of debt		48
Total		250
Net identifiable assets acquired
Leasehold improvements		21
Inventory		4
Total		25
Purchase price allocation
Net identifiable assets acquired		25
Goodwill		225
Total		250

On November 1, 2018, the Company purchased all the assets of 2107746 Alberta Ltd. and MK Light It Up Inc.(“MK Light”) which had been operating a Smoker’s Corner franchise on Edmonton Trail in Calgary Alberta. The assets which included the leaseholds and inventory were purchased for $250 with $202 being settled in cash and the balance being used to settle all outstanding debts between MK Light, Smoker’s Corner Ltd. and RGR Canada Inc. The Company is currently using this location as a Canna Cabana retail store; which became operational on October 31, 2019. Goodwill has been recognized as a result of the synergies between MK Light and the Company’s retail business.

D.	Jasper Ave. Acquisition

Total consideration	$
Cash paid		75
Settlement of debt		195
Share consideration		205
Total		475
Net identifiable assets acquired		-
Total		-
Purchase price allocation
Net identifiable assets acquired		-
Goodwill		475
Total		475

On September 4, 2019, the Company acquired a Smoker’s Corner franchise located at 10275 Jasper Avenue in Edmonton, Alberta (“Jasper Ave.”). The total consideration paid to acquire the franchise was $475, of which $75 was paid in cash, issuance of 559,742 common shares of High Tide with a fair value of $205 and and the remaining balance being used to settle all outstanding debts between Jasper Ave., Smoker’s Corner Ltd. and RGR Canada Inc.. The Company has begun the process of converting the Jasper Avenue Store to a Canna Cabana retail location for the sale of recreational cannabis, subject to inspection and licensing by Alberta Gaming, Liquor and Cannabis. Goodwill has been recognized as a result of the synergies between Jasper Ave. and the Company’s retail business.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

5. Revenue from Contracts with Customers

For the year ended October 31, 2019	Retail		Wholesale		Corporate		Total
	$		$		$		$
Primary geographical markets
Canada		19,875		4,693		606		25,174
USA		3,684		1,901		-		5,585
International		443		92		-		535
Total revenue		24,002		6,686		606		31,294
Major products and services
Cannabis		16,366		-		-		16,366
Smoking accessories		6,603		6,478		-		13,081
Franchise royalties and fees		953		-		562		1,515
Interest and other revenue		80		208		44		332
Total revenue		24,002		6,686		606		31,294
Timing of revenue recognition
Transferred at a point in time		23,949		6,686		606		31,241
Transferred over time		53		-		-		53
Total revenue		24,002		6,686		606		31,294

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

6. Property and Equipment

	Office equipment		Leasehold
	and computers		improvements			Vehicles		Buildings		Total
	$		$			$		$		$
Cost
Balance, October 31, 2017		49		321			163		-		533
Additions		144		3,288			4		145		3,581
Balance, October 31, 2018		193		3,609			167		145		4,114
Additions ⁽ⁱ⁾ (Note 13)		196		6,823			-		2,655		9,674
Additions from business combinations (Note 4)		63		293			-		-		356
Impairment loss ⁽ⁱⁱ⁾		-		(220	)		-		-		(220	)
Balance, October 31, 2019		452		10,505			167		2,800		13,924
Accumulated depreciation
Balance, October 31, 2017		25		311			96		-		432
Depreciation		24		14			46		-		84
Balance, October 31, 2018		49		325			142		-		516
Depreciation		78		940			6		2		1,026
Balance, October 31, 2019		127		1,265			148		2		1,542
Net book value
Balance, October 31, 2018		144		3,284			25		145		3,598
Balance, October 31, 2019		325		9,240			19		2,798		12,382

(i)

Included in additions is $1,227 incurred for new buildout of leasehold improvements for the Company’s head office and warehouse in November and December 2018. The new head office and warehouse was available for use on January 1, 2019. The Company purchased a building in Niagara, Ontario, for the purpose of opening a Canna Cabana retail location. The consideration for the building consisted of $754 in cash, a $1,600 vendor take back loan (see note 13), and $300 paid in shares (see note 14).

(ii)

In fiscal year 2019, the Company undertook a strategic shift with regards to its Smoker’s Corners operations, pivoting focus towards Canna Cabana. As a result of the strategic shift, an impairment test was performed on the CGU’s related to Smoker’s Corner. Negative cash flow projections indicated impairment as the carrying value exceeded the respective recoverable amount of the corresponding CGU. As a result, the assets were written down to their recoverable amount of nil.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

7. Intangible Assets and Goodwill

	Software		Licenses		Lease buy-out		Brand Name		Goodwill			Total
		$		$		$		$		$			$
Cost
Balance, October 31, 2017		-		-		-		-		-			-
Additions		159		-		777		-		-			936
Balance, October 31, 2018		159		-		777		-		-			936
Additions		553		-		1,780		-		-			2,333
Additions from business combinations (Note 4)		1,136		2,594		-		1,539		9,066			14,335
Impairment loss		-		-		-		-		(4,600	)		(4,600	)
Balance, October 31, 2019		1,848		2,594		2,557		1,539		4,466			13,004
Accumulated depreciation
Balance, October 31, 2017		-		-		-		-		-			-
Amortization		2		-		-		-		-			2
Balance, October 31, 2018		2		-		-		-		-			2
Amortization		109		75		191		-		-			375
Balance, October 31, 2019		111		75		191		-		-			377
Foreign currency translation
Balance, October 31, 2018		-		-		-		-		-			-
Recorded in other comprehensive loss		60		-		-		57		336			453
Balance, October 31, 2019		60		-		-		57		336			453
Net book value
Balance at October 31, 2017		-		-		-		-		-			-
Balance at October 31, 2018		157		-		777		-		-			934
Balance, October 31, 2019		1,677		2,519		2,366		1,482		4,130			12,174

The carrying values of goodwill and intangible assets with indefinite lives are tested for impairment annually. The Company completed its annual impairment tests as of October 31, 2019 and has included a summary of the key inputs below for each CGU to which goodwill and indefinite life intangibles have been allocated.

Grasscity:

All goodwill and indefinite life intangibles acquired in the Grasscity acquisition were allocated to the Grasscity CGU. The Company performed its annual impairment test at October 31, 2019 and the recoverable amount of the Grasscity CGU was determined based on fair value less cost of disposal, determined using an income approach with the following key assumptions:

i.	5-year cash flow projections expected to be generated based on historical performance, financial forecasts and growth expectations. Cash flows beyond 5 years used a terminal growth rate of 2%;

ii.	Forecasted revenue at an average growth rate of 16%;

iii.	Average forecasted earnings before interest, tax, depreciation and amortization (“EBITDA”) of 14%; and,

iv.	Cash flows were discounted at an after-tax discount rate of 20.50 % based on a market participant weighted average cost of capital.

As a result of the impairment test performed, the recoverable amount was determined to be approximately $5,483, which resulted in an impairment of $4,600. The most sensitive inputs to the fair value model are the forecasted EBITDA and discount rate.

All else being equal:

i.	A 2% increase in the discount rate would have resulted in an impairment of approximately $5,211: and,

ii.	A 2% decrease in the average forecasted EBITDA would have resulted in an impairment of approximately $6,165.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

7. Intangible Assets and Goodwill (continued)

Dreamweaver:

All goodwill acquired in the Dreamweavers acquisition was allocated to the Dreamweavers CGU. The Company performed its annual impairment test at October 31, 2019 and the recoverable amount of the Dreamweavers CGU was determined based on fair value less cost of disposal calculation determined an income approach with the following key assumptions:

i.	5 year cash flow projections expected to be generated based on historical performance, financial forecasts and growth expectations. Cash flows beyond 5 years used a terminal growth rate of 2%;

ii.	Forecasted revenue at an average growth rate of 25%;

iii.	Average forecasted EBITDA of 14%; and,

iv.	Cash flows were discounted at an after-tax discount rate of 17% based on a market particpants weighted average cost of capital and risks specific to the particular CGU.

As a result of the impairment test performed, the recoverable amount was determined to be approximately $3,284, which exceeds the carrying amount by approximately $312, and therefore, did not result in an impairment. The most sensitive inputs to the fair value model are the forecasted EBITDA and discount rate.

All else being equal:

A 2% increase in the discount rate would have resulted in an impairment of approximately $127; and,

ii.

A 2% decrease in the average forecasted EBITDA would not have resulted in an impairment.

MK Light:

All goodwill acquired in the MK Light acquisition was allocated to the MK Light CGU. The Company performed its annual impairment test at October 31, 2019 and the recoverable amount of the MK Light CGU was determined based on a VIU calculation using the following key assumptions:

i.	5 year cash flow projections expected to be generated based on, financial forecasts and growth expectations. Cash flows beyond 5 years used a terminal growth rate of 2%;

ii.	Forecasted revenue of $1,745 for 2020 and an average annual growth rate of 2% thereafter;

iii.	Average forecasted EBITDA of 12%; and,

iv.	Cash flows were discounted at an after-tax discount rate of 23% based on the Company’s post-tax weighted average cost of capital and risks specific to the particular CGU (pre-tax discount rate of 31%).

As a result of the impairment test performed, the recoverable amount was determined to be approximately $670 which exceeds the carrying amount by approximately $114, and therefore, did not result in an impairment. The most sensitive inputs to the VIU model are the forecasted EBITDA and discount rate.

All else being equal:

i.	A 2% increase in the discount rate would have resulted in a recoverable amount of $610, which would not have resulted in an impairment; and,

ii.	A 2% decrease in the average forecasted EBITDA would have resulted in an impairment of $36.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

7. Intangible Assets and Goodwill (continued)

Jasper Ave:

All goodwill acquired in the Jasper Ave. acquisition was allocated to the Jasper Ave. CGU. The Company performed its annual impairment test at October 31, 2019 and the recoverable amount of the Jasper Ave. CGU was determined based on a fair value less cost of disposal calculation, determined using an income approach with the following key assumptions:

i.	5 year cash flow projections expected to be generated based on financial forecasts and growth expectations. Cash flows beyond 5 years used a terminal growth rate of 2%;

ii.	Forecasted revenue of $1,148 from May to October 2020 and an average annual growth rate of 2% thereafter;

iii.	Average forecasted EBITDA of 12%; and,

iv.	Cash flows were discounted at an after-tax discount rate of 23% based on a market participants weighted average cost of capital and risks specific to the particular CGU.

As a result of the impairment test performed, the recoverable amount was determined to be approximately $600, which exceeds the carrying amount by approximately $125, and therefore, did not result in an impairment. The most sensitive inputs to the fair value less costs to sell model are the forecasted EBITDA and discount rate.

All else being equal:

i.	A 2% increase in the discount rate would not have resulted in an impairment,

ii.	A 2% decrease in the average forecasted EBITDA would have resulted in an impairment of approximately $55.

8. Prepaid expenses and deposits

	2019			2018
	$			$
Business acquisition deposit		300			897
Deposits on cannabis retail outlets and warehouse		1,380			1,039
Prepaid insurance, licenses and other		1,833			405
Prepaid marketing contract		-			2,400
Advances to related party for purchases of inventory		-			863
Advances to third party vendor for purchases of inventory		385			504
Other receivable from related parties		-			23
Total		3,898			6,131
Less current portion		(2,518	)		(4,931	)
Long term portion		1,380			1,200

9. Inventory

	2019			2018
	$			$
Finished goods		7,092			4,054
Provision for obsolescence		(373	)		(591	)
		6,719			3,463

(i)	Inventories recognized as an expense and included in cost of sales during the year ended October 31, 2019 totaled $17,728 (2018 – $3,960).

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

10. Loans Receivable

	2019			2018
	$			$
Term loans ⁽ⁱ⁾		1,139			62
Demand loan ⁽ⁱⁱ⁾		-			1,094
Demand loan written-off (Note 23)		-			(1,094	)
Total loans receivable		1,139			62
Less current portion		(261	)		(62	)
Long-term portion		878			-

(i)

Term loans are due from franchisees and relate to acquisitions of the sub-lease location from the Company and initial inventory. Term loans are secured by promissory notes, bear interest between 6.95% and 8.00 % (2018 - ranging between 5.00 % and 7.00 %) per annum and require blended payments of principal and interest between $4 and $10 monthly. (2018 - ranging between $0.8 and $4 monthly). The Company maintains the head lease to all franchisee locations.

(ii)	Demand loans are unsecured, non-interest bearing and are due on demand.

11. Derivative Liability

The put option issued on the Grasscity acquistion on December 19, 2019 was initially measured at $2,853 using a monte-carlo simulation and the following assumptions: stock price: $0.3623; expected life of 1 year; $nil dividends; expected volatility of 126% based on comparable companies; exercise price of $0.50; and risk-free interest rate of 1.65%.

On October 31, 2019, the Company revalued the fair value of the derivative liability and recognized an unrealized gain of $732 in the consolidated statements of loss and other comprehensive loss. The derivative liability was revalued to $2,121 using monte-carlo simulation and the following assumptions: stock price: $0.25; expected life of 1 year; $nil dividends; expected volatility of 92% based on comparable companies; exercise price of $0.50; and risk-free interest rate of 1.65%.

12. Finance Lease Obligation

	2019			2018
	$			$
3.49% per annum vehicle loan, payable in monthly installments of $0.5 including principal and interest, maturing in June 2022. The vehicle has been pledged as security.		17			23
Less: current portion		(6	)		(6	)
		11			17

13. Notes payable

On May 23, 2019, the Company acquired all of the issued and outstanding shares of Dreamweavers for aggregate consideration of $3,094 which included 3,100,000 common shares with a fair value of $1,147, 1,550,000 purchase warrants exercisable at $0.75 per common share of High Tide and notes payables of $300 repayable over five years with zero interest rate due at each anniversary date. Notes payable was valued at $102 by discounting it over five years at market interest rate of 22%. During, the year ended October 31, 2019, the Company incurred accretion of $11.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

13. Notes payable (continued)

	2019
	$
Opening balance		-
Vendor loan		1,600
Term loan		1,910
Dreamweavers - notes payable		122
Total		3,632
Less current portion		(3,570	)
Long-term		62

	2019
	$
Notes payable, beginning of year		-
Cash advances from debt		2,000
Vendor loan advanced		1,711
Transfer of conversion and warrants component to equity		(105	)
Accretion on notes payable		26
Notes payable, end of year		3,632

14. Finance and other costs

Finance and other costs are comprised of the following:

	2019		2018
	$		$
Accretion expense		1,476		-
Interest on convertible debenture		1,423		-
Interest on notes payable		84		-
Listing expenses		106		499
Total		3,089		499

15. Convertible Debentures

(i)

On November 28, 2018, the Company entered into an agreement for a brokered private placement for the sale of up to 20,000 unsecured convertible debentures of the Company, at a price of $1 per debenture for gross proceeds of up to $20,000. The debentures bear interest at a rate of 8.5% per annum, payable on the last business day of each calendar quarter. The debentures are convertible to common shares of the Company at a price of $0.75 per common share and mature two years from the closing of the offering. The first closing occurred on December 13, 2018 issuing 11,330 debentures at a price of $1 per debenture for gross proceeds of $11,330. The company incurred $618 in issue costs in relation to the first closing which included the 504,733 broker warrants valued at $93 using Black-Scholes model with the following assumptions: stock price of $0.36; expected life of 2 years; $Nil dividends; 130% volatility; and risk-free interest rate of 1.60%. Each broker warrant is exercisable for one common share of the Company at a price of $0.75 per share until December 11, 2020.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

15. Convertible Debentures (continued)

Management calculated the fair value of the liability component as $8,907 using a discount rate of 22%, with the residual amount of $2,422 net of deferred tax of $654 being allocated to the conversion feature recorded in equity. The Company incurred $618 in debt issuance cost, $486 was allocated to debt component and the remaining $132 to the equity.

(ii)

Management calculated the fair value of the liability component as $7,138 using a discount rate of 22%, with the residual amount of $1,222 net of deferred tax of $330 being allocated to warrants, recorded in equity. The Company incurred $58 in debt issuance cost, $50 being allocated to debt component and the remaining $8 to the warrants.

(iii)

On June 17, 2019, the Company closed the final tranche of the sale of unsecured convertible debentures of the Company under the non-brokered private placement for gross proceeds of $3,200. The outstanding principal amount is convertible at any time before maturity at the option of the holder, into common shares of the Company at a conversion price of $0.75 per share and mature two years from the closing of the offering. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.75 original principal amount of its debenture, resulting in 4,266,667 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.85 per share for two years from the date of issuance. The debentures will bear interest at a rate of 10% per annum, payable annually upfront in common shares of High Tide based on the 10-day volume weighted average price of $0.384 prior to the closing date of the offering. Concurrent with the final tranche issuance of the debentures, the Company paid the annual amount of interest due to holders upfront in the form of 855,615 Shares.

Management calculated the fair value of the liability component as $2,732 using a discount rate of 22%, with the residual amount of $468 net of deferred tax of $126 being allocated to warrants, recorded in equity.

	2019
	$
Convertible debentures, beginning of year		-
Cash advances from debt		22,890
Debt issuance costs paid in cash		(471	)
Debt issuance costs paid in equity instruments		(93	)
Transfer of warrants component to equity		(1,690	)
Transfer of conversion component to equity		(2,422	)
Repayment of debt		-
Accretion on convertible debentures		1,450
Convertible debentures, end of year		19,664

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

16. Taxes

Reconciliation of effective tax rate:

The provision for income taxes differs from the result that would have been obtained by applying the consolidated federal and provincial tax rates to the income before taxes. The difference results from the following items:

	2019			2018
	$			$
Current tax expense		-			-
Deferred tax expense (recovery)		(708	)		(1,496	)
		(708	)		(1,496	)
Reconciliation of effective tax rate
Income (loss) before taxes		(27,000	)		(6,029	)
Statutory income tax rate		27	%		27	%
Expected tax expense (recovery)		(7,290	)		(1,627	)

Increase (decrease) in taxes resulting from:
Rate differential		535			382
Permanent differences		1,633			18
Other items		348			(267	)
Unrecognized deferred tax assets		4,066			-
Tax expense (recovery)		(708	)		(1,495	)

Deferred tax asset (liability) is comprised of the following:
Opening		1,974			479
Recovery (expense) on income statement		708			1,495
Deferred tax effect in equity		(1,004	)		-
Tax effect on business combination:		(1,198	)		-
Ending		480			1,974

Deferred tax asset (liability) is comprised of the following:
Non-capital loss carry forwards		5,327			1,162
PPE & Intangible		(1,386	)		(76	)
Others		470			729
Capital loss carry forwards		135			158
Unrecognized deductible temporary differences:		(4,066	)		-
Net deferred tax asset		480			1,974

Net deferred tax asset (liability) reconciliatoin:
Net deferred tax asset:		1,190			1,974
Net deferred tax liability:		(710	)		-
Total:		480			1,974

The following provides the details of gross unrecognized deductible temporary differences and unused losses for which no deferred tax asset has been recognized:

	2019		2018
	$		$
Non-capital loss carry forwards		14,612		1,162
PPE & Intangibles		313		(76	)
Others		1,556		729
Capital loss carry forwards		1,173		158
Unrecognized deductible temporary differences		17,655		1,974

The Company’s estimated non-capital loss carry forwards is approximately $22,305,326 which begins to expire in 2036.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

17. Share Capital

(a) Issued:

Common shares:

	Number of shares			Amount
	#			$
Balance, October 31, 2017		18,400,200			667
Issued for cash (i)		11,113,817			445
Issued on debt conversion (ii)		20,486,183			852
Issued for services rendered (iii)		3,500,000			146
Issued on conversion of convertible debentures (Note 20(i))		5,017,012			669
Issued on incorporation of High Tide Inc. (iv)		2,760,000			20
Issued to acquire common shares of RGR ((v)(i))		6,128,304			1,196
Issued to acquire preferred shares of RGR ((v)(i))		45,128,840			8,804
Issued to acquire common shares of Smoker’s ((v)(ii))		6,024,250			1,175
Issued to acquire preferred shares of Smoker’s ((v)(ii))		50,358,600			9,825
Issued to acquire common shares of Famous Brandz ((v)(iii))		30,324,120			10,987
Eliminated upon reorganization ((v)(iii))		(58,517,212	)		(2,779	)
Issued for cash on private placement (vi)		10,225,800			3,705
Share issue costs – broker warrants (vi)		-			(158	)
Share issue cost – cash (vii)		-			(263	)
Tax effect on share issue costs		-			114
Issued upon asset acquisition (vii)		800,000			290
Balance, October 31, 2018		151,749,914			35,695
Issued upon listing of securities (viii), (Note 19)		36,728,474			13,051
Issued upon closing of Grasscity acquisition (Note 4a)		8,410,470			3,047
Issued to pay fees in shares (x)		4,042,203			1,607
Issued to pay interest via shares (Note 15)		2,608,236			1,156
Reduction in share capital (ix)		-			(29,699	)
Issued upon closing of Dreamweavers acquisition (Note 4b)		3,100,000			1,147
Share-based compensation (Note 24)		200,000			71
Exercise - broker warrants (Note 20)		7,590			3
Issued upon closing of Jasper Ave. acquisition (Note 4d)		559,742			205
Balance, October 31, 2019		207,406,629			26,283

(i)

Famous Brandz issued 11,113,817 common shares to existing shareholders for cash totalling $445.

(ii)

Balances due to Smoker’s and RGR by Famous Brandz totalling $852 were converted into 20,486,183 common shares at fair value determined upon conversion.

(iii)

Famous Brandz issued 3,500,000 common shares to arms length parties for consulting services having a value of $146.

(iv)

Upon incorporation of High Tide on February 8, 2018, 2,760,000 (pre-share split: 1,000,000) common shares at a price of $0.0073 per share (pre-share split: $0.02 per share), totalling $20 were issued.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

17. Share Capital (continued)

(v)

On February 28, 2018 and April 30, 2018 (“Reorganization Date”), both RGR Canada Inc. (“RGR”), Smoker’s Corner Ltd. (“Smoker’s”), and then Famous Brandz Inc. (“Famous Brandz”), respectively, became wholly owned subsidiaries of a newly created High Tide following a corporate reorganization whereby the shareholders of RGR, Smoker’s and Famous Brandz transferred all of their ownership interests in exchange for fully-paid common shares of High Tide as follows:

(i)

On February 28, 2018, High Tide issued 6,128,304 (pre-share split: 2,220,400) Class A common shares at a price of $0.1949 per share (pre-share split: $0.538 per share) totalling $1,196 to acquire 100 Class A common shares of RGR from its shareholders and issued 45,128,840 (pre-share split: 16,351,029) Class A common shares at a price of $0.1949 per share (pre-share split: $0.538 per share) totalling $8,804 to acquire 88,044 preferred shares of RGR from its holders;

(ii)

On February 28, 2018, High Tide issued 6,024,250 (pre-share split: 2,182,700) Class A common shares at a price of

$0.1949 per share (pre-share split: $0.538 per share) totalling $1,175 to acquire 100 Class A common shares of Smoker’s from its shareholders and issued 50,358,600 (pre-share split: 18,245,871) Class A common shares at a price of $0.1949 per share (pre-share split: $0.538 per share) totalling $9,825 to acquire 98,247 preferred shares of Smoker’s from its holders;

(iii)

On April 30, 2018, High Tide issued 30,324,120 (pre-share split: 10,987,000) Class A common shares at a price of $0.3623 per share (pre-share split: $1.00 per share) totaling $10,987 to acquire 58,517,012 Class A common shares of Famous Brandz and issued 1,194,590 High Tide warrants with fair value of $243 to acquire Famous Brandz’ warrants; and

(iv)

Declared dividends totalling $4,492, which were settled as follows: cash of $1,155, assignment of marketable securities with carrying value at the date of dividend declaration totaling $675, assignment of common shares of Famous Brandz owned by RGR and Smoker’s totaling $1,006 and assignment of net related party balance totaling $1,654 (comprised of advances to related companies, related through common shareholders, and shareholder loans).

The carrying values of the common shares, preferred shares and warrants acquired by High Tide totalled $2,779, $18,629, and $31, respectively in the accounting records of respective entities. Since the carrying values were lower than the fair value of High Tide common shares and warrants (totalling $32,228) issued, the additional value of $10,789 was recorded against accumulated deficit as this was a related party transaction.

(vi)

On May 2, 2018, the Company closed a private brokered placement offering for 10,225,800 (pre-share split: 3,705,000) common shares at $0.3623 per share (pre-share split: $1.00 per share), for gross proceeds totalling $3,705. The Company paid brokers’ fees consisting of a cash payment of $263 and 670,680 (pre-share split: 243,000) broker warrants, which are exercisable at $0.3623 each (pre-share split: $1.00 each). These warrants were valued at $158 using Black Scholes option pricing model using the following assumptions: - Rate free interest rate: 1.77% - Expected volatility: 130% - Expected life in years: 2 - Expected dividends: Nil

(vii)

On October 17, 2018, the Company completed the acquisition of all the issued and outstanding shares of Smiley’s Cannabis and Budz Ltd. in Okotoks, Alberta (“Smiley’s”). The acquisition provides the Company with an additional retail location and development permit to operate a recreational cannabis store. Management determined that the acquisition of Smiley’s did not meet the definition of a business in accordance with IFRS 3 Business Combinations, as it did not have the inputs, processes and outputs required to meet the definition of a business. Accordingly, the acquisition has been accounted for as an asset acquisition. As consideration, 800,000 common shares of the Company were issued having a value of $290, based on the share price of the Company on October 17, 2018 of $0.3623 per share. Smiley’s assigned its assets, being a permitted lease, and a cash lease deposit totaling $12, to Canna Cabana and then Smiley’s was dissolved on October 29, 2018. The deposit, representing the first two monthly lease payments, was expensed during the year. As a result of the transaction, $277, representing the value of the lease, was recorded as an intangible asset.

(viii)

On November 20, 2018, the Company filed its final prospectus in connection with its proposed initial public offering. The final prospectus qualified, and the Company distributed, 36,728,474 common shares.

(ix)

The Board of Directors received approval from the shareholders at the Company’s Annual General Meeting, through a special resolution, to reduce its stated capital, in accordance with Part V, paragraph 37 of the Business Corporations Act, and reduce its retained deficit by $29,699.

(x)

During, the year ended October 31, 2019, the Company settled payables of $1,717 through issuance of 4,042,203 common shares of the Company which were valued at $1,607. The difference of $110 was recognized as a gain on extinguishment of financial liability.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

18.

Stock Option Plan:

The Company’s stock option plan limits the number of common shares reserved under the plan from exceeding a “rolling maximum” of ten (10%) percent of the Company’s issued and outstanding common shares from time to time. The stock options vest at the discretion of the Board of Directors, upon grant to directors, officers, employees and consultants of the Company and its subsidiaries. All options that are outstanding will expire upon maturity, or earlier, if the optionee ceases to be a director, officer, employee or consultant or there is a merger, amalgamation or change in control of the Company. One-fourth vesting immediately, one-fourth twelve months after the option grant date, one-fourth eighteen months after the option grant date and one-fourth twenty-four months after the option grant date. The maximum exercise period of an option shall not exceed 10 years from the grant date. Changes in the number of stock options, with their weighted average exercise prices, are summarized below:

	October 31, 2019					October 31, 2018
				Weighted Average				Weighted Average
	Number of options			Exercise Price ($)		Number of options		Exercise Price ($)
Balance, beginning of year		-			-		-		-
Granted		12,410,000			0.50		-		-
Forfeited		(1,800,000	)		0.50		-		-
Balance, end of year		10,610,000			0.50		-		-
Exercisable, end of year		5,966,875			0.50		-		-

During, the year ended October 31, 2019, the Company granted 12,410,000 incentive stock options to various officers, directors, employees and consultants. Subsequent to the grant date, 1,800,000 options were forfeited. The options were valued using the Black-Scholes model utilizing the following, weighted average assumptions:

Risk Free Rate – 1.56%

Volatility – 130%

Option life – 2 years

Exercise price - $0.50

Forfeiture rate – 0%

	Outstanding						Exercisable
Issue date	Exercise price		Number of Options		Remaining contractual life		Number of Options		Remaining contractual life
	$		#		(years)		#		(years)
November 21, 2018		0.50		7,862,500		2.06		4,342,500		2.06
April 30, 2019		0.50		2,247,500		2.50		1,499,375		2.50
June 20, 2019		0.50		500,000		2.64		125,000		2.64
		0.50		10,610,000		2.40		5,966,875		2.40

For the year ended October 31, 2019, the Company recorded share-based compensation of $2,119 (2018 -$0) related to stock options. The weighted average fair value of stock options granted during the year ended October 31, 2019 was $0.21 (2018 - nil) per option.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

19.

Special Warrants

	Number of special warrants			Amount
	#			$
Balance, October 31, 2017		-			-
Special warrants issued August 22, 2018 ⁽ⁱ⁾		17,911,459			8,956
Issue costs – Cash		-			(582	)
Issue costs – Broker warrants		-			(247	)
Issue costs – Legal fees		-			(178	)
Special warrants issued October 2, 2018 ⁽ⁱⁱ⁾		18,817,015			9,409
Issue costs – Cash		-			(612	)
Issue costs – Broker warrants		-			(259	)
Issue costs – Legal fees		-			(123	)
Tax effect on share issue costs		-			540
Balance, October 31, 2018		36,728,474			16,904
Special warrants converted into units* on November 27, 2018		(36,728,474	)		(16,904	)
Balance, October 31, 2019		-			-

Each unit comprised of 1 share and ½ purchase warrant, with each full warrant exercisable to acquire one common share at $0.75.

(i)

On August 22, 2018, the Company closed a private placement offering of special warrants (the “Special Warrants”) for aggregate proceeds of $8,956. Pursuant to the Special Warrant offering, the Company issued 17,911,459 (preshare split 6,489,659) warrants at a price of $0.50 (pre-share split $1.38) per Special Warrant. Each Special Warrant is automatically exercisable, with no additional consideration, into units of the Company on the date the Company obtains receipt from the applicable securities’ regulatory authorities for a final prospectus. Each Special Warrant entitles the holder thereof to 1 common share and ½ common share purchase warrant of the Company. Each full purchase warrant will be exercisable to acquire one common share at a price of $0.75 (pre-split $2.07) per purchase warrant until November 26, 2020, being two years from the initial day of trading of the Company’s securities. On closing of the offering of Special Warrants, the Company paid agents’ commissions of $582 and legal fees and expenses of $178. The Company also issued 1,164,245 (pre-split: 421,828) broker warrants, with each broker warrant convertible into units of the Company for $0.50 (pre-split - $1.38). Each unit will comprise 1 share and ½ purchase warrant, with each full warrant exercisable to acquire one common share at $0.75 (pre-split - $2.07). The broker warrants issued to the agents were fair valued at $247 calculated using Black Scholes option pricing model using the following assumptions: Risk free interest rate: 2.11%, Expected volatility: 130%, Expected life in years: 2, Expected dividends: $Nil

(ii)

On October 2, 2018, the Company closed a private placement offering of special warrants (the “Special Warrants”) for aggregate proceeds of $9,409. Pursuant to the Special Warrant offering, the Company issued 18,817,015 (preshare split 6,817,759) Special Warrants at a price of $0.50 (pre-share split $1.38) per Special Warrant. Each Special Warrant is automatically exercisable, with no additional consideration, into Units of the Company on the date that the Company obtains receipt from the applicable security’s regulatory authorities for a final prospectus (the “Qualifying Prospectus”). Each Special Warrant entitles the holder thereof to 1 common share and ½ common share purchase warrant of the Company. Each full purchase warrant will be exercisable to acquire one common share at a price of $0.75 (pre-split $2.07) per purchase warrant until November 26, 2020, being two years from the initial day of trading of the Company’s securities. On closing of the offering of the Special Warrants, the Company paid agents’ commissions of $612 and legal fees and expenses of $123. The Company also issued 1,223,105 (pre-split: 443,154) broker warrants with each broker warrant convertible into units of the Company for $0.50 (pre-split - $1.38). Each unit will comprise 1 share and ½ purchase warrant, with each full warrant exercisable to acquire one common share at $0.75 (pre-split - $2.07). The broker warrants issued to the agents were fair valued at $259 calculated using the Black Scholes option pricing model using the following assumptions: Risk free interest rate: 2.27%, Expected volatility: 130%, Expected life in years: 2, Expected dividends: Nil

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

20. Warrants

Outstanding warrants at October 31, 2019 were as follows:

	Number of warrants			Amount		Weighted average exercise price		Weighted average number of years to expiry		Expiry dates
	#			$		$

Balance, October 31, 2017		-			-		-		-	-
Issued in exchange for Famous Brandz’s warrants (i)		1,194,590			243		0.4975		0.14	April 29, 2020
Issued to brokers for private placement (Note 17(vi))		670,680			158		0.3623		0.08	April 29, 2020
Issued to brokers for special warrant financing (Note 19(i))		1,164,245			246		0.3246		0.22	August 21, 2020
Issued to brokers for special warrant financing (Note 19(ii))		1,223,105			259		0.3246		0.26	October 1, 2020
Balance, October 31, 2018		4,252,620			906		0.3773		0.70
Special warrants converted into units November 27, 2018 (Note 19)		18,364,236			3,853		0.7500		0.45	November 26, 2020
Issued to brokers for financing (Note 15(i))		504,733			93		0.7500		0.01	December 10, 2020
Issued warrants on Convertibile debt April 18, 2019 (Note 15(ii))		11,146,667			885		0.8500		0.37	April 17, 2021
Issued warrants for acquisition - Dreamweavers (Note 4b)		1,550,000			295		0.7500		0.06	May 22, 2021
Issued warrants on convertibile debt June 17, 2019 (Note 14(iii))		4,266,667			340		0.8500		0.16	June 16, 2021
Issued warrants for services (ii)		2,000,000			132		0.5000		0.01	January 24, 2020
Issued warrants on debt September 04, 2019 (Note 13)		1,600,000			105		0.8500		0.07	September 3, 2021
Warrants exercised		(7,590	)		-		-		-	-
Balance, October 31, 2019		43,677,333			6,609		0.6083		1.13

As at October 31, 2019 all 43,677,333 warrants were exercisable.

Prior to the corporate reorganization, Famous Brandz issued 721 units of unsecured convertible debentures with warrants at a price of $1,000 per unit for total proceeds of $721. The debentures were converted into common share of Famous Brandz prior to the corporate reorganization. Total shares issued on conversion was 5,017,012 for a value of $669. The change in the fair value of the conversion feature and accretion totaled $28,415 and $7,709, respectively during the period the convertible debentures were outstanding during the year. As part of the corporate reorganization, the Company issued 1,194,590 (pre-share split: 432,822) warrants with an exercise price of $0.4975 (pre-share split: $1.373) in exchange for 3,403,333 Famous Brandz warrants of which 2,403,333 warrants related to the convertible debentures and 1,000,000 were other warrants. The 1,194,590 warrants were valued at $243 using Black Scholes option pricing model using the following assumptions: - Risk free interest rate: 1.77% - Expected volatility: 130% - Expected life in years: 2 - Expected dividends: Nil

ii)

On July 29, 2019, the Company issued 2,000,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.50 for six months. The warrants were valued at $132 using the Black-Scholes model as, the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.42; expected life of six month; $nil dividends; expected volatility of 78% based on comparable companies; exercise price of $0.50; and a risk-free interest rate of 1.6%.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

21. Loss Per Share

				Year ended
				October 31
	2019			2018
	$			$
Net Loss for the year	(26,292		)	(4,533		)
Non-controlling interest		166			13
Net Loss for the year attributable to owners of the Company		(26,126	)		(4,520	)
		#			#
Weighted average number of common shares - basic and diluted		198,181,696			107,223,734
Basic loss per share		(0.13	)		(0.04	)
Dilutive loss per share⁽ⁱ⁾		(0.13	)		(0.04	)

(i)

For the year ended October 31, 2019, the stock-options and warrants outstanding were excluded from the calculation of diluted loss per share as they were anti-dilutive.

22. Financial Instruments and Risk Management

The Company’s activities expose it to a variety of financial risks. The Company is exposed to credit, liquidity, and market risk due to holding certain financial instruments. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.

Risk management is carried out by senior management in conjunction with the Board of Directors.

Fair value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, restricted marketable securities, loans receivable, accounts payable and accrued liabilities, notes payable, convertible debentures, derivative liabilities and shareholders’ loans.

IFRS 13 establishes a three-level hierarchy that prioritizes the inputs relative to the valuation techniques used to measure fair value. Fair values of assets and liabilities included in Level 1 of the hierarchy are determined by reference to quoted prices in active markets for identical assets and liabilities. Fair value of assets and liabilities in Level 2 are determined using inputs other than quoted prices for which all significant outputs are observable, either directly or indirectly. Fair value of assets and liabilities in Level 3 are determined based on inputs that are unobservable and significant to the overall fair value measurement. Accordingly, the Company has categorized its financial instruments carried at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The Company’s cash and cash equivalents are subject to Level 1 valuation.

The marketable securities and derivative liability have been recorded at fair value based on level 2 inputs. The carrying values of accounts receivable, accounts payable and accrued liabilities and shareholder loans approximate their fair values due to the short-term maturities of these financial instruments. The carrying value of the notes payable and convertibile debentures approximate their fair value as they are discounted using a market rate of interest.

Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The fair values of loans receivable are not materially different to their carrying amounts, since the interest rate on those loans is either close to current market rates or the loans are of a short-term nature.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

22. Financial Instruments and Risk Management (continued)

Credit risk

Credit risk arises when a party to a financial instrument will cause a financial loss for the counter party by failing to fulfill its obligation. Financial instruments that subject the Company to credit risk consist primarily of cash, accounts receivable, marketable securities and loans receivable. The credit risk relating to cash and cash equivalents and restricted marketable securities balances is limited because the counterparties are large commercial banks. The amounts reported for accounts receivable in the statement of consolidated financial position is net of expected credit loss and the net carrying value represents the Company’s maximum exposure to credit risk. Accounts receivable credit exposure is minimized by entering into transactions with creditworthy counterparties and monitoring the age and balances outstanding on an ongoing basis. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. The following table sets forth details of the aging profile of accounts receivable and the allowance for expected credit loss:

As at	October 31, 2019			October 31, 2018
	$			$
Current (for less than 30 days)		1,038			343
31 – 60 days		336			233
61 – 90 days		295			73
Greater than 90 days		2,355			334
Loss allowance		(1,639	)		(128	)
		2,385			855

During the year ended October 31, 2019, $100 in trade receivables were written off due to bad debts which is being included in general and adminstrative expense (year ended October 31, 2018 – $396). Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly.

The Company performs a regular assessment of collectability of accounts receivables. The Company monitors the financial performance and/or cash flows of its franchisees through observation of their point of sale system, receipt of cash from customers and maintains regular contact/discussions. In fiscal 2018, the Company reviewed the expected payment schedule and discounted it using an average franchisee credit adjusted rate of 11% resulting in the receivables being discounted by $475. For the year ended October 31, 2019, management reviewed the estimates and have created additional loss allowances for the Smokers Corner’s franchisee receivable of $1,136 and transferred $475 from discounts on accounts receivable to loss allowance.

	2019			2018
	$			$
Opening balance		128			109
Expeected credit loss allowance		1,142			415
Receivables written off during the year		(106	)		(396	)
Transfer from discounts on accounts receivables		475			-
		1,639			128

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

22. Financial Instruments and Risk Management (continued)

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company generally relies on funds generated from operations and equity financings to provide sufficient liquidity to meet budgeted operating requirements and to supply capital to expand its operations. The Company continues to seek capital to meet current and future obligations as they come due. Maturities of the Company’s financial liabilities are as follows:

	Contractual cash flows		Less than one year		1-5 years		Greater than 5 years
	$		$		$		$
October 31, 2018
Accounts payable and accrued liabilities		2,515		2,515		-		-
Shareholder loans		36		36		-		-
Convertible debentures		-		-		-		-
Total		2,551		2,551		-		-
October 31, 2019
Accounts payable and accrued liabilities		4,402		4,402		-		-
Notes Payable		3,632		3,570		62		-
Shareholder loans		701		701		-		-
Convertible debentures		19,664		-		19,664		-
Total		28,399		8,673		19,726		-

Interest rate risk

The Company is not exposed to significant interest rate risk as its interest-bearing financial instruments carry a fixed rate of interest.

Foreign currency risk

Foreign currency risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company maintains cash balances and enters into transactions denominated in foreign currencies, which exposes the Company to fluctuating balances and cash flows due to variations in foreign exchange rates.

The Canadian dollar equivalent carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as at October 31, 2019 was as follows:

(Canadian dollar equivalent amounts of USD dollar and	October 31,			October 31,			October 31,			October 31,
Euro balances)	2019 (Euro)			2019 (USD)			2019 Total			2018
	$			$			$			$
Cash		32			220			252			90
Accounts receivable		136			285			421			522
Accounts payable and accrued liabilities		(506	)		(492	)		(998	)		(218	)
Net monetary assets		(338	)		13			(325	)		394

Assuming all other variables remain constant, a fluctuation of +/- 5.0 percent in the exchange rate between the United States dollar and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $11 (October 31, 2018 - $20). Maintaining constant variables, a fluctuation of +/- 5.0 percent in the exchange rate between the Euro and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $17 (October 31, 2018 - $Nil). To date, the Company has not entered into financial derivative contracts to manage exposure to fluctuations in foreign exchange rates. The Company had no balances denominated in Euros as at October 31, 2018.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

23. Segmented Information

Segments are identified by management based on the allocation of resources, which is done on a basis of selling channel rather than by legal entity. As such, the Company has established two main segments, being retail and wholesale, with a Corporate segment which includes oversight and start up operations of new entities until such time as revenue generation commences. The reportable segments are managed separately because of the unique characteristics and requirements of each business.

	Retail			Retail		Wholesale			Wholesale			Corporate			Corporate			Total			Total
For the year	2019			2018		2019			2018			2019			2018			2019			2018
ended Oct 31,	($)			($)		($)			($)			($)			($)			($)			($)

Net Revenue		24,002			3,757		6,686			4,992			606			-			31,294			8,749
Gross margin		8,074			3,280		2,642			(171	)		600			-			11,316			3,109
Income (loss) from operations		(6,154	)		126		(2,482	)		(2,802	)		(11,237	)		(1,058	)		(19,874	)		(3,734	)
Net (loss) Income		(10,275	)		520		(3,432	)		(3,660	)		(12,586	)		(1,393	)		(26,292	)		(4,533	)
Total assets		32,350			9,323		4,819			6,225			3,574			10,375			40,743			25,922
Total liabilities		4,521			847		672			1,000			26,142			761			31,336			2,607

Geographical segments

	Canada			Canada			Europe			Europe		Total			Total
	2019			2018			2019			2018		2019			2018
For the year ended Oct 31,	($)			($)			($)			($)		($)			($)

Net Revenue		26,945			8,749			4,349			-		31,294			8,749
Gross margin		9,724			3,109			1,591			-		11,316			3,109
Income (loss) from operations		(18,267	)		(3,734	)		(1,606	)		-		(19,874	)		(3,734	)
Net (loss) Income		(20,080	)		(4,533	)		(6,213	)		-		(26,292	)		(4,533	)
Total assets		33,894			25,922			6,849			-		40,743			25,922
Total liabilities		30,830			2,607			506			-		31,336			2,607

24. Related Party Transactions

As at October 31, 2019, the Company had the following transactions with related parties as defined in IAS 24 – Related Party Disclosures, except those pertaining to transactions with key management personnel in the ordinary course of their employment and/or directorship arrangements and transactions with the Company’s shareholders in the form of various financing.

Financing transactions

As at October 31, 2019, the Company owed the non-controlling interest shareholder of KushBar Inc. $701.The loan carries no interest and is due on demand. Included in the convertible debenture issued on December 12, 2018, was an investment by a related party, CannaIncome Fund Corporation, for a total subscription amount of $250.

Operational transactions

The Company paid $2,176 (2018 - $2,618), to 1990299 Alberta Ltd. (“199”), a company controlled by the President and CEO of the Company, for inventory purchases. 199 primarily facilitates the import of goods and sells these imported goods to the Company at 199’s purchasing and transportaion costs, without markup. High Tide has transitioned the process of facilitation of its imports from 199 to HT Global Imports. During the year, the Company paid for certain expenses on behalf of the President and CEO totalling $56 (2018 - $24). These items are included in accounts receivables. As well, the Company wrote-off related party balances totalling $34 (2018 - $1,419).

An office and warehouse unit has been developed by Grover Properties Inc., a company that is related through a common controlling shareholder and the President & CEO of the company. The office and warehouse space were leased to High Tide to accommodate the Company’s operational expansion. The lease was established by an independent real estate valuations services company at prevailing market rates and has annual lease payments totalling $386 per annum. The primary lease term is 5 years with two additional 5-year term extensions exercisable at the option of the Company. To facilitate the mortgage granted to Grover Properties Inc. for the development of this unit, a loan guarantee of up to $1,500 has been provided by Smoker’s Corner Ltd., a subsidary of High Tide Inc.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

24.

Related Party Transactions (continued)

Key management personnel

Key management personnel is comprised of 9 members of Company’s Executive Team and Board of Directors. Key management compensation for the years ended October 31 is as follows:

	2019		2018
	$		$
Short-term compensation		1,469		272
Share-based compensation ⁽ⁱ⁾		71		25
Total		1,540		297

(i)

During, the year ended October 31, 2019, the Company paid a bonus of $90 in the form of 200,000 common shares to the officers of the company which were valued at $71 and the difference of $19 was recognized as a gain on extinguishment of financial liability (2018- $25).

25. Commitments and Contingencies

The Company has commitments relating to operating leases for its office space and outlets under non-cancelable operating leases.

The future minimal annual rental payments under these operating leases are as follows:

As at	October 31, 2019		October 31, 2018
	$		$
Less than one year		3,962		2,336
Between one and five years		13,830		10,103
Greater than five years		3,426		2,532
		21,218		14,971

Included in the commitments schedule above, is the office and warehouse unit leased by High Tide for $386 per annum (Note 24).

Contingent liability

An action with the Court of Queen’s Bench (Alberta) (the “QB Claim”) and a complaint with the Human Rights Tribunal (Alberta) (the “HR Complaint”) was filed by a former employee. The amount claimed by the former employee is approximately $200 plus interest and other costs. The Company has calculated a provision based on the amount claimed and the probability of the QB Claim being successful. The provision has been recorded in accounts payable and accrued liabilities.

A claim for 110 Euro was lodged against the Company in relation to non-payment under a service contract. The company has disclaimed liability and is defending the action. Management’s opinion is that the likelihood of any cash outflow as a result of these matters is remote, therefore, no amounts have been provided for in these consolidated financial statements.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

26. Non-Controlling Interests

The following table presents the summarized financial information for KushBar Inc., the Company’s subsidiaries which have non-controlling interests. This information represents amounts before intercompany eliminations.

	2019
	$
Total current assets		458
Total non-current assets		1,019
Total current liabilities		(996	)
Total non-current liabilities		-
Revenues for the year ended		259
Net loss for the year ended		(294	)

The net change in non-controlling interests is as follows:

Balance, October 31, 2018	(13	)
Share of loss for the period	(166	)
Balance, October 31, 2019	(179	)

27. Subsequent Events

(i)

On November 5, 2019, the Company issued unsecured convertible debentures under a non-brokered private placement with proceeds of $2,000. Subject to the need for further growth capital, the Company’s Board of Directors has authorized the issuance of an optional second tranche of the offering for aggregate proceeds of up to $5,000. The outstanding principal amount is convertible at any time before maturity and at the holder’s option, into common shares of the Company at a conversion price of $0.252 per share. The debentures are due 24 months from the date of issuance and carry an interest cost of 10% per annum, payable annually in advance in shares. The interest cost is payable in common shares at a price equal to the volume-weighted average price per common share for the 10-day period prior to the date upon which interest is due. Concurrent with the issuance of the debentures, the Company paid the annual amount of interest due up-front in the form of 784,314 shares. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.252 original principal amount of its debenture, resulting in 7,936,507 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one Share at an exercise price of $0.50 per common share for two years from the date of issuance.

(ii)

On December 5, 2019, the Company closed the second tranche of the sale of unsecured convertible debentures of the Company under the private placement previously announced on November 5, 2019. Gross proceeds from the Second Tranche were $2,115. The outstanding principal amount is convertible at any time before maturity and at the holder’s option, into common shares of the Company at a conversion price of $0.252 per share. The debentures are due 24 months from the date of issuance and carry an interest cost of 10% per annum, payable annually in advance in common shares. The interest rate is payable in common shares at a price equal to the volume-weighted average price per common share for the 10-day period prior to the date upon which interest is due. Concurrent with the issuance of the debentures, the Company paid the annual amount of interest due up-front in the form of 1,016,826 common shares. Under the second tranche of the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.252 original principal amount of its debenture, resulting in 8,392,857 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one common share at an exercise price of $0.50 per common share for two years from the date of issuance.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

27. Subsequent Events (continued)

(iii)

On December 10, 2019, the Company entered into a definitive share purchase agreement with 2651576 Ontario Inc. (the “Minority Holder”), a private Ontario company, to acquire the remaining 49.9% interest (the “Minority Interest”) in High Tide’s majority-owned subsidiary, KushBar Inc. Pursuant to the definitive agreement, High Tide, which presently holds a controlling interest of 50.1% in KushBar, will acquire the Minority Interest in a transaction (the “Transaction”) that will result in KushBar becoming a wholly owned subsidiary of High Tide. The consideration paid for the minority interest was by the issuance of a secured convertible debenture in the principal amount of approximately $700 and such number of common shares in the capital of High Tide (“Shares”) having an aggregate value of $500, with each common share priced at the 10-day volume weighted average trading price of the shares on the CSE immediately prior to the closing date. The outstanding principal amount under the debenture is convertible, at the holder’s option, before the maturity date into Shares at a price of $0.25 per common share. The debenture will be due 24 months from the issuance date and will not bear interest, provided however that any principal amount outstanding following the maturity date will bear interest at a rate of 10% per annum until repaid. If, following the expiry of all hold periods imposed by applicable Canadian securities laws, the volume-weighted average trading price of the common shares on the CSE exceeds $0.30 for a period of 30 consecutive days, High Tide will be entitled to, subject to certain other conditions being met, cause the holder to convert all or part of the outstanding principal amount of the debenture into common shares. In addition, if at any time during the term thereof, High Tide issues securities at a price deemed lower than the conversion price then in effect, then, subject to certain other conditions, such conversion price will be adjusted downward to such lower price.

(iv)

On December 13, 2019, the Company issued $2,000 in convertible debt and 7,936,508 warrants to the sellers of GrassCity to settle the put option valued at $2,121 as of October 31, 2019.

(v)

On January 1, 2020, the Company launched a new revenue stream in its proprietary data analytics platform, “Cabanalytics”. Cabanalytics provides the Company a deep understanding of consumer behaviours and preferences and serves as a new net margin stream by providing consumer and product insights to licensed producers and other companies supporting the cannabis sector. The Company continues to develop the program with a number of licensed producers and other market participants.

(vi)

On January 6, 2020, the Company entered into a loan agreement with Windsor Private Capital (“Windsor”), a Toronto-based merchant bank, to secure a senior secured, non-revolving term credit facility in the amount of up to $10,000. The Company will have immediate access to an initial $6,000, that can be drawn down at Company’s discretion, and subject to satisfaction of certain conditions, will provide the Company with access to an additional $4,000. Amounts drawn down under the facility will bear interest at a rate of 11.5% per annum, payable monthly, in arrears, on the last day of each calendar month. Provided that certain conditions are satisfied, the facility will automatically extend for an additional one-year term. The principal amount advanced under the facility is convertible, during its term at any time after an initial 6 month hold period, and at Windsor’s option, into common shares in the capital of the Company at a conversion price of $0.17. The conversion price is subject to downward adjustment if the Company, at any time during the term of the facility, issues securities at a price deemed lower than the conversion price then in effect. Pursuant to the loan agreement, Windsor is entitled to a one-time placement fee equal to 3.5% of the initial facility amount, which the Company intends to capitalize into the principal amount advanced under the facility. In addition, Company will issue to Windsor such number of share purchase warrants equal to the aggregate principal amount of the facility divided by the conversion price. The warrants will be subject to vesting as follows: (i) with respect to such number of warrants equal to the initial facility amount divided by the conversion price, such warrants will vest on the earlier of the date on which Windsor advances to the Company the total initial facility amount, and February 6, 2020, and (ii) with respect to the remaining warrants, such number of warrants equal to the quotient obtained by dividing the principal amount advanced to the Company (from the remaining Facility amount) by the conversion price, will vest on the date of each such advance. Each warrant will entitle the holder thereof, following the vesting date applicable to such warrant, to acquire one at an exercise price equal to 150% of the conversion price per common share for a period of two years from the date of issuance.

(vii)

On January 24, 2020, the Company completed the acquisition of the Canna Cabana retail cannabis store in Hamilton, Ontario. As consideration for the acquisition, the Company paid to the vendor $2,097 in cash and issued to the vendor 4,761,904 common shares in the capital of the Company. In connection with the transaction, the Company acquired all the issued and outstanding shares of a numbered company that was wholly owned by the holder of a cannabis retail store. Under IFRS 3, if the acquisition date of a business combination is after the end of the reporting period, but prior the publication of the consolidated financial statements, the Company must provide the information required by IFRS 3 unless the initial accounting for the business combination is incomplete. Due to the short time period between the closing of the acquisition date and the publication of these consolidated financial statements, the allocation of the purchase price has not been provided because that information has not yet been finalized.

High Tide Inc.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2019 and 2018

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

27. Subsequent Events (continued)

(viii)

On January 27, 2020, the Company acquired a 50% interest in the Canna Cabana branded store in Sudbury, Ontario. As consideration for the transaction, the Company issued to a nominee of the partners of the partnership an aggregate of 5,319,149 common shares of the Company, which are subject to a four month and one day statutory hold period, as well as common share purchase warrants to purchase up to an aggregate of 2,500,000 shares of the Company. Each warrant entitles the holder to acquire one share at an exercise price of $0.40 per share for a period of two years from the date of issuance. In addition, for a period of 2 years following the closing date, one of the outgoing partners will be entitled to receive, from the Company, a royalty of 1% of the gross revenues of the Sudbury store.

(ix)

On February 14, 2020, the Company entered into a binding asset purchase agreement with Halo Labs Inc. (“Halo”), under which High Tide will sell its KushBar retail cannabis assets and the rights to 5 permitted retail cannabis stores (the “Portfolio”) to Halo for $12,000, payable in the form of 46,153,846 common shares of Halo, of which $3,500 has been paid to the Company as a non-refundable deposit, subject to certain limited circumstances. In addition, Halo has agreed to engage the Company to substantially oversee all aspects of its retail cannabis operations with respect to the Portfolio and will pay the Company ongoing royalties for regulatory advisory services and retail management, and a fixed fee for managing the construction of the unopened stores.

(x)

On February 21, 2020, the Company closed the acquisition of a retail cannabis store currently operating in Tisdale, Saskatchewan (the “Tisdale Store”) as licensed by the Saskatchewan Liquor and Gaming Authority. The consideration paid to acquire the Tisdale Store was $219 in cash, $500 in the form of a promissory note due six months from the time of closing of the transaction and 5,000,000 of common shares of the Company with a fair value of $975. Under IFRS 3, if the acquisition date of a business combination is after the end of the reporting period, but prior the publication of the consolidated financial statements, the Company must provide the information required by IFRS 3 unless the initial accounting for the business combination is incomplete. Due to the short time period between the closing of the acquisition date and the publication of these consolidated financial statements, the allocation of the purchase price has not been provided because that information has not yet been finalized.

EXHIBIT 99.155

High Tide Opens its First Cannabis Retail Store in Canmore, Alberta, and Appoints Chief Operating Officer

CALGARY, AB, March 19, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, announced that the Canna Cabana retail store located at 1702 Bow Valley Trail, in Canmore, Alberta, will begin selling recreational cannabis products for adult use today. This opening represents High Tide’s 77^th branded retail location across Canada selling recreational cannabis products and consumption accessories. Located one-hour west of Calgary and only 5 minutes from the Banff National Park, the new Canmore store is strategically located within walking distance of several ski resorts and other tourist attractions.

High Tide Inc. - March 19, 2021 (CNW Group/High Tide Inc.)

High Tide is also pleased to announce that it has promoted Aman Sood to the position of Chief Operating Officer of the Company, effective March 15^th, 2021. Mr. Sood has been serving as Senior Director, IT & Retail Operations since transitioning to High Tide after the Company’s acquisition of META Growth. Mr. Sood is a seasoned leader with over two decades of experience in retail sector project management, operations, technology, and cost optimization. He has proven successes in new market identification and strategic positioning for companies of all sizes. Having led the building and management of 25 NewLeaf Cannabis locations, Mr. Sood is a pioneer in the legal market who specializes in spearheading operational improvements to reduce shrink, enhance productivity, increase sales, and drive efficiencies. The Company has also approved the grant of 600,000 stock options for Mr. Sood to purchase common shares of High Tide as per the terms of the stock option plan.

“Along with our existing Banff location, the opening of this new Canmore store solidifies our presence within Alberta’s Bow Valley region which includes Banff National Park and the popular tourist hamlet of Lake Louise,” said Raj Grover, President and Chief Executive Officer of High Tide. “I am also very excited to announce the promotion of Mr. Sood who has played a leading role in driving the successful integration of META Growth into the High Tide family. I look forward to Aman bringing his expertise in driving operational efficiencies into his new leadership role on our team, particularly as we aggressively pursue new acquisition targets,” added Mr. Grover.

Grant of Stock Options and Restricted Share Units

The Company also announces that its Board of Directors has approved a grant of 5,000,000 stock options to purchase common shares of High Tide to certain officers, and consultants. In addition, the Company also announces that its Board of Directors has approved a grant of 1,000,000 restricted share units (“RSUs”) to certain directors of the Company pursuant to the Company’s restricted share unit plan. Each RSU entitles the holder to acquire one common share of the Company upon vesting.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 77 branded retail locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

Neither the TSX Venture Exchange (the “TSXV”) nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this news release are forward-looking information or forward-looking statements. Such information and statements, referred to herein as “forward-looking statements” are made as of the date of this news release or as of the date of the effective date of information described in this news release, as applicable. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (generally, forward-looking statements can be identified by use of words such as “outlook”, “expects”, “intend”, “forecasts”, “anticipates”, “plans”, “projects”, “estimates”, “envisages, “assumes”, “needs”, “strategy”, “goals”, “objectives”, or variations thereof, or stating that certain actions, events or results “may”, “can”, “could”, “would”, “might”, or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions, and other similar terminology) are not statements of historical fact and may be forward-looking statements.

Such forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to the ability of High Tide to execute on its business plan and that High Tide will receive one or multiple licenses from Alberta Gaming, Liquor & Cannabis, British Columbia’s Liquor Distribution Branch, Liquor, Gaming and Cannabis Authority of Manitoba, Alcohol and Gaming Commission of Ontario or the Saskatchewan Liquor and Gaming Authority permitting it to carry on its Canna Cabana Inc. and KushBar Inc. businesses. High Tide considers these assumptions to be reasonable in the circumstances. However, there can be no assurance that any one or more of the government, industry, market, operational or financial targets as set out herein will be achieved. Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements, or industry results, to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.

The forward–looking statements contained herein are current as of the date of this news release. Except as required by law, High Tide does not have any obligation to advise any person if it becomes aware of any inaccuracy in or omission from any forward-looking statement, nor does it intend, or assume any obligation, to update or revise these forward-looking statements to reflect new events or circumstances. Any and all forward-looking statements included in this news release are expressly qualified by this cautionary statement, and except as otherwise indicated, are made as of the date of this news release.

SOURCE High Tide Inc.

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CO: High Tide Inc.

CNW 06:00e 19-MAR-21

EXHIBIT 99.156

High Tide Announces Filing of Form 40-F with SEC Fulfilling a Significant Milestone for the NASDAQ Listing

CALGARY, AB, March 22, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (Frankfurt: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of smoking accessories, is pleased to announce that it has filed a Form 40-F Registration Statement (“Form 40-F”) with the United States Securities and Exchange Commission (the “SEC”), fulfilling a significant milestone in the process for High Tide to list its common shares on The Nasdaq Stock Market LLC (“Nasdaq”). A copy of the Form 40-F is available on the Company’s website at www.hightideinc.com.

High Tide Inc. Logo (CNW Group/High Tide Inc.)

“We were the first Canadian cannabis retailer to pursue this prestigious listing on Nasdaq and we believe it will allow us to greatly expand our shareholder base, enhance shareholder value and accelerate our already aggressive M&A initiatives in Canada, Europe and the United States,” said Raj Grover, President and Chief Executive Officer of High Tide. “We are currently in several discussions with potential acquisition targets in these jurisdictions and look forward to updating the market soon,” added Mr. Grover.

The listing of the Company’s common shares on Nasdaq remains subject to the approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements, including the effectiveness of the Form 40-F.

High Tide’s common shares will continue to trade on the OTCQB under the ticker symbol HITIF until Nasdaq approval and up listing. High Tide’s common shares will continue to trade on the TSX Venture Exchange (“TSXV”) under the ticker symbol “HITI” post-Nasdaq up listing. There can be no assurance, however, that Nasdaq approval will be received.

Following receipt of all required approvals, the Company will issue a press release announcing its first trading date on Nasdaq.

Release of First Quarter 2021 Financial Results

The Company will release its financial and operational results for the quarter ended January 31, 2021 after market close on April 1, 2021. High Tide’s first quarter 2021 financial and operational results will be available on SEDAR and on the Company’s website at www.hightideinc.com/invest.

Following the release of its first quarter 2021 financial and operational results, High Tide will host a conference call with Raj Grover, President and Chief Executive Officer, and Rahim Kanji, Chief Financial Officer, at 5:00 PM Eastern Time on April 1, 2021. The conference call will discuss High Tide’s first quarter 2021 financial and operational results and updates on the Company’s plans for 2021.

Dial-In Information

US/CANADA Participant Toll-Free Dial-In Number: (833) 570-1148

US/CANADA Participant International Dial-In Number: (914) 987-7095

Conference ID: 5128837

In order to join the conference call, all speakers and participants will be required to provide the Conference ID listed above.

Encore Replay Information (Available until April 8, 2021)

Toll-Free Encore Dial-In Number: (855) 859-2056

Encore Dial-In Number: (404) 537-3406

Conference ID: 5128837

In addition to the toll-free number listed above, participants can also dial (800) 585-8367 to access Encore.

About High Tide

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of smoking accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 77 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous lifestyle accessory businesses including e-commerce platforms Grasscity.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative of these terms and similar expressions. Forward-looking statements regarding High Tide and its business include, but are not limited to, statements with respect to: the potential listing of High Tide’s Shares on Nasdaq, the timing thereof, receipt of regulatory approval for, and the Form 40-F Registration Statement with the SEC. The forward-looking events and circumstances discussed in this press release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting High Tide, including risks relating to the listing of High Tide’s securities in the United States, a shutdown of the United States government, the Nasdaq listing not providing High Tide with broadened access to international investors or enhance High Tide’s liquidity, the Company not expanding globally, which could result in the Company not having a diversified business platform for growth, the Company not being well positioned to pursue additional opportunities for growth, or such opportunities no longer being available to High Tide, risks associated with the geographic markets in which High Tide operates, risks associated with fluctuations in exchange rates (including, without limitation, fluctuations in currencies), risks associated with the cannabis industry and the regulation thereof, the failure to comply with applicable laws, the failure to obtain regulatory approvals, economic factors, market conditions, the equity and debt markets generally, risks associated with growth and competition, general economic and stock market conditions, risks and uncertainties detailed from time to time in High Tide’s filings with the SEC and Canadian Securities Administrators, the COVID-19 pandemic nationally and globally and the response of governments to the COVID-19 pandemic in respect of the operation of retail stores and other risks and many other factors beyond the control of High Tide. Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. High Tide disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

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CNW 06:00e 22-MAR-21

EXHIBIT 99.157

High Tide Acquires Leading E-commerce Retailer Smoke Cartel

CALGARY, AB, March 24, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, is pleased to announce that it has completed the acquisition (the “Acquisition”) of Smoke Cartel Inc. (“Smoke Cartel”) (OTCQB: SMKC) and now operates both the largest and second largest e-commerce platforms for consumption accessories in the world¹ with a combined total of 33 million site visits in 2020. As a result of the acquisition, High Tide has considerably expanded its footprint in the United States market, and is very enthusiastic about its position to begin online cannabis sales should the United States move forward with federal legalization.

High Tide Inc.- March 24, 2021 (CNW Group/High Tide Inc.)

“The acquisition of Smoke Cartel is part of our strategy to aggressively pursue M&A targets that can be immediately accretive to shareholders. Now that the transaction has closed, High Tide will move quickly to take advantage of Smoke Cartel's proprietary and licensable drop-shipping technology to enhance all our e-commerce businesses and further drive vertical integration across all accessory business lines, while continuing to make progress on our application to list on the Nasdaq,” said Raj Grover, President and Chief Executive Officer of High Tide. “This deal immediately gives High Tide access to Smoke Cartel's 550,000 customers, driving more sales opportunities and increased profit margin,” added Mr. Grover.

The Acquisition was completed pursuant to the terms of the definitive agreement (the “Acquisition Agreement”) previously announced by the Company on January 25, 2021. High Tide acquired all of the issued and outstanding shares of Smoke Cartel (“SC Shares”) for US$8.0 Million, implying an approximate value of US$0.31 per SC Share.

The consideration was comprised of: (i) 9,540,754 common shares of High Tide (the “HT Shares”), having an aggregate value of US$6.0 Million with each HT Share priced at the 10-day volume weighted average price of the HT Shares on the TSX Venture Exchange immediately prior to the closing of the Acquisition (the “Share Consideration”); and (ii) US$2.0 Million in cash (the “Cash Consideration”). As a result of U.S. securities law considerations and negotiations between the parties, certain Smoke Cartel significant shareholders have agreed to allow the Cash Consideration to be allocated first to Smoke Cartel's shareholders generally, who were paid fully in cash, using all or a portion of the Cash Consideration.

Pursuant to the Acquisition Agreement, 25% of the Share Consideration has been placed in escrow for a period of 12 months from Closing.

In connection with the Acquisition, High Tide is excited to announce that Sean Geng, Founder and CTO of Smoke Cartel, has joined the High Tide team as Chief Technology Officer to oversee all IT and e-commerce initiatives for High Tide globally.

The Acquisition is an arm's length transaction pursuant to applicable regulatory policies.

As of March 23rd, 2021, based on traffic analytics data provided by SEMrush Inc.”

ABOUT SMOKE CARTEL

Smoke Cartel, Inc. (OTCQB: SMKC) is one of the leading online retailers of glass water pipes, vaporizers, consumption accessories, and hemp derived CBD products. The company provides a marketplace with a wide variety of high-quality products, subscription boxes, reliable customer service, and rapid dependable shipping. Smoke Cartel leverages its proprietary marketplace technology to seamlessly connect brands & vendors with its growing customer base built over the last 7 years. The company's website at www.smokecartel.com offers fast load times and optimizations, making the customer experience quick, seamless, and engaging.

ABOUT HIGH TIDE

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 77 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide's strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking statements also necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving the retail cannabis markets; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the retail cannabis industries generally; income tax and regulatory matters; the ability of High Tide to implement its business strategy; competition; currency and interest rate fluctuations; the COVID-19 pandemic nationally and globally and the response of governments to the COVID-19 pandemic in respect of the operation of retail stores and other risks. Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Readers are further cautioned that the assumptions used in the preparation of such forward-looking statements (including, but not limited to, the assumption that (i) High Tide's financial condition and development plans do not change as a result of unforeseen events, (ii) there will continue to be a demand, and market opportunity, for High Tide's product offerings; (iii) current and future economic conditions will neither affect the business and operations of High Tide nor High Tide's ability to capitalize on anticipated business opportunities, although considered reasonable by management of High Tide at the time of preparation, may prove to be imprecise and result in actual results differing materially from those anticipated, and as such, undue reliance should not be placed on forward-looking statements.

Forward-looking statements, forward-looking financial information and other metrics presented herein are not intended as guidance or projections for the periods referenced herein or any future periods, and in particular, past performance is not an indicator of future results and the results of High Tide in this press release may not be indicative of, and are not an estimate, forecast or projection of High Tide future results. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. High Tide disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters referred to above and elsewhere in High Tide's public filings and material change reports, which are and will be available on SEDAR.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933 (the “1933 Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration is available.

SOURCE High Tide Inc.

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http://www.newswire.ca/en/releases/archive/March2021/24/c3431.html

%SEDAR: 00045217E

For further information: High Tide Inc., Vahan Ajamian, Vice President, Capital Markets, ir@hightideinc.com, Tel. 1 (403) 770-9435; extension 116; Smoke Cartel, Inc., Jayme Tinti, Investor Relations Coordinator, Tel. (912) 704 - 2939, investors@smokecartel.com

CO: High Tide Inc.

CNW 06:00e 24-MAR-21

EXHIBIT 99.158

AGREEMENT AND PLAN OF MERGER

By and Among

HIGH TIDE INC.

and

Smoke Cartel USA Inc.

and

SMOKE CARTEL, INC.

and

the Shareholder Representative

Dated as of January 25, 2021

TABLE OF CONTENTS

Article I The Merger		2
Section 1.01	The Merger	2
Section 1.02	Closing	2
Section 1.03	Effective Time	2
Section 1.04	Effects of the Merger	3
Section 1.05	Organizational Documents	3
Section 1.06	Directors and Officers	3
Article II Effect of the Merger on Capital Stock; Exchange of certificates		3
Section 2.01	Effect of the Merger on Capital Stock	3
Section 2.02	Exchange Procedures	5
Section 2.03	Dissenting Shares	7
Section 2.04	Adjustments	7
Section 2.05	Withholding Rights	8
Section 2.06	Lost Certificates	8
Section 2.07	Tax Treatment	8
Article III Representations and Warranties of the Company		8
Section 3.01	Organization; Standing and Power; Charter Documents; Subsidiaries	8
Section 3.02	Capital Structure	9
Section 3.03	Authority; Non-Contravention; Governmental Consents; Board Approval; Anti-Takeover Statutes	10
Section 3.04	OTC Filings; Financial Statements; Off-Balance Sheet Arrangements	12
Section 3.05	Absence of Certain Changes or Events	13
Section 3.06	Taxes	13

Section 3.07	Intellectual Property	15
Section 3.08	Compliance; Permits	16
Section 3.09	Litigation	17
Section 3.10	Brokers’ and Finders’ Fees	17
Section 3.11	Employee Benefit Issues	17
Section 3.12	Real Property and Personal Property Matters	21
Section 3.13	Environmental Matters	21
Section 3.14	Material Contracts	22
Section 3.15	Insurance	24
Section 3.16	Anti-Corruption Matters	24
Article IV Representations and Warranties of Parent and Merger Sub		25
Section 4.01	Organization; Standing and Power; Charter Documents; Subsidiaries	25
Section 4.02	Capital Structure	26
Section 4.03	Authority; Non-Contravention; Governmental Consents; Board Approval	27
Section 4.04	Canadian Public Filings; Financial Statements; Undisclosed Liabilities	28
Section 4.05	Absence of Certain Changes or Events	29
Section 4.06	Taxes	30
Section 4.07	Privacy and Data Security	31
Section 4.08	Compliance; Permits	31
Section 4.09	Litigation	32
Section 4.10	Brokers’ and Finders’ Fees	32
Section 4.11	Employees	32
Section 4.12	Real Property and Personal Property Matters	33
Section 4.13	Environmental	34

Section 4.14	Material Contracts	35
Section 4.15	Insurance	35
Section 4.16	Information Supplied	35
Section 4.17	Anti-Corruption Matters	35
Section 4.18	Ownership of Company Common Stock	36
Section 4.19	Intended Tax Treatment	36
Section 4.20	Financial Capability	36
Section 4.21	Merger Sub	36
Article V Covenants		36
Section 5.01	Conduct of Business of the Company	36
Section 5.02	Conduct of the Business of Parent	39
Section 5.03	Access to Information; Confidentiality	40
Section 5.04	No Solicitation	40
Section 5.05	Company Stockholder Approval	43
Section 5.06	Approval by Sole Stockholder of Merger Sub	43
Section 5.07	Notices of Certain Events; Stockholder Litigation; No Effect on Disclosure Letters	43
Section 5.08	Employees; Benefit Plans	44
Section 5.09	Company Directors’ and Officers’ Indemnification	45
Section 5.10	Public Announcements	45
Section 5.11	Anti-Takeover Statutes	46
Section 5.12	Stock Exchange Matters	46
Section 5.13	Obligations of Merger Sub	46
Section 5.14	Further Assurances	46
Article VI Conditions		46
Section 6.01	Conditions to Each Party’s Obligation to Effect the Merger	46

iii

Section 6.02	Conditions to Obligations of Parent and Merger Sub	47
Section 6.03	Conditions to Obligation of the Company	49
Section 6.04	Post-Closing Covenants of the Parties	50
Article VII Termination, Amendment, and Waiver		50
Section 7.01	Termination by Mutual Consent	50
Section 7.02	Termination by Either Parent or the Company	50
Section 7.03	Termination by Parent	51
Section 7.04	Termination by the Company	51
Section 7.05	Notice of Termination; Effect of Termination	52
Section 7.06	Fees and Expenses Following Termination	52
Section 7.07	Amendment	53
Section 7.08	Extension; Waiver	53
Article VIII Miscellaneous		53
Section 8.01	Definitions	53
Section 8.02	Interpretation; Construction	63
Section 8.03	Benefitting Parties; Survival; Indemnification	63
Section 8.04	Governing Law	68
Section 8.05	Submission to Jurisdiction	68
Section 8.06	Waiver of Jury Trial	68
Section 8.07	Notices	69
Section 8.08	Entire Agreement	69
Section 8.09	No Third-Party Beneficiaries	70
Section 8.10	Severability	70
Section 8.11	Assignment	70
Section 8.12	Remedies	70
Section 8.13	Specific Performance	70
Section 8.14	Counterparts; Effectiveness	70

* * *

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”), is entered into as of January 25, 2021 (the “Execution Date”) by and among High Tide Inc., an Alberta corporation (“Parent”), Smoke Cartel USA Inc., a New York corporation and a wholly-owned Subsidiary of Parent (“Merger Sub”), Smoke Cartel, Inc., a New York corporation (the “Company”), and , as the representative of the Converting Shareholders (solely for the purposes of ARTICLE VIII of this Agreement, the “Shareholder Representative”). Capitalized terms used herein (including in the immediately preceding sentence) and not otherwise defined herein shall have the meanings set forth in Section 8.01 hereof.

RECITALS

WHEREAS, the Company sells certain goods through an internet website located at https://www.smokecartel.com/ which offers various goods for sale pursuant to various drop- arrangements with certain third-parties (as operated by the Company prior to the Closing, and as operated by the Surviving Entity subsequent to the Closing, the “Business”).

WHEREAS, the parties intend for Parent to acquire the Company, on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance of such acquisition of the Company by Parent, and on the terms and subject to the conditions set forth in this Agreement and in accordance with the New York Business Corporation Law (the “NYBCL”), the Company shall be merged with and into Merger Sub (the “Merger”), with the Merger Sub surviving the Merger as a wholly-owned Subsidiary of Parent, and each outstanding share of the Company’s common stock, par value $0.0001 per share (the “Company Common Stock”) (other than the Cancelled Shares and the Dissenting Shares) will be converted into the right to receive the Merger Consideration;

WHEREAS, the Board of Directors of the Company (the “Company Board”) has unanimously: (a) determined that it is in the best interests of the Company and the holders of Company Common Stock, and declared it advisable, to enter into this Agreement with Parent and Merger Sub; (b) approved the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger; and (c) resolved, subject to the terms and conditions set forth in this Agreement, to recommend adoption of this Agreement by the stockholders of the Company;

WHEREAS, the respective Boards of Directors of Parent (the “Parent Board”) and Merger Sub (the “Merger Sub Board”) have each unanimously: (a) determined that it is in the best interests of Parent, or Merger Sub, as applicable, and their respective stockholders, as applicable, and declared it advisable, to enter into this Agreement; and (b) approved the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger;

WHEREAS, for U.S. federal income Tax purposes, the parties intend that the Merger, qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement be, and is hereby, adopted as a plan of reorganization within the meaning of Section 368(a) of the Code; and

WHEREAS, the parties desire to make certain representations, warranties, covenants, and agreements in connection with the Merger and the other transactions contemplated by this Agreement and also to prescribe certain terms and conditions to the Merger.

NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants, and agreements contained in this Agreement, the parties, intending to be legally bound, agree as follows:

Article I
The Merger

Section 1.01 The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the NYBCL, at the Effective Time: (i) the Company will merge with and into the Merger Sub; (ii) the separate corporate existence of the Company will cease; and (iii) the Merger Sub will continue its corporate existence under the NYBCL as the surviving corporation in the Merger and a wholly-owned Subsidiary of Parent (sometimes referred to herein as the “Surviving Entity”).

Section 1.02 Closing. Upon the terms and subject to the conditions set forth herein, the closing of the Merger (the “Closing”) will take place at 10 a.m., New York time, as soon as practicable (and, in any event, within three Business Days) after the satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver of all such conditions), unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto. The Closing shall take place at the offices of Sichenzia Ross Ference LLC (“Buyer’s Counsel”), 1185 Avenue of Americas, New York, New York 10036, or remotely by exchange of documents and signatures (or their electronic counterparts), unless another place is agreed to in writing by the parties hereto. The actual date of the Closing is hereinafter referred to as the “Closing Date.”

Section 1.03 Effective Time. Subject to the provisions of this Agreement, on the Closing Date, the Company and Merger Sub will cause a certificate of merger (the “ Certificate of Merger”) to be executed, acknowledged, and filed with the Secretary of State of the State of New York in accordance with the relevant provisions of the NYBCL and shall make all other filings or recordings required under the NYBCL. The Merger will become effective at such time as the Certificate of Merger has been duly filed with the Secretary of State of the State of New York or at such later date or time as may be agreed by the Company and Parent in writing and specified in the Certificate of Merger in accordance with the NYBCL (the effective time of the Merger being hereinafter referred to as the “Effective Time”).

Section 1.04 Effects of the Merger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the NYBCL. Without limiting the generality of the foregoing, and subject thereto from and after the Effective Time, the effects of the Merger shall be that all property, rights, privileges, immunities, powers, franchises, licenses, and authority of the Company and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities, obligations, restrictions, and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, and duties of the Surviving Entity.

Section 1.05 Organizational Documents. At the Effective Time: (i) the articles of incorporation of the Surviving Entity shall be amended and restated so as to read in its entirety as set forth in Exhibit A and, as so amended and restated, shall be the articles of incorporation of the Surviving Entity until thereafter amended in accordance with the terms thereof or as provided by applicable Law; and (ii) the by-laws of Merger Sub as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Entity except that references to Merger Sub’s name shall be replaced with references to the Surviving Entity’s name, until thereafter amended in accordance with the terms thereof, the articles of incorporation of the Surviving Entity, or as provided by applicable Law.

Section 1.06 Directors and Officers. The Merger Sub Directors, in each case, immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Entity until their successors have been duly elected or appointed and qualified or until their earlier death, resignation, or removal in accordance with the articles of incorporation and by-laws of the Surviving Entity, except that Rahim Kanji and Raj Grover shall be officers and directors of the Surviving Entity. Sean Geng (“Geng”) will become the Chief Technology Officer of the Parent upon the Closing.

Article II
Effect of the Merger on Capital Stock; Exchange of certificates

Section 2.01 Effect of the Merger on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of Parent, Merger Sub, or the Company or the holder of any capital stock of Parent, Merger Sub, or the Company:

(a) Cancellation of Certain Company Common Stock. Each share of Company Common Stock that is outstanding (as treasury stock or otherwise) as of immediately prior to the Effective Time (the “Cancelled Shares”) will automatically be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor.

(b) Conversion of Company Common Stock. Each shareholder identified in Schedule 2.1(b) (each a “Converting Shareholder” and collectively, the “Converting Shareholders”) shall convert their shares of Company Common Stock issued and outstanding immediately prior to the Effective Time into an amount of Parent Common Stock and cash as set forth next to their name. Except for holders of Cancelled Shares or Dissenting Shares, each Company shareholder as of the Effective Date and who is not identified on Schedule 2.1(b) (each a “Non-Converting Shareholder” and collectively, the “Non-Converting Shareholders”) shall convert their shares of Company Common Stock issued and outstanding immediately prior to the Effective Time into cash at a ratio of US $0.309 per share. In addition, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted into the right to receive to the extent applicable, any cash in lieu of fractional shares of Parent Common Stock payable pursuant to Section 2.01(f) and any dividends or other distributions to which the holder thereof becomes entitled to upon the surrender of such shares of Company Common Stock in accordance with Section 2.02(f). The total amount of shares of Parent Common Stock issued to the Converting Shareholders shall herein be referred to as the “Stock Consideration”, the total amount of cash to be paid to the Converting Shareholders and Non-Converting Shareholders shall herein be referred to as the “Cash Consideration”, and the Stock Consideration together with the Cash Consideration shall herein be referred to as the “Merger Consideration.” The total Stock Consideration shall have a value of $6,000,000 calculated on the basis of a deemed price per share of Parent Common Stock equal to the Parent VWAP Trading Price on the day prior to the Closing Date. The total Cash Consideration shall be equal to $2,000,000.

(c) Cancellation of Shares. At the Effective Time, all shares of Company Common Stock will no longer be outstanding and all shares of Company Common Stock will be cancelled and retired and will cease to exist, and, subject to Section 2.03, each holder of: (i) a certificate formerly representing any shares of Company Common Stock (each, a “Certificate”); or (ii) any book-entry shares which immediately prior to the Effective Time represented shares of Company Common Stock (each, a “Book-Entry Share”) will, subject to applicable Law in the case of Dissenting Shares, cease to have any rights with respect thereto, except the right to receive (A) the Merger Consideration in accordance with Section 2.02 hereof, (B) any cash in lieu of fractional shares of Parent Common Stock payable pursuant to Section 2.01 (d), and (C) any dividends or other distributions to which the holder thereof becomes entitled to upon the surrender of such shares of Company Common Stock in accordance with Section 2.02(f).

(d) Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable share of common stock, par value $0.0001 per share, of the Surviving Entity (“Surviving Entity Common Stock”) with the same rights, powers, and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Entity. From and after the Effective Time, all certificates representing shares of Merger Sub common stock shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Entity into which they were converted in accordance with the immediately preceding sentence.

(e) Fractional Shares. No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the conversion of Company Common Stock pursuant to Section 2.01(b) and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a holder of shares of Parent Common Stock. Notwithstanding any other provision of this Agreement, each holder of shares of Company Common Stock converted pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after taking into account all shares of Company Common Stock exchanged by such holder) shall in lieu thereof, upon surrender of such holder’s Certificates and Book-Entry Shares, receive in cash (rounded to the nearest whole cent), without interest, an amount equal to such fractional amount multiplied by the Parent VWAP Trading Price on the day prior to the Closing Date.

Section 2.02 Exchange Procedures.

(a) Exchange Agent; Exchange Fund. Prior to the Effective Time, Parent shall appoint an exchange agent (the “Exchange Agent”) to act as the agent for the purpose of paying the Merger Consideration for the Certificates and the Book-Entry Shares. At or promptly following the Effective Time, Parent shall deposit with the Exchange Agent: (i) certificates representing the shares of Parent Common Stock to be issued as Stock Consideration (or make appropriate alternative arrangements if uncertificated shares of Parent Common Stock represented by book-entry shares will be issued); (ii) cash sufficient to pay the Cash Consideration; and (iii) any cash sufficient to make payments in lieu of fractional shares pursuant to Section 2.01(e). In addition, Parent shall deposit or cause to be deposited with the Exchange Agent, as necessary from time to time after the Effective Time, any dividends or other distributions, if any, to which the holders of Company Common Shares may be entitled pursuant to Section 2.02 (f) for distributions or dividends, on the Parent Common Stock to which they are entitled to pursuant to Section 2.01(b), with both a record and payment date after the Effective Time and prior to the surrender of the Company Common Shares in exchange for such Parent Common Stock. Such cash and shares of Parent Common Stock, together with any dividends or other distributions deposited with the Exchange Agent pursuant to this Section 2.02(a), are referred to collectively in this Agreement as the “Exchange Fund.”

(b) Procedures for Surrender; No Interest. Promptly after the Effective Time, Parent shall send, or shall cause the Exchange Agent to send, to each record holder of shares of Company Common Stock at the Effective Time, whose Company Common Stock was converted pursuant to Section 2.01(b) into the right to receive the Merger Consideration, a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Book-Entry Shares to the Exchange Agent, and which letter of transmittal will be in customary form and have such other provisions as Parent and the Surviving Entity may reasonably specify) for use in such exchange. Each holder of shares of Company Common Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive the Merger Consideration into which such shares of Company Common Stock have been converted pursuant to Section 2.01(b) in respect of the Company Common Stock represented by a Certificate or Book-Entry Share, any cash in lieu of fractional shares which the holder has the right to receive pursuant to Section 2.01(e), and any dividends or other distributions pursuant to Section 2.02 (f) upon: (i) surrender to the Exchange Agent of a Certificate; or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of Book-Entry Shares; in each case, together with a duly completed and validly executed letter of transmittal and such other documents as may reasonably be requested by the Exchange Agent. No interest shall be paid or accrued upon the surrender or transfer of any Certificate or Book-Entry Share. Upon payment of the Merger Consideration pursuant to the provisions of this Article II, each Certificate or Certificates or Book-Entry Share or Book-Entry Shares so surrendered or transferred, as the case may be, shall immediately be cancelled.

(c) Payments to Non-Registered Holders. If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Book-Entry Share, as applicable, is registered, it shall be a condition to such payment that: (i) such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Book-Entry Share shall be properly transferred; and (ii) the Person requesting such payment shall pay to the Exchange Agent any transfer or other Tax required as a result of such payment to a Person other than the registered holder of such Certificate or Book-Entry Share, as applicable, or establish to the reasonable satisfaction of the Exchange Agent that such Tax has been paid or is not payable.

(d) Full Satisfaction. All Merger Consideration paid upon the surrender of Certificates or transfer of Book-Entry Shares in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificate or Book-Entry Shares, and from and after the Effective Time, there shall be no further registration of transfers of shares of Company Common Stock on the stock transfer books of the Surviving Entity or similar records of the Surviving Entity. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Parent, or Surviving Entity, they shall be cancelled and exchanged as provided in this Article II.

(e) Termination of Exchange Fund. Any portion of the Exchange Fund that remains unclaimed by the holders of shares of Company Common Stock twelve months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged shares of Company Common Stock for the Merger Consideration in accordance with this Section 2.02 prior to that time shall thereafter look only to Parent (subject to abandoned property, escheat, or other similar Laws), as general creditors thereof, for payment of the Merger Consideration without any interest. Notwithstanding the foregoing, Parent shall not be liable to any holder of shares of Company Common Stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat, or similar Laws.

(f) Distributions with Respect to Unsurrendered Shares of Company Common Stock. All shares of Parent Common Stock to be issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time and whenever a dividend or other distribution is declared by Parent in respect of the Parent Common Stock, the record date for which is after the Effective Time, that declaration shall include dividends or other distributions in respect of all shares issuable pursuant to this Agreement. No dividends or other distributions in respect of the Parent Common Stock shall be paid to any holder of any unsurrendered Company Common Share until the Certificate (or affidavit of loss in lieu of the Certificate as provided in Section 2.06 or Book-Entry Share is surrendered for exchange in accordance with this Section 2.02. Subject to the effect of applicable Laws, following such surrender, there shall be issued or paid to the holder of record of the whole shares of Parent Common Stock issued in exchange for Company Common Shares in accordance with this Section 2.02, without interest: (i) at the time of such surrender, the dividends or other distributions with a record date after the Effective Time theretofore payable with respect to such whole shares of Parent Common Stock and not paid; and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to such whole shares of Parent Common Stock with a record date after the Effective Time but with a payment date subsequent to surrender.

(g) Dissenting Shares Merger Consideration. Any portion of the Cash Consideration made available to the Exchange Agent in respect of any Dissenting Shares shall be returned to Parent, upon demand.

Section 2.03 Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary, including Section 2.01, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares) and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto in writing and who is entitled to demand and has properly exercised appraisal rights of such shares in accordance with Section 910 of the NYBCL (such shares of Company Common Stock being referred to collectively as the “Dissenting Shares” until such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the NYBCL with respect to such shares) shall not be converted into a right to receive the Merger Consideration or the CVRs, but instead shall be entitled to only such rights as are granted by Section 910 of the NYBCL; provided, however, that if, after the Effective Time, such holder fails to perfect, waives, withdraws, or loses such holder’s right to appraisal pursuant to Section 910 of the NYBCL or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 910 of the NYBCL, such shares of Company Common Stock shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration in accordance with Section 2.01(b), without interest thereon, upon surrender of such Certificate formerly representing such share or transfer of such Book-Entry Share, as the case may be. The Company shall provide Parent prompt written notice of any demands received by the Company for appraisal of shares of Company Common Stock, any waiver or withdrawal of any such demand, and any other demand, notice, or instrument delivered to the Company prior to the Effective Time that relates to such demand, and Parent shall have the opportunity and right to direct all negotiations and proceedings with respect to such demands. Except with the prior written consent of Parent, the Company shall not make any payment with respect to, or settle, or offer to settle, any such demands.

Section 2.04 Adjustments. Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company or the Parent Common Stock shall occur (other than the issuance of additional shares of capital stock of the Company or Parent as permitted by this Agreement), including by reason of any reclassification, recapitalization, stock split (including a reverse stock split), or combination, exchange, readjustment of shares, or similar transaction, or any stock dividend or distribution paid in stock, the Stock Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to reflect such change; provided, however, that this sentence shall not be construed to permit Parent or the Company to take any action with respect to its securities that is prohibited by the terms of this Agreement.

Section 2.05 Withholding Rights. Each of the Exchange Agent, Parent, Merger Sub, and the Surviving Entity shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article II such amounts as may be required to be deducted and withheld with respect to the making of such payment under any Tax Laws. To the extent that amounts are so deducted and withheld by the Exchange Agent, Parent, Merger Sub or the Surviving Entity, as the case may be, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Exchange Agent, Parent, Merger Sub, or the Surviving Entity, as the case may be, made such deduction and withholding.

Section 2.06 Lost Certificates. If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue, in exchange for such lost, stolen, or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate as contemplated under this Article II.

Section 2.07 Tax Treatment. The Merger is intended to constitute a “reorganization” within the meaning of Section 368(a) of the Code. The parties hereto intend the Merger to constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3, which plan of reorganization the parties adopt by executing this Agreement. Notwithstanding the above, the Parent is making no representations with regard to the tax free nature of the Merger and the Consideration received therein.

Article III
Representations and Warranties of the Company

Except (a) as disclosed in the Company OTC Documents at least five (5) Business Days prior to the date hereof and as identified in the particular representation that is reasonably apparent on the face of such disclosure to be applicable to the representation and warranty set forth herein, or (b) as set forth in the correspondingly numbered Section of the Company Disclosure Letter that relates to such Section or in another Section of the Company Disclosure Letter to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to such Section, the Company hereby represents and warrants to Parent and Merger Sub as follows:

Section 3.01 Organization; Standing and Power; Charter Documents; Subsidiaries.

(a) Organization; Standing and Power. The Company is a corporation duly organized, validly existing, and in good standing (to the extent that the concept of “good standing” is applicable in the case of any jurisdiction outside the United States) under the Laws of its jurisdiction of organization, and has the requisite corporate power and authority to own, lease, and operate its assets and to carry on its business as now conducted. The Company is duly qualified or licensed to do business as a foreign corporation, limited liability company, or other legal entity and is in good standing (to the extent that the concept of “good standing” is applicable in the case of any jurisdiction outside the United States) in each jurisdiction where the character of the assets and properties owned, leased, or operated by it or the nature of its business makes such qualification or license necessary, except where the failure to be so qualified or licensed or to be in good standing, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) Charter Documents. The copies of the Articles of Incorporation and By-Laws of the Company in the form provided to Parent are true, correct, and complete copies of such documents as in effect as of the date of this Agreement.

Section 3.02 Capital Structure.

(a) Capital Stock. The authorized capital stock of the Company consists of: 380,000,0000 shares of Company Common Stock; of which 25,852,809 shares of Company Common Stock were issued and outstanding (not including shares held in treasury); none of which are held by the Company in its treasury. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, and non-assessable, and not subject to any pre-emptive rights.

(b) Stock Awards.

(i) The Company does not have any equity incentive plans or any outstanding stock options or other stock awards.

(ii) As of the date hereof, there are no outstanding: (A) securities of the Company convertible into or exchangeable for Voting Debt or shares of capital stock of the Company; (B) options, warrants, or other agreements or commitments to acquire from the Company, or obligations of the Company to issue, any Voting Debt or shares of capital stock of (or securities convertible into or exchangeable for shares of capital stock of) the Company; or (C) restricted shares, restricted stock units, stock appreciation rights, performance shares, profit participation rights, contingent value rights, “phantom” stock, or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares of capital stock of the Company, in each case that have been issued by the Company (the items in clauses (A), (B), and (C), together with the capital stock of the Company, being referred to collectively as “Company Securities”). All outstanding shares of Company Common Stock have been issued or granted, as applicable, in compliance in all material respects with all applicable securities Laws.

(iii) There are no outstanding Contracts requiring the Company to repurchase, redeem, or otherwise acquire any Company Securities. The Company is not a party to any voting agreement with respect to any Company Securities.

(c) Voting Debt. No bonds, debentures, notes, or other indebtedness issued by the Company: (i) having the right to vote on any matters on which stockholders or equity holders of the Company may vote (or which is convertible into, or exchangeable for, securities having such right); or (ii) the value of which is directly based upon or derived from the capital stock, voting securities, or other ownership interests of the Company, are issued or outstanding (collectively, “Voting Debt”).

Section 3.03 Authority; Non-Contravention; Governmental Consents; Board Approval; Anti-Takeover Statutes.

(a) Authority. The Company has all requisite corporate power and authority to enter into and to perform its obligations under this Agreement and, subject to, in the case of the consummation of the Merger, adoption of this Agreement by the affirmative vote or consent of the holders of a majority of the outstanding shares of Company Common Stock (the “Requisite Company Vote”), to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement or to consummate the Merger and the other transactions contemplated hereby, subject only, in the case of consummation of the Merger, to the receipt of the Requisite Company Vote. The Requisite Company Vote is the only vote or consent of the holders of any class or series of the Company’s capital stock necessary to approve and adopt this Agreement, approve the Merger, and consummate the Merger and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery by Parent and Merger Sub constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar Laws affecting creditors’ rights generally and by general principles of equity.

(b) Non-Contravention. Except as disclosed in Schedule 3.03(b) of the Company Disclosure Letter, the execution, delivery, and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated by this Agreement, including the Merger, do not and will not: (i) subject to obtaining the Requisite Company Vote, contravene or conflict with, or result in any violation or breach of, the Charter Documents of the Company; (ii) assuming that all Consents contemplated by clauses (i) through (v) of Section 3.03 (c) have been obtained or made and, in the case of the consummation of the Merger, obtaining the Requisite Company Vote, conflict with or violate any Law applicable to the Company, or any of their respective properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the Company’s loss of any benefit or the imposition of any additional payment or other liability under, or alter the rights or obligations of any third party under, or give to any third party any rights of termination, amendment, acceleration, or cancellation, or require any Consent under, any Contract to which the Company is a party or otherwise bound as of the date hereof; or (iv) result in the creation of a Lien (other than Permitted Liens) on any of the properties or assets of the Company, except, in the case of each of clauses (ii), (iii), and (iv), for any conflicts, violations, breaches, defaults, loss of benefits, additional payments or other liabilities, alterations, terminations, amendments, accelerations, cancellations, or Liens that, or where the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) Governmental Consents. Except as disclosed in Schedule 3.03(c) of the Company Disclosure Letter, no consent, approval, order, or authorization of, or registration, declaration, or filing with, or notice to (any of the foregoing being a “Consent”), any supranational, national, state, municipal, local, or foreign government, any instrumentality, subdivision, court, administrative agency or commission, or other governmental authority, or any quasi-governmental or private body exercising any regulatory or other governmental or quasi-governmental authority (a “Governmental Entity”) is required to be obtained or made by the Company in connection with the execution, delivery, and performance by the Company of this Agreement or the consummation by the Company of the Merger and other transactions contemplated hereby, except for: (i) the filing of the Certificate of Merger with the Secretary of State of the State of New York; and (ii) such other Consents which if not obtained or made would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Board Approval. The Company Board, by resolutions duly adopted by a unanimous vote at a meeting of all directors of the Company duly called and held and, not subsequently rescinded or modified in any way, has: (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair to, and in the best interests of, the Company and the Company’s stockholders; (ii) approved and declared advisable this Agreement, including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by this Agreement, including the Merger, upon the terms and subject to the conditions set forth herein; (iii) directed that this Agreement be submitted to a vote of the Company’s stockholders for adoption by the Company’s Stockholders at duly called meeting or by written consent in lieu of meeting; and (iv) resolved to recommend that Company stockholders vote in favor of adoption of this Agreement in accordance with the NYBCL (collectively, the “Company Board Recommendation”).

(e) Anti-Takeover Statutes. Except for Section 912 of the NYBCL, no “fair price,” “moratorium,” “control share acquisition,” “supermajority,” “affiliate transactions,” “business combination,” or other similar anti-takeover statute or regulation enacted under any federal, state, local, or foreign laws applicable to the Company is applicable to this Agreement, the Merger, or any of the other transactions contemplated by this Agreement. The Company Board has taken all actions so that the restrictions contained in Section 912 of the NYBCL applicable to a “business combination” (as defined in such Section 912) will not apply to the execution, delivery, or performance of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement.

Section 3.04 OTC Filings; Financial Statements; Off-Balance Sheet Arrangements.

(a) OTC Filings. The Company has timely filed with or furnished to, as applicable, all quarterly and annual reports (including exhibits and schedules thereto and all other information incorporated by reference) required to be filed or furnished by it with the OTC Markets, Inc. since January 1, 2020 (the “Company OTC Documents”). True, correct, and complete copies of all Company OTC Documents are publicly available at https://www.otcmarkets.com/stock/SMKC/disclosure. As of their respective filing dates or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last such amendment or superseding filing (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), each of the Company OTC Documents complied as to form in all material respects with the applicable requirements of the OTC Markets, Inc. None of the Company OTC Documents, including any financial statements, schedules, or exhibits included or incorporated by reference therein at the time they were filed (or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last such amendment or superseding filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. To the Knowledge of the Company, none of the Company OTC Documents is the subject of ongoing SEC review or outstanding SEC investigation.

(b) Financial Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in or incorporated by reference into the Company OTC Documents: (i) was prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements, as applicable for unaudited financial statements); and (ii) fairly presented in all material respects the consolidated financial position and the results of operations, changes in stockholders’ equity, and cash flows of the Company as of the respective dates of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements, to normal and year-end audit adjustments as permitted by GAAP (but only if the effect of such adjustments would not, individually or in the aggregate, be material).

(c) Off-Balance Sheet Arrangements. Except as disclosed in Schedule 3.04(c) of the Disclose Schedule, the Company is not a party to, or has any commitment to become a party to: (i) any joint venture, off-balance sheet partnership, or any similar Contract or arrangement (including any Contract or arrangement relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any other Person, including any structured finance, special purpose, or limited purpose Person, on the other hand); or (ii) any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act).

(d) Undisclosed Liabilities. Except as disclosed in Schedule 3.04(d) of the Company Disclosure Letter, the unaudited balance sheet of the Company dated as of September 30, 2020 contained in the Company OTC Documents filed prior to the date hereof is hereinafter referred to as the “Company Balance Sheet.” The Company does not have any Liabilities other than Liabilities that: (i) are reflected or reserved against in the Company Balance Sheet (including in the notes thereto); (ii) were incurred since the date of the Company Balance Sheet in the ordinary course of business consistent with past practice; (iii) are incurred in connection with the transactions contemplated by this Agreement; or (iv) would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.05 Absence of Certain Changes or Events. Since the date of the Company Balance Sheet, except in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, the business of the Company has been conducted in the ordinary course of business consistent with past practice and there has not been or occurred:

(a) any Company Material Adverse Effect or any event, condition, change, or effect that could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; or

(b) any event, condition, action, or effect that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.01.

Section 3.06 Taxes.

(a) Tax Returns and Payment of Taxes. The Company has duly and timely filed or caused to be filed (taking into account any valid extensions) all material Tax Returns required to be filed by them. Such Tax Returns are true, complete, and correct in all material respects. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return other than extensions of time to file Tax Returns obtained in the ordinary course of business consistent with past practice. All material Taxes due and owing by the Company (whether or not shown on any Tax Return) have been timely paid or, where payment is not yet due, the Company has made an adequate provision for such Taxes in the Company’s financial statements included in the Company OTC Documents (in accordance with GAAP). The Company’s most recent financial statements included in the Company OTC Documents reflect an adequate reserve (in accordance with GAAP) for all material Taxes payable by the Company through the date of such financial statements. The Company has not incurred any material Liability for Taxes since the date of the Company’s most recent financial statements included in the Company OTC Documents outside of the ordinary course of business or otherwise inconsistent with past practice.

(b) Availability of Tax Returns. The Company has made available to Parent complete and accurate copies of all federal, state, local, and foreign income, franchise, and other material Tax Returns filed by or on behalf of the Company for any Tax period ending after December 31, 2019.

(c) Withholding. The Company has withheld and timely paid each material Tax required to have been withheld and paid in connection with amounts paid or owing to any Company Employee, creditor, customer, stockholder, or other party (including, without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any state, local, and foreign Laws), and materially complied with all information reporting and backup withholding provisions of applicable Law.

(d) Liens. There are no Liens for material Taxes upon the assets of the Company other than for current Taxes not yet due and payable or for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP has been made in the Company’s most recent financial statements included in the Company OTC Documents.

(e) Tax Deficiencies and Audits. No deficiency for any material amount of Taxes which has been proposed, asserted, or assessed in writing by any taxing authority against the Company remains unpaid. There are no waivers or extensions of any statute of limitations currently in effect with respect to Taxes of the Company. There are no audits, suits, proceedings, investigations, claims, examinations, or other administrative or judicial proceedings ongoing or pending with respect to any material Taxes of the Company.

(f) Tax Jurisdictions. No claim has ever been made in writing by any taxing authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to Tax in that jurisdiction.

(g) Tax Rulings. Neither the Company has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, or similar ruling or memorandum with any taxing authority with respect to any material Taxes, nor is any such request outstanding.

(h) Consolidated Groups, Transferee Liability, and Tax Agreements. The Company has not: (i) been a member of a group filing Tax Returns on a consolidated, combined, unitary, or similar basis; (ii) incurred any material liability for Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any comparable provision of local, state, or foreign Law), as a transferee or successor, by Contract, or otherwise; or (iii) is a party to, bound by or has any material liability under any Tax sharing, allocation, or indemnification agreement or arrangement (other than customary Tax indemnifications contained in credit or other commercial agreements the primary purpose of which agreements does not relate to Taxes).

(i) Change in Accounting Method. The Company has not agreed to make, nor is it required to make, any material adjustment under Section 481(a) of the Code or any comparable provision of state, local, or foreign Tax Laws by reason of a change in accounting method or otherwise.

(j) Post-Closing Tax Items. The Company will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; (ii) installment sale or open transaction disposition made on or prior to the Closing Date; (iii) prepaid amount received on or prior to the Closing Date; (iv) any income under Section 965(a) of the Code, including as a result of any election under Section 965(h) of the Code with respect thereto; or (v) election under Section 108(i) of the Code.

(k) Section 355. The Company has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code.

(l) Reportable Transactions. The Company has not been a party to, or a material advisor with respect to, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).

(m) Intended Tax Treatment. The Company has not taken or agreed to take any action, and to the Knowledge of the Company there exists no fact or circumstance, that is reasonably likely to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

Section 3.07 Intellectual Property.

(a) Scheduled Company-Owned IP. Section 3.07(a) of the Company Disclosure Letter contains a true and complete list, as of the date hereof, of all: (i) Company-Owned IP that is the subject of any issuance, registration, certificate, application, or other filing by, to or with any Governmental Entity or authorized private registrar, including patents, patent applications, trademark registrations and pending applications for registration, copyright registrations and pending applications for registration, and internet domain name registrations; and (ii) material unregistered Company-Owned IP.

(b) Right to Use; Title. The Company is the sole and exclusive legal and beneficial owner of all right, title, and interest in and to the Company-Owned IP, and has the valid and enforceable right to use all other Intellectual Property used in or necessary for the conduct of the business of the Company as currently conducted and as proposed to be conducted (“Company IP”), in each case, free and clear of all Liens other than Permitted Liens, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) Validity and Enforceability. The Company’s rights in the Company-Owned IP are valid, subsisting, and enforceable, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has taken reasonable steps to maintain the Company IP and to protect and preserve the confidentiality of all trade secrets included in the Company IP, except where the failure to take such actions would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Non-Infringement. Except as would not be reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the conduct of the businesses of the Company has not infringed, misappropriated, or otherwise violated, and is not infringing, misappropriating, or otherwise violating, any Intellectual Property of any other Person; and (ii) to the Knowledge of the Company, no third party is infringing upon, violating, or misappropriating any Company IP.

(e) IP Legal Actions and Orders. There are no Legal Actions pending or, to the Knowledge of the Company, threatened: (i) alleging any infringement, misappropriation, or violation by the Company of the Intellectual Property of any Person; or (ii) challenging the validity, enforceability, or ownership of any Company-Owned IP or the Company’s rights with respect to any Company IP, in each case except for such Legal Actions that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company is not subject to any outstanding Order that restricts or impairs the use of any Company-Owned IP, except where compliance with such Order would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(f) Privacy and Data Security. The Company has complied in all material respects with all applicable Laws and all internal or publicly posted policies, notices, and statements concerning the collection, use, processing, storage, transfer, and security of personal information in the conduct of the Company’s businesses, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. In the past twelve (12) months, the Company has not: (i) experienced any actual, alleged, or suspected data breach or other security incident involving personal information in their possession or control; or (ii) been subject to or received any notice of any audit, investigation, complaint, or other Legal Action by any Governmental Entity or other Person concerning the Company’s collection, use, processing, storage, transfer, or protection of personal information or actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and to the Company’s Knowledge, there are no facts or circumstances that could reasonably be expected to give rise to any such Legal Action, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.08 Compliance; Permits.

(a) Compliance. The Company is and, since January 1, 2019, have been in material compliance with, all Laws or Orders applicable to the Company or by which the Company or any of it businesses or properties is bound. Since January 1, 2019, no Governmental Entity has issued any notice or notification stating that the Company is not in compliance with any Law in any material respect.

(b) Permits. The Company holds and, to the extent necessary to operate their respective businesses as such businesses are being operated as of the date hereof, all permits, licenses, registrations, variances, clearances, consents, commissions, franchises, exemptions, Orders, authorizations, and approvals from Governmental Entities (collectively, “Permits”), except for any Permits for which the failure to obtain or hold would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (the “Excluded Permits”). Schedule 3.08(b) of the Company Disclosure Letter contains a complete and accurate list of the Permits (except any Excluded Permits). No suspension, cancellation, non-renewal, or adverse modifications of any Permits of the Company is pending or, to the Knowledge of the Company, threatened, except for any such suspension or cancellation which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company is and, since January 1, 2019, has been in compliance with the terms of all Permits, except where the failure to be in such compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.09 Litigation. Except as disclosed in Schedule 3.09 of the Company Disclosure Letter, there is no Legal Action pending, or to the Knowledge of the Company, threatened against the Company or any of its properties or assets or, to the Knowledge of the Company, any officer or director of the Company in its capacities as such other than any such Legal Action that: (a) does not involve an amount in controversy in excess of $100,000; and (b) does not seek material injunctive or other material non-monetary relief. Notwithstanding the $100,000 threshold, all litigations which the Company is a party to and which would reasonably be expected to have a Company Material Adverse Effect, are disclosed in Schedule 3.09. None of the Company or any of their respective properties or assets is subject to any order, writ, assessment, decision, injunction, decree, ruling, or judgment of a Governmental Entity or arbitrator, whether temporary, preliminary, or permanent (“Order”), which would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, there are no SEC inquiries or investigations, other governmental inquiries or investigations, or internal investigations pending or, to the Knowledge of the Company, threatened, in each case regarding any accounting practices of the Company or any malfeasance by any officer or director of the Company.

Section 3.10 Brokers’ and Finders’ Fees. The Company has not incurred, nor will it incur, directly or indirectly, any liability for investment banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection with this Agreement or any transaction contemplated by this Agreement.

Section 3.11 Employee Benefit Issues.

(a) Schedule. Section 3.12(a) of the Company Disclosure Letter contains a true and complete list, as of the date hereof, of each plan, program, policy, agreement, collective bargaining agreement, or other arrangement providing for compensation, severance, deferred compensation, performance awards, stock or stock-based awards, health, dental, retirement, life insurance, death, accidental death & dismemberment, disability, fringe, or wellness benefits, or other employee benefits or remuneration of any kind, including each employment, termination, severance, retention, change in control, or consulting or independent contractor plan, program, arrangement, or agreement, in each case whether written or unwritten or otherwise, funded or unfunded, insured or self-insured, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, which is or has been sponsored, maintained, contributed to, or required to be contributed to, by the Company for the benefit of any current or former employee, independent contractor, consultant, or director of the Company (each, a “Company Employee”), or with respect to which the Company or any Company ERISA Affiliate has or may have any Liability (collectively, the “Company Employee Plans”).

(b) Documents. The Company has made available to Parent correct and complete copies (or, if a plan or arrangement is not written, a written description) of all Company Employee Plans and amendments thereto, and, to the extent applicable: (i) all related trust agreements, funding arrangements, insurance contracts, and service provider agreements now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (ii) the most recent determination letter received regarding the tax-qualified status of each Company Employee Plan; (iii) the most recent financial statements for each Company Employee Plan; (iv) the Form 5500 Annual Returns/Reports and Schedules for the most recent plan year for each Company Employee Plan; (v) the current summary plan description and any related summary of material modifications and, if applicable, summary of benefits and coverage, for each Company Employee Plan; and (vi) all actuarial valuation reports related to any Company Employee Plans.

(c) Employee Plan Compliance. (i) Each Company Employee Plan has been established, administered, and maintained in all material respects in accordance with its terms and in material compliance with applicable Laws, including but not limited to ERISA and the Code; (ii) all the Company Employee Plans that are intended to be qualified under Section 401(a) of the Code are so qualified and have received timely determination letters from the IRS and no such determination letter has been revoked nor, to the Knowledge of the Company, has any such revocation been threatened, or with respect to a prototype plan, can rely on an opinion letter from the IRS to the prototype plan sponsor, to the effect that such qualified retirement plan and the related trust are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and to the Knowledge of the Company no circumstance exists that is likely to result in the loss of such qualified status under Section 401(a) of the Code; (iii) the Company, where applicable, have timely made all contributions, benefits, premiums, and other payments required by and due under the terms of each Company Employee Plan and applicable Law and accounting principles, and all benefits accrued under any unfunded Company Employee Plan have been paid, accrued, or otherwise adequately reserved to the extent required by, and in accordance with GAAP; (iv) except to the extent limited by applicable Law, each Company Employee Plan can be amended, terminated, or otherwise discontinued after the Effective Time in accordance with its terms, without material liability to Parent or the Company (other than ordinary administration expenses and in respect of accrued benefits thereunder); (v) there are no investigations, audits, inquiries, enforcement actions, or Legal Actions pending or, to the Knowledge of the Company, threatened by the IRS, U.S. Department of Labor, Health and Human Services, Equal Employment Opportunity Commission, or any similar Governmental Entity with respect to any Company Employee Plan; (vi) there are no material Legal Actions pending, or, to the Knowledge of the Company, threatened with respect to any Company Employee Plan (in each case, other than routine claims for benefits); (vii) to the Knowledge of the Company, neither the Company nor any of its Company ERISA Affiliates has engaged in a transaction that could subject the Company or any Company ERISA Affiliate to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA; and (viii) all non-US Company Employee Plans that are intended to be funded or book-reserved are funded or book-reserved, as appropriate, based on reasonable actuarial assumptions.

(d) Plan Liabilities. Neither the Company nor any Company ERISA Affiliate has: (i) incurred or reasonably expects to incur, either directly or indirectly, any liability under Title I or Title IV of ERISA, or related provisions of the Code or foreign Law relating to any Company Employee Plan and nothing has occurred that could reasonably be expected to constitute grounds under Title IV of ERISA to terminate, or appoint a trustee to administer, any Company Employee Plan; (ii) except for payments of premiums to the Pension Benefit Guaranty Corporation (“PBGC”) which have been timely paid in full, not incurred any liability to the PBGC in connection with any Company Employee Plan covering any active, retired, or former employees or directors of the Company or any Company ERISA Affiliate, including, without limitation, any liability under Sections 4069 or 4212(c) of ERISA or any penalty imposed under Section 4071 of ERISA, or ceased operations at any facility, or withdrawn from any such Company Employee Plan in a manner that could subject it to liability under Sections 4062, 4063 or 4064 of ERISA; (iii) failed to satisfy the health plan compliance requirements under the Affordable Care Act, including the employer mandate under Section 4980H of the Code and related information reporting requirements; (iv) failed to comply with Sections 601 through 608 of ERISA and Section 4980B of the Code, regarding the health plan continuation coverage requirements under COBRA; (v) failed to comply with the privacy, security, and breach notification requirements under HIPAA; or (vi) incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 4201 or 4204 of ERISA to any multiemployer plan and nothing has occurred that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization, or insolvency of any such multiemployer plan which could result in any liability of the Company or any Company ERISA Affiliate to any such multiemployer plan. No complete or partial termination of any Company Employee Plan has occurred or is expected to occur.

(e) Certain Company Employee Plans. With respect to each Company Employee Plan:

(i) no such plan is a “multiemployer plan” within the meaning of Section 3(37) of ERISA or a “multiple employer plan” within the meaning of Section 413(c) of the Code and neither the Company nor any of its Company ERISA Affiliates has now or at any time within the previous six years contributed to, sponsored, maintained, or had any liability or obligation in respect of any such multiemployer plan or multiple employer plan;

(ii) no Legal Action has been initiated by the PBGC to terminate any such Company Employee Plan or to appoint a trustee for any such Company Employee Plan;

(iii) no Company Employee Plan is subject to the minimum funding standards of Section 302 of ERISA or Sections 412, 418(b), or 430 of the Code, and none of the assets of the Company or any Company ERISA Affiliate is, or may reasonably be expected to become, the subject of any lien arising under Section 303 of ERISA or Sections 430 or 436 of the Code; and

(iv) no “reportable event,” as defined in Section 4043 of ERISA, has occurred, or is reasonably expected to occur, with respect to any such Company Employee Plan.

(f) No Post-Employment Obligations. No Company Employee Plan provides post-termination or retiree health benefits to any person for any reason, except as may be required by COBRA or other applicable Law, and neither the Company nor any Company ERISA Affiliate has any Liability to provide post-termination or retiree health benefits to any person or ever represented, promised, or contracted to any Company Employee (either individually or to Company Employees as a group) or any other person that such Company Employee(s) or other person would be provided with post-termination or retiree health benefits, except to the extent required by COBRA or other applicable Law.

(g) Potential Governmental or Lawsuit Liability. Other than routine claims for benefits: (i) there are no pending or, to the Knowledge of the Company, threatened claims by or on behalf of any participant in any Company Employee Plan, or otherwise involving any Company Employee Plan or the assets of any Company Employee Plan; and (ii) no Company Employee Plan is presently or has within the three years prior to the date hereof, been the subject of an examination or audit by a Governmental Entity or is the subject of an application or filing under, or is a participant in, an amnesty, voluntary compliance, self-correction, or similar program sponsored by any Governmental Entity.

(h) Section 409A Compliance. Each Company Employee Plan that is subject to Section 409A of the Code has been operated in compliance with such section and all applicable regulatory guidance (including, without limitation, proposed regulations, notices, rulings, and final regulations).

(i) Health Plan Compliance. The Company complies in all material respects with the applicable requirements under ERISA and the Code, including COBRA, HIPAA, and the Affordable Care Act, and other federal requirements for employer-sponsored health plans, and any corresponding requirements under state statutes, with respect to each Company Employee Plan that is a group health plan within the meaning of Section 733(a) of ERISA, Section 5000(b)(1) of the Code, or such state statute.

(j) Effect of Transaction. Neither the execution or delivery of this Agreement, the consummation of the Merger, nor any of the other transactions contemplated by this Agreement will (either alone or in combination with any other event): (i) entitle any current or former director, employee, contractor, or consultant of the Company to severance pay or any other payment; (ii) accelerate the timing of payment, funding, or vesting, or increase the amount of compensation due to any such individual; (iii) limit or restrict the right of the Company to merge, amend, or terminate any Company Employee Plan; or (iv) increase the amount payable or result in any other material obligation pursuant to any Company Employee Plan. No amount that could be received (whether in cash or property or the vesting of any property) as a result of the consummation of the transactions contemplated by this Agreement by any employee, director, or other service provider of the Company under any Company Employee Plan or otherwise would not be deductible by reason of Section 280G of the Code nor would be subject to an excise tax under Section 4999 of the Code.

(k) Employment Law Matters. The Company: (i) is in compliance with all applicable Laws and agreements regarding hiring, employment, termination of employment, plant closing and mass layoff, employment discrimination, harassment, retaliation, and reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification, employee health and safety, use of genetic information, leasing and supply of temporary and contingent staff, engagement of independent contractors, including proper classification of same, payroll taxes, and immigration with respect to Company Employees and contingent workers; and (ii) is in compliance with all applicable Laws relating to the relations between it and any labor organization, trade union, work council, or other body representing Company Employees, except, in the case of clauses (i) and (ii) immediately above, where the failure to be in compliance with the foregoing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(l) Labor. The Company is not party to, or subject to, any collective bargaining agreement or other agreement with any labor organization, work council, or trade union with respect to any of its or their operations. No material work stoppage, slowdown, or labor strike against the Company with respect to employees who are employed within the United States is pending, threatened, or has occurred in the last two years, and, to the Knowledge of the Company, no material work stoppage, slowdown, or labor strike against the Company with respect to employees who are employed outside the United States is pending, threatened, or has occurred in the last two years. None of the Company Employees is represented by a labor organization, work council, or trade union and, to the Knowledge of the Company, there is no organizing activity, Legal Action, election petition, union card signing or other union activity, or union corporate campaigns of or by any labor organization, trade union, or work council directed at the Company, or any Company Employees. There are no Legal Actions, government investigations, or labor grievances pending, or, to the Knowledge of the Company, threatened relating to any employment related matter involving any Company Employee or applicant, including, but not limited to, charges of unlawful discrimination, retaliation or harassment, failure to provide reasonable accommodation, denial of a leave of absence, failure to provide compensation or benefits, unfair labor practices, or other alleged violations of Law, except for any of the foregoing which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.12 Real Property and Personal Property Matters.

(a) Owned Real Estate. The Company does not own any Real Estate.

(b) Leased Real Estate. Section 3.12(b) of the Company Disclosure Letter contains a true and complete list of all Leases (including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto) as of the date hereof for each such Leased Real Estate (including the date and name of the parties to such Lease document). The Company has delivered to Parent a true and complete copy of each such Lease. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or as set forth on Section 3.12(b) of the Company Disclosure Letter, with respect to each of the Leases: (i) such Lease is legal, valid, binding, enforceable, and in full force and effect; (ii) the Company, and to the Knowledge of the Company, any other party to the Lease, is not in breach or default under such Lease, and no event has occurred or circumstance exists which, with or without notice, lapse of time, or both, would constitute a breach or default under such Lease; (iii) the Company’s possession and quiet enjoyment of the Leased Real Estate under such Lease has not been disturbed, and to the Knowledge of the Company, there are no disputes with respect to such Lease; and (iv) there are no Liens on the estate created by such Lease other than Permitted Liens. The Company has not assigned, pledged, mortgaged, hypothecated, or otherwise transferred any Lease or any interest therein nor has the Company, licensed, or otherwise granted any Person a right to use or occupy such Leased Real Estate or any portion thereof.

(c) Real Estate Used in the Business. The Leased Real Estate identified in Section 3.12(b) of the Company Disclosure Letter comprise all of the real property used or intended to be used in, or otherwise related to, the business of the Company.

(d) Personal Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company is in possession of and have good and marketable title to, or valid leasehold interests in or valid rights under contract to use, the machinery, equipment, furniture, fixtures, and other tangible personal property and assets owned, leased, or used by the Company, free and clear of all Liens other than Permitted Liens.

Section 3.13 Environmental Matters. Except for such matters as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:

(a) Compliance with Environmental Laws. The Company is, and has been, in compliance with all Environmental Laws, which compliance includes the possession, maintenance of, compliance with, or application for, all Permits required under applicable Environmental Laws for the operation of the business of the Company as currently conducted.

(b) No Disposal, Release, or Discharge of Hazardous Substances. The Company has not disposed of, released, or discharged any Hazardous Substances on, at, under, in, or from any real property currently or, to the Knowledge of the Company, formerly owned, leased, or operated by it or at any other location that is: (i) currently subject to any investigation, remediation, or monitoring; or (ii) reasonably likely to result in liability to the Company, in either case of (i) or (ii) under any applicable Environmental Laws.

(c) No Production or Exposure of Hazardous Substances. The Company has not: (i) produced, processed, manufactured, generated, transported, treated, handled, used, or stored any Hazardous Substances, except in compliance with Environmental Laws, at any Real Estate; or (ii) exposed any employee or any third party to any Hazardous Substances under circumstances reasonably expected to give rise to any material Liability or obligation under any Environmental Law.

(d) No Legal Actions or Orders. Except as disclosed in Schedule 3.13(d) of the Company Disclosure Letter, the Company has not received written notice of and there is no Legal Action pending, or to the Knowledge of the Company, threatened against the Company, alleging any Liability or responsibility under or non-compliance with any Environmental Law or seeking to impose any financial responsibility for any investigation, cleanup, removal, containment, or any other remediation or compliance under any Environmental Law. The Company is not subject to any Order, settlement agreement, or other written agreement by or with any Governmental Entity or third party imposing any material Liability or obligation with respect to any of the foregoing.

(e) No Assumption of Environmental Law Liabilities. Except as disclosed in Schedule 3.13(e) of the Company Disclosure Letter, The Company has not expressly assumed or retained any Liabilities under any applicable Environmental Laws of any other Person, including in any acquisition or divestiture of any property or business.

Section 3.14 Material Contracts.

(a) Material Contracts. For purposes of this Agreement, “Company Material Contract” shall mean the following to which the Company is a party or any of the respective assets are bound (excluding any Leases):

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act);

(ii) any employment or consulting Contract (in each case with respect to which the Company has continuing obligations as of the date hereof) with any current or former (A) officer of the Company, (B) member of the Company Board, or (C) Company Employee providing for an annual base salary or payment in excess of $60,000;

(iii) any Contract providing for indemnification or any guaranty by the Company, in each case that is material to the Company, taken as a whole, other than (A) any guaranty by the Company thereof of any of the obligations of (1) the Company, or (B) any Contract providing for indemnification of customers or other Persons pursuant to Contracts entered into in the ordinary course of business;

(iv) any Contract that purports to limit in any material respect the right of the Company (or, at any time after the consummation of the Merger, Parent or any of its Subsidiaries) (A) to engage in any line of business, (B) compete with any Person or solicit any client or customer, or (C) operate in any geographical location;

(v) any Contract relating to the disposition or acquisition, directly or indirectly (by merger, sale of stock, sale of assets, or otherwise), by the Company after the date of this Agreement of assets or capital stock or other equity interests of any Person, in each case with a fair market value in excess of $100,000;

(vi) any Contract that grants any right of first refusal, right of first offer, or similar right with respect to any material assets, rights, or properties of the Company;

(vii) any Contract that contains any provision that requires the purchase of all or a material portion of the Company’s requirements for a given product or service from a given third party, which product or service is material to the Company, taken as a whole;

(viii) any Contract that obligates the Company to conduct business on an exclusive or preferential basis or that contains a “most favored nation” or similar covenant with any third party or upon consummation of the Merger will obligate Parent to conduct business on an exclusive or preferential basis or that contains a “most favored nation” or similar covenant with any third party;

(ix) any partnership, joint venture, limited liability company agreement, or similar Contract relating to the formation, creation, operation, management, or control of any material joint venture, partnership, or limited liability company;

(x) any mortgages, indentures, guarantees, loans, or credit agreements, security agreements, or other Contracts, in each case relating to indebtedness for borrowed money, whether as borrower or lender, in each case in excess of $100,000, other than accounts receivables and payables;

(xi) any employee collective bargaining agreement or other Contract with any labor union;

(xii) any Company IP Agreement;

(xiii) any other Contract under which the Company is obligated to make payment or incur costs in excess of $100,000 in any year and which is not otherwise described in clauses (i)–(xii) above; or

(xiv) any Contract which is not otherwise described in clauses (i)-(xiii) above that is material to the Company, taken as a whole.

(b) Schedule of Material Contracts; Documents. Section 3.14(b) of the Company Disclosure Letter sets forth a true and complete list as of the date hereof of all Company Material Contracts. The Company has made available to Parent correct and complete copies of all Company Material Contracts, including any amendments thereto.

(c) No Breach. (i) All the Company Material Contracts are legal, valid, and binding on the Company, enforceable against it in accordance with its terms, and is in full force and effect; (ii) neither the Company, nor to the Knowledge of the Company, any third party has violated any material provision of, or failed to perform any material obligation required under the provisions of, any Company Material Contract; and (iii) neither the Company nor, to the Knowledge of the Company, any third party is in material breach, or has received written notice of breach, of any Company Material Contract.

Section 3.15 Insurance. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all insurance policies of the Company are in full force and effect and provide insurance in such amounts and against such risks as the Company reasonably has determined to be prudent, taking into account the industries in which the Company, and as is sufficient to comply with applicable Law. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company is not in breach or default, and the Company has not has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect and to the Knowledge of the Company: (i) no insurer of any such policy has been declared insolvent or placed in receivership, conservatorship, or liquidation; and (ii) no notice of cancellation or termination, other than pursuant to the expiration of a term in accordance with the terms thereof, has been received with respect to any such policy.

Section 3.16 Anti-Corruption Matters. Since December 31, 2019, none of the Company r any director, officer or, to the Knowledge of the Company, employee or agent of the Company has: (i) used any funds for unlawful contributions, gifts, entertainment, or other unlawful payments relating to an act by any Governmental Entity; (ii) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iii) made any other unlawful payment under any applicable Law relating to anti-corruption, bribery, or similar matters. Since January 1, 2020, neither the Company has disclosed to any Governmental Entity that it violated or may have violated any Law relating to anti-corruption, bribery, or similar matters. To the Knowledge of the Company, no Governmental Entity is investigating, examining, or reviewing the Company’s compliance with any applicable provisions of any Law relating to anti-corruption, bribery, or similar matters.

Article IV
Representations and Warranties of Parent and Merger Sub

Except: (a) as disclosed in the Parent Public Documents at least (5) five Business Days prior to the date hereof and as identified in the particular representation that is reasonably apparent on the face of such disclosure to be applicable to the representation and warranty set forth herein (other than any disclosures contained or referenced therein under the captions “Risk Factors,” “Forward-Looking Statements,” “Quantitative and Qualitative Disclosures About Market Risk,” and any other disclosures contained or referenced therein of information, factors, or risks that are predictive, cautionary, or forward-looking in nature); or (b) as set forth in the correspondingly numbered Section of the Parent Disclosure Letter that relates to such Section or in another Section of the Parent Disclosure Letter to the extent that it is reasonably apparent on the face of such disclosure that such disclosure is applicable to such Section; Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:

Section 4.01 Organization; Standing and Power; Charter Documents; Subsidiaries.

(a) Organization; Standing and Power. Each of Parent and its Subsidiaries is a corporation, limited liability company, or other legal entity duly organized, validly existing, and in good standing (to the extent that the concept of “good standing” is applicable in the case of any jurisdiction outside the United States) under the Laws of its jurisdiction of organization, and has the requisite corporate, limited liability company, or other organizational, as applicable, power and authority to own, lease, and operate its assets and to carry on its business as now conducted. Each of Parent and its Subsidiaries is duly qualified or licensed to do business as a foreign corporation, limited liability company, or other legal entity and is in good standing (to the extent that the concept of “good standing” is applicable in the case of any jurisdiction outside the United States) in each jurisdiction where the character of the assets and properties owned, leased, or operated by it or the nature of its business makes such qualification or license necessary, except where the failure to be so qualified or licensed or to be in good standing, would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(b) Charter Documents. The copies of the Articles of Incorporation and By-Laws of Parent as most recently filed with the Parent Public Documents are true, correct, and complete copies of such documents as in effect as of the date of this Agreement. Parent has delivered or made available to the Company a true and correct copy of the Charter Documents of Merger Sub. Neither Parent nor Merger Sub is in violation of any of the provisions of its Charter Documents.

(c) Subsidiaries. All of the outstanding shares of capital stock of, or other equity or voting interests in, each Subsidiary of Parent have been validly issued and are owned by Parent, directly or indirectly, free of pre-emptive rights, are fully paid and non-assessable, and are free and clear of all Liens, including any restriction on the right to vote, sell, or otherwise dispose of such capital stock or other equity or voting interests, except for any Liens: (i) imposed by applicable securities Laws; or (ii) arising pursuant to the Charter Documents of any non-wholly-owned Subsidiary of Parent. Except for the capital stock of, or other equity or voting interests in, its Subsidiaries, Parent does not own, directly or indirectly, any capital stock of, or other equity or voting interests in, any Person.

Section 4.02 Capital Structure.

(a) Capital Stock. The authorized capital stock of Parent consists of: (i) an unlimited number of shares of Parent Common Stock. As of the date of this Agreement: 449,371,660 shares of Parent Common Stock were issued and outstanding. All of the outstanding shares of capital stock of Parent are, and all shares of capital stock of Parent which may be issued as contemplated or permitted by this Agreement, including the shares of Parent Common Stock constituting the Stock Consideration, will be, when issued, duly authorized, validly issued, fully paid, and non-assessable, and not subject to any pre-emptive rights. No Subsidiary of Parent owns any shares of Parent Common Stock.

(b) Stock Awards. Except for outstanding Parent Options under the Parent Stock Option Plan, outstanding RSUs under the Parent RSU Plan, Parent Debentures, Parent warrants and Parent’s contingent commitment to grant shares in the capital stock of the Parent as disclosed in the Parent Disclosure Letter, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any kind that obligate the parent to issue or sell any shares of capital stock or other securities of the Parent or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any person a right to subscribe for or acquire, any securities of the Parent or any of its Subsidiaries. The description of the Parent’s capitalization on a fully diluted basis is as set forth in Schedule 4.02 of the Parent Disclosure Letter.

(c) Voting Debt. No bonds, debentures, notes, or other indebtedness issued by Parent or any of its Subsidiaries: (i) having the right to vote on any matters on which stockholders or equity holders of Parent or any of its Subsidiaries may vote (or which is convertible into, or exchangeable for, securities having such right); or (ii) the value of which is directly based upon or derived from the capital stock, voting securities, or other ownership interests of Parent or any of its Subsidiaries, are issued or outstanding (collectively, “Parent Voting Debt”).

(d) Parent Subsidiary Securities. As of the date hereof, there are no outstanding: (i) securities of Parent or any of its Subsidiaries convertible into or exchangeable for Parent Voting Debt, capital stock, voting securities, or other ownership interests in any Subsidiary of Parent; (ii) options, warrants, or other agreements or commitments to acquire from Parent or any of its Subsidiaries, or obligations of Parent or any of its Subsidiaries to issue, any Parent Voting Debt, capital stock, voting securities, or other ownership interests in (or securities convertible into or exchangeable for capital stock, voting securities, or other ownership interests in) any Subsidiary of Parent; or (iii) restricted shares, restricted stock units, stock appreciation rights, performance shares, profit participation rights, contingent value rights, “phantom” stock, or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock or voting securities of, or other ownership interests in, any Subsidiary of Parent, in each case that have been issued by a Subsidiary of Parent (the items in clauses (i), (ii), and (iii), together with the capital stock, voting securities, or other ownership interests of such Subsidiaries, being referred to collectively as “Parent Subsidiary Securities”).

Section 4.03 Authority; Non-Contravention; Governmental Consents; Board Approval.

(a) Authority. Each of Parent and Merger Sub has all requisite corporate power or limited liability power, as applicable, and authority to enter into and to perform its obligations under this Agreement and, subject to, in the case of the consummation of the Merger to the adoption of this Agreement by Parent as the sole stockholder of Merger Sub; “Requisite Parent Vote”), to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or limited liability action, as applicable, on the part of Parent and Merger Sub and no other corporate or limited liability proceedings, as applicable, on the part of Parent or Merger Sub are necessary to authorize the execution and delivery of this Agreement or to consummate the Merger, the Parent Stock Issuance, and the other transactions contemplated by this Agreement, subject only, in the case of consummation of the Merger, to obtain the Requisite parent vote This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due execution and delivery by the Company, constitutes the legal, valid, and binding obligation of Parent Merger Sub enforceable against Parent and Merger Sub, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, and other similar Laws affecting creditors’ rights generally and by general principles of equity.

(b) Non-Contravention. The execution, delivery, and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement, do not and will not: (i) contravene or conflict with, or result in any violation or breach of, Parent’s or Merger Sub’s Charter Documents; (ii) assuming that all of the Consents contemplated by clauses (i) through (v) of Section 4.03 have been obtained or made, and in the case of the consummation of the Merger, conflict with or violate any Law applicable to Parent or Merger Sub or any of their respective properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in Parent’s or any of its Subsidiaries’ loss of any benefit or the imposition of any additional payment or other liability under, or alter the rights or obligations of any third party under, or give to any third party any rights of termination, amendment, acceleration, or cancellation, or require any Consent under, any Contract to which Parent or any of its Subsidiaries is a party or otherwise bound as of the date hereof; or (iv) result in the creation of a Lien (other than Permitted Liens) on any of the properties or assets of Parent or any of its Subsidiaries, except, in the case of each of clauses (ii), (iii), and (iv), for any conflicts, violations, breaches, defaults, loss of benefits, additional payments or other liabilities, alterations, terminations, amendments, accelerations, cancellations, or Liens that, or where the failure to obtain any Consents, in each case, would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(c) Governmental Consents. No Consent of any Governmental Entity is required to be obtained or made by Parent or Merger Sub in connection with the execution, delivery, and performance by Parent and Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the Merger, the Parent Stock Issuance, and the other transactions contemplated hereby, except for: (i) Certificate of Merger with the Secretary of State of the State of New York; (ii) such Consents as may be required under applicable state securities or “blue sky” Laws and the securities Laws of any foreign country or the rules and regulations of the TSVX; and (iii) such other Consents which if not obtained or made would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(d) Board Approval.

(i) The Parent Board by resolutions duly adopted by a unanimous vote at a meeting of all directors of Parent duly called and held and, not subsequently rescinded or modified in any way, has (A) determined that this Agreement and the transactions contemplated hereby, including the Merger, and the Parent Stock Issuance, upon the terms and subject to the conditions set forth herein, are fair to, and in the best interests of, Parent and the Parent’s stockholders, and (B) approved and declared advisable this Agreement, including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by this Agreement, including the Merger and the Parent Stock Issuance, upon the terms and subject to the conditions set forth herein. The Merger Sub Board by resolutions duly adopted by a unanimous vote at a meeting of all directors of Merger Sub duly called and held and, not subsequently rescinded or modified in any way, has (A) determined that this Agreement and the transactions contemplated hereby, including the Merger, upon the terms and subject to the conditions set forth herein, are fair to, and in the best interests of, Merger Sub and Parent, as the sole stockholder of Merger Sub, (B) approved and declared advisable this Agreement, including the execution, delivery, and performance thereof, and the consummation of the transactions contemplated by this Agreement, including the Merger, upon the terms and subject to the conditions set forth herein, and (C) resolved to recommend that Parent, as the sole stockholder of Merger Sub, approve the adoption of this Agreement in accordance with the NYBCL.

Section 4.04 Canadian Public Filings; Financial Statements; Undisclosed Liabilities.

(a) Canadian Public Filings. Parent has timely filed with or furnished to, as applicable, the Alberta Securities Commission (the “ASC”), as applicable, all material registration statements, prospectuses, reports, schedules, forms, statements, and other documents (including exhibits and all other information incorporated by reference) required to be filed or furnished by it with the ASC since January 1, 2020 (the “Parent Public Documents”). Parent is a reporting issuer, or the equivalent thereof, in British Columbia, Alberta and Ontario (the “Reporting Jurisdictions”), and is not currently in default of any requirement of the applicable laws of each of the Reporting Jurisdictions and other regulatory instruments of the securities authorities in such provinces, and no order ceasing, halting or suspending trading in securities of Parent or prohibiting the distribution of such securities has been issued to and is outstanding against Parent and no investigations or proceedings for such purposes are, to the knowledge of Parent, pending or threatened. Parent is in compliance in all material respects with all its disclosure obligations under applicable Laws and all documents filed by Parent pursuant to such obligations are in compliance in all material respects with applicable laws and, other than in respect of documents that have been amended or refiled did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) Financial Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in or incorporated by reference into the Parent Public Documents: (i) complied as to form in all material respects with the published rules and regulations of the ASC with respect thereto as of their respective dates; (ii) was prepared in accordance with IFRS applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted by the ASC for Quarterly Reports on Form 10-Q); and (iii) fairly presented in all material respects the consolidated financial position and the results of operations, changes in stockholders’ equity, and cash flows of Parent and its consolidated Subsidiaries as of the respective dates of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements, to normal and year-end audit adjustments as permitted by IFRS and the applicable rules and regulations of the ASC (but only if the effect of such adjustments would not, individually or in the aggregate, be material).

(c) Undisclosed Liabilities. The reviewed balance sheet of Parent dated as of July 31, 2020 contained in the Parent Public Documents filed prior to the date hereof is hereinafter referred to as the “Parent Balance Sheet.” Neither Parent nor any of its Subsidiaries has any Liabilities other than Liabilities that: (i) are reflected or reserved against in the Parent Balance Sheet (including in the notes thereto); (ii) were incurred since the date of the Parent Balance Sheet in the ordinary course of business consistent with past practice; (iii) are incurred in connection with the transactions contemplated by this Agreement; or (iv) would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(d) TSXV Compliance. Parent is in compliance with all of the applicable listing and corporate governance rules of the TSXV, except for any non-compliance that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.05 Absence of Certain Changes or Events. Since the date of the Parent Balance Sheet, except in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, the business of Parent and each of its Subsidiaries has been conducted in the ordinary course of business consistent with past practice and there has not been or occurred any Parent Material Adverse Effect or any event, condition, change, or effect that could reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.06 Taxes.

(a) Except as disclosed in Schedule 4.06 of the Parent Disclosure Letter, all Tax Returns required by applicable Laws to be filed with any Governmental Entity by, or on behalf of, Parent or any of its Subsidiaries have been filed when due in accordance with applicable Laws (taking into account any applicable extensions), and all such material Tax Returns are complete and correct in all material respects.

(b) Parent and each of its Subsidiaries has paid, or has had paid on its behalf, or has collected, withheld and remitted to the appropriate Governmental Entity all Taxes due and payable by them on a timely basis, other than those Taxes being contested in good faith and in respect of which reserves have been provided in the most recently published consolidated financial statements of Parent. Parent and its Subsidiaries have provided adequate accruals in accordance with IFRS in the most recently published consolidated financial statements of Parent for any Taxes of Parent and each of its Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due in any Tax Returns. Since the date of publication of the most recent consolidated financial statements of Parent, no material liability in respect of Taxes not reflected in such financial statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

(c) No material deficiencies, litigation, proposed adjustments or other matters in controversy exist or have been asserted with respect to Taxes of Parent or any of its Subsidiaries and neither Parent nor any of its Subsidiaries is a party to any action or proceeding for assessment or collection of Taxes and no such event has been asserted or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries or any of their respective assets.

(d) There are no currently effective material elections, agreements or waivers extending the statutory period or providing for any extension of time with respect to the assessment or reassessment of any material Taxes, or of the filing of any material Tax Return or any payment of material Taxes, by Parent or any of its Subsidiaries.

(e) Parent and each of its Subsidiaries has made available to Company true, correct and complete copies of all Tax Returns for which applicable statutory periods of limitations have not expired.

Section 4.07 Privacy and Data Security.

(a) Parent and each of its Subsidiaries have complied in all material respects with all applicable Laws and all internal or publicly posted policies, notices, and statements concerning the collection, use, processing, storage, transfer, and security of personal information in the conduct of Parent’s and its Subsidiaries’ businesses, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. In the past twelve (12) months, Parent and its Subsidiaries have not: (i) experienced any actual, alleged, or suspected data breach or other security incident involving personal information in their possession or control; or (ii) been subject to or received any notice of any audit, investigation, complaint, or other Legal Action by any Governmental Entity or other Person concerning the Parent’s or any of its Subsidiaries’ collection, use, processing, storage, transfer, or protection of personal information or actual, alleged, or suspected violation of any applicable Law concerning privacy, data security, or data breach notification, and to Parent’s Knowledge, there are no facts or circumstances that could reasonably be expected to give rise to any such Legal Action, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect

Section 4.08 Compliance; Permits.

(a) Parent and each of its Subsidiaries are and, since January 1, 2017, have been in compliance with, all Laws or Orders applicable to Parent or any of its Subsidiaries or by which Parent or any of its Subsidiaries or any of their respective businesses or properties is bound, except for such non-compliance that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Since January 1, 2017, no Governmental Entity has issued any notice or notification stating that Parent or any of its Subsidiaries is not in compliance with any Law, except where such non-compliance would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(b) Permits. Parent and its Subsidiaries hold, to the extent necessary to operate their respective businesses as such businesses are being operated as of the date hereof, all Permits except for any Permits for which the failure to obtain or hold would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. No suspension, cancellation, non-renewal, or adverse modifications of any Permits of Parent or any of its Subsidiaries is pending or, to the Knowledge of Parent, threatened, except for any such suspension or cancellation which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Parent and each of its Subsidiaries is and, since January 1, 2017, has been in compliance with the terms of all Permits, except where the failure to be in such compliance would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.09 Litigation. Except as disclosed in Schedule 4.09 of the Parent Disclosure Letter, there is no Legal Action pending, or to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries or any of their respective properties or assets or, to the Knowledge of Parent, any officer or director of Parent or any of its Subsidiaries in their capacities as such other than any such Legal Action that: (a) does not involve an amount that would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; and (b) does not seek material injunctive or other material non-monetary relief. None of Parent or any of its Subsidiaries or any of their respective properties or assets is subject to any Order of a Governmental Entity or arbitrator, whether temporary, preliminary, or permanent, which would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. To the Knowledge of Parent, there are no OSCC inquiries or investigations, other governmental inquiries or investigations, or internal investigations pending or, to the Knowledge of Parent, threatened, in each case regarding any accounting practices of Parent or any of its Subsidiaries or any malfeasance by any officer or director of Parent.

Section 4.10 Brokers’ and Finders’ Fees. Neither Parent, Merger Sub, nor any of their respective Affiliates has incurred, nor will it incur, directly or indirectly, any liability for investment banker, brokerage, or finders’ fees or agents’ commissions, or any similar charges in connection with this Agreement or any transaction contemplated hereby for which the Company would be liable in connection with the Merger.

Section 4.11 Employees.

(a) Parent and its Subsidiaries are in material compliance with all terms and conditions of employment and all applicable Laws respecting employment, including pay equity, wages, hours of work, overtime, vacation, human rights and work safety and health.

(b) All amounts due or accrued due for all salary, wages, bonuses, commissions, vacation with pay, sick days and benefits under all employee benefit, health, dental or other medical, life, disability or other insurance (whether insured or self-insured) welfare, mortgage insurance, employee loan, employee assistance, supplemental unemployment benefit, bonus, profit sharing, option, incentive, incentive compensation, deferred compensation, share purchase, share compensation, share appreciation, pension, retirement, savings, supplemental retirement, severance or termination pay, and any other material plans, programs, practices, policies, agreements or arrangements (whether written or unwritten) for the benefit of employees, former employees, directors or former directors of the Parent or its Subsidiaries, or their respective dependents or beneficiaries, which are maintained by or binding upon a Party or its Subsidiaries or in respect of which a Party or its Subsidiaries has any actual or potential liability, other than benefit plans established pursuant to statute (each, a “Parent Employee Plan”) and other similar accruals have been either paid or are accurately reflected in all material respects in the books and records of Parent and its Subsidiaries.

(c) Except as disclosed in Section 4.11(c) of the Parent Disclosure Letter, there are no material Parent Employee Plan related claims, complaints, investigations or orders under all applicable Laws that could reasonably be expected to have a Parent Material Adverse Effect respecting employment now pending or, to the knowledge of Parent, threatened against Parent and its Subsidiaries by or before any Governmental Entity as of the date of this Agreement.

(d) Except as disclosed in Section 4.11(d) of the Parent Disclosure Letter, no employee of Parent or any of its Subsidiaries has any agreement as to length of notice or severance payment required to terminate his or her employment other than such as results from applicable Law from the employment of an employee without an agreement as to notice or severance.

(e) Except as disclosed in Section 4.11(e) of the Parent Disclosure Letter, neither Parent nor any of its Subsidiaries are party to any collective bargaining agreement, contract or legally binding commitment to any trade unions or employee organization or group or to any Parent Employee Plans, and there are no threatened or apparent union organizing activities involving employees of Parent or any of its Subsidiaries, nor is Parent or any of its Subsidiaries currently negotiating any collective bargaining agreements or any Parent Employee Plans.

(f) There are no change of control payments, golden parachutes, severance payments, retention payments, Contracts or other agreements with current or former Parent Employees providing for cash or other compensation or benefits upon the consummation of, or relating to, the Merger, including a change of control of Parent or any of its Subsidiaries.

(g) There are no material outstanding assessments, penalties, fines, liens, charges, surcharges or other amounts due or owing pursuant to any workplace safety, workers compensation or insurance legislation and neither Parent nor any Subsidiary has been reassessed in any material respect under such legislation during the past three years and, to the knowledge of Parent, no audit of Parent or any of its Subsidiaries is currently being performed pursuant to any applicable workplace safety, workers compensation or insurance legislation. As of the date of this Agreement, to Parent’s knowledge, there are no claims or potential claims which may materially adversely affect Parent and its Subsidiaries’ accident cost experience.

(h) There are no charges pending against Parent or its Subsidiaries under applicable occupational health and safety legislation. Parent has complied in all material respects with any orders issued under applicable occupational health and safety legislation and there are no appeals of any orders under applicable occupational health and safety legislation currently outstanding.

Section 4.12 Real Property and Personal Property Matters.

(a) Real Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and each of its Subsidiaries are in possession of and have good and marketable title to, or valid leasehold interests in or valid rights under contract to use, all real property owned, leased, or used by Parent or any of its Subsidiaries, free and clear of all Liens other than Permitted Liens

(b) Personal Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and each of its Subsidiaries are in possession of and have good and marketable title to, or valid leasehold interests in or valid rights under contract to use, the machinery, equipment, furniture, fixtures, and other tangible personal property and assets owned, leased, or used by Parent or any of its Subsidiaries, free and clear of all Liens other than Permitted Liens.

Section 4.13 Environmental. Except for such matters as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect:

(a) Compliance with Environmental Laws. Parent and its Subsidiaries are, and have been, in compliance with all Environmental Laws, which compliance includes the possession, maintenance of, compliance with, or application for, all Permits required under applicable Environmental Laws for the operation of the business of Parent and its Subsidiaries as currently conducted.

(b) No Disposal, Release, or Discharge of Hazardous Substances. Neither Parent nor any of its Subsidiaries has disposed of, released, or discharged any Hazardous Substances on, at, under, in, or from any real property currently or, to the Knowledge of Parent, formerly owned, leased, or operated by it or any of its Subsidiaries or at any other location that is: (i) currently subject to any investigation, remediation, or monitoring; or (ii) reasonably likely to result in liability to Parent or any of its Subsidiaries, in either case of (i) or (ii) under any applicable Environmental Laws.

(c) No Production or Exposure of Hazardous Substances. Neither Parent nor any of its Subsidiaries has: (i) produced, processed, manufactured, generated, transported, treated, handled, used, or stored any Hazardous Substances, except in compliance with Environmental Laws, at any Real Estate; or (ii) exposed any employee or any third party to any Hazardous Substances under circumstances reasonably expected to give rise to any material Liability or obligation under any Environmental Law.

(d) No Legal Actions or Orders. Neither Parent nor any of its Subsidiaries has received written notice of and there is no Legal Action pending, or to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries, alleging any Liability or responsibility under or non-compliance with any Environmental Law or seeking to impose any financial responsibility for any investigation, cleanup, removal, containment, or any other remediation or compliance under any Environmental Law. Neither Parent nor any of its Subsidiaries is subject to any Order, settlement agreement, or other written agreement by or with any Governmental Entity or third party imposing any material Liability or obligation with respect to any of the foregoing.

(e) No Assumption of Environmental Law Liabilities. Neither Parent nor any of its Subsidiaries has expressly assumed or retained any Liabilities under any applicable Environmental Laws of any other Person, including in any acquisition or divestiture of any property or business

Section 4.14 Material Contracts. Material Contracts. For purposes of this Agreement, “Parent Material Contract” shall mean any Contract that is material to Parent and its Subsidiaries, taken as a whole. All the Parent Material Contracts are legal, valid, and binding on Parent or its applicable Subsidiary, enforceable against it in accordance with its terms, and is in full force and effect; (ii) neither Parent nor any of its Subsidiaries nor, to the Knowledge of Parent, any third party has violated any material provision of, or failed to perform any material obligation required under the provisions of, any Parent Material Contract; and (iii) neither Parent nor any of its Subsidiaries nor, to the Knowledge of Parent, any third party is in material breach, or has received written notice of breach, of any Parent Material Contract

Section 4.15 Insurance. Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, all insurance policies of Parent and its Subsidiaries are in full force and effect and provide insurance in such amounts and against such risks as the Parent reasonably has determined to be prudent, taking into account the industries in which the Parent and its Subsidiaries operate, and as is sufficient to comply with applicable Law. Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, neither the Parent nor any of its Subsidiaries is in breach or default, and neither Parent nor any of its Subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies. Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect and to the Knowledge of the Parent: (i) no insurer of any such policy has been declared insolvent or placed in receivership, conservatorship, or liquidation; and (ii) no notice of cancellation or termination, other than pursuant to the expiration of a term in accordance with the terms thereof, has been received with respect to any such policy.

Section 4.16 Information Supplied. None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in any information sent to the Company’s shareholders will, at the date it is first mailed to the Company’s stockholders or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.. Notwithstanding the foregoing, no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein based on information that was not supplied by or on behalf of Parent or Merger Sub.

Section 4.17 Anti-Corruption Matters. Since December 31, 2019, none of Parent, any of its Subsidiaries or any director, officer or, to the Knowledge of Parent, employee or agent of Parent or any of its Subsidiaries has: (i) used any funds for unlawful contributions, gifts, entertainment, or other unlawful payments relating to an act by any Governmental Entity; (ii) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iii) made any other unlawful payment under any applicable Law relating to anti-corruption, bribery, or similar matters. Since January 1, 2020, neither Parent nor any of its Subsidiaries has disclosed to any Governmental Entity that it violated or may have violated any Law relating to anti-corruption, bribery, or similar matters. To the Knowledge of Parent, no Governmental Entity is investigating, examining, or reviewing Parent ‘s compliance with any applicable provisions of any Law relating to anti-corruption, bribery, or similar matters.

Section 4.18 Ownership of Company Common Stock. Neither Parent nor any of its Affiliates or Associates is the “beneficially owner” (as defined in Section 912(a)(4) of the NYBCL) of any shares of Company Common Stock.

Section 4.19 Intended Tax Treatment. Neither Parent nor any of its Subsidiaries has taken or agreed to take any action, and to the Knowledge of Parent there exists no fact or circumstance, that is reasonably likely to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. This Section shall in no way serve as a representation of Parent that the transaction is tax free to the shareholders of the Company.

Section 4.20 Financial Capability. Parent has or will have prior to the Effective Time, sufficient funds to pay the aggregate Cash Consideration contemplated by this Agreement and to perform the other obligations of Parent and Merger Sub contemplated by this Agreement.

Section 4.21 Merger Sub. Merger Sub: (a) has engaged in no business activities other than those related to the transactions contemplated by this Agreement; and (b) is a direct, wholly-owned Subsidiary of Parent.

Article V
Covenants

Section 5.01 Conduct of Business of the Company. During the period from the date of this Agreement until the Effective Time, the Company shall, and shall cause each of its Subsidiaries, except as expressly permitted or required by this Agreement, as required by applicable Law, or with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), to use commercially reasonable efforts to conduct its business only in the ordinary course of business consistent with past practice, and, to the extent consistent therewith, the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to preserve substantially intact its and its Subsidiaries’ business organization, to keep available the services of its and its Subsidiaries’ current officers and employees, to preserve its and its Subsidiaries’ present relationships with its material customers, suppliers, distributors, licensors, licensees, and other Persons having material business relationships with it. Without limiting the generality of the foregoing, between the date of this Agreement and the Effective Time, except as otherwise expressly permitted or required by this Agreement, as set forth in Section 5.01 of the Company Disclosure Letter, or as required by applicable Law, the Company shall not, nor shall it permit any of its Subsidiaries to, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed):

(a) amend or propose to amend its Charter Documents;

(b) (i) split, combine, or reclassify any Company Securities or Company Subsidiary Securities, (ii) repurchase, redeem, or otherwise acquire, or offer to repurchase, redeem, or otherwise acquire, any Company Securities or Company Subsidiary Securities, or (iii) other than the Company Dividend, declare, set aside, or pay any dividend or distribution (whether in cash, stock, property, or otherwise) in respect of, or enter into any Contract with respect to the voting of, any shares of its capital stock (other than dividends from its direct or indirect wholly-owned Subsidiaries);

(c) except as required by applicable Law or by any Company Employee Plan or Contract in effect as of the date of this Agreement (i) increase the compensation payable or that could become payable by the Company or any of its Subsidiaries to directors, officers, or employees in any material respect, other than increases in compensation made to officers and employees in the ordinary course of business consistent with past practice, (ii) promote any officers or employees, except in connection with the Company’s annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, or (iii) establish, adopt, enter into, amend, terminate, exercise any discretion under, or take any action to accelerate rights under any Company Employee Plans or any plan, agreement, program, policy, trust, fund, or other arrangement that would be a Company Employee Plan if it were in existence as of the date of this Agreement, or make any contribution to any Company Employee Plan, other than contributions required by Law, the terms of such Company Employee Plans as in effect on the date hereof, or that are made in the ordinary course of business consistent with past practice;

(e) (i) transfer, license, sell, lease, or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets, or otherwise) or pledge, encumber, mortgage, or otherwise subject to any Lien (other than a Permitted Lien), any assets, including the capital stock or other equity interests in any Subsidiary of the Company; provided, that the foregoing shall not prohibit the Company and its Subsidiaries from selling inventory in the ordinary course of business or transferring, selling, leasing, or disposing of obsolete equipment or assets being replaced, or granting non-exclusive licenses under the Company IP, in each case in the ordinary course of business consistent with past practice, or (ii) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization;

(f) repurchase, prepay, or incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or options, warrants, calls, or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other Contract to maintain any financial statement condition of any other Person (other than any wholly-owned Subsidiary of it) or enter into any arrangement having the economic effect of any of the foregoing, other than in connection with the financing of ordinary course trade payables consistent with past practice;

(g) enter into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any Company Material Contract or any Lease with respect to material Real Estate or any other Contract or Lease that, if in effect as of the date hereof would constitute a Company Material Contract or Lease with respect to material Real Estate hereunder;

(h) institute, settle, or compromise any Legal Action involving the payment of monetary damages by the Company or any of its Subsidiaries of any amount exceeding $100,000 in the aggregate, other than (i) any Legal Action brought against Parent or Merger Sub arising out of a breach or alleged breach of this Agreement by Parent or Merger Sub and (ii) the settlement of claims, liabilities, or obligations reserved against on the Company Balance Sheet; provided, that neither the Company nor any of its Subsidiaries shall settle or agree to settle any Legal Action which settlement involves a conduct remedy or injunctive or similar relief or has a restrictive impact on the Company’s business;

(i) settle or compromise any material Tax claim, audit, or assessment for an amount materially in excess of the amount reserved or accrued on the Company Balance Sheet (or most recent consolidated balance sheet included in the Company OTC Documents), (ii) make or change any material Tax election, change any annual Tax accounting period, or adopt or change any method of Tax accounting, (iii) amend any material Tax Returns or file claims for material Tax refunds, or (iv) enter into any material closing agreement, surrender in writing any right to claim a material Tax refund, offset or other reduction in Tax liability or consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment relating to the Company or its Subsidiaries;

(j) enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding, or similar Contract with respect to any joint venture, strategic partnership, or alliance;

(k) except in connection with actions permitted by Section 5.04 hereof, take any action to exempt any Person from, or make any acquisition of securities of the Company by any Person not subject to, any state takeover statute or similar statute or regulation that applies to Company with respect to a Takeover Proposal or otherwise, including the restrictions on “business combinations” set forth in Section 912 of the NYBCL, except for Parent, Merger Sub, or any of their respective Subsidiaries or Affiliates, or the transactions contemplated by this Agreement;

(l) fail to maintain cash and cash equivalents on its balance sheet of at least $350,000;

(m) adopt or implement any stockholder rights plan or similar arrangement; or

(n) agree or commit to do any of the foregoing.

Section 5.02 Conduct of the Business of Parent. During the period from the date of this Agreement until the Effective Time, Parent shall, and shall cause each of its Subsidiaries, except as expressly contemplated by this Agreement, as required by applicable Law, or with the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned, or delayed), to use its reasonable best efforts to conduct its business in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, between the date of this Agreement and the Effective Time, except as otherwise expressly contemplated by this Agreement, as set forth in Section 5.02 of the Parent Disclosure Letter, or as required by applicable Law, Parent shall not, nor shall it permit any of its Subsidiaries to, without the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned, or delayed):

(a) amend its Charter Documents in a manner that would adversely affect the Company or the holders of Company Common Stock relative to the other holders of Parent Common Stock;

(b) (i) split, combine, or reclassify any Parent Securities or Parent Subsidiary Securities in a manner that would adversely affect the Company or the holders of Company Common Stock relative to the other holders of Parent Common Stock, except that the Parent shall be able to effect a reverse split in order to meet the requirements for listing on Nasdaq; (ii) repurchase, redeem, or otherwise acquire, or offer to repurchase, redeem, or otherwise acquire, any Parent Securities or Parent Subsidiary Securities, or (iii) declare, set aside, or pay any dividend or distribution (whether in cash, stock, property, or otherwise) in respect of, or enter into any Contract with respect to the voting of, any shares of its capital stock (other than dividends from its direct or indirect wholly-owned Subsidiaries and ordinary quarterly dividends, consistent with past practice with respect to timing of declaration and payment);

(c) issue, sell, pledge, dispose of, or encumber any Parent Securities or Parent Subsidiary Securities, other than (i) the issuance of shares of Parent Common Stock upon the exercise of any Parent Equity Awards outstanding as of the date of this Agreement in accordance with its terms, (ii) the issuance of shares of Parent Common Stock in connection with or upon the exercise of any Parent Equity Awards granted after the date hereof in the ordinary course of business consistent with past practice, and (iii) shares to be issued in connection with a financing of up to $15.0 million as necessary to list on Nasdaq;

(d) acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or Person or division thereof or make any loans, advances, or capital contributions to or investments in any Person, in each case that would reasonably be expected to prevent, impede, or materially delay the consummation of the Merger or other transactions contemplated by this Agreement;

(e) (i) transfer, license, sell, lease, or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets, or otherwise) or pledge, encumber, mortgage, or otherwise subject to any Lien (other than a Permitted Lien), any material assets, including the capital stock or other equity interests in any Subsidiary of the Parent; provided, that the foregoing shall not prohibit the Parent and its Subsidiaries from selling inventory in the ordinary course of business or transferring, selling, leasing, or disposing of obsolete equipment or assets being replaced, or granting non-exclusive licenses under the Parent IP, in each case in the ordinary course of business consistent with past practice, or (ii) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization;

(f) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization; or

(g) agree or commit to do any of the foregoing.

Section 5.03 Access to Information; Confidentiality.

(a) Access to Information. From the date of this Agreement until the earlier to occur of the Effective Time or the termination of this Agreement in accordance with the terms set forth in Article VII, each of Parent and the Company shall, and shall cause their respective Subsidiaries (if any) to, afford to the other and their respective Representatives reasonable access, at reasonable times and in a manner as shall not unreasonably interfere with the business or operations of Parent, the Company or any of their respective Subsidiaries (if any), to the officers, employees, accountants, agents, properties, offices, and other facilities and to all books, records, contracts, and other assets of Parent, the Company and their respective Subsidiaries (if any). Further, each of Parent and the Company shall, and shall cause their respective Subsidiaries (if any) to, furnish promptly to the Company or Parent such other information concerning the business and properties of Parent, the Company and their respective Subsidiaries (if any) as the other of the Company or Parent may reasonably request from time to time. None of Parent, the Company nor any of their respective Subsidiaries (if any) shall be required to provide access to or disclose information where such access or disclosure would jeopardize the protection of attorney-client privilege or contravene any Law (it being agreed that the parties shall use their reasonable best efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention). No investigation shall affect the representations, warranties, covenants, or agreements contained herein, or limit or otherwise affect the remedies available to the Company, Parent or Merger Sub pursuant to this Agreement.

(b) Confidentiality. Parent and the Company shall comply with, and shall cause their respective Representatives to comply with, all of their respective obligations under the Confidentiality Agreement, dated September 15, 2020 between Parent and the Company (the “Confidentiality Agreement”), which shall survive the termination of this Agreement in accordance with the terms set forth therein.

Section 5.04 No Solicitation.(a) Takeover Proposal. Neither the Company, on the one hand, nor Parent, on the other hand, shall, and each shall cause their respective Subsidiaries (if any) not to, and shall not authorize or permit its or its respective Subsidiaries’ (if any) directors, officers, employees, investment bankers, attorneys, accountants, consultants, or other agents or advisors (with respect to any Person, the foregoing Persons are referred to herein as such Person’s “Representatives”) to, directly or indirectly, solicit, initiate, or knowingly take any action to facilitate or encourage the submission of any Takeover Proposal or the making of any proposal that could reasonably be expected to lead to any Takeover Proposal, or, subject to Section 5.04 (b): (i) conduct or engage in any discussions or negotiations with, disclose any non-public information relating to the Company or Parent or any of their respective Subsidiaries (if any) to, afford access to the business, properties, assets, books, or records of the Company or Parent or any of their respective Subsidiaries (if any) to, or knowingly assist, participate in, facilitate, or encourage any effort by, any third party (or its potential sources of financing) that is seeking to make, or has made, any Takeover Proposal; (ii) (A) except where the Company Board or Parent Board, as applicable, makes a good faith determination, after consultation with outside legal counsel, that the failure to do so would be inconsistent with its fiduciary duties, amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or Parent, as applicable, or any of their respective Subsidiaries (if any), or (B) approve any transaction under, or any third party becoming an “interested stockholder” under, Section 912 of the NYBCL; or (iii) enter into any agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement, or other Contract relating to any Takeover Proposal (each, an “Acquisition Agreement”). Except as expressly permitted by this Section 5.04, neither the Company Board shall effect a Company Adverse Recommendation Change, nor shall the Parent Board effect a Parent Adverse Recommendation Change. The Company on the one hand, and Parent, on the other hand, shall, and shall cause their respective Subsidiaries (if any) to cease immediately and cause to be terminated, and shall not authorize or knowingly permit any of its or their Representatives to continue, any and all existing activities, discussions, or negotiations, if any, with any third party conducted prior to the date hereof with respect to any Takeover Proposal and shall use its reasonable best efforts to cause any such third party (or its agents or advisors) in possession of non-public information in respect of the Company or Parent, as applicable, and any of their respective Subsidiaries(if any) that was furnished by or on behalf of such party or its respective Subsidiaries(if any) to return or destroy (and confirm destruction of) all such information.

(b) Superior Proposal. Notwithstanding Section 5.04(a), prior to the receipt of the Requisite Company Vote, the Company Board, on the one hand, and prior to the receipt of the Requisite Parent Vote, the Parent Board, on the other hand, directly or indirectly through any Representative, may, subject to Section 5.04 (c): (i) participate in negotiations or discussions with any third party that has made (and not withdrawn) a bona fide, unsolicited Takeover Proposal in writing that the Company Board or Parent Board, as applicable, believes in good faith, after consultation with outside legal counsel and, in the case of Parent, Parent’s financial advisor, as applicable, constitutes or would reasonably be expected to result in a Superior Proposal; (ii) thereafter furnish to such third party non-public information relating to such party or any of its respective Subsidiaries (if any) pursuant to an executed confidentiality agreement that constitutes an Acceptable Confidentiality Agreement (a copy of which confidentiality agreement shall be promptly (in all events within 24 hours) provided for informational purposes to the other party); (iii) following receipt of and on account of a Superior Proposal, make a Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable; and/or (iv) take any action that any court of competent jurisdiction orders such party to take (which order remains unstayed), but in each case referred to in the foregoing clauses (i) through (iv), only if the Company Board or Parent Board, as applicable, determines in good faith, after consultation with outside legal counsel, that the failure to take such action would reasonably be expected to cause it to be in breach of its fiduciary duties under applicable Law. Nothing contained herein shall prevent the Company Board or Parent Board, as applicable, from disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act, the Business Corporations Act (Alberta) or National Instrument 61-101, as applicable, with regard to a Takeover Proposal, if the party determines, after consultation with outside legal counsel, that failure to disclose such position would constitute a violation of applicable Law.

(c) Notification to Parent. The Company Board, on the one hand, and the Parent Board, on the other hand, shall not take any of the actions referred to in clauses (i) through (iv) of Section 5.04(b) unless such party shall have delivered to the other party a prior written notice advising the other party that it intends to take such action. The Company, on the one hand, and Parent, on the other hand, shall notify the other party promptly (but in no event later than 24 hours) after it obtains Knowledge of the receipt by the such party (or any of its Representatives) of any Takeover Proposal, any inquiry that could reasonably be expected to lead to a Takeover Proposal, any request for non-public information relating to such party or any of its Subsidiaries (if any) or for access to the business, properties, assets, books, or records of such party or any of its Subsidiaries (if any) by any third party. In such notice, such party shall identify the third party making, and details of the material terms and conditions of, any such Takeover Proposal, indication or request, including any proposed financing. Such party shall keep the other party fully informed, on a current basis, of the status and material terms of any such Takeover Proposal, indication or request, including any material amendments or proposed amendments as to price, proposed financing, and other material terms thereof. Such party shall provide the other party with at least 48 hours prior notice of any meeting of its board of directors, or any committee thereof (or such lesser notice as is provided to the members of such party’s board of directors or committee thereof) at which such party’s board of directors, or any committee thereof, is reasonably expected to consider any Takeover Proposal. Such party shall promptly provide the other party with a list of any non-public information concerning such party’s or any of its Subsidiaries’ (if any) business, present or future performance, financial condition, or results of operations, provided to any third party, and, to the extent such information has not been previously provided to the other party, copies of such information.

(d) Adverse Recommendation Change or Acquisition Agreement. Except as expressly permitted by this Section 5.04, neither the Company Board shall effect a Company Adverse Recommendation Change, nor shall the Parent Board effect a Parent Adverse Recommendation Change; or, in either case, enter into (or permit any of its respective Subsidiaries (if any) to enter into) an Acquisition Agreement. Notwithstanding the foregoing, at any time prior to the receipt of: (i) the Requisite Company Vote, the Company Board may effect a Company Adverse Recommendation Change or enter into (or permit any Subsidiary (if any) to enter into) an Acquisition Agreement; and (ii) the Requisite Parent Vote, the Parent Board may effect a Parent Adverse Recommendation Change or enter into (or permit any Subsidiary (if any) to enter into) an Acquisition Agreement, if (A) such party promptly notifies the other party, in writing, at least five Business Days (the “Superior Proposal Notice Period”) before making a Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, or entering into (or causing one of its Subsidiaries (if any) to enter into) an Acquisition Agreement, of its intention to take such action with respect to a Superior Proposal, which notice shall state expressly that such party has received a Takeover Proposal that such party’s board of directors (or a committee thereof) intends to declare a Superior Proposal and that it intends to effect a Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, and/or such party intends to enter into an Acquisition Agreement, (B) such party specifies the identity of the party making the Superior Proposal and the material terms and conditions thereof in such notice and includes an unredacted copy of the Takeover Proposal and attaches to such notice the most current version of any proposed agreement (which version shall be updated on a prompt basis) and any related documents, including financing documents, to the extent provided by the relevant party in connection with the Superior Proposal, (C) such party shall, and shall cause its Representatives to, during the Superior Proposal Notice Period, negotiate with the other party in good faith to make such adjustments in the terms and conditions of this Agreement so that such Takeover Proposal ceases to constitute a Superior Proposal, if the other party, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after commencement of the Superior Proposal Notice Period, there is any material revision to the terms of a Superior Proposal, including, any revision in price or financing, the Superior Proposal Notice Period shall be extended, if applicable, to ensure that at least three Business Days remains in the Superior Proposal Notice Period subsequent to the time such party notifies the other party of any such material revision (it being understood that there may be multiple extensions)), and (D) such party’s board of directors (or a committee thereof) determines in good faith, after consulting with outside legal counsel and, in the case of Parent, its financial advisor, that such Takeover Proposal continues to constitute a Superior Proposal after taking into account any adjustments made by the other party during the Superior Proposal Notice Period in the terms and conditions of this Agreement.

(e) Intervening Event. Notwithstanding anything to the contrary in the foregoing, in response to an Intervening Event that has occurred after the date of this Agreement: (i) but, in the case of the Company, prior to the receipt of the Requisite Company Vote, the Company Board may effect a Company Adverse Recommendation Change; and (ii) but, in the case of Parent, prior to the receipt of the Requisite Parent Vote, Parent may effect a Parent Adverse Recommendation Change; in each case, if (A) prior to effecting the Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, such party promptly notifies the other party, in writing, at least five Business Days (the “Intervening Event Notice Period”) before taking such action of its intent to consider such action (which notice shall not, by itself, constitute a Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable), and which notice shall include a reasonably detailed description of the underlying facts giving rise to, and the reasons for taking, such action, (B) such party shall, and shall cause its Representatives to, during the Intervening Event Notice Period, negotiate with the other party in good faith to make such adjustments in the terms and conditions of this Agreement so that the underlying facts giving rise to, and the reasons for taking such action, ceases to constitute an Intervening Event, if the other party, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after commencement of the Intervening Event Notice Period, there is any material development in an Intervening Event, the Intervening Event Notice Period shall be extended, if applicable, to ensure that at least three Business Days remains in the Intervening Event Notice Period subsequent to the time such party notifies the other party of any such material development (it being understood that there may be multiple extensions)), and (C) such party’s board of directors (or a committee thereof) determines in good faith, after consulting with outside legal counsel and, in the case of Parent, its financial advisor, that the failure to effect such Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, after taking into account any adjustments made by the other party during the Intervening Event Notice Period, would continue to constitute a breach of its fiduciary duties under applicable Law. The parties acknowledge and hereby agree that any Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, effected (or proposed to be effected) in response to or in connection with any Takeover Proposal may be made solely and exclusively pursuant to Section 5.04(d) only, and may not be made pursuant to this Section 5.04(e), and any Company Adverse Recommendation Change or Parent Adverse Recommendation Change, as applicable, may only be made pursuant to this Section 5.04 and no other provisions of this Agreement.

(f) The Company Shareholders identified on schedule 5.04 (f) shall have entered into voting agreements whereby they agree to vote for the Merger and the transactions contemplated thereby.

Section 5.05 Company Stockholder Approval. The Company shall take all action necessary to obtain the approval of the requisite shareholders of the Company as soon as reasonably practicable after the execution of this Agreement in accordance with the NYBCL and shall provide such notice as shall be required under the NYBCL to the stockholders of the Company in connection therewith. Subject to Section 5.04 hereof, the Company shall use reasonable best efforts to: (a) solicit from the holders of Company Common Stock consents in favor of the adoption of this Agreement and approval of the Merger; and (b) take all other actions necessary or advisable to secure the vote or consent of the holders of Company Common Stock required by applicable Law to obtain such approval. The Company shall keep Parent and Merger Sub updated with respect to the consent of shareholders owning a majority of the Common Stock of the Company as required by the NYBCL as requested by Parent or Merger Sub. Once the Company Stockholders have approved the Merger, the Company shall not postpone or adjourn the Merger without the consent of Parent (other than: (i) in order to obtain the approval of its stockholders; or (ii) as reasonably determined by the Company to comply with applicable Law). If the Company Board makes a Company Adverse Recommendation Change, it will not alter the obligation of the Company to submit the adoption of this Agreement and the approval of the Merger to the holders of Company Common Stock for their consent unless this Agreement shall have been terminated in accordance with its terms prior to sending the Information Statement.

Section 5.06 Approval by Sole Stockholder of Merger Sub. Approval by Sole Stockholder. Immediately following the execution and delivery of this Agreement, Parent, as sole stockholder of Merger Sub, shall adopt this Agreement and approve the Merger, in accordance with the NYBCL.

Section 5.07 Notices of Certain Events; Stockholder Litigation; No Effect on Disclosure Letters.

(a) Notices of Certain Events. The Company shall notify Parent and the Merger Sub, and Parent and Merger Sub shall notify the Company, promptly of: (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and (iii) any event, change, or effect between the date of this Agreement and the Effective Time which causes or is reasonably likely to cause the failure of the conditions set forth in Section 6.02(a), Section 6.02(b), or Section 6.02(d)of this Agreement (in the case of the Company) or Section 6.03(a), Section 6.03(b), or Section 6.03(c) of this Agreement (in the case of Parent and Merger Sub), to be satisfied.

(b) Stockholder Litigation. The Company shall promptly advise Parent in writing after becoming aware of any Legal Action commenced, or to the Company’s Knowledge threatened, after the date hereof against the Company or any of its directors by any stockholder of the Company (on their own behalf or on behalf of the Company) relating to this Agreement or the transactions contemplated hereby (including the Merger) and shall keep Parent reasonably informed regarding any such Legal Action. The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such stockholder litigation and shall consider Parent’s views with respect to such stockholder litigation and shall not settle any such stockholder litigation without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed, or conditioned).

(c) No Effect on Disclosure Letters. In no event shall: (i) the delivery of any notice by a party pursuant to this Section Section 5.07 limit or otherwise affect the respective rights, obligations, representations, warranties, covenants, or agreements of the parties or the conditions to the obligations of the parties under this Agreement; (ii) disclosure by the Company be deemed to amend or supplement the Company Disclosure Letter or constitute an exception to the Company’s representations or warranties; or (iii) disclosure by Parent be deemed to amend or supplement the Parent Disclosure Letter or constitute an exception to Parent’s or Merger Sub’s representations or warranties. This Section Section 5.07 shall not constitute a covenant or agreement for purposes of Section 6.02(b) or Section 6.03(b).

Section 5.08 Employees; Benefit Plans.

(a) Comparable Salary and Benefits. During the period commencing at the Effective Time and ending on the date which is twelve months from the Effective Time (or if earlier, the date of the employee’s termination of employment with Parent and its Subsidiaries), and to the extent consistent with the terms of the governing plan documents, Parent shall cause the Surviving Entity and each of its Subsidiaries, as applicable, to provide the employees of the Company and its Subsidiaries who remain employed immediately after the Effective Time (collectively, the “Company Continuing Employees”) with annual base salary or wage level, annual target bonus opportunities (excluding equity-based compensation), and employee benefits (excluding any retiree health or defined benefit retirement benefits) that are, in the aggregate, no less favorable than the annual base salary or wage level, annual target bonus opportunities (excluding equity-based compensation), and employee benefits (excluding any retiree health or defined benefit retirement benefits) provided by the Company on the date of this Agreement.

(b) Crediting Service. With respect to any “employee benefit plan” as defined in Section 3(3) of ERISA maintained by Parent or any of its Subsidiaries, excluding any retiree health plans or programs maintained by Parent or any of its Subsidiaries, any defined benefit retirement plans or programs maintained by Parent or any of its Subsidiaries, and any equity compensation arrangements maintained by Parent or any of its Subsidiaries (collectively, “Parent Benefit Plans”) in which any Company Continuing Employees will participate effective as of the Effective Time, and subject to the terms of the governing plan documents, Parent shall, or shall cause the Surviving Entity to, credit all service of the Company Continuing Employees with the Company, as if such service were with Parent, for purposes of eligibility to participate (but not for purposes of vesting or benefit accrual, except for vacation, if applicable) for full or partial years of service in any Parent Benefit Plan in which such Company Continuing Employees may be eligible to participate after the Effective Time; provided, that such service shall not be credited to the extent that: (i) such crediting would result in a duplication of benefits; or (ii) such service was not credited under the corresponding Company Employee Plan.

(c) Employees Not Third-Party Beneficiaries. This Section 08 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 5.08, express or implied, shall confer upon any Company Employee, any beneficiary, or any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 5.08. Nothing contained herein, express or implied: (i) shall be construed to establish, amend, or modify any benefit plan, program, agreement, or arrangement; (ii) shall alter or limit the ability of the Surviving Entity, Parent, or any of their respective Affiliates to amend, modify, or terminate any benefit plan, program, agreement, or arrangement at any time assumed, established, sponsored, or maintained by any of them; or (iii) shall prevent the Surviving Entity, Parent, or any of their respective Affiliates from terminating the employment of any Company Continuing Employee following the Effective Time. The parties hereto acknowledge and agree that the terms set forth in this Section 5.08 shall not create any right in any Company Employee or any other Person to any continued employment with the Surviving Entity, Parent, or any of their respective Subsidiaries (if any) or compensation or benefits of any nature or kind whatsoever, or otherwise alters any existing at-will employment relationship between any Company Employee and the Surviving Entity.

(d) Prior Written Consent. With respect to matters described in this Section 5.08, the Company will not send any written notices or other written communication materials to Company Employees without the prior written consent of Parent.

Section 5.09 Company Directors’ and Officers’ Indemnification.

(a) Indemnification. Parent and Merger Sub agree that all rights to indemnification, advancement of expenses, and exculpation by the Company now existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time an officer or director of the Company (each an “Company Indemnified Party”) as provided in the Charter Documents of the Company, in each case as in effect on the date of this Agreement, or pursuant to any other Contracts in effect on the date hereof and disclosed in Section 5.09 of the Company Disclosure Letter, shall be assumed by the Surviving Entity in the Merger, without further action, and shall survive the Merger and shall remain in full force and effect in accordance with their terms. For a period of six (6) years from the Effective Time, the Surviving Entity shall, and Parent shall cause the Surviving Entity to, maintain in effect the exculpation, indemnification, and advancement of expenses equivalent to the provisions of the Charter Documents of the Company as in effect immediately prior to the Effective Time with respect to acts or omissions by any Company Indemnified Party occurring prior to the Effective Time, and shall not amend, repeal, or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any Company Indemnified Party; provided that all rights to indemnification in respect of any claim made for indemnification within such period shall continue until the disposition of such action or resolution of such claim.

(b) RESERVED.

(c) Assumptions by Successors and Assigns; No Release or Waiver. In the event Parent, the Surviving Entity, or any of their respective successors or assigns: (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger; or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Entity, as the case may be, shall assume all of the obligations set forth in this Section 5.09. The agreements and covenants contained herein shall not be deemed to be exclusive of any other rights to which any Indemnified Party is entitled, whether pursuant to Law, Contract, or otherwise. Nothing in this Agreement is intended to, shall be construed to, or shall release, waive, or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors, and employees, it being understood and agreed that the indemnification provided for in this Section 5.09 is not prior to, or in substitution for, any such claims under any such policies.

Section 5.10 Public Announcements. The initial press release with respect to this Agreement and the transactions contemplated hereby shall be a release mutually agreed to by the Company and Parent. Thereafter, each of the Company, Parent and Merger Sub agrees that no public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior written consent of the Company and Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), except as may be required by applicable Law or the rules or regulations of any applicable securities exchange or other Governmental Entity to which the relevant party is subject or submits, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other party reasonable time to comment on such release or announcement in advance of such issuance. Notwithstanding the foregoing, the restrictions set forth in this Section 5.10 shall not apply to any release or announcement made or proposed to be made in connection with and related to: (a) a Company Adverse Recommendation Change; (b) a Parent Adverse Recommendation Change; or (c) any disclosures made in compliance with Section 5.04.

Section 5.11 Anti-Takeover Statutes. If any “control share acquisition,” “fair price,” “moratorium,” or other anti-takeover Law becomes or is deemed to be applicable to Parent, Merger Sub, the Company, the Merger, or any other transaction contemplated by this Agreement, then each of the Company and the Company Board on the one hand, and Parent and the Parent Board on the other hand, shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover Law inapplicable to the foregoing.

Section 5.12 Stock Exchange Matters.

(a) Listing of Parent Common Stock. Parent shall use its best efforts to cause the shares of Parent Common Stock to be issued in connection with the Merger to be listed on the TSVX (or such other stock exchange as may be mutually agreed upon by the Company and Parent), subject to official notice of issuance, prior to the Effective Time.

(b) Delisting. To the extent requested by Parent, prior to the Effective Time, the Company shall cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws and the rules and policies of OTCQB to enable the delisting by the Surviving Entity of the shares of Company Common Stock from the OTCQB.

Section 5.13 Obligations of Merger Sub. Parent will take all action necessary to cause Merger Sub to perform their respective obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement.

Section 5.14 Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments, or assurances and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect, or confirm of record or otherwise in the Surviving Entity any and all right, title, and interest in, to and under any of the rights, properties, or assets of the Company acquired or to be acquired by the Surviving Entity as a result of, or in connection with, the Merger.

Article VI
Conditions

Section 6.01 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of each party to this Agreement to effect the Merger is subject to the satisfaction or waiver (where permissible pursuant to applicable Law) on or prior to the Closing Date of each of the following conditions:

(a) Company Stockholder Approval. This Agreement will have been duly adopted by the Requisite Company Vote.

(b) Parent Stockholder Approval. The Merger shall have been approved by the Parent as the sole stockholder of Merger Sub.

(c) Listing. The shares of Parent Common Stock issuable as Merger Consideration pursuant to this Agreement shall have been approved for listing on the TSVX, subject to official notice of issuance.

(d) No Injunctions, Restraints, or Illegality. No Governmental Entity having jurisdiction over any party hereto shall have enacted, issued, promulgated, enforced, or entered any Laws or Orders, whether temporary, preliminary, or permanent, that make illegal, enjoin, or otherwise prohibit consummation of the Merger, the Parent Stock Issuance, or the other transactions contemplated by this Agreement.

(e) Governmental Consents. All consents, approvals and other authorizations of any Governmental Entity set forth in Section 6.01 of the Company Disclosure Letter and Section 6.01 of the Parent Disclosure Letter and required to consummate the Merger, the Parent Stock Issuance, and the other transactions contemplated by this Agreement shall have been obtained, free of any condition that would reasonably be expected to have a Company Material Adverse Effect or Parent Material Adverse Effect.

(f) Escrow Agreement. The Escrow Agreement shall have been duly executed by each of Seller Parent, Representative, and Buyer’s Counsel (as the escrow agent thereunder).

(g) Company Dividend. A dividend by the Company, if authorized for issuance and declared by the Company, in its sole discretion, shall have been issued and paid to each holder of Company Common Stock as of the date that such dividend is declared (the “Company Dividend.”)

Section 6.02 Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are also subject to the satisfaction or waiver (where permissible pursuant to applicable Law) by Parent and the Merger Sub on or prior to the Effective Time of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of the Company (other than in Section 3.01(a), Section 3.02, Section 3.03(a), Section 3.03(b), Section 3.03(d), Section 3.03(e), and Section 3.05(a)) set forth in Article III of this Agreement shall be true and correct in all respects (without giving effect to any limitation indicated by the words “Company Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,” or “materially”) when made, and also on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; (ii) the representations and warranties of the Company contained in Section 3.02 shall be true and correct (other than de minimis inaccuracies) when made and on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all material respects as of that date); and (iii) the representations and warranties contained in Section 3.01(a), Section 3.03(a), Section 3.03(b), Section 3.03(d), Section 3.03(e), and Section 3.05(a), shall be true and correct in all respects when made and on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date).

(b) Performance of Covenants. The Company shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, in this Agreement required to be performed by or complied with by it at or prior to the Closing Date.

(c) Lock-Ups and Leak-Outs. Geng shall have entered into a lock up agreement whereby any shares of Parent Common Stock owned by Geng shall not be sold or disposed of for a period of twelve (12) months following the Closing in the form attached as Exhibit 6.02(c)-1. Each other holder of more than 5% of the Company’s Common Stock as identified on Schedule 6.02(c) shall have entered into a leak-out agreement whereby they are prohibited from selling more than 5% of the trailing thirty (30) day average volume on any given day during the first 6 months following the Closing and no more than ten percent (10%) of the trailing thirty (30) day average volume during the following six (6) months after Closing in the form attached as Exhibit 6.02(c)-2.

(d) Company Material Adverse Effect. Since the date of this Agreement, there shall not have been any Company Material Adverse Effect.

(e) Officers Certificate. Parent will have received a certificate, signed by the chief executive officer or chief financial officer of the Company, certifying as to the matters set forth in Section 6.02 Section 6.02(b), and Section 6.02(d) hereof.

(f) PPP Escrow. The PPP Escrow shall have been consummated.

(g) Delisting. On the Closing Date and at the time of the Closing, the Company and the Parent shall cause the Company to delist from an exchange on which the Company’s stock is publically traded prior to Closing.

(h) Shareholder Support Agreement. The Company shall have entered in the Shareholder Support Agreement with each of the Converting Shareholders.

Section 6.03 Conditions to Obligation of the Company. The obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company on or prior to the Effective Time of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of Parent and Merger Sub (other than in Section 4.01(a), Section 4.02(a), Section 4.03(a), Section 4.03(b)), Section 4.03(d), Section 4.05, and Section Section 4.10 set forth in ARTICLE IV of this Agreement) shall be true and correct in all respects (without giving effect to any limitation indicated by the words “Parent Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,” or “materially”) when made and on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; (ii) the representations and warranties of Parent and Merger Sub contained in Section 4.02(a) shall be true and correct (other than de minimis inaccuracies) when made and on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all material respects as of that date); and (iii) the representations and warranties contained in Section 4.01(a), Section 4.03(a), Section 4.03(b), Section 4.03(d), Section 4.05, and Section Section 4.10 shall be true and correct in all respects when made and on and as of the Closing Date, as if made on and as of such date (except those representations and warranties that address matters only as of a particular date, which shall be true and correct in all respects as of that date).

(b) Performance of Covenants. Parent and Merger Sub shall have performed in all material respects all obligations, and complied in all material respects with the agreements and covenants, of this Agreement required to be performed by or complied with by them at or prior to the Closing Date.

(c) Parent Material Adverse Effect. Since the date of this Agreement, there shall not have been any Parent Material Adverse Effect.

(d) Share Consideration Listing. The Share Consideration shall be listed on the TSVX.

(e) Officers Certificate. The Company will have received a certificate, signed by an officer of Parent, certifying as to the matters set forth in Section 6.03(a), Section 6.03(b), and Section 6.03(c).

(f) Employment Agreements; Offer Letters. The Parent shall have entered into (i) an employment agreement with Geng for a term of one (1) year from the Effective Time. In addition, certain key employees of the Company identified on Schedule 6.03(f) (each, a “Key Employee”), shall have entered into binding offer letters with the Parent, effective as of the Effective Time (the “Offer Letters”).

(g) Financing Contingency. Between the Execution Date and the Closing Date, Parent shall have consummated a fundraise of at least CAD $15,000,000 of additional capital (excluding conversion of any outstanding convertible debt or other instrument).

(h) Merger Sub Board Representation. Parent shall have taken sufficient steps to ensure that each of (i) Raj Grover, Rahim Kanji and Geng shall have been appointed as directors of Merger Sub (the “Merger Sub Directors”), conditioned, if at all, only on the Closing.

Section 6.04 Post-Closing Covenants of the Parties. In further consideration of the premises, representations and warranties and the covenants and agreements contained herein and other good and valuable consideration, the parties hereto hereby agree as follows:

(a) Employment Agreements. Within sixty (60) days post-Closing, each Key Employee shall be offered employment agreements with the Parent, Merger Sub the appropriate Parent Subsidiary, consistent with the Offer Letters and otherwise on terms substantially similar to those contained in the employment agreement with Geng except with respect to the amount of cash and the amount of equity compensation.

(b) Filing of Thread Cartel Certificate of Merger and Related Actions. Immediately after the Closing, the Surviving Entity, as the predecessors in interest to the Company, and Parent, will work together diligently to cause the Certificate of Merger and dissolution of Thread Cartel, Inc. to be filed with the Secretary of State of the State of Georgia, and to take all other actions to change the name of all bank accounts in Thread Cartel, Inc.’s name to Smoke Cartel USA, INC. Accordingly, the Company will prepare all necessary documentation to effectuate such filings and allow the Parent to review such documentation prior to Closing.

Article VII
Termination, Amendment, and Waiver

Section 7.01 Termination by Mutual Consent. This Agreement may be terminated at any time prior to the Effective Time (whether before or after the receipt of the Requisite Company Vote or the Requisite Parent Vote) by the mutual written consent of Parent and the Company.

Section 7.02 Termination by Either Parent or the Company. This Agreement may be terminated by either Parent or the Company at any time prior to the Effective Time (whether before or after the receipt of the Requisite Company Vote or the Requisite Parent Vote):

(a) if the Merger shall not have been consummated on or prior to 5:00 p.m., Eastern Time, on March 31, 2021 (the “End Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 7.02(a) shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in this Agreement has been the cause of, or resulted in, the failure of the Merger to be consummated on or before the End Date. The Parties mutually covenant to use their reasonable best efforts to consummate the Closing by March 1, 2021;

(b) if any Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any Law or Order making illegal, permanently enjoining, or otherwise permanently prohibiting the consummation of the Merger, the Parent Stock Issuance, or the other transactions contemplated by this Agreement, and such Law or Order shall have become final and nonappealable; provided, however, that the right to terminate this Agreement pursuant to this Section 7.02(b) shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in this Agreement has been the cause of, or resulted in, the issuance, promulgation, enforcement, or entry of any such Law or Order; or

(c) if this Agreement has been submitted to the stockholders of the Company for adoption at a duly convened Company stockholders meeting and the Requisite Company Vote shall not have been obtained at such meeting (unless such Company stockholders meeting has been adjourned or postponed, in which case at the final adjournment or postponement thereof);

Section 7.03 Termination by Parent. This Agreement may be terminated by Parent at any time prior to the Effective Time:

(a) if: (i) a Company Adverse Recommendation Change shall have occurred; or (ii) the Company shall have breached or failed to perform in any material respect any of its covenants and agreements set forth in Section 5.04; or

(b) if there shall have been a breach or failure of any representation, warranty, covenant, or agreement on the part of the Company set forth in this Agreement such that the conditions to the Closing of the Merger set forth in Section 6.02(a) or Section 6.02(b), as applicable, would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided, that Parent shall have given the Company at least thirty (30) days written notice prior to such termination stating Parent’s intention to terminate this Agreement pursuant to this Section 7.03(b) provided further, that Parent shall not have the right to terminate this Agreement pursuant to this Section 7.03(b) if Parent or Merger Sub is then in material breach of any representation, warranty, covenant, or obligation hereunder, which breach has not been cured.

Section 7.04 Termination by the Company. This Agreement may be terminated by the Company at any time prior to the Effective Time:

(a) if prior to the receipt of the Requisite Company Vote, the Company Board authorizes the Company, to the extent permitted by and subject to full compliance with the applicable terms and conditions of this Agreement, including Section 5.04 hereof, to enter into an Acquisition Agreement (other than an Acceptable Confidentiality Agreement) in respect of a Superior Proposal; provided, that the Company shall have paid any amounts due pursuant to Section 7.06(b) hereof in accordance with the terms, and at the times, specified therein; and provided further, that in the event of such termination, the Company substantially concurrently enters into such Acquisition Agreement; or

(b) if there shall have been a breach of any representation, warranty, covenant, or agreement on the part of Parent or Merger Sub set forth in this Agreement such that the conditions to the Closing of the Merger set forth in Section 6.03(a) or Section 6.03(b), as applicable, would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided, that the Company shall have given Parent at least 30 days written notice prior to such termination stating the Company’s intention to terminate this Agreement pursuant to this Section 7.04(b); provided further, that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.04(b) if the Company is then in material breach of any representation, warranty, covenant, or obligation hereunder, which breach has not been cured.

Section 7.05 Notice of Termination; Effect of Termination. The party desiring to terminate this Agreement pursuant to this Article VII (other than pursuant to Section 7.01) shall deliver written notice of such termination to each other party hereto specifying with particularity the reason for such termination, and any such termination in accordance with this Section 7.05 shall be effective immediately upon delivery of such written notice to the other party. If this Agreement is terminated pursuant to this Article VII, it will become void and of no further force and effect, with no liability on the part of any party to this Agreement (or any stockholder, director, officer, employee, agent, or Representative of such party) to any other party hereto, except: (a) with respect to Section 5.03(b), this Section 7.05, Section 7.06, and Article VIII (and any related definitions contained in any such Sections or Article), which shall remain in full force and effect; and (b) with respect to any liabilities or damages incurred or suffered by a party, to the extent such liabilities or damages were the result of fraud or the breach by another party of any of its representations, warranties, covenants, or other agreements set forth in this Agreement.

Section 7.06 Fees and Expenses Following Termination.

(a) If this Agreement is terminated by: (i) Parent pursuant to Section 7.03(a), then the Company shall pay to Parent (by wire transfer of immediately available funds), within two Business Days after such termination, a fee in an amount equal to $500,000 (the “Company Termination Fee”) on or prior to the termination of this Agreement; and (ii) the Company pursuant to Section 7.04(b), then Parent shall pay to the Company (by wire transfer of immediately available funds), at or prior to such termination, the sum of $500,000 (the “Parent Termination Fee”) on or prior to the termination of this Agreement;

(b) The parties acknowledge and hereby agree that the provisions of this Section 7.06 are an integral part of the transactions contemplated by this Agreement (including the Merger), and that, without such provisions, the parties would not have entered into this Agreement. If the Company, on the one hand, or Parent and Merger Sub, on the shall fail to pay in a timely manner the amounts due pursuant to this Section 7.06, and, in order to obtain such payment, the other party makes a claim against the non-paying party that results in a judgment, the non-paying party shall pay to the other party the reasonable costs and expenses (including its reasonable attorneys’ fees and expenses) incurred or accrued in connection with such suit, together with interest on the amounts set forth in this Section 7.06 at the prime rate as published in The Wall Street Journal in effect on the date such payment was actually received, or a lesser rate that is the maximum permitted by applicable Law. The parties acknowledge and agree that in no event shall the Company be obligated to pay the Company Termination Fee, or Parent the Parent Termination Fee, on more than one occasion.

(c) Except as expressly set forth in this Section 7.06, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such Expenses.

Section 7.07 Amendment. At any time prior to the Effective Time, this Agreement may be amended or supplemented in any and all respects, whether before or after receipt of the Requisite Company Vote , by written agreement signed by each of the parties hereto; provided, however, that following the receipt of the Requisite Company Vote, there shall be no amendment or supplement to the provisions of this Agreement which by Law would require further approval by the holders of Company Common Stock without such approval.

Section 7.08 Extension; Waiver. At any time prior to the Effective Time, Parent or Merger Sub, on the one hand, or the Company, on the other hand, may: (a) extend the time for the performance of any of the obligations of the other party(ies); (b) waive any inaccuracies in the representations and warranties of the other party(ies) contained in this Agreement or in any document delivered under this Agreement; or (c) unless prohibited by applicable Law, waive compliance with any of the covenants, agreements, or conditions contained in this Agreement. Any agreement on the part of a party to any extension or waiver will be valid only if set forth in an instrument in writing signed by such party. The failure of any party to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights.

Article VIII
Miscellaneous

Section 8.01 Definitions. For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters:

“Acceptable Confidentiality Agreement” means a confidentiality and standstill agreement that contains confidentiality and standstill provisions that are no less favorable to a party hereof than those contained in the Confidentiality Agreement.

“Acquisition Agreement” has the meaning set forth in Section 5.04(a).

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such first Person. For the purposes of this definition, “control” (including, the terms “controlling,” “controlled by,” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract, or otherwise.

“Affordable Care Act” means the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act (HCERA).

“Agreement” has the meaning set forth in the Preamble.

“Antitrust Laws” has the meaning set forth in Section 3.03(c).

“Associate” has the meaning set forth in Section 912(a)(3) of the NYBCL.

“Book-Entry Share” has the meaning set forth in Section 2.01(c).

“Business Day” means any day, other than Saturday, Sunday, or any day on which banking institutions located in New York, New York are authorized or required by Law or other governmental action to close.

“Cancelled Shares” has the meaning set forth in Section 2.01(a).

“Cash Consideration” has the meaning set forth in Section 2.01(b).

“Certificate” has the meaning set forth in Section 2.01(c).

“Charter Documents” means: (a) with respect to a corporation, the charter, articles of incorporation, as applicable, and bylaws thereof; (b) with respect to a limited liability company, the certificate of formation or organization, as applicable, and the operating or limited liability company agreement, as applicable, thereof; (c) with respect to a partnership, the certificate of formation and the partnership agreement; and (d) with respect to any other Person the organizational, constituent and/or governing documents and/or instruments of such Person.

“Closing” has the meaning set forth in Section 1.02.

“Closing Date” has the meaning set forth in Section 1.02.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Section 4980B of the Code and Section 601 et. seq. of ERISA.

“Code” has the meaning set forth in the Recitals.

“Company” has the meaning set forth in the Preamble.

“Company Adverse Recommendation Change” means the Company Board: (a) failing to make, withdraw, amend, modify, or materially qualify, in a manner adverse to Parent, the Company Board Recommendation; (b) failing to prepare and distribute the Information statement to the Company’s stockholders after obtaining the requisite approval of the majority of the Company’s stockholders.; (c) recommending a Takeover Proposal; (d) failing to recommend against acceptance of any tender offer or exchange offer for the shares of Company Common Stock within ten Business Days after the commencement of such offer; (e) failing to reaffirm (publicly, if so requested by Parent) the Company Board Recommendation within ten Business Days after the date any Takeover Proposal (or material modification thereto) is first publicly disclosed by the Company or the Person making such Takeover Proposal; (f) making any public statement inconsistent with the Company Board Recommendation; or (g) resolving or agreeing to take any of the foregoing actions.

“Company Balance Sheet” has the meaning set forth in Section 3.04(d).

“Company Board” has the meaning set forth in the Recitals.

“Company Board Recommendation” has the meaning set forth in Section 3.04(d).

“Company Common Stock” has the meaning set forth in the Recitals.

“Company Continuing Employees” has the meaning set forth in Section Section 5.08(a).

“Company Disclosure Letter” means the disclosure letter, dated as of the date of this Agreement and delivered by the Company to Parent concurrently with the execution of this Agreement.

“Company Employee” has the meaning set forth in Section Section 3.11(a).

“Company Employee Plans” has the meaning set forth in Section Section 3.11(a)).

“Company ERISA Affiliate” means all employers, trades, or businesses (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a “single employer” within the meaning of Section 414 of the Code.

“Company Indemnified Party” has the meaning set forth in Section 5.09(a).

“Company IP” has the meaning set forth in Section 3.07(b).

“Company IP Agreement” means any licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions, and other Contracts, whether written or oral, relating to Intellectual Property and to which the Company is a party, beneficiary, or otherwise bound.

“Company Material Adverse Effect” means any event, occurrence, fact, condition, or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to: (a) the business, results of operations, condition (financial or otherwise), or assets of the Company; or (b) the ability of the Company to consummate the transactions contemplated hereby on a timely basis; provided, however, that, a Company Material Adverse Effect shall not be deemed to include events, occurrences, facts, conditions or changes arising out of, relating to, or resulting from: (i) changes generally affecting the economy, financial or securities markets, or political conditions; (ii) the execution and delivery, announcement, or pendency of the transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, of the Company with employees, suppliers, customers, Governmental Entities, or other third Persons (it being understood and agreed that this clause shall not apply with respect to any representation or warranty that is intended to address the consequences of the announcement or the pendency of this Agreement); (iii) any changes in applicable Law or GAAP or other applicable accounting standards, including interpretations thereof, (iv) acts of war or terrorism, or military actions, or the escalation thereof; (v) natural disasters, or weather conditions, epidemics, pandemics, or disease outbreaks (including the COVID-19 virus)/public health emergencies (as declared by the World Health Organization or the Health and Human Services Secretary of the United States), or other force majeure events; (vi) general conditions in the industry in which the Company operates; (vii) any failure, in and of itself, by the Company to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a Company Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); (viii) any change, in and of itself, in the market price or trading volume of the Company’s securities (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a Company Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); or (ix) actions taken as required or specifically permitted by the Agreement or actions or omissions taken with Parent’s consent; provided further, however, that any event, change, and effect referred to in clauses (i), (iii), (iv), (v), or (vi) immediately above shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change, or effect has a disproportionate effect on the Company, compared to other participants in the industries in which the Company conducts its businesses.

“Company Material Contract” has the meaning set forth in Section Section 3.14(a).

“Company-Owned IP” means all Intellectual Property owned by the Company.

“Company OTC Documents” has the meaning set forth in Section 3.04(a).

“Company Securities” has the meaning set forth in Section 3.02(b)(i).

“Confidentiality Agreement” has the meaning set forth in Section 5.03(b).

“Consent” has the meaning set forth in Section 3.03(c).

“Contracts” means any contracts, agreements, licenses, notes, bonds, mortgages, indentures, leases, or other binding instruments or binding commitments, whether written or oral.

“Damages” means all losses, damages, liabilities and claims, and fees, costs and expenses of any kind related thereto, provided that notwithstanding anything to the contrary contained in this Agreement, Damages shall not include lost profits, lost revenue, diminutions in value, lost anticipated savings or consequential, special, incidental, indirect or punitive damages.

“Dissenting Shares” has the meaning set forth in Section 2.03.

“Effective Time” has the meaning set forth in Section 1.03.

“End Date” has the meaning set forth in Section 7.02(a).

“Environmental Laws” means any applicable Law, and any Order or binding agreement with any Governmental Entity: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq, the Canadian Environmental Protection Act, as amended, the Environmental Protection Act (Alberta), as amended, and its equivalents.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agreement” means that certain escrow agreement, by and among High Tide, Inc., Geng, the Shareholder Representative, and Sichenzia Ross Ference LLP as Escrow Agent, in substantially the form agreed to by the parties thereto as of the Execution Date.

“Exchange Act” has the meaning set forth in Section 3.03(c).

“Exchange Agent” has the meaning set forth in Section 2.02(a).

“Exchange Fund” has the meaning set forth in Section 2.02(a).

“Expenses” means, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors, and investment bankers of such Person and its Affiliates), incurred by such Person or on its behalf in connection with or related to the authorization, preparation, negotiation, execution, and performance of this Agreement and any transactions related thereto, any litigation with respect thereto, the preparation, printing, filing, and mailing of the Joint Proxy Statement and Form S-4, the filing of any required notices under the HSR Act or any non-US similar or equivalent Laws, or in connection with other regulatory approvals, and all other matters related to the Merger, the Parent Stock Issuance, and the other transactions contemplated by this Agreement.

“Certificate of Merger” has the meaning set forth in Section 1.03.

“GAAP” has the meaning set forth in Section 3.04(b).

“Governmental Entity” has the meaning set forth in Section 3.03(c).

“Hazardous Substance” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral, or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Intellectual Property” means any and all of the following arising pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, and similar indicia of source or origin, all registrations and applications for registration thereof, and the goodwill connected with the use of and symbolized by the foregoing; (b) copyrights and all registrations and applications for registration thereof; (c) trade secrets and know-how; (d) patents and patent applications; (e) internet domain name registrations; and (f) other intellectual property and related proprietary rights.

“Intervening Event” means with respect to Parent or the Company, as applicable, any material event, circumstance, change, effect, development, or condition occurring or arising after the date hereof that was not known to, nor reasonably foreseeable by, any member of such party’s board of directors, as of or prior to the date hereof and did not result from or arise out of the announcement or pendency of, or any actions required to be taken by such party (or to be refrained from being taken by such party) pursuant to, this Agreement; provided, however, that in no event shall the following events, circumstances, or changes in circumstances constitute an Intervening Event: (a) the receipt, existence, or terms of a Takeover Proposal or any matter relating thereto or consequence thereof or any inquiry, proposal, offer, or transaction from any third party relating to or in connection with a transaction of the nature described in the definition of “Takeover Proposal” (which, for the purposes of the Intervening Event definition, shall be read without reference to the percentage thresholds set forth in the definition thereof); (b) any change in the price, or change in trading volume, of the Company Common Stock or Parent Common Stock (provided, however, that the exception to this clause (b) shall not apply to the underlying causes giving rise to or contributing to such change or prevent any of such underlying causes from being taken into account in determining whether an Intervening Event has occurred).

“Intervening Event Notice Period” has the meaning set forth in Section 5.04(e).

“IRS” means the United States Internal Revenue Service.

“Knowledge” means: (a) with respect to the Company, the actual knowledge of each of the individuals listed in Section 8.01 of the Company’s Disclosure Letter; and (b) with respect to Parent and its Subsidiaries, the actual knowledge of each of the individuals listed in Section 8.01 of the Parent’s Disclosure Letter; in each case, after due inquiry.

“Laws” means any federal, state, local, municipal, foreign, multi-national or other laws, common law, statutes, constitutions, ordinances, rules, regulations, codes, Orders, or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered, or applied by any Governmental Entity.

“Lease” means all leases, subleases, licenses, concessions, and other agreements (written or oral) under which the Company holds any Leased Real Estate, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company thereunder.

“Leased Real Estate” means all leasehold or subleasehold estates and other rights to use or occupy any Real Estate held by the Company.

“Legal Action” means any legal, administrative, arbitral, or other proceedings, suits, actions, investigations, examinations, claims, audits, hearings, charges, complaints, indictments, litigations, or examinations.

“Liability” means any liability, indebtedness, or obligation of any kind (whether accrued, absolute, contingent, matured, unmatured, determined, determinable, or otherwise, and whether or not required to be recorded or reflected on a balance sheet under GAAP).

“Liens” means, with respect to any property or asset, all pledges, liens, mortgages, charges, encumbrances, hypothecations, options, rights of first refusal, rights of first offer, and security interests of any kind or nature whatsoever.

“Maximum Premium” has the meaning set forth in Section 5.09(a).

“Merger” has the meaning set forth in the Recitals.

“Merger Consideration” has the meaning set forth in Section 2.01(b).

“Merger Sub” has the meaning set forth in the Preamble.

“Merger Sub Board” has the meaning set forth in the Recitals.

“Order” has the meaning set forth in Section 3.09.

“Parent” has the meaning set forth in the Preamble.

“Parent Adverse Recommendation Change” means the Parent Board: (a) recommending a Takeover Proposal; (b) failing to recommend against acceptance of any tender offer or exchange offer for the shares of Parent Common Stock within ten Business Days after the commencement of such offer; or (c) resolving or agreeing to take any of the foregoing actions.

“Parent Balance Sheet” has the meaning set forth in Section 4.04(c).

“Parent Benefit Plans” has the meaning set forth in Section Section 5.08(b).

“Parent Board” has the meaning set forth in the Recitals.

“Parent Common Stock” has the meaning set forth in the Recitals.

“Parent Disclosure Letter” means the disclosure letter, dated as of the date of this Agreement and delivered by Parent and Merger Sub to the Company concurrently with the execution of this Agreement.

“Parent Equity Award” means a Parent Stock Option or a Parent Restricted Share, as the case may be.

“Parent Material Adverse Effect” means any event, occurrence, fact, condition, or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to: (a) the business, results of operations, condition (financial or otherwise), or assets of Parent and its Subsidiaries, taken as a whole; or (b) the ability of Parent to consummate the transactions contemplated hereby on a timely basis; provided, however, that, for the purposes of clause (a), a Parent Material Adverse Effect shall not be deemed to include events, occurrences, facts, conditions, or changes arising out of, relating to, or resulting from: (i) changes generally affecting the economy, financial or securities markets, or political conditions; (ii) the execution and delivery, announcement, or pendency of the transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, of the Parent and its Subsidiaries with employees, suppliers, customers, Governmental Entities, or other third Persons (it being understood and agreed that this clause shall not apply with respect to any representation or warranty that is intended to address the consequences of the execution and delivery of this Agreement or the announcement or the pendency of this Agreement); (iii) any changes in applicable Law or applicable accounting standards, including interpretations thereof, (iv) any outbreak or escalation of war or any act of terrorism, (v) natural disasters, or weather conditions, epidemics, pandemics, or disease outbreaks (including the COVID-19 virus)/public health emergencies (as declared by the World Health Organization or the Health and Human Services Secretary of the United States), or other force majeure events; (vi) general conditions in the industry in which Parent and its Subsidiaries operate; (vii) any failure, in and of itself, by Parent to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a Parent Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); (viii) any change, in and of itself, in the market price or trading volume of Parent’s securities (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a Parent Material Adverse Effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); or (ix) actions taken as required or specifically permitted by the Agreement or actions or omissions taken with the Company’s consent; provided further, however, that any event, change, and effect referred to in clauses (i), (iii), (iv), (v), or (vi) immediately above shall be taken into account in determining whether a Parent Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change, or effect has a disproportionate effect on Parent and its Subsidiaries, taken as a whole, compared to other participants in the industries in which Parent and its Subsidiaries conduct their businesses.

“Parent Restricted Share” means any Parent Common Stock subject to vesting, repurchase, or other lapse of restrictions granted under any Parent Stock Plan.

“Parent Public Documents” has the meaning set forth in Section 4.04(a).

“Parent Securities” means the outstanding securities of Parent as set forth in Schedule 4.02 to the Parent Disclosure Letter.

“Parent Stock Issuance” has the meaning set forth in the Recitals.

“Parent Stock Option” means any option to purchase Parent Common Stock granted under any Parent Stock Plan.

“Parent Subsidiary Securities” has the meaning set forth in Section 4.02(d).

“Parent VWAP Trading Price” means, with respect to any date, the volume weighted average price per share of Parent Common Stock as reported on the TSVX for the 10 consecutive trading days preceding such date (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications, or similar events).

“Parent Voting Debt” has the meaning set forth in Section 4.02(c).

“PBGC” has the meaning set forth in Section Section 3.11(d).

“Permits” has the meaning set forth in Section 3.08(b).

“Permitted Liens” means: (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith (provided appropriate reserves required pursuant to GAAP have been made in respect thereof); (b) mechanics’, carriers’, workers’, repairers’, and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent or which are being contested by appropriate proceedings (provided appropriate reserves required pursuant to GAAP have been made in respect thereof); (c) zoning, entitlement, building, and other land use regulations imposed by Governmental Entities having jurisdiction over such Person’s owned or leased real property, which are not violated by the current use and operation of such real property; (d) covenants, conditions, restrictions, easements, and other similar non-monetary matters of record affecting title to such Person’s owned or leased real property, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses; (e) any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person’s businesses; and (f) Liens arising under workers’ compensation, unemployment insurance, social security, retirement, and similar legislation.

“Person” means any individual, corporation, limited or general partnership, limited liability company, limited liability partnership, trust, association, joint venture, Governmental Entity, or other entity or group (which term will include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act).

“PPP Escrow” means an escrow arrangement between the Company and its Paycheck Protection Program lender, to be entered into between the Execution Date and the Closing, pursuant to which the Company will, if required, escrow an amount required with by lender in compliance of its obligations pursuant to its Paycheck Protection Program Loan documentation.

“Real Estate” means all land, together with all buildings, structures, fixtures, and improvements located thereon and all easements, rights of way, and appurtenances relating thereto, owned by the Company.

“Representatives” has the meaning set forth in Section 5.04(a).

“Requisite Company Vote” has the meaning set forth in Section 3.03(a).

“Requisite Parent Vote” has the meaning set forth in Section 4.03(a).

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means Securities Act of 1933, as amended.

“SEDAR” means The System for Electronic Document Analysis and Retrieval.

“Shareholder Support Agreement” means an agreement to be entered into prior to the Closing between the Company and the Converting Shareholders affirming certain agreements between the Company and the Converting Shareholders in anticipation of consummating the transactions provided for in this Agreement.

“Stock Consideration” has the meaning set forth in Section 2.01(b).

“Subsidiary” of a Person means a corporation, partnership, limited liability company, or other business entity of which a majority of the shares of voting securities is at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person.

“Superior Proposal” means a bona fide written Takeover Proposal with respect to the applicable party or its Subsidiaries (except that, for purposes of this definition, each reference in the definition of “Takeover Proposal” to “15%” shall be “50%”), that such party’s board determines in good faith (after consultation with outside legal counsel and, in the case of Parent, such party’s financial advisor) is more favorable from a financial point of view to the holders of such party’s common stock than the transactions contemplated by this Agreement, taking into account: (a) all financial considerations; (b) the identity of the third party making such Takeover Proposal; (c) the anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Takeover Proposal; (d) the other terms and conditions of such Takeover Proposal and the implications thereof on such party, including relevant legal, regulatory, and other aspects of such Takeover Proposal deemed relevant by such party (including any conditions relating to financing, stockholder approval, regulatory approvals, or other events or circumstances beyond the control of the party invoking the condition); and (e) any revisions to the terms of this Agreement and the transaction contemplated by this Agreement proposed by the other party during the Superior Proposal Notice Period set forth in Section 5.04(d).

“Superior Proposal Notice Period” has the meaning set forth in Section 5.04(d).

“Surviving Entity” has the meaning set forth in Section 1.01.

“Takeover Proposal” means with respect to the Company or Parent, as the case may be, an inquiry, proposal, or offer from, or indication of interest in making a proposal or offer by, any Person or group relating to any transaction or series of related transactions (other than the transactions contemplated by this Agreement), involving any: (a) direct or indirect acquisition of assets of such party hereto or its Subsidiaries (including any voting equity interests of Subsidiaries, but excluding sales of assets in the ordinary course of business) equal to 15% or more of the fair market value of such party’s consolidated assets or to which 15% or more of such party’s net revenues or net income on a consolidated basis are attributable; (b) direct or indirect acquisition of 15% or more of the voting equity interests of such party hereto or any of its Subsidiaries whose business constitutes 15% or more of the consolidated net revenues, net income, or assets of such party and its Subsidiaries, taken as a whole; (c) tender offer or exchange offer that if consummated would result in any Person or group (as defined in Section 13(d) of the Exchange Act) beneficially owning (within the meaning of Section 13(d) of the Exchange Act) 15% or more of the voting power of such party hereto; (d) merger, consolidation, other business combination, or similar transaction involving such party hereto or any of its Subsidiaries, pursuant to which such Person or group (as defined in Section 13(d) of the Exchange Act) would own 15% or more of the consolidated net revenues, net income, or assets of such party and its Subsidiaries, taken as a whole; (e) liquidation, dissolution (or the adoption of a plan of liquidation or dissolution), or recapitalization or other significant corporate reorganization of such party hereto or one or more of its Subsidiaries which, individually or in the aggregate, generate or constitute 15% or more of the consolidated net revenues, net income, or assets of such party and its Subsidiaries, taken as a whole; or (f) any combination of the foregoing.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“Tax Returns” means any return, declaration, report, claim for refund, information return or statement, or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“TSXV” means The TSX Venture Exchange.

“Treasury Regulations” means the Treasury regulations promulgated under the Code.

“Voting Debt” has the meaning set forth in Section 3.02(c).

Section 8.02 Interpretation; Construction.

(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Exhibit, Article, or Schedule, such reference shall be to a Section of, Exhibit to, Article of, or Schedule of this Agreement unless otherwise indicated. Unless the context otherwise requires, references herein: (i) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (ii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” and the word “or” is not exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and does not simply mean “if.” A reference in this Agreement to $ or dollars is to U.S. dollars. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. The words “hereof,” “herein,” “hereby,” “hereto,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to “this Agreement” shall include the Company Disclosure Letter and Parent Disclosure Letter.

(b) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

Section 8.03 Benefitting Parties; Survival; Indemnification.

(a) Benefitting Parties. The representations, warranties and covenants of any party benefitting from such representations, warranties and covenants (as the case may be, the “Benefitting Party”), and any Benefiting Party’s right to indemnification or other recourse with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Benefiting Party (including by any of its Representatives) or by reason of any information contained in any Parent Public Documents or by reason of the fact that the Benefiting Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Benefiting Party’s waiver of any condition set forth in this Agreement, as the case may be.

(b) Survival. No representation, warranty, covenant or agreement of the parties contained in this Agreement contained in this Agreement or in any instrument delivered under this Agreement will survive the Effective Time, except (x) the Confidentiality Agreement, which will survive termination of this Agreement in accordance with its terms; (y) any representation, warranty, covenant or agreement of the parties contained in this Agreement which, by its terms, contemplates performance after the Effective Time; and (z) as follows:

(i) the representations and warranties set out in ARTICLE 3 (Representations and Warranties Relating to the Company) shall continue in full force and effect for a period of one (1) year after the Closing Date.

(ii) the representations and warranties set out in ARTICLE 4 (Representations and Warranties Relating to Sphere) shall continue in full force and effect for a period of one (1) year after the Closing Date; and

(iii) any claim for any breach of any of the representations and warranties contained in this Agreement or in any agreement, instrument, certificate or other document executed or delivered pursuant hereto involving fraud or fraudulent misrepresentation may be made at any time following the Closing Date, subject only to applicable limitation periods imposed by law.

The periods in Section 8.03(b) above are collectively referred to as the “Survival Period.”

(c) Indemnity by Company. During the Survival Period (or provided notice of a claim for Damages was provided prior the expiration of the Survival Period), the Company shall indemnify Parent against and to protect, save and keep harmless Parent and its current and former directors, officers, agents and employees from and to assume liability for, payment of all any and all Damages that may be incurred or suffered by Parent as a consequence of or in connection with any inaccuracy or breach of any representation or warranty contained in this Agreement or as a result of any claim or liabilities related to the Company’s former subsidiary Thread Cartel (each, a “Buyer Indemnification Event”). Since it is impractical for any Non-Converting Shareholder to indemnify the Parent, the Converting Shareholders shall bear the following indemnification responsibilities of the Company (collectively, the “Company Indemnifying Parties”) as follows. An aggregate of 25% of the Share Consideration shall be placed in escrow for a period of twelve (12) months from the Closing Date (the “Indemnity Period”) and held pursuant to the Escrow Agreement (the “Escrowed Shares”). The Escrowed Shares shall be the sole and limited recourse to satisfy any and all Damages claimed for any and all obligations of the Company contained in or arising from in this Agreement, the Shareholder Support Agreement, the Voting Agreement, the Escrow Agreement, any lock-up or leak-out agreement, or any other ancillary document contemplated or executed in connection herewith (collectively, the “Transaction Documents”). In the event that there are no claims made for Damages during the Indemnity Period, the Escrowed Shares shall be released to the Converting Shareholders in accordance with the Escrow Agreement. In order to induce the Shareholder Representative to enter into the Escrow Agreement and to serve in the capacity of Shareholder Representative and to make the indemnification of the Shareholder Representative contained in the Escrow Agreement, Parent hereby authorizes and irrevocably consents to the Converting Shareholders indemnifying the Shareholder Representative with the Escrowed Shares, whether pursuant to the Shareholder Support Agreement or otherwise.

(d) Indemnity by Parent. During the Survival Period (or provided notice of a claim for Damages was provided prior the expiration of the Survival Period), Parent hereby agrees to indemnify the Company against and to protect, save and keep harmless the Company and its current and former directors, officers, agents, employees and shareholders from and to assume liability for any Damages that may be incurred or suffered by the Company as a consequence of or in connection with for any breach or for any inaccuracy or breach of any representation or warranty contained in this Agreement (each, a “Company Indemnification Event”, and together with any Buyer Indemnification Event, an “Indemnification Event”).

(e) Either the Company or the Parent, as a party which has a right to seek indemnification pursuant to this Agreement and in such capacity, as the case may be, shall be referred to as an “Indemnified Party”. Either the Company Indemnifying Parties or the Parent subject to any indemnification obligation pursuant to this Agreement and in such capacity, as the case may be, shall be referred to an “Indemnifying Party.”

(f) Direct Claims. Any claim for Damages by an Indemnified Party against an Indemnifying Party which does not result from a Third-Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying Party (or, in the case of a Company Indemnification Event, the Shareholder Representative on behalf of and as representative of the Company Indemnifying Parties) reasonably prompt, but in any event not later than thirty (30) days after Indemnified Party becomes aware of such Direct Claim, in each case by written notice of such Direct Claim to the Shareholder Representative (in the case of Buyer Indemnification Event) or to the Parent (in the case of Company Indemnification Event) (and such party, the “Notice Party”). Such notice by Indemnified Party will describe the Direct Claim in reasonable detail, will include copies of all available material, written evidence thereof and will indicate the estimated amount, if reasonably practicable, of Damages that has been or may be sustained by Indemnified Party. The Indemnifying Party will have a period of thirty (30) days after receipt thereof within which to respond in writing to such Direct Claim. If the Indemnifying Party does not respond in writing within the thirty (30) day period, the Indemnifying Party will be deemed to have rejected such Direct Claim and Indemnified Party will be free to pursue remedies available to Indemnified Party on the terms and subject to the provisions of this Agreement.

(g) Third-Party Claims. If the Parent or the Company, as the case may be, receives notice or otherwise becomes aware of the commencement of any action, suit or proceeding, the assertion of any claim, the occurrence of any event, the existence of any fact or circumstance, or the incurrence of any Damages, for which indemnification is provided for by Section 8.03 from any third party (a “Third-Party Claim”) against which an Indemnified Party may bring a claim under this Agreement, the Parent or Company, as the case may be, shall provide prompt written notice thereof, but in any event not later than thirty (30) days after receipt of such written notice of such Third-Party Claim. Such notice will describe the Third-Party Claim in reasonable detail, will include copies of all available material, written evidence thereof and will indicate the estimated amount, if reasonably practicable, of the Damages that has been or may be sustained by the Indemnifying Party.

(h) The Parent, or in the case of a Buyer Indemnification Claim, the Shareholder Representative, will have the right to participate in, or, by giving written notice to Indemnified Party, to assume, the defense of any Third-Party Claim at the Indemnifying Party’s own expense and by the Indemnifying Party’s own counsel, and the Indemnifying Party will cooperate in good faith in such defense. The Indemnified Party and the Indemnifying Party shall each cooperate fully (and shall each cause its Affiliates to cooperate fully) with the other in the defense of any Third-Party Claim. Without limiting the generality of the foregoing, each such Person shall furnish the other such Person (at the expense of the Indemnifying Party) with such documentary or other evidence as is then in its or any of its Affiliates’ possession as may reasonably be requested by the other Person for the purpose of defending against any such Third-Party Claim.

(i) The Indemnified Party shall use reasonable efforts to minimize and mitigate any Damages for which indemnification is sought hereunder. The Indemnified Party agrees that, for so long as it has any right of indemnification under this Section 8.03, it shall not voluntarily or by discretionary action, accelerate the timing or increase the cost of any obligation of the Indemnifying Party under this Section 8.03 (and the Indemnifying Party shall not be obligated to indemnify an Indemnified Party for any Damages to the extent arising from any such voluntary or discretionary action), except to the extent that such action is taken (i) in the ordinary course of business consistent with past practice (and not with the intent of discovering a condition that would constitute the breach of any representation or warranty, or the breach of any, covenant or other agreement, of any other party hereto) and (ii) without violating the immediately preceding clause (i), in order to enforce its rights under this Agreement.

(j) If, within ten (10) days after giving notice of a Third-Party Claim to the Indemnifying Party pursuant, the Indemnified Party receives written notice from the Indemnifying Party that they have elected to assume the defense of such Third-Party Claim as provided for in Section 8.03, the Indemnifying Party will not be liable for any legal expenses subsequently incurred by Indemnified Party in connection with the defense thereof; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim within ten (10) days after receiving written notice from Indemnified Party that Indemnified Party reasonably believes the Indemnifying Party has failed to take such steps or if the Indemnifying Party has not undertaken fully to indemnify Indemnified Party in respect of all Damages relating to the matter, Indemnified Party may assume its own defense and the Indemnifying Party will be liable for all reasonable costs and expenses paid or incurred in connection therewith. Without the prior written consent of Indemnified Party, which consent shall not be unreasonably withheld or delayed, the Indemnifying Party will not enter into any settlement of any Third-Party Claim which would lead to liability or create any financial or other obligation on the part of Indemnified Party for which Indemnified Party is not entitled to indemnification hereunder, or which provides for injunctive or other non-monetary relief applicable to Indemnified Party, or does not include an unconditional release of Indemnified Party. If a firm offer is made to settle a Third-Party Claim without leading to liability or the creation of a financial or other obligation on the part of Indemnified Party for which Indemnified Party is not entitled to indemnification hereunder and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party will give written notice to Indemnified Party to that effect. If Indemnified Party fails to consent to such firm offer within five (5) days after its receipt of such notice, Indemnified Party may continue to contest or defend such Third-Party Claim and, in such event, the maximum liability of the Indemnifying Party to Indemnified Party as to such Third-Party Claim will not exceed the amount of such settlement offer. Parent will provide the Company with reasonable access during normal business hours to books, records and employees (if still in their employ) of Indemnified Party necessary in connection with the Indemnifying Party’s defense of any Third-Party Claim which is the subject of a claim for indemnification by Indemnified Party hereunder.

(k) If the Indemnifying Party (or, if the Indemnifying Party is the Company, the Shareholder Representative on behalf of the Company Indemnifying Parties) is not notified by the Indemnified Party (or, if the Indemnified Party is the Company, the Shareholder Representative on behalf of the Company) within thirty (30) days after the date of the receipt by the Indemnified Party of notice of, or of the Indemnified Party otherwise becoming aware of, any particular Indemnification Event, whether pursuant to a Direct Claim or a Third-Party Claim, the Indemnifying Party shall be relieved of all liability hereunder in respect of such Indemnification Event (or the facts or circumstances giving rise thereto) solely to the extent that such Indemnifying Party is prejudiced or harmed as a consequence of such failure, and in any event the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party (or, if the Indemnified Party is the Company, the Shareholder Representative on behalf of such the Company) was overdue in giving, and had not given, such notice.

(l) Any liability for indemnification under this Agreement shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement.

(m) The amount of any Losses shall be determined on a Net After-Tax Basis and will be reduced by the amount recoverable by the applicable Seller or Buyer Party or any of their respective Affiliates, including each Company, as applicable, from any third party under contract with such party or under any applicable insurance policy.

(n) The rights and remedies of the Indemnified Parties under this Section 8.03 are exclusive and in lieu of any and all other rights and remedies which any in Indemnified Party may have against the other party pursuant to this Agreement or the Transaction Documents or otherwise with respect to the transactions contemplated by this Agreement or the Transaction Documents), with respect to (i) any breach of any representation or warranty by an Indemnifying Party in or pursuant to this Agreement or any certificate required to be delivered pursuant to this Agreement, or (ii) any breach by any Indemnifying Party of or failure by any Indemnifying Party to perform, any covenant or agreement contained in this Agreement or the Transaction Documents. All claims for indemnification must be asserted, if at all, in good faith and in accordance with the provisions of Section 8.03 and, to the extent applicable to such claims, within the relevant time period set forth in 8.03. In furtherance of the foregoing, effective as of the consummation of the Closing, each Indemnified Party hereby waives, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action (including rights of contributions, if any) known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against any Indemnifying Party, as the case may be, arising under or based upon any Law (including any Law relating to environmental matters or arising under or based upon any securities Law, common Law or otherwise) based upon events occurring prior to the Closing Date. Notwithstanding the foregoing, this Section 8.03(n) shall not operate to limit the rights of the parties to (I) seek equitable remedies (including specific performance or injunctive relief) which may be specifically provided for pursuant to this Agreement, or (II) pursue claims arising from fraud on the part of any Person. Without limiting the generality of the foregoing, no party shall have any rights to set off indemnifiable Damages pursuant to this ARTICLE VIII against other obligations owed to another party hereto.

Section 8.04 Governing Law. This Agreement and all Legal Actions (whether based on contract, tort, or statute) arising out of, relating to, or in connection with this Agreement or the actions of any of the parties hereto in the negotiation, administration, performance, or enforcement hereof, shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of New York.

Section 8.05 Submission to Jurisdiction. Each of the parties hereto irrevocably agrees that any Legal Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by any other party hereto or its successors or assigns shall be brought and determined exclusively in the State of New York, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such Legal Action, in the State of New York. Each of the parties hereto agrees that mailing of process or other papers in connection with any such Legal Action in the manner provided in Section 8.07 or in such other manner as may be permitted by applicable Laws, will be valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to any such Legal Action for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any Legal Action relating to this Agreement or any of the transactions contemplated by this Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim, or otherwise, in any Legal Action with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder: (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 8.05; (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise); and (c) to the fullest extent permitted by the applicable Law, any claim that (i) the suit, action, or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action, or proceeding is improper, or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 8.06 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION Section 8.06.

Section 8.07 Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given upon the earlier of actual receipt or (a) when delivered by hand providing proof of delivery; (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by email if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient. Such communications must be sent to the respective parties at the following addresses (or to such other Persons or at such other address for a party as shall be specified in a written notice given in accordance with this Section 8.07):

If to Parent or Merger Sub, to:		HIGH TIDE INC. #112, 11127 15^th Street NE Calgary, AB T3K 2M4 Attention: Raj Grover Email: Raj@hightide.com

with a copy (which will not constitute notice to Parent or Merger Sub) to:		Garfinkle Biderman LLP Dynamic Funds Tower, Suite 801 1 Adelaide Street East Ontario, M5C 2V9 Attention: Shimmy Posen Email: sposen@garfinkle.com

If to the Company, to:		SMOKE CARTEL USA, INC. 302 W. Victoria Drive Savannah, GA 31405 Attention: Steve Forman Email: Steve@smokecartel.com

with a copy (which will not constitute notice to the Company) to:		Fox Rothschild LLP 101 Park Ave. 17th Floor New York, NY 10178 Attn: Matthew Kittay mkittay@foxrothschild.com

If to the Shareholder Representative, to:		SMOKE CARTEL USA, INC. 302 W. Victoria Drive Savannah, GA 31405 Attention: Shareholder Representative Email: sean@smokecartel.com

with a copy (which will not constitute notice to the Shareholder Representative) to:		Fox Rothschild LLP 101 Park Ave. 17th Floor New York, NY 10178 Attn: Matthew Kittay mkittay@foxrothschild.com

Section 8.08 Entire Agreement. This Agreement (including the Exhibits to this Agreement), the Company Disclosure Letter, the Parent Disclosure Letter, and the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all other prior agreements and understandings, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement. In the event of any inconsistency between the statements in the body of this Agreement, the Confidentiality Agreement, the Parent Disclosure Letter, and the Company Disclosure Letter (other than an exception expressly set forth as such in the Parent Disclosure Letter or Company Disclosure Letter), the statements in the body of this Agreement will control.

Section 8.09 No Third-Party Beneficiaries. Except as provided in Section 5.09 hereof (which shall be to the benefit of the Persons referred to in such section), this Agreement is for the sole benefit of the parties hereto and their permitted assigns and respective successors and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.

Section 8.10 Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 8.11 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither Parent, or Merger Sub, on the one hand, nor the Company on the other hand, may assign its rights or obligations hereunder without the prior written consent of the other party (Parent in the case of Parent and Merger Sub), which consent shall not be unreasonably withheld, conditioned, or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 8.12 Remedies. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at Law, or in equity. The exercise by a party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.

Section 8.13 Specific Performance.

(a) The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of New York or any New York state court, in addition to any other remedy to which they are entitled at Law or in equity.

(b) Each party further agrees that: (i) no such party will oppose the granting of an injunction or specific performance as provided herein on the basis that the other party has an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity; (ii) no such party will oppose the specific performance of the terms and provisions of this Agreement; and (iii) no other party or any other Person shall be required to obtain, furnish, or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.13, and each party irrevocably waives any right it may have to require the obtaining, furnishing, or posting of any such bond or similar instrument.

Section 8.14 Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, all of which will be one and the same agreement. This Agreement will become effective when each party to this Agreement will have received counterparts signed by all of the other parties.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

	COMPANY:
	SMOKE CARTEL, INC.

	By:	“Steven Forman”
	Name:
	Title:

	PARENT:
	HIGH TIDE INC.

	By:	“Harkirat Singh Grover”
	Name:
	Title:

	MERGER SUB:

	Smoke Cartel USA Inc.

	By:	“Harkirat Singh Grover”
	Name:
	Title:

	And, solely for the purposes of ARTICLE VIII, the SHAREHOLDER REPRESENTATIVE:

	By:	“ ”
	, an individual

EXHIBIT A

Articles of Incorporation

[SURVIVING ENTITY ARTICLES OF INCORPORATION]

Exhibit 6.02(c)-1

FORM OF LOCK-UP AGREEMENT - GENG

Exhibit 6.02(c)-2

FORM OF LEAK-OUT AGREEMENT – CERTAIN HOLDERS

First amendment to AGREEMENT AND PLAN OF MERGER

THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the “Amendment”) is made and entered into effective as of ___________, 2021, by and among High Tide Inc., an Alberta corporation (“Parent”), Smoke Cartel USA Inc., a New York corporation and a wholly-owned Subsidiary of Parent (“Merger Sub”), Smoke Cartel, Inc., a New York corporation (the “Company”), and , as the representative of the Converting Shareholders (the “Shareholder Representative”).

RECITALS

WHEREAS, the Parties hereto are parties to that Agreement and Plan of Merger (the “Merger Agreement”) dated as of January 24, 2021 (the “Agreement Date”);

WHEREAS, Schedule 2.01(b) to the Merger Agreement sets forth a list of Converting Shareholders, and each Company shareholder not listed on Schedule 2.01(b) is a Non-Converting Shareholder, entitled to the cash consideration described in the Merger Agreement for their shares of Company Common Stock;

WHEREAS, since the Agreement Date, the Company and certain of the Company shareholders have taken actions that require an update to Schedule 2.01(b) to the Merger Agreement;

WHEREAS, the undersigned parties desire to amend the Merger Agreement to replace Schedule 2.01(b) to the Merger Agreement in its entirety, in accordance with this Amendment;

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Amendment and the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties agree as follows:

1. Schedule 2.01(b) to the Merger Agreement is hereby deleted and replaced in its entirety with the form of Schedule 2.01(b) attached to this Amendment as Exhibit A.

2. The terms and conditions of this Amendment shall be binding upon the parties to the Merger Agreement and their respective successors and assigns.

4. All capitalized terms used but not defined in this Amendment shall have the meaning given to such terms in the Merger Agreement.

5. As amended by the terms and provisions of this Amendment, the undersigned parties hereby acknowledge and agree that the Merger Agreement remains in full force and effect.

6. This Amendment may be executed and delivered by facsimile or other electronic transmission in any number of counterparts, each of which, when executed, shall be deemed to be an original and all of which together will be deemed to be one and the same instrument.

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.

	COMPANY:
	SMOKE CARTEL, INC.

	By:	“Steven Forman”
	Name:
	Title:

	PARENT:
	HIGH TIDE INC.

	By:	“Harkirat Singh Grover”
	Name:
	Title:

	MERGER SUB:
	Smoke Cartel USA Inc.

	By:	“Harkirat Singh Grover”
	Name:
	Title:

	SHAREHOLDER REPRESENTATIVE:

	By:
	, an individual

Signature Page to First Amendment to Agreement and Plan of Merger

EXHIBIT A

SCHEDULE 2.01(b)
CONVERTING SHAREHOLDERS

Shareholder		Company Common Stock Converted		Parent Common Stock Issued¹		Cash Consideration

1.			9,350,000		4,113,382	$	464,050.79

2.			7,650,000		3,365,495	$	379,677.92

3.			2,203,972		969,602	$	109,385.56

4.			1,410,145		620,371	$	69,987.05

5.			998,701		439,362	$	49,566.63

6.			762,415		335,412	$	37,839.50

7.			180,000		79,188	$	8,933.60

8.			170,047		74,809	$	8,439.62

9.			120,000		52,792	$	5,955.73

10.	.		67,000		29,476	$	3,325.28

11.			50,000		21,997	$	2,481.56

12.			35,000		15,398	$	1,737.09

13.			27,500		12,098	$	1,364.86

14.			27,500		12,098	$	1,364.86

15.			27,500		12,098	$	1,364.86

16.			13,750		6,049	$	682.43

“Parent Common Stock Issued” will be updated, at Closing and without the requirement of further amendment to the Agreement, to comply with the provision of Section 2.01(b) of the Agreement that provides that the “total Stock Consideration shall have a value of $6,000,000 calculated on the basis of a deemed price per share of Parent Common Stock equal to the Parent VWAP Trading Price on the day prior to the Closing Date.”

Signature Page to First Amendment to Agreement and Plan of Merger

EXHIBIT 99.159

High Tide Opens Two New Stores in Underserviced Calgary Neighbourhoods

CALGARY, AB, March 25, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, announced today that its new Canna Cabana retail store, located in the affluent Silverado neighbourhood of Calgary, has begun selling recreational cannabis products for adult use, and that an additional store located in Calgary’s Shawnessy neighbourhood will begin sales tomorrow. The new stores are located at 850 - 19369 Sheriff King Street SW and 130 - 296 Shawville Blvd SE, and represent High Tide’s 78^th and 79^th branded retail locations across Canada selling recreational cannabis products and consumption accessories. The Silverado store, the first cannabis retail store within the neighbourhood, is situated in a popular retail plaza anchored by a major grocery chain while the Shawnessy location is in a power centre alongside major national retail brands.

High Tide Inc (CNW Group/High Tide Inc.)

“Both new stores will follow High Tide’s “one stop cannabis shop” differentiated model for all our customers’ cannabis and consumption accessory needs,” said Raj Grover, President and Chief Executive Officer of High Tide. “While Alberta remains a competitive market, our business strategy in the province focuses on continuing organic growth by opening new stores in underserviced neighbourhoods while offering price points and product offerings that appeal to a broad spectrum of consumers,” added Mr. Grover.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 79 branded retail locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com, Smokecartel.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

SOURCE High Tide Inc.

View original content to download multimedia:

http://www.newswire.ca/en/releases/archive/March2021/25/c6451.html

%SEDAR: 00045217E

For further information: Omar Khan, Senior Vice President, Corporate and Public Affairs, omar@hightideinc.com, Tel. 1 (647) 985-4401

CO: High Tide Inc.

CNW 06:00e 25-MAR-21

EXHIBIT 99.160

High Tide Opens its 80th Cannabis Retail Store in Burlington, Ontario

CALGARY, AB, March 26, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, announced today that its new Canna Cabana retail store, located at 3505 Upper Middle Road, Unit D3, in Burlington, Ontario, has begun selling recreational cannabis products for adult use. The new store represents High Tide’s 80^th branded retail location across Canada selling recreational cannabis products and consumption accessories, and the Company’s eighth new organically built store in the month of March alone. The new Burlington store is strategically located within a popular commercial plaza with a major grocery anchor and several national restaurant chains nearby.

High Tide Inc, - March 26, 2021 (CNW Group/High Tide Inc.)

“The new store is another step towards our commitment of reaching 30 branded retail locations within Ontario by September of this year. I am so proud of the work our team has put into launching eight new stores this month alone. March has been the busiest month in terms of new store openings since High Tide’s inception,” said Raj Grover, President and Chief Executive Officer of High Tide. “Continued expansion in Canada’s largest province remains a core part of High Tide’s organic growth strategy. We will continue to execute this strategy by bringing our one-stop cannabis shop concept to high traffic areas like the new Upper Middle Store in Burlington,” added Mr. Grover.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 80 branded retail locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com, Smokecartel.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

SOURCE High Tide Inc.

View original content to download multimedia:

http://www.newswire.ca/en/releases/archive/March2021/26/c5441.html

%SEDAR: 00045217E

For further information: Omar Khan, Senior Vice President, Corporate and Public Affairs, omar@hightideinc.com, Tel. 1 (647) 985-4401

CO: High Tide Inc.

CNW 06:00e 26-MAR-21

EXHIBIT 99.161

High Tide Provides Updated Timing for Release of First Quarter 2021 Results and Conference Call

CALGARY, AB, March 30, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, announced today that it has changed the time of the release of its first quarter 2021 results and conference call. The Company will now release its financial and operational results for the quarter ended January 31, 2021 after market close on Wednesday, March 31, 2021. High Tide’s first quarter 2021 financial and operational results will be available on SEDAR and on the Company’s website at www.hightideinc.com/invest.

High Tide Inc. - March 30, 2021 (CNW Group/High Tide Inc.)

Following the release of its first quarter financial and operational results, High Tide will host a conference call with Raj Grover, President and Chief Executive Officer, and Rahim Kanji, Chief Financial Officer, at 8:30 AM Eastern Time on Thursday, April 1, 2021. The conference call will discuss High Tide’s first quarter 2021 financial and operational results and updates on the Company’s plans for 2021.

Dial-In Information

US/CANADA Participant Toll-Free Dial-In Number: (833) 570-1148

US/CANADA Participant International Dial-In Number: (914) 987-7095

Conference ID: 5128837

In order to join the conference call, all speakers and participants will be required to provide the Conference ID listed above.

Encore Replay Information (Available until April 8, 2021)

Toll-Free Encore Dial-In Number: (855) 859-2056

Encore Dial-In Number: (404) 537-3406

Conference ID: 5128837

In addition to the toll-free number listed above, participants can also dial (800) 585-8367 to access Encore.

Grant of Stock Options

The Company also announced that its Board of Directors has approved a grant of 500,000 stock options to purchase common shares of High Tide to Sean Geng, in connection with his recent appointment as Chief Technology Officer of the Company.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 80 branded retail locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com, Smokecartel.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

View original content to download multimedia:

http://www.prnewswire.com/news-releases/high-tide-provides-updated-timing-for-release-of-first-quarter-2021-results-and-conference-call-301258014.html

SOURCE High Tide Inc.

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/March2021/30/c7057.html

%SEDAR: 00045217E

For further information: CONTACT INFORMATION: Omar Khan, Senior Vice President, Corporate and Public Affairs, omar@hightideinc.com, Tel. 1 (647) 985-4401

CO: High Tide Inc.

CNW 06:00e 30-MAR-21

Exhibit 99.162

Condensed Interim Consolidated
Financial Statements

For the three months ended January 31, 2021 and 2020

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

(Unaudited)

High Tide Inc.
Condensed Interim Consolidated Financial Statement
For the three months ended January 31, 2021 and 2020

Condensed Interim Consolidated Financial Statements for the three months ended January 31, 2021 and 2020.

The accompanying unaudited condensed interim consolidated financial statements of High Tide Inc. (“High Tide” or the “Company”) have been prepared by and are the responsibility of the Company’s management and have been approved by the Audit Committee and Board of Directors of the Corporation.

Approved on behalf of the Board:

(Signed) “Harkirat (Raj) Grover”		(Signed) “Nitin Kaushal”
President and Chair of the Board		Director and Chair of the Audit Committee

High Tide Inc.
Condensed Interim Consolidated Statements of Financial Position
As at January 31, 2021 and October 31, 2020
(Unaudited – In thousands of Canadian dollars)

	Notes	2021			2020
		$			$
Assets
Current assets
Cash		16,576			7,524
Marketable securities	16		851			50
Trade and other receivables	8		3,452			2,861
Inventory			9,723			5,702
Prepaid expenses and deposits	7		4,406			3,070
Current portion of loans receivable			1,464			74
Total current assets			36,472			19,281
Non-current assets
Loans receivable			230			230
Property and equipment	6		20,579			13,085
Net Invesment - Lease	19		1,827			1,716
Right-of-use assets, net	19		27,510			16,413
Long term prepaid expenses and deposits	7		1,474			809
Deferred tax asset			250			250
Intangible assets and goodwill	3, 5		78,232			18,027
Total non-current assets			130,102			50,530
Total assets			166,574			69,811
Liabilities Current liabilities
Accounts payable and accrued liabilities			9,071			6,421
Notes payable current	11		4,098			1,939
Deferred liability			1,704			1,700
Current portion of convertible debentures	10		15,494			14,446
Current portion of lease liabilities	19		5,152			2,194
Derivative liability	14		11,453			764
Total current liabilities			46,972			27,464
Non-current liabilities
Notes payable	11		12,311			2,536
Convertible debentures	10		24,031			11,376
Lease liabilities	19		23,477			14,474
Long term contract liability			47			53
Deferred tax liability			5,937			2,185
Total non-current liabilities			65,803			30,624
Total liabilities			112,775			58,088
Shareholders’ equity
Share capital	12		76,486			32,552
Warrants	14		4,358			5,796
Contributed surplus			9,865			4,704
Convertible debentures – equity	10		10,916			1,965
Accumulated other comprehensive income			(382	)		(487	)
Accumulated deficit			(51,228	)		(34,359	)
Equity attributable to owners of the Company			50,015			10,171
Non-controlling interest	21		3,784			1,552
Total shareholders’ equity			53,799			11,723
Total liabilities and shareholders’ equity			166,574			69,811

High Tide Inc.
Condensed Interim Consolidated Statements of Comprehensive Loss
For the three months ended January 31, 2021 and 2020
(Unaudited – In thousands of Canadian dollars)

	Notes	2021			2020
		$			$
Revenue
Merchandise sales			36,286			13,007
Royalty revenue			46			583
Other revenue			1,987			125
Total Revenue	4		38,319			13,715
Cost of sales			(23,551	)		(8,922	)
Gross profit			14,768			4,793
Expenses
Salaries, wages and benefits			(5,850	)		(3,174	)
Share-based compensation	13		(553	)		(27	)
General and administration			(2,908	)		(1,446	)
Professional fees			(1,136	)		(764	)
Advertising and promotion			(71	)		(87	)
Depreciation and amortization	5,6,19		(6,094	)		(1,269	)
Interest and bank charges			(201	)		(143	)
Total expenses			(16,813	)		(6,910	)
Loss from operations			(2,045	)		(2,117	)
Other income (expenses)
Loss on extinguishment of debenture	10		(516	)		-
Debt restructuring gain	11		1,145			-
Revaluation of marketable securities			15			-
Finance and other costs	9		(4,283	)		(2,356	)
Revaluation of derivative liability	10,14		(10,484	)		439
Foreign exchange gain (loss)			(89	)		4
Total other expenses			(14,212	)		(1,913	)
Loss before taxes			(16,257	)		(4,030	)
Deferred Income tax (expense) recovery			(588	)		85
Net loss			(16,845	)		(3,945	)
Other comprehensive income (loss)
Translation difference on foreign subsidary			105			68
Total comprehensive loss			(16,740	)		(3,877	)
Net income (loss) and comprehensive income (loss) attributable to:
Owners of the Company			(16,764	)		(3,890	)
Non-controlling interest			24			3
			(16,740	)		(3,887	)
Loss per share
Basic	15		(0.04	)		(0.02	)
Diluted	15		(0.02	)		(0.02	)

Subsequent Events (Note 22)

High Tide Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited – In thousands of Canadian dollars)

	Note	Share capital		Warrants			Contributed surplus		Equity portion of convertible debt			Accumulated other comprehensive income (loss)			Accumulated deficit			Attributable to owners of the Company			NCI			Total
		$		$			$		$			$			$			$			$			$
Opening balance, November 1, 2019			26,283		6,609			2,119		1,637			(366	)		(26,696	)		9,586			(179	)		9,407
Fee paid in shares			182		-			-		-			-			-			182			-			182
Warrants			-		1,543			-		-			-			-			1,543			-			1,543
Share-based compensation			-		-			27		-			-			-			27			-			27
Equity portion of convertible debentures			-		-			-		91			-			-			91			-			91
Cumulative translation adjustment			-		-			-		-			68			-			68			-			68
Prepaid Interest paid in shares			612		-			-		-			-			-			612			-			612
Purchase of minority interest - KushBar Inc.			500		-			-		-			-			(695	)		(195	)		187			(8	)
Acquisition - 2680495 Ontario Inc.			1,048		-			-		-			-			-			1,048			-			1,048
Acquisition - Saturninus Partners			1,064		316			-		-			-			-			1,380			930			2,310
Comprehensive loss for the period			-		-			-		-			-			(3,948	)		(3,948	)		3			(3,945	)
Balance, January 31, 2020			29,689		8,468			2,146		1,728			(298	)		(31,339	)		10,393			941			11,334
Opening balance, October 31, 2020			32,552		5,796			4,704		1,965			(487	)		(34,359	)		10,171			1,552			11,723
Acquisition - Meta Growth	3		35,290		2,739			240		9,008			-			-			47,277			2,208			49,485
Prepaid Interest paid in shares			1,458		-			-		-			-			-			1,458			-			1,458
Share-based compensation	13		-		-			553		-			-			-			553			-			553
Equity portion of convertible debentures	10		-		-			-		133			-			-			133			-			133
Excersie options	13		13		-			-		-			-			-			13			-			13
Warrants expired	14		-		(3,946	)		3,946					-			-			-			-			-
Issued to pay fees in shares			174		-			-		-			-			-			174			-			174
Conversion of convertible debentures			6,759		-			394		(190	)		-			-			6,963			-			6,963
Warrants	14		240		(231	)		28		-			-			-			37			-			37
Cumulative translation adjustment			-		-			-		-			105			-			105			-			105
Comprehensive loss for the period			-		-			-		-			-			(16,869	)		(16,869	)		24			(16,845	)
Balance, January 31, 2021			76,486		4,358			9,865		10,916			(382	)		(51,228	)		50,015			3,784			53,799

High Tide Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three months ended January 31, 2021 and 2020

(Unaudited – In thousands of Canadian dollars)

	Notes	2021			2020
		$			$
Operating activities

Net loss			(16,845	)		(3,945	)
Adjustments for items not effecting cash and cash equivalents
Income tax expense (recovery)			588			(85	)
Accretion expense			1,584			1,252
Fee for services and interest paid in shares and warrants	12		1,632			1,358
Acquisition costs paid in shares			-			600
Depreciation and amortization	5,6,19		6,094			1,269
Revaluation of derivative liability	10,14		10,484			439
Debt restructuing gain	11		(1,145	)		-
Foreign exchange loss			89			(4	)
Share-based compensation	13		553			27
Loss on settlement of convertible debentures	10		516			-
Revaluation of marketable securities			(15	)		-
			3,535			911
Changes in non-cash working capital
Trade and other receivables			1,423			(171	)
Inventory			(474	)		499
Prepaid expenses and deposits			1,128			128
Accounts payable and accrued liabilities			(4,165	)		(1,529	)
Contract liability			-			(44	)
Net cash provided by (used in) operating activities			1,447			(206	)

Investing activities
Purchase of property and equipment	6		(1,667	)		(372	)
Purchase of intangible assets	5		(24	)		(132	)
Loans receivables			(292	)		17
Cash paid for business combination, net of cash acquired	3		10,209			(2,284	)
Net cash provided by (used in) investing activities			8,226			(2,771	)

Financing activities
Repayment of finance lease obligations			(11	)		(2	)
Proceeds from convertible debentures net of issue costs	10		980			8,855
Repayment of convertible debentures			-			(1,500	)
Interest paid on debentures and loans			(742	)		(114	)
Lease liability payments	19		(1,088	)		(969	)
Warrants exercised	14		240			-
Net cash provided by (used in) financing activities			(621	)		6,270

Net increase in cash			9,052			3,293
Cash, beginning of period			7,524			806
Cash, end of period			16,576			4,099

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

Nature of Operations

High Tide Inc. (the “Company” or “High Tide”) is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company’s shares are listed on the TSX Venture Exchange (“TSXV”) under the symbol “HITI”, the Frankfurt Stock Exchange (“FSE”) under the securities identification code ‘WKN: A2PBPS’ and the ticker symbol “2LY”, and on the OTCQB Market (“OTCQB”) under the symbol “HITIF”. The address of the Company’s corporate and registered office is # 120 – 4954 Richard Road SW, Calgary, Alberta T3E 6L1.

High Tide does not engage in any U.S. cannabis-related activities as defined by the Canadian Securities Administrators Staff Notice 51-352.

COVID-19

The Company’s business could be significantly adversely affected by the effects of the recent outbreak of novel coronavirus (“COVID-19”). Several significant measures have been implemented in Canada and the rest of the world in response to the increased impact from COVID-19. The Company cannot accurately predict the impact COVID-19 will have on third parties’ ability to meet their obligations with the Company, including due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In particular, the continued spread of COVID-19 globally could materially and adversely impact the Company’s business including without limitation, employee health, workplace productivity, and other factors that will depend on future developments beyond the Company’s control. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries resulting in an economic downturn that could negatively impact the Company’s financial position, financial performance, cash flows, and its ability to raise capital. Since the initial outset of the pandemic, the Company did not experience a significant decline in sales for most of the operating businesses.

Accounting Policies

Basis of Preparation

These condensed interim consolidated financial statements (“Financial Statements”) have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). They are condensed as they do not include all of the information required for full annual financial statements, and they should be read in conjunction with the audited consolidated financial statements of the Company for the year ended October 31, 2020 which are available on SEDAR at www.sedar.com.

For comparative purposes, the Company has reclassified certain immaterial items on the comparative condensed interim consolidated statement of financial position and the condensed interim consolidated statement of comprehensive income (loss) to conform with current period’s presentation.

These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on March 31, 2021

Use of estimates

The estimates and assumptions are reviewed on an ongoing basis. Revisions in accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. Significant judgements, estimates, and assumptions within these condensed interim consolidated financial statements remain the same as those applied to the consolidated financial statements for the year ended October 31, 2020.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

Business Combinations

Meta Growth Corp. Acquisition

*Total consideration*	$
Common shares		35,290
Conversion feature of convertible debt		9,008
Warrants		2,739
Options		86
Restricted stock units		154
		47,277
Purchase price allocation
Cash and cash equivalents		10,209
Trade and other receivables		2,014
Inventory		3,547
Prepaid expenses		3,129
Marketable securities		635
Notes receivable		312
Property and equipment		6,850
Loan receivable		756
Intangible assets - license		61,800
Right of use asset		12,490
Goodwill		2,099
Non-controlling interest		(2,208	)
Accounts payable and accrued liabilities		(6,336	)
Lease liability		(12,887	)
Convertible debenture		(18,809	)
Notes payable		(13,326	)
Deferred tax liability		(2,998	)
		47,277

On November 18, 2020, the Company closed the acquisition of 100% of the outstanding common shares of Meta Growth Corp (“Meta Growth” or “META”). Pursuant to the terms of the Arrangement, holders of common shares of META (“META Shares“) received 0.824 (the “Exchange Ratio“) High Tide Shares for each META Share held. In total, High Tide acquired 237,941,274 META Shares in exchange for 196,063,610 High Tide Shares, resulting in former META shareholders holding approximately 45.0% of the total number of issued and outstanding High Tide Shares.

In accordance with IFRS 3, Business Combinations (“IFRS 3”), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, property plant and equipment, right of use asset, non-controlling interest, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business, expanded access to capital and greater financial flexibility. For the three months ended January 31, 2021, Meta Growth accounted for $14,506 in revenues and $243 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $3,422 in revenues and an increase of $401 in net loss for the three months ended January 31, 2021. The Company also incurred $1,354 in transaction costs, which have been expensed to finance and other costs during the period.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

Revenue from Contracts with Customers

For the three months ended January 31, 2021	Retail		Wholesale		Corporate		Total
	$		$		$		$
Primary geographical markets ⁽ⁱ⁾
Canada		33,282		908		11		34,201
USA		3,266		643		-		3,909
International		209		-		-		209
Total revenue		36,757		1,551		11		38,319
Major products and services
Cannabis		30,377		-		-		30,377
Smoking accessories		4,382		1,527		-		5,909
Franchise royalties and fees		36		-		10		46
Data analytics services		1,488		-		-		1,488
Other revenue		474		24		1		499
Total revenue		36,757		1,551		11		38,319
Timing of revenue recognition
Transferred at a point in time		36,757		1,551		11		38,319
Total revenue		36,757		1,551		11		38,319

For the three months ended January 31, 2020	Retail		Wholesale		Corporate		Total
	$		$		$		$
Primary geographical markets ⁽ⁱ⁾
Canada		10,768		871		217		11,856
USA		1,193		507		-		1,700
International		159		-		-		159
Total revenue		12,120		1,378		217		13,715
Major products and services
Cannabis		9,024		-		-		9,024
Smoking accessories		2,663		1,320		-		3,983
Franchise royalties and fees		376		-		207		583
Interest and other revenue		57		58		10		125
Total revenue		12,120		1,378		217		13,715
Timing of revenue recognition
Transferred at a point in time		12,120		1,378		217		13,715
Total revenue		12,120		1,378		217		13,715

(i)

Represents revenue based on geographical locations of the customers who have contributed to the revenue generated in the applicable segment.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

Intangible Assets and Goodwill

	Software			Licenses		Lease buy-out			Brand Name			Goodwill			Total
Cost	$			$		$			$			$			$
Balance, October 31, 2019		1,848			2,594		2,557			1,539			4,466			13,004
Transition adjustment - IFRS 16		-			-		(2,557	)		-			-			(2,557	)
Additions		474			-		-			-			-			474
Additions from business combinations		-			7,382		-			-			1,896			9,278
Balance, October 31, 2020		2,322			9,976		-			1,539			6,362			20,199
Additions		24			-		-			-			-			24
Additions from business combinations (Note 3)		-			61,800		-			-			2,099			63,899
Balance, January 31, 2021		2,346			71,776		-			1,539			8,461			84,122
Accumulated depreciation
Balance, October 31, 2019		111			75		191			-			-			377
Transition adjustment - IFRS 16		-			-		(191	)		-			-			(191	)
Amortization		495			1,113		-			-			-			1,608
Balance, October 31, 2020		606			1,188		-			-			-			1,794
Amortization		98			3,614		-			-			-			3,712
Balance, January 31, 2021		704			4,802		-			-			-			5,506
Foreign currency translation
Balance, October 31, 2019		60			-		-			57			336			453
Recorded in other comprehensive loss		(20	)		-		-			(20	)		(35	)		(75	)
Balance, October 31, 2020		40			-		-			37			301			378
Recorded in other comprehensive loss		-			-		-			-			6			6
Balance, January 31, 2021		40			-		-			37			307			384
Net book value
Balance, October 31, 2019		1,677			2,519		2,366			1,482			4,130			12,174
Balance, October 31, 2020		1,676			8,788		-			1,502			6,061			18,027
Balance, January 31, 2021		1,602			66,974		-			1,502			8,154			78,232

Property and Equipment

	Office equipment and computers			Leasehold improvements			Vehicles		Buildings		Total
	$			$			$		$		$
Cost
Balance, October 31, 2019		452			10,505			167		2,800		13,924
Additions		306			1,989			-		-		2,295
Additions from business combinations		31			1,180			-		-		1,211
Impairment loss		(11	)		(694	)		-		-		(705	)
Balance, October 31, 2020		778			12,980			167		2,800		16,725
Additions		154			1,513			-		-		1,667
Additions from business combinations (Note 3)		1,620			5,230			-		-		6,850
Balance, January 31, 2021		2,552			19,723			167		2,800		25,242
Accumulated depreciation
Balance, October 31, 2019		127			1,265			148		2		1,542
Depreciation		125			1,953			10		10		2,098
Balance, October 31, 2020		252			3,218			158		12		3,640
Depreciation		232			787			2		2		1,023
Balance, January 31, 2021		484			4,005			160		14		4,663
Net book value
Balance, October 31, 2019		325			9,240			19		2,798		12,382
Balance, October 31, 2020		526			9,762			9		2,788		13,085
Balance, October 31, 2021		2,068			15,718			7		2,786		20,579

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

Prepaid expenses and deposits

As at	January 31, 2021			October 31, 2020
	$			$
Deposits on cannabis retail outlets		816			809
Prepaid insurance and other		2,916			311
Prepayment on inventory		2,148			2,759
Total		5,880			3,879
Less current portion		(4,406	)		(3,070	)
Long-term		1,474			809

Trade and other receivables

As at	January 31, 2021		October 31, 2020
	$		$
Trade accounts receivable		3,372		2,673
Sales tax receivable		80		188
Total		3,452		2,861

Finance and other costs

Finance and other costs are comprised of the following:

	2021		2020
	$		$
Accretion expense		804		824
Interest on convertible debenture		1,021		583
Interest on notes payable		297		82
Accretion notes payable		111		21
Accretion of lease liability		469		224
Transaction cost		227		22
Acquisition costs		1,354		600
Total		4,283		2,356

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

10.

Convertible Debentures

On July 24, 2020, the Company entered into a debt restructuring agreement of $10,808 of the Company’s outstanding debt held by a key industry investor under an 8.5% senior unsecured convertible debenture issued in December 2018. The Company agreed to pay to the key investor certain structured installment payments over a period of over approximately three years, beginning on November 1, 2021, the parties have agreed to amend the original debenture into a secured convertible debenture of the Company in the principal amount equal to the $10,808 (the “Deferred Amount “). The Structured Payments, which start in November 2021, will be credited towards the Deferred Amount. As part of the Debt Restructuring, the parties have also (i) extended the maturity date of the amended debenture to January 1, 2025, (ii) amended the conversion price such that the Deferred Amount is convertible into common shares of High Tide (“HITI Shares“) at a conversion price of $0.425 per HITI Share, and (iii) amended the interest provisions such that the Deferred Amount will not bear any interest until maturity, with the portion of the Deferred Amount outstanding on maturity bearing interest on and from the maturity date at a rate of 8.5% per annum. Upon extinguishment of the debenture $1,445 conversion option was moved to contributed surplus. Management calculated the fair value of the liability component as $5,069 using a discount rate of 22% along with forecasted scheduled payments, with the residual amount of $1,072 net of deferred tax of $247 being allocated to equity. The Company also recognized $3,808 as a gain on extinguishment of debenture.

On December 10, 2020, the Company entered into a debt extension agreement of $1,250 of the Company’s outstanding debt under an 8.5% senior unsecured convertible debenture issued in December 2018. As part of the Debt extension, the parties have also (i) extended the maturity date of the amended debenture to December 31, 2022, (ii) amended the conversion price such that the deferred amount is convertible into common shares of High Tide (“HITI Shares”) at a conversion price of $0.22 per HITI Share. Management calculated the fair value of the liability component as $1,062 using a discount rate of 15%, with the residual amount of $188 net of deferred tax of $42 being allocated to equity. On December 15, 2020, the Company repaid $80 towards the principal amount in cash.

ii.

On April 10, 2019, the Company closed the first tranche of the sale of unsecured convertible debentures of the Company under a non-brokered private placement for gross proceeds of $8,360. The outstanding principal amount is convertible at any time before maturity at the option of the holder, into common shares of the Company at a conversion price of $0.75 per share and mature two years from the closing of the private placement. Under the private placement, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.75 original principal amount of its debenture, resulting in 11,146,667 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.85 per share for two years from the date of issuance. The company incurred $50 in legal costs which was paid by the issuance of 100,000 shares with a fair value of $0.50 per share. The debentures bear interest at a rate of 10% per annum, payable annually upfront in common shares of High Tide based on the 10-day volume weighted average price of $0.48 prior to the closing date of the private placement. Concurrent with the issuance of the debentures, the Company paid the annual amount of interest due to holders upfront in the form of 1,752,621 Shares. Management calculated the fair value of the liability component as $7,138 using a discount rate of 22%, with the residual amount of $1,222 net of deferred tax of $330 being allocated to warrants, recorded in equity. The Company reclassed $515 from warrants to conversion option within equity. The Company incurred $58 in debt issuance cost, $50 being allocated to debt component and the remaining $8 to the warrants. On December 4, 2019, the Company repaid $1,500 and on April 1, 2020, the Company repaid $367 towards the principal of the convertible debt. During, the year ended October 31, 2020 the Company recognized $142 loss on settlement of convertible debentures.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

10.

Convertible Debentures (continued)

iii.

On December 10, 2020, the Company entered into a debt restructuring agreement of $1,000 of the Company’s outstanding debt under an 10% senior unsecured convertible debenture issued in June 2019. As part of the Debt Restructuring, the parties have also (i) extended the maturity date of the amended debenture to December 31, 2022, (ii) amended the conversion price such that the Deferred Amount is convertible into common shares of High Tide (“HITI Shares”) at a conversion price of $0.22 per HITI Share. Upon extinguishment of the debenture $63 conversion option was moved to contributed surplus. Management calculated the fair value of the liability component as $850 using a discount rate of 15% along with forecasted scheduled payments, with the residual amount of $150 net of deferred tax of $35 being allocated to equity. The Company also recognized $87 as a loss on extinguishment of debenture.

iv.

On November 14, 2019, the Company closed the sale of unsecured convertible debentures of the Company under a non-brokered private placement for gross proceeds of $2,000. The outstanding principal amount is convertible at any time before maturity at the option of the holder, into common shares of the Company at a conversion price of $0.252 per share and mature two years from the closing of the offering. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.252 original principal amount of its debenture, resulting in 7,936,057 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.50 per share for two years from the date of issuance. The debentures will bear interest at a rate of 10% per annum, payable annually upfront in common shares of High Tide based on the 10-day volume weighted average price of $0.255 prior to the closing date of the offering. Concurrent with the final tranche issuance of the debentures, the Company paid the annual amount of interest due to holders upfront in the form of 784,314 Shares.

Management calculated the fair value of the liability component as $1,707 using a discount rate of 22%, the conversion option at relative fair value of $189 net of deferred tax of $43 and the residual of $104 net of deferred tax of $24 being allocated to warrants, recorded in equity.

On December 4, 2019, the Company closed the sale of unsecured convertible debentures of the Company under a non-brokered private placement for gross proceeds of $2,115. The outstanding principal amount is convertible at any time before maturity at the option of the holder, into common shares of the Company at a conversion price of $0.252 per share and mature two years from the closing of the offering. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.252 original principal amount of its debenture, resulting in 8,392,857 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.50 per share for two years from the date of issuance. The debentures will bear interest at a rate of 10% per annum, payable annually upfront in common shares of High Tide based on the 10-day volume weighted average price of $0.208 prior to the closing date of the offering. Concurrent with the final tranche issuance of the debentures, the Company paid the annual amount of interest due to holders upfront in the form of 1,016,826 Shares. An advising fee of $3 was paid in connection to the convertible debt.

Management calculated the fair value of the liability component as $1,806 using a discount rate of 22%, the conversion option at relative fair value of $167 net of deferred tax of $38 and the residual of $142 net of deferred tax of $33 being allocated to warrants, recorded in equity.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

10.

Convertible Debentures (continued)

On December 10, 2020, the Company entered into a debt restructuring agreement of $2,000 of the Company’s outstanding debt under an 10% senior unsecured convertible debenture issued in December 2019. As part of the Debt Restructuring, the parties have also (i) extended the maturity date of the amended debenture to December 31, 2022, (ii) amended the conversion price such that the Deferred Amount is convertible into common shares of High Tide (“HITI Shares”) at a conversion price of $0.22 per HITI Share. Upon extinguishment of the debenture $122 conversion option was moved to contributed surplus. Management calculated the fair value of the liability component as $1,886 using a discount rate of 15% along with forecasted scheduled payments, with the residual amount of $114 net of deferred tax of $26 being allocated to equity. The Company also recognized $230 as a loss on extinguishment of debenture. Subsequent to the restructuring, all the debenture holders exercised the conversion option resulting in the issuance of 9,547,257 shares. Upon conversion of the debenture $121 related to the conversion option was moved to contributed surplus.

On December 14, 2019, the Company issued $2,000 in convertible debt to settle the put option related to Grasscity acquisition valued at $2,554 as of December 14, 2019. The outstanding principal amount is convertible at any time before maturity at the option of the holder, into common shares of the Company at a conversion price of $0.252 per share and mature two years from the closing of the offering. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.252 original principal amount of its debenture, resulting in 7,936,508 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.50 per share for two years from the date of issuance. The debentures will bear interest at a rate of 10% per annum, payable annually upfront in common shares of High Tide based on the 10-day volume weighted average price of $0.175 prior to the closing date of the offering. Concurrent with the final tranche issuance of the debentures, the Company paid the annual amount of interest due to holders upfront in the form of 1,142,857 Shares. The Company also recognized a $505 unrealized gain on the fair value of the instrument.

Management calculated the fair value of the liability component as $1,707 using a discount rate of 22%, the conversion option at relative fair value of $167 net of deferred tax of $38 and the residual of $175 net of deferred tax of $40 being allocated to warrants, recorded in equity.

vi.

On January 6, 2020, the Company entered into a loan agreement with Windsor Private Capital (“Windsor”), a Toronto-based merchant bank, for a senior secured, non-revolving term credit facility (“the Facility”) in the amount of up to $10,000. The Company will have immediate access to an initial $6,000, that can be drawn down at Company’s discretion, and subject to satisfaction of certain conditions, will provide the Company with access to an additional $4,000. Provided that certain conditions are satisfied, the Facility will automatically extend for an additional one-year term. The principal amount advanced under the facility is convertible, during its term at any time after an initial 6 month hold period, and at Windsor’s option, into common shares in the capital of the Company at a conversion price of $0.17 per share and mature one year from the closing of the offering. The conversion price is subject to downward adjustment if the Company, at any time during the term of the facility, issues securities at a price deemed lower than the conversion price then in effect. Pursuant to the loan agreement, Windsor is entitled to a one-time placement fee equal to 3.5% of the initial Facility amount, which the Company capitalized into the principal amount advanced under the Facility. Under the offering, the Company also issued common share purchase warrants such that each subscriber received one warrant for each $0.17 original principal amount of its debenture, resulting in 58,823,529 warrants being issued as part of the offering. Each warrant entitles the holder to acquire one share at an exercise price of $0.255 per share for two years from the date of issuance. Amounts drawn down under the facility will bear interest at a rate of 11.5% per annum, payable monthly, in arrears, on the last day of each calendar month. As of January 31, 2020, the Company withdrew in the amount of $5,000 from the credit facility. As of October 31, 2020, the Company still have access to unused remaining balance of $5,000.

Gross proceeds were $5,000 and net proceeds were $4,743, net of cash transaction costs of $257. The gross proceeds were allocated using the Black-Scholes model to value warrants at $364 which was recorded as a derivative liability for $364, the host debt component for $4,309, and the embedded derivatives for $327. The warrants were initially valued at $364 using the Black-Scholes model and the following assumptions were used: stock price of $0.16; expected life of two years; $nil dividends; expected volatility of 70%; exercise price of $0.255; and a risk-free interest rate of 0.52%. At October 31, 2020, the warrants were revalued at $266 using the Black-Scholes model and the following assumptions were used: stock price of $0.145; expected life of 1.4 years; $nil dividends; expected volatility of 70%; exercise price of $0.255; and a risk-free interest rate of 0.52% and recognized a gain of $98 as revaluation of derivative liability. Subsequent changes in fair value of the equity conversion option will be recognized through profit and loss (i.e., FVTPL). The equity conversion option was classified as a derivative liability as it can be settled through the issuance of a variable number of shares, cash, or a combination thereof, based on the trading price at the time of settlement. The fair value of the equity conversion option was determined using the Black-Scholes model and the following assumptions: stock price: $0.16; expected life of 2 year; $nil dividends; expected volatility of 70%; exercise price of $0.255; and risk-free interest rate of 1.98%. Management elected to capitalize $257 transaction costs, which are directly attributable to the issuance of the loan agreement. As of October 31, 2020, the conversion option had a fair value of $498 and the Company recognized a $171 unrealized loss on the derivative liability for the year ended October 31, 2020. The fair value of the equity conversion option was determined using the Black-Scholes model and the following assumptions: stock price: $0.145; expected life of 1.4 year; $nil dividends; expected volatility of 70%; exercise price of $0.255; and risk-free interest rate of 0.52%.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

10.

Convertible Debentures (continued)

On December 8, 2020, the Company entered into a debt restructuring agreement of $5,000 of the Company’s outstanding debt. In conjunction with the restructuring, the Company withdrew an additional $1,000 on the credit facility. As part of the Debt Restructuring, the parties have also (i) extended the maturity date of the amended debenture to December 31, 2021, (ii) amended the conversion price such that the Deferred Amount is convertible into common shares of High Tide (“HITI Shares”) at a conversion price of $0.17 per HITI Share (iii) amended the interest rate from 11.50% per annum to 10% per annum. At December 8, 2020, the warrants were revalued at $389 using the Black-Scholes model and the following assumptions were used: stock price of $0.165; expected life of 1.0 years; $nil dividends; expected volatility of 35%; exercise price of $0.255; and a risk-free interest rate of 0.52% and $199 fair value of the equity conversion option was determined using the Black-Scholes model and the following assumptions: stock price: $0.165; expected life of 1.0 year; $nil dividends; expected volatility of 35%; exercise price of $0.17; and risk-free interest rate of 0.52%. Revaluation of derivative liability resulted in recognizing a gain of $176. Upon extinguishment of the debenture $199 in derivative liability was moved to convertible debenture – equity. Management calculated the fair value of the liability component as $5,577 using a discount rate of 18%. As a result of the debt restructuring, the Company recognized a $199 debt restructuring loss in the statement of net loss and comprehensive loss for the period ended January 31, 2021. Subsequent to the restructuring, the debenture holders exercised the conversion option for $2,000 resulting in the issuance of 11,764,705 shares. As part, of the restructuring 23,529,412 warrants were cancelled.

vii.

In connection with the Company’s acquisition of META on November 18, 2020, the holders of the Convertible Debentures consented to amend the conversion price of the Listed Debentures such that, following the acquisition of META, the conversion price is $0.22 per High Tide Share. The holders also agreed to extend the maturity date of the Listed Debentures to November 30, 2022. Following the acquisition of META, the Convertible Debentures will remain debt obligations of META but will become convertible into High Tide Shares. Management calculated the fair value of the liability component as $18,809 using a discount rate of 15%, the conversion option at relative fair value of $9,008 recorded in equity. Subsequent to the restructuring, the debenture holder exercised the conversion option to convert part of the debt resulting in the issuance of 14,772,726 shares.

As at	January 31, 2021			October 31, 2020
	$			$
Convertible debentures, beginning of year		25,822			19,664
Debt assumed (Note 3)		18,809			-
Gain (loss) on extinguishment of debenture		516			(3,808	)
Cash advances from debt		980			9,115
Debt issuance to settle liabilities		-			2,700
Debt issuance costs paid in cash		-			(260	)
Conversion of debenture into equity		(6,759	)		(550	)
Transfer of warrants component to equity		-			(420	)
Transfer of conversion component to equity		(467	)		(523	)
Transfer of conversion component to derivative liability		-			(921	)
Repayment of debt		(180	)		(1,637	)
Accretion on convertible debentures		804			2,462
Total		39,525			25,822
Less current portion		(15,494	)		(14,446	)
Long-term		24,031			11,376

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

11.

Notes Payable

On May 23, 2019, the Company acquired all of the issued and outstanding shares of Dreamweavers for aggregate consideration of $3,094 which included 3,100,000 common shares with a fair value of $1,147, 1,550,000 purchase warrants exercisable at $0.75 per common share of High Tide and notes payables of $300 repayable over five years with zero interest rate due at each anniversary date. Notes payable was valued at $102 by discounting it over five years at market interest rate of 22%. During the three-month ended January 31, 2021, the Company incurred accretion of $10.

On June 26, 2019, the Company purchased a building in Niagara, Ontario, for the purpose of opening a Canna Cabana retail location. The consideration for the building consisted of $754 in cash, out of which $54 was legal fees, a $1,600 vendor take back loan, and $300 paid in shares. The loan has a twelve-month term and bears an interest rate of 5.5% per annum payable monthly with a maturity date of June 30^th, 2020. On July 16, 2020, the Company refinanced the loan through Windsor Private Capital (“Windsor”), a Toronto-based merchant bank. The new loan has a seventeen - month term and bears an interest rate of 10% per annum payable monthly with a maturity date of December 30th, 2021. The Company also incurred $43 in transaction costs, which will be expensed over the term of the loan using the effective interest rate.

On September 4, 2019, the Company entered into a $2,000 loan agreement with a private lender. The loan had a twelve-month term and carried an interest rate of 12% per annum payable monthly. In connection with the advance of the loan, the Company issued 1,600,000 warrants to the lender. Each warrant is redeemable for one common share in the capital of the Company at a price of $0.85 per Common Share for a period of two years from the date of the loan agreement. Management calculated the fair value of the liability component as $1,895 using a discount rate of 22%, with the residual amount of $105 being allocated to warrants, recorded in equity. The loan was personally guaranteed by the CEO. On September 14, 2020, the Company entered into loan amending agreement, the maturity of the Loan was extended until September 30, 2021. The Company also entered into a warrant exchange agreement wherein the 1,600,000 warrants the Lender originally received as consideration for the Loan under the Loan Agreement, having an exercise price of $0.85 per common share and exercisable for a period of 2 years from the effective date of the Loan, were terminated and 1,600,000 new warrants having an exercise price of $0.30 per Common Share and expiring on September 30, 2021 were issued. Management calculated the fair value of the liability component as $1,928 using a discount rate of 22%, with the residual amount of $72 net of deferred tax of $17 being allocated to warrants, recorded in equity. During the three-month ended January 31, 2021, the Company incurred accretion of $17.

The Company obtained a government loan under the Canada Emergency Response Benefit, part of Canada’s COVID-19 economic response plan. The loan bears no interest and has a maturity date of December 31, 2025. The note payable has been recorded at its fair value of $69 by discounting it over six months at a market interest rate of 22%. During the three-months ended January 31, 2021, the Company incurred accretion of $6.

On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation (“OCN”). Notes payable were valued at $12,783 at the date of acquisition by discounting it over two years at market interest rate of 15%. On January 6, 2021, the Company entered into another Amended Loan Agreement with OCN to remove the annual administration fee and extend the maturity date of the loan until December 31, 2024. As a result of the debt restructuring, the Company recognized a $1,145 debt restructuring gain in the statement of net loss and comprehensive loss for the period ended January 31, 2021. The carrying value of the loan balance as at January 31, 2021 amounts to $11,402. During the three-months ended January 31, 2021, the Company incurred accretion of $267 and also made $503 in payment towards the outstanding balance.

As at	January 31, 2021			October 31, 2020
	$			$
Vendor loan		1,600			1,600
Term loan		1,956			1,939
OCN – notes payable		11,402			-
Loan to partners (Note 3)		542			-
Dreamweavers – notes payable		129			162
Saturninus Partners – notes payable		690			690
Government loan		90			84
Total		16,409			4,475
Less current portion		(4,098	)		(1,939	)
Long-term		12,311			2,536

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

12.

Share Capital

(a)

Issued:

Common shares:

	Number of shares		Amount
	#		$
Balance, October 31, 2019		207,406,629		26,283
Issued to pay fees in shares		3,852,319		860
Issued to pay interest via shares		6,782,011		1,168
Acquisition - KushBar		2,645,503		500
Acquisition - 2680495		4,761,905		1,048
Acquisition - Saturninus		5,319,149		1,064
Acquisition - 102088460		5,000,000		975
Lease acquisition - Canmore		612,764		104
Exercise - Convertibile Debt		3,709,916		550
Balance, October 31, 2020		240,090,196		32,552
Acquisition - Meta Growth (Note 3)		196,063,610		35,290
Prepaid Interest paid in shares		7,646,923		1,458
Conversion of convertible debentures (Note 10)		31,539,234		6,759
Excersie options (Note 13)		62,500		13
Conversion of warrants		800,824		240
Issued to pay fees in shares ⁽ⁱ⁾		1,025,477		174
Balance, January 31, 2021		477,228,764		76,486

(i)

During the three months period ended January 31, 2021, Company settled payables of $174 through issuance of 1,025,477 common shares of the Company. The fair value of $174 was based on the closing price of $0.175 on the date of issuance.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

13.

Share – Based Compensation

(a)

Stock Option Plan:

The Company’s stock option plan limits the number of common shares reserved under the plan from exceeding a “rolling maximum” of ten (10%) percent of the Company’s issued and outstanding common shares from time to time. The stock options vest at the discretion of the Board of Directors, upon grant to directors, officers, employees and consultants of the Company and its subsidiaries. All options that are outstanding will expire upon maturity, or earlier, if the optionee ceases to be a director, officer, employee or consultant or there is a merger, amalgamation or change in control of the Company. The maximum exercise period of an option shall not exceed 10 years from the grant date. Changes in the number of stock options, with their weighted average exercise prices, are summarized below:

	January 31, 2021					October 31, 2020
	Number of options			Weighted Average Exercise Price ($)		Number of options			Weighted Average Exercise Price ($)
Balance, beginning of year		9,310,000			0.50		10,610,000			0.50
Granted ⁱ		23,633,280			0.27		200,000			0.50
Cancelled		(7,100,000	)		0.50		-			-
Forfeited		-			-		(1,500,000	)		0.50
Exercised		(62,500	)		0.20		-			-
Balance, end of period		25,780,780			0.29		9,310,000			0.50
Exercisable, end of period		11,318,280			0.29		7,370,625			0.50

For the period ended January 31, 2021, the Company recorded share-based compensation of $553 (2020 - $27) related to stock options.

(i)

On November 18, 2020, the Company acquired all the issued and outstanding shares of Meta which resulted in acquiring 3,683,280 options outstanding on the date of closing. The fair value of the options acquired were calculated using the Black-Scholes option pricing model valued using the Black-Scholes model and the following assumptions were used: stock price of $0.18; expected life of 1 years; $nil dividends; expected volatility of 100%; exercise price as per the plan times the exchange ratio of 0.824; and a risk-free interest rate of 0.52%. During the three months ended Jan 31, 2021 the Company granted 19,950,000 options to directors, officers, employees and consultants of the Company and its subsidiaries. The options were valued using the Black-Scholes model and the following assumptions were used: stock price of $0.19; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $0.20; and a risk-free interest rate of 0.52%.

(b)

Restricted Share Units (“RSUs”) plan

On November 18, 2020, the Company acquired all the issued and outstanding shares of Meta which resulted in acquiring 943,579 RSUs outstanding on the date of closing based on the exchange ratio of 0.824 agreed upon in the arrangement agreement. The Company’s RSU plan is applicable to directors, officers, and employees of the Company. The RSUs are equity-settled and each RSU can be settled for one common share for no consideration. The number of RSUs outstanding at January 31, 2021 amounts to 943,579. These RSUs were recorded in contributed surplus using the Black-Scholes model and the following assumptions were used: stock price of $0.18; expected life of 0.35 years; $nil dividends; expected volatility of 70%; exercise price of $0.18; and a risk-free interest rate of 0.52%.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

14.

Warrants

	Number of warrants			Warrants amount			Derivative liability amount		Weighted average exercise price		Weighted average number of years to expiry		Expiry dates
	#			$			$		$
Opening balance, November 1, 2019		43,677,333			6,609			-		0.6083		1.13		-
Re-class warrants on convertible debt to equity		-			(660	)		-		-		-		-
Issued warrants for services ⁽ⁱ⁾		300,000			64			-		0.3800		0.00		September 3, 2021
Issued warrants for services ⁽ⁱⁱ⁾		3,500,000			204			-		0.3000		0.03		November 12, 2021
Issued warrants for services ⁽ⁱⁱⁱ⁾		1,000,000			111			-		0.3000		0.01		November 12, 2021
Issued warrants on convertible debt November 14, 2019 (Note 10)		7,936,507			80			-		0.5000		0.08		November 14, 2021
Issued warrants on convertible debt December 4, 2019 (Note 10)		8,392,857			109			-		0.5000		0.08		December 4, 2021
Issued warrants on convertible debt December 14, 2019 (Note 10)		7,936,508			135			-		0.5000		0.08		December 12, 2021
Issued warrants for acquisition - Saturninus		3,750,000			100			-		0.4000		0.04		January 26, 2022
Issued warrants on convertible debt January 06, 2020 (Note 10) ^(iv)		58,823,529			-			266		0.2550		0.62		December 31, 2022
Issued warrants on debt September 14, 2020 (Note 11)		1,600,000			55			-		0.3000		-		September 30, 2021
Warrants terminated (Note 11)		(1,600,000	)		(105	)		-		-		-		-
Warrants expired		(4,252,620	)		(906	)		-		-		-		-
Balance, October 31, 2020		131,064,114			5,796			266		0.4159		2.07
Warrants expired		(18,868,969	)		(3,946	)		-		-		-		-
Re-class warrants to derivative liability ⁽ⁱⁱ⁾		-			(204	)		833						November 12, 2021
Issued warrants for acquisition - Meta (Note 3)		741,600			3			-		1.3110		0.00		December 14, 2021
Issued warrants for acquisition - Meta (Note 3)		37,454,590			2,445			-		0.3520		0.56		February 6, 2023
Issued warrants for acquisition - Meta (Note 3)		2,621,821			171			-		0.3520		0.04		February 6, 2023
Issued warrants for acquisition - Meta (Note 3)		4,120,000			120			-		1.1040		0.07		April 11, 2023
Conversion of warrants		(800,000	)		(27	)		-		-		-		-
Issued warrants on convertible debt January 06, 2020 (Note 10) ^(iv)		-			-			10,354		-		-		December 31, 2022
Warrants cancelled (Note 10)		(23,529,412	)		-			-		-		-		-
Balance, January 31, 2021		132,803,744			4,358			11,453		0.4159		2.74

As at January 31, 2021 132,803,744 warrants were exercisable.

The Company issued 300,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.38. The warrants were valued at $64 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.37; expected life of two years; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.38; and a risk-free interest rate of 1.6%.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

14.

Warrants (continued)

ii)

The Company issued 3,500,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.30. The warrants were valued at $204 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.22; expected life of two years; $nil dividends; expected volatility of 70% based on comparable companies; exercise price of $0.30; and a risk-free interest rate of 1.6%. The Company measured the derivative liability to be $833 and recognized $628 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss for the period ended January 31, 2021.

iii)

The Company issued 1,000,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.30. The warrants were valued at $111 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.22; expected life of two years; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.30; and a risk-free interest rate of 1.6%.

iv)

The Company measured the derivative liability to be $10,620 and recognized $10,032 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss for the period ended January 31, 2021.

15.

Loss Per Share

	Three months ended
	January 31
	2021			2020
	$			$
Net loss for the period		(16,845	)		(3,945	)
Non-controlling interest		(24	)		(3	)
Net income (loss) for the period attributable to owners of the Company		(16,869	)		(3,948	)
		#			#
Weighted average number of common shares - basic		406,363,073			183,626,456
Weighted average number of common shares - diluted		697,394,089			-
Basic income (loss) per share		(0.04	)		(0.02	)
Dilutive income (loss) per share		(0.02	)		(0.02	)

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

16.

Financial Instruments and Risk Management

Risk management is carried out by senior management in conjunction with the Board of Directors.

Fair value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, marketable securities, loans receivable, accounts payable and accrued liabilities, notes payable, convertible debentures, derivative liabilities and shareholders’ loans.

Marketable securities

In connection with the Company’s acquisition of META on November 18, 2020, the Company acquired 1,350,000 shares of THC Global Group Limited (“THC”). The fair value of the THC shares amounting to $606 has been recognized as a marketable security, based on the trading price of THC’s shares. In addition, to this the Company has also recorded $245 in GICs as a marketable security.

Credit risk

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

16.

Financial Instruments and Risk Management (continued)

The following table sets forth details of the aging profile of accounts receivable and the allowance for expected credit loss:

As at	January 31, 2021			October 31, 2020
	$			$
Current (for less than 30 days)		2,188			1,822
31 – 60 days		185			246
61 – 90 days		92			202
Greater than 90 days		1,076			762
Less allowance		(169	)		(359	)
		3,372			2,673

For the three months ended January 31, 2021, $190 in trade receivables were written off against the loss allowance due to bad debts (year ended October 31, 2020 – $1,280). Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The remaining accounts receivable are assessed collectively to determine whether there is objective evidence that an impairment has been incurred but not yet been identified.

The Company performs a regular assessment of collectability of accounts receivables. In determining the expected credit loss amount, the Company considers the customer’s financial position, payment history and economic conditions. For the year ended January 31, 2021, management reviewed the estimates and have not created any additional loss allowances on trade receivable.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company generally relies on funds generated from operations, equity and debt financings to provide sufficient liquidity to meet budgeted operating requirements and to supply capital to expand its operations. The Company continues to seek capital to meet current and future obligations as they come due. Maturities of the Company’s financial liabilities are as follows:

	Contractual cash flows		Less than one year		1-5 years		Greater than 5 years
	$		$		$		$
October 31, 2020
Accounts payable and accrued liabilities		6,421		6,421		-		-
Notes payable		4,475		1,939		2,536		-
Convertible debentures		25,822		14,446		11,376		-
Total		36,718		22,806		13,912		-
January 31, 2021
Accounts payable and accrued liabilities		9,071		9,071		-		-
Notes payable		16,409		4,098		12,311		-
Convertible debentures		39,525		15,494		24,031		-
Total		65,005		28,663		36,342		-

Interest rate risk

The Company is not exposed to significant interest rate risk as its interest-bearing financial instruments carry a fixed rate of interest.

Foreign currency risk

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

16.

Financial Instruments and Risk Management (continued)

The Canadian dollar equivalent carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities as at January 31, 2021 was as follows:

(Canadian dollar equivalent amounts of US dollar and Euro balances)	January 31, 2021 (Euro)			January 31, 2021 (USD)			January 31, 2021 Total			October 31, 2020
	$			$			$			$
Cash		330			1,232			1,562			975
Accounts receivable		232			312			544			653
Accounts payable and accrued liabilities		(813	)		(983	)		(1,796	)		(1,728	)
Net monetary assets		(251	)		561			310			(100	)

Assuming all other variables remain constant, a fluctuation of +/- 5.0 percent in the exchange rate between the United States dollar and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $28 (October 31, 2020 - $34). Maintaining constant variables, a fluctuation of +/- 5.0 percent in the exchange rate between the Euro and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $13 (October 31, 2020 - $39). To date, the Company has not entered into financial derivative contracts to manage exposure to fluctuations in foreign exchange rates.

17.

Segmented Information

	Retail			Retail			Wholesale			Wholesale			Corporate			Corporate			Total			Total
For the three months	2021			2020			2021			2020			2021			2020			2021			2020
ended January 31,	($)			($)			($)			($)			($)			($)			($)			($)
Total Revenue		36,757			12,120			1,551			1,378			11			217			38,319			13,715
Gross profit		14,195			4,106			562			471			11			216			14,768			4,793
Income (loss) from operations		1,238			(638	)		(222	)		(376	)		(3,061	)		(1,103	)		(2,045	)		(2,117	)
Net Income (loss)		(182	)		(712	)		(335	)		(400	)		(16,328	)		(2,833	)		(16,845	)		(3,945	)

Total assets		94,642			46,678			5,932			5,972			66,000			17,161			166,574			69,811
Total liabilities		38,470			22,893			2,111			1,894			72,194			33,301			112,775			58,088

	Canada			Canada			USA			USA			Europe		Europe			Total			Total
For the three months	2021			2020			2021			2020			2021		2020			2021			2020
ended January 31,	($)			($)			($)			($)			($)		($)			($)			($)
Total Revenue		34,202			12,297			643			-			3,474		1,418			38,319			13,715
Gross profit		12,984			4,062			219			-			1,565		731			14,768			4,793
Income (loss) from operations		(2,489	)		(1,747	)		(114	)		(181	)		558		(189	)		(2,045	)		(2,117	)
Net Income (loss)		(17,090	)		(3,547	)		(129	)		(204	)		374		(194	)		(16,845	)		(3,945	)

Total assets		155,673			60,621			2,554			1,062			8,347		8,128			166,574			69,811
Total liabilities		98,739			55,471			765			806			13,271		1,811			112,775			58,088

18.

Related Party Transactions

As at January 31, 2021, the Company had the following transactions with related parties as defined in IAS 24 – Related Party Disclosures, except those pertaining to transactions with key management personnel in the ordinary course of their employment and/or directorship arrangements and transactions with the Company’s shareholders in the form of various financing.

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

18.

Related Party Transactions (continued)

Financing transactions

Included in the convertible debenture issued on December 12, 2018, was an investment by a director of the Company, CannaIncome Fund Corporation, for a total subscription amount of $250.

A Director of the Company is Chief of the Opaskwayak Cree Nation (“OCN”). On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation (“OCN”). As at January 31, 2021 the Company has drawn $13,000.

Operational transactions

19.

Right of Use Assets and Lease Obligations

The Company entered into various lease agreements predominantly to execute its retail platform strategy. The Company leases properties such as various retail stores and offices. Lease contracts are typically made for fixed periods of 5 to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

Right of use assets
	$
Balance at November 1, 2020		16,413
Net additions		12,456
Depreciation expense for the period		(1,359	)
Balance at January 31, 2021		27,510

Lease Liabilities
	$
Balance at November 1, 2020		16,668
Net additions		12,580
Cash outflows in the period		(1,088	)
Accretion (Interest) expense for the period ended		469
Balance at January 31, 2021		28,629
Current		(5,152	)
Non-current		23,477

As at January 31, 2021, $1,827 is due to the Company in respect of sublease arrangements for franchise cannabis retail locations. For the period ended January 31, 2021, $80 was received in respect of sublease arrangements, which was recognized as other revenue. During the period ended January 31, 2021, the Company also paid $660 in variable operating costs associated to the leases which are expensed under general and adminstrative expenses.

The following is a summary of the contractual undiscounted cash outflows for lease obligations as of January 31, 2021:

	$
Less than one year		7,792
Between one and five years		21,713
Greater than five years		5,795
		35,300

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended January 31, 2021 and 2020

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

20.

Contingent liability

In the normal course of business, the Company and its subsidiaries may become defendants in certain employment claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount can be reasonably estimated. Other than the claims described below, the Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company’s business, financial condition or results of the operations.

21.

Non-controlling interest

The following table presents the summarized financial information for the Company’s subsidiaries which have non-controlling interests. This information represents amounts before intercompany eliminations.

	2021			2020
	$			$
Total current assets		1,358			2,540
Total non-current assets		4,259			3,696
Total current liabilities		(1,908	)		(942	)
Total non-current liabilities		(1,323	)		(1,080	)
Revenues for the year ended		3,240			6,011
Net income for the year ended		352			1,320

The net change in non-controlling interests is as follows:

As at	January 31, 2021		October 31, 2020
	$		$
Balance, beginning of the year		1,552		(179	)
Share of (loss) income for the period		24		614
Purchase of minority interest - KushBar Inc.		-		187
Purchase of - Saturninus Partners		-		930
Purchase of – Meta (Note 3)		2,208		-
		3,784		1,552

As of October 31, 2019, the Company held a 50.1% ownership interest in KushBar, with $179 NCI. As well, the Company owed the non-controlling interest shareholder $701 (2018 - $36). The loan carries no interest and is due on demand. On December 10, 2019, the Company entered into a definitive share purchase agreement with 2651576 Ontario Inc. (the “Minority Shareholder”), a private Ontario company, to acquire the remaining 49.9% interest (the “Minority Interest”) in High Tide’s majority-owned subsidiary, KushBar Inc. (“KushBar”).

On January 27, 2020, the Company acquired a 50% interest in the Saturninus Partners (“Saturninus”) which operates a licensed retail cannabis store in Sudbury, Ontario. The Company has classified this arrangement as a joint venture with controlling interest.

On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included four joint ventures with controlling interest. These joint ventures operate as a licensed cannabis retail store in Manitoba.

22.

Subsequent Events

(i)

On February 22, 2021, the Company closed of its previously announced “bought deal” short-form prospectus offering (the “Offering”) of units of the Company (the “Units”), including the exercise in full of the underwriters’ over-allotment option. The Offering was led by ATB Capital Markets Inc. and Echelon Wealth Partners Inc., together with Beacon Securities Limited and Desjardins Securities Inc. In connection with the Offering, the Company issued an aggregate of 47,916,665 Units at a price of $0.48 per Unit, for aggregate gross proceeds of $23,000. Each Unit is comprised of one common share of the Company (each, a “Common Share”) and one half of one Common Share purchase warrant (each whole warrant, a “Warrant”). Each Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of $0.58, for a period of 36 months following the closing of the Offering.

(ii)

Subsequent to the period ended January 31, 2021, $23,260 of debt was converted into common shares.

(iii)

On March 24, 2021, the Company acquired all the issued and outstanding shares of Smoke Cartel (“SC Shares”) for US$8,000, implying an approximate value of US$0.31 per SC Share. The consideration was comprised of: (i) 9,540,754 common shares of High Tide (the “HT Shares”), having an aggregate value of US$6,000; and (ii) US$2,000 in cash. Pursuant to the Acquisition Agreement, 25% of the Share Consideration has been placed in escrow for a period of 12 months from Closing.

Exhibit 99.163

Management’s Discussion & Analysis

For the three months ended January 31, 2021 and 2020

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

This Management’s Discussion and Analysis (“MD&A”) of High Tide Inc. (“High Tide” or the “Company”) for the three months ended January 31, 2021 and 2020 is dated March 31, 2021. This MD&A should be read in conjunction with the audited Consolidated Financial Statements of the Company for the years ended October 31, 2020 (hereafter the “Financial Statements”) and with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).

In this document, the terms “we”, “us” and “our” refer to High Tide. This document also refers to the Company’s three reportable operating segments: (i) the “Retail” Segment represented by brands, including Canna Cabana, NewLeaf Cannabis, Meta Cannabis Co, KushBar, Grasscity, and CBDcity, (ii) the “Wholesale” Segment represented by brands, including Valiant Distribution (“Valiant”) and Famous Brandz (“Famous Brandz”), and (iii) the “Corporate” Segment.

High Tide is a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories. The Company’s shares are listed on the TSX Venture Exchange (“TSXV”) under the symbol “HITI”, the Frankfurt Stock Exchange (“FSE”) under the securities identification code ‘WKN: A2PBPS’ and the symbol “2LY”, and on the OTCQB Market (“OTCQB”) under the symbol “HITIF”. The address of the Company’s corporate and registered office is # 120 – 4954 Richard Road SW, Calgary, Alberta T3E 6L1, while the address of the Company’s headquarters is #112, 11127 15 Street NE, Calgary, Alberta, T3K 2M4.

Additional information about the Company, including the October 31, 2020 audited Consolidated Financial Statements, news releases, the Company’s short-form prospectus, and other disclosure items of the Company can be accessed at www.sedar.com and at www.hightideinc.com.

Forward-Looking Information and Statements

Certain statements contained within this MD&A, and in certain documents incorporated by reference into this document, constitute forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

In particular, this MD&A contains forward-looking statements pertaining, without limitation, to the following: changes in general and administrative expenses; future business operations and activities and the timing thereof; the future tax liability of the Company; the estimated future contractual obligations of the Company; the future liquidity and financial capacity of the Company; and its ability to fund its working capital requirements and forecasted capital expenditures.

We believe the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this MD&A should not be unduly relied upon.

These forward-looking statements speak only as of the date of this MD&A or as of the date specified in the documents incorporated by reference into this MD&A. The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A: counterparty credit risk; access to capital; limitations on insurance; changes in environmental or legislation applicable to our operations, and our ability to comply with current and future environmental and other laws; changes in income tax laws or changes in tax laws and incentive programs relating to the cannabis industry; and the other factors discussed under “Financial Instruments and Risk Management” in this MD&A.

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this MD&A and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The forward-looking statements contained in this document speak only as of the date of this document and the Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Changes in Accounting Policies and Critical Accounting Estimates

The significant accounting policies applied in preparation of the unaudited condensed interim consolidated financial statements for the three months ended January 31, 2021 and 2020 are consistent with those applied and disclosed in Note 3 of the Company’s Consolidated Financial Statements for the year ended October 31, 2020 and 2019.

Non-IFRS Financial Measures

Throughout this MD&A, references are made to non-IFRS financial measures, including earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA. These measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-IFRS measures provide investors with a supplemental measure of the Company’s operating performance and therefore highlight trends in Company’s core business that may not otherwise be apparent when relying solely on IFRS measures. Management uses non-IFRS measures in measuring the financial performance of the Company.

Corporate Overview

Nature of Operations

The Company’s vision is to offer a full range of best-in-class products and services to cannabis consumers, while growing organically and through acquisitions, to become the world’s premier retail-focused and vertically integrated enterprise.

The Company’s retail operations are focused on business-to-consumer markets. The operations of Canna Cabana, KushBar and recently acquired NewLeaf Cannabis and META Cannabis Co are focused on the retail sale of recreational cannabis products for adult use as well as consumption accessories. Grasscity has been operating as a major e-commerce retailer of consumption accessories for over 20 years. It has significant brand equity in the United States and around the world, while providing an established online sales channel for High Tide to sell its proprietary products.

The wholesale operations of Valiant are primarily focused on the manufacturing and distribution of consumption accessories. Valiant designs and distributes a proprietary suite of branded consumption accessories including overseeing their contract manufacturing by third parties. Valiant also focuses on acquiring celebrity licenses, designing, and distributing branded consumption accessories. Additionally, it also distributes a minority of products that are manufactured by third parties. Valiant does not sell its products directly to consumers but operates an e-commerce platform for wholesale customers.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Established Consumer Brands:

Competitive Landscape

As of the date of this MD&A, the Company operates 72 corporately owned retail cannabis locations represented by 40 Canna Cabana locations, 19 NewLeaf Cannabis locations, 10 META Cannabis Co locations, and 3 KushBar locations. Further, the Company has a 50% interest in a partnership that operates a branded retail Canna Cabana location in Sudbury, Ontario and three joint venture operations with 49% interest that operates three branded retail META Cannabis Co locations in Manitoba. The Company is also represented by three branded locations in Toronto, Ontario, Scarborough, Ontario, and Guelph, Ontario, as well as one franchise in Calgary. In total, the Company currently has a total of 80 branded retail cannabis stores operating across Canada.

The Company’s retail recreational cannabis products segment operates amongst many competitors, both consolidated chains and independent operators. Notable competitors include Fire & Flower, Nova Cannabis, Spiritleaf and Tokyo Smoke, as well as numerous independent retailers.

Most of the Company’s competitors applicable to its Wholesale Segment operate primarily as product distributors, while Valiant designs, sources, imports and distributes majority of their own products. This creates advantages through vertical integration, thereby enabling Valiant to bring unique product designs to market and offer wholesale customers favourable terms, proprietary products, and flexible pricing.

In the future, the Company expects its brick-and-mortar retail operations to experience increased competition from the recreational cannabis industry as a greater number of third-party stores are established across Canada, offering both cannabis products and consumption accessories. However, the Company believes that its vertically integrated e-commerce and wholesale operations, product knowledge, and operational expertise will enable it to operate profitably over the long term. In addition, the Company expects opportunities to arise from the legalization of recreational cannabis for its Wholesale Segment to acquire new clients by supplying third-party retailers with consumption accessories on a wholesale basis, thereby offsetting some of the risks associated with the increased competition expected to affect the Retail Segment. While the Company is presently focused on its existing markets in the Provinces of Ontario, Alberta, Saskatchewan, and Manitoba, the Company is looking to expand its presence in Ontario and enter the market in British Columbia. The Company is currently evaluating entering other provinces and territories including North West Territories, and the Yukon as regulations permit and anticipates being able to grow both organically as well as through acquisitions in the future.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Select Financial Highlights and Operating Performance

For the three months ended January 31,	2021			2020			Change
	$			$			%
Revenue		38,319			13,715			179	%
Gross Profit		14,768			4,793			208	%
Gross Profit Margin		39	%		35	%		4	%
Total Operating Expenses		(16,813	)		(6,910	)		143	%
Adjusted EBITDA^(a)		4,602			(821	)		NM
Loss from Operations		(2,045	)		(2,117	)		(3	)%
Net Loss		(16,845	)		(3,945	)		327	%
Loss Per Share (Basic)		(0.04	)		(0.02	)		100	%
Loss Per Share (Diluted)		(0.02	)		(0.02	)		NM

^(a)

Adjusted EBITDA is a non-IFRS financial measure. A reconciliation of the Adjusted EBITDA to Net Loss in found under “EBITDA and Adjusted EBITDA” in this MD&A.

NM - Not Meaningful

Revenue increased by 179% to $38,319 in the first quarter of 2021 (2020: $13,715) and gross profit increased by 208% to $14,768 in the first quarter of 2021 (2020: $4,793). Loss from operations decreased to $2,045 in the first quarter of 2021 (2019: loss $2,117).

The key factors affecting the results for the three-month period ended January 31, 2021 were:

●

Merchandise Sales – Merchandise sales increased by $23,279 or 179% for the three-month period ended January 31, 2021 as compared to 2020. Growth in merchandise sales was largely driven by acquired businesses representing $14,098 of total sales increase; the organic increase in the number of Canna Cabana stores and a shift in consumer spending towards e-commerce that resulted in a significant increase in sales on Grasscity.com, which accounts for $9,181 in total sales increase.

●

Operating Expenses – Operating expenses increased by $9,903 or 143% for the three-months ended January 31, 2021 compared to 2020, and as a percentage of revenue decreased by 6% in the first quarter of 2021 to 44% (2020: 50%).

Revenue

Revenue increased by 179% or $24,604 to $38,319 in the first quarter of 2021 (2020: $13,715).

The increase in revenue was driven primarily by the Company’s Retail Segment via the acquisition of Meta Growth Corp (“META”). on November 18, 2020.

Addition of new stores and the business combination of META into the Company contributed $23,213 of the increase in revenue while existing businesses contributed $1,391.

Canna Cabana, NewLeaf, and META all provide a unique customer experience focused on retention and loyalty through its Cabana Club membership platform. Members of Cabana Club receive short message service (“SMS”) and email communications highlighting new and upcoming product arrivals, member-only events, and other special offers. The database communicates with highly relevant consumers who are segmented at the local level by delivering regular content that is specific to their local Canna Cabana, NewLeaf, and META locations. As of the date of this MD&A, approximately 96,000 members have joined Cabana Club, with the majority subscribing in-store, while completing purchase transactions. Over 50% of the Company’s daily business is conducted with regular Cabana Club members. During the quarter, Cabana Club members spent, on average, 13% more than non-Cabana Club members, which enhanced the Retail Segment’s overall basket-size. This is a confirmation that the Company’s one-stop shop ecosystem helps to attract and retain new and existing customers.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

The Company continues to generate interest in its proprietary data analytics service named Cabanalytics^TM and grow its recurring subscription-based revenue. The Cabanalytics^TM program provides subscribers with a monthly report of anonymized consumer purchase data, in order to assist them with forecasting and planning their future product decisions and implementing appropriate marketing initiatives.

Gross Profit

For the three-month period ended January 31, 2021, gross profit increased by 208% or $9,975 to $14,768 in the first quarter of 2021 (2020: $4,793). The increase in gross profit was driven by the acquisition of META, an increase in sales volume and the optimization of sales costs. The gross profit margin also increased to 39% in the first quarter of 2021 (2020: 35%).

Operating Expenses

Total operating costs increased by $9,903 to $16,813 in the first quarter of 2021 (2020: $6,910). Operating expenses increased over the same period in 2020 due to the Company’s continued growth of their Retail Segment through new store openings and the acquisition of META, resulting in a total of 71 branded retail stores operating across Canada compared to 30 branded retail stores as of January 31, 2020 (increase of 41 stores). While total operating costs for the three-month period ending January 31, 2021 increased compared to the same period in 2020, as a percentage of revenue, operating expenses decreased by 6% to 44% (2020: 50%), due to continued cost control initiatives.

Salaries, wages, and benefits expenses increased by $2,676 in the first quarter of 2021 compared to the prior year. The increase in staffing was due primarily to the acquisition of META, and the need for additional personnel within the Retail Segment to facilitate growth in the number of cannabis locations and, by extension, an increase in revenue. Share-based compensation increased by $526 for the first quarter of 2021 compared to the same period in the prior year.

General and administrative expenses increased by $1,462 for the first quarter of 2021 compared to 2020 primarily because of the acquisition of META. Additionally, professional fees also increased by $372 in the first quarter of 2021 compared to the same period in 2020.

Amortization expense on property, equipment, intangibles, and right-of-use assets of $6,094 for the first quarter of 2021 increased by $4,825 compared to same period in 2020 primarily because of $78,440 of assets acquired by the acquisition of META.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

The Company is progressing well in integrating META’s operations. As of the date of this MD&A, the Company has achieved approximately 71% of the synergies. Following is a breakdown of the annualized synergies achieved:

Synergy Category	Actual Savings		Target Savings		% Achieved
Overhead SG&A and Other	$	3,700	$	4,500		82	%
Store Optimization + Leases	$	2,200	$	3,800		58	%
Total		5,900	$	8,300		71	%

Financing and Other Costs

Financing and other costs of $4,283 was recorded during the first quarter of 2021 (2020: $2,356), representing the expense associated with the interest expense related to convertible debentures, the accretion of lease liabilities, as well as transaction costs related to the Company’s acquisitions and business development.

Revaluation of Derivative Liability

The Company recorded a loss from the revaluation of derivative liability of $10,484 during the first quarter of 2021 (2020: gain of $439). This non-cash accounting charge primarily relates to warrants issued to Windsor Private Capital in connection with the loan agreement entered into on January 6, 2020. The cashless exercise feature in the warrants creates a derivative liability which is required to be revalued each reporting period. The increase in our share price during the quarter resulted in an increase in the derivative liability.

Segment Operations

	Retail			Retail			Wholesale			Wholesale			Corporate			Corporate			Total			Total
For the year ended	2021			2020			2021			2020			2021			2020			2021			2020
January 31,	($)			($)			($)			($)			($)			($)			($)			($)
Total Revenue		36,577			12,120			1,551			1,378			11			217			38,319			13,715
Gross profit		14,195			4,106			562			471			11			216			14,768			4,793
Income (loss) from operations		1,238			(638	)		(222	)		(376	)		(3,061	)		(1,103	)		(2,045	)		(2,117	)
Net Income (loss)		(182	)		(712	)		(335	)		(400	)		(16,328	)		(2,833	)		(16,845	)		(3,945	)

Total assets		94,642			46,678			5,932			5,972			66,000			17,161			166,574			69,811
Total liabilities		38,470			22,893			2,111			1,894			72,194			33,301			112,775			58,088

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Retail Segment Performance

The Company’s Retail Segment demonstrated significant sales growth with an increase in revenue of $24,637 in the first quarter of 2021 compared to the same period in the prior year. Revenue growth is primarily attributable to its acquired businesses, which resulted in an increased number of retail locations and transactions on Grasscity.com due to shifting consumer habits.

Gross profit for the three-month period ending January 31, 2021 increased by $10,809 compared to the same period in the prior year and the gross profit margin increased to 39% (2020: 34%). The increase in the gross margin was due to Cabanalytics^TM, and product mix optimization.

For the three-month period ending January 31, 2021 the Retail Segment recorded income from operations of $1,238 compared to a loss from operations of $638 for the same period in the prior year.

Same-store retail revenue

Same-store sales refers to the change in revenue generated by the Company’s existing retail cannabis locations over the period. The Company had 21 cannabis locations that were operational for full three-month period ended January 31, 2021 and January 31, 2020. For these 21 cannabis locations, same-store sales increased by 14% compared to the three-month period ended January 31, 2020. The increase was primarily related to these locations growing to maturity over time.

Grasscity.com

During the first quarter of 2021, Grasscity processed 42,601 orders (2020: 17,831), attracted 8.3 million visitors (2020: 3.5 million) and increased its customer base by 15% to 570, 000 (2020: 496,000). High Tide continues to invest in Grasscity to refresh its online sales platform, increase its searchability, align its supply chain with Valiant, and optimize its distribution channels. Grasscity enables the Company to leverage its vertical integration to improve order fulfillment, customer reach, product margins and its overall profitability.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Wholesale Segment Performance

Revenues in the Company’s Wholesale Segment increased by 13% or $173 to $1,551 for the three-month period ending January 31, 2021 (2020: $1,378). The Company’s Wholesale Segment attracted a significant number of new wholesale and distributor clients due to its proprietary and licensed products.

Gross profit increased by $91 to $562 for the three-month period ending January 31, 2021 (2020: $471).

The Wholesale Segment reported a loss from operations of $222 for the three-month period ending January 31, 2021 (2020: loss $376).

Corporate Segment Performance

The Corporate Segment’s main function is to administer the other two Segments (Retail and Wholesale) and is responsible for the executive management and financing needs of the business. The Corporate Segment earned revenues of $11 for the three-month period ending January 31, 2021 (2020: $217). The revenue was made up of royalty fees and other revenues.

Geographical Markets

* USA revenues are related to sale of consumption accessories and not related to sale of cannabis.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

The following presents information related to the Company’s geographical markets and product mix:

For the three months ended January 31, 2021		Retail		Wholesale		Corporate		Total
		$		$		$		$
Primary geographical markets ⁽ⁱ⁾
	Canada		33,282		908		11		34,201
	USA		3,266		643		-		3,909
	International		209		-		-		209
Total revenue			36,757		1,551		11		38,319
Major products and services
	Cannabis		30,377		-		-		30,377
	Smoking accessories		4,382		1,527		-		5,909
	Franchise royalties and fees		36		-		10		46
	Data analytics services		1,488		-		-		1,488
	Other revenue		474		24		1		499
Total revenue			36,757		1,551		11		38,319
Timing of revenue recognition
	Transferred at a point in time		36,757		1,551		11		38,319
Total revenue			36,757		1,551		11		38,319

⁽ⁱ⁾

Represents revenue based on geographical locations of the customers who have contributed to the revenue generated in the applicable segment.

Sales performance increased significantly, on average, with Canna Cabana leading Canadian sales and Grasscity contributing to USA and International sales. Revenues in the International market are comprised of sales made to all countries outside of North America.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Summary of Quarterly Results

(C$ in thousands,	Q1			Q4			Q3		Q2			Q1			Q4			Q3			Q2
except per share amounts)	2021			2020			2020		2020			2020			2019			2019			20219
Revenue		38,319			24,876			24,104		20,570			13,715			11,409			8,288			6,596
Adjusted EBITDA^(a)		4,602			3,626			3,397		1,773			(821	)		(5,968	)		(3,369	)		(3,486	)
Income (loss) from Operations		(2,045	)		1,133			1,624		156			(2,117	)		(6,393	)		(4,038	)		(4,582	)
Net Income (loss)		(16,845	)		(1,324	)		3,827		(4,911	)		(3,945	)		(15,427	)		(3,724	)		(3,319	)
Net Income (Loss) Per Share (Basic)		(0.04	)		(0.02	)		0.02		(0.02	)		(0.02	)		(0.07	)		(0.02	)		(0.02	)
Net Income (Loss) Per Share (Diluted)		(0.02	)		(0.02	)		0.02		(0.02	)		(0.02	)		(0.07	)		(0.02	)		(0.02	)

^(a)

Adjusted EBITDA is a non-IFRS financial measure. A reconciliation of the Adjusted EBITDA to Net Loss is found under “EBITDA and Adjusted EBITDA” in this MD&A.

Aside from the seasonal increase in consumer spending leading up to and slightly after the winter holiday period, which occurs in the first quarter of the Company’s fiscal year, seasonality is becoming a decreasing factor in the Company’s sales performance as the Retail Segment grows. Quarter over quarter revenues are increasing as the Company aggressively expands Canna Cabana operations and integrates acquired businesses such as META into the Company’s business.

The adjusted EBITDA increased by $5,423 in the first quarter of 2021 compared to same period in the prior year due to higher revenues and improving operating expenses as a percentage of revenues.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

EBITDA and Adjusted EBITDA

The Company defines EBITDA and Adjusted EBITDA as per the table below. It should be noted that these performance measures are not defined under IFRS and may not be comparable to similar measures used by other entities. The Company believes that these measures are useful financial metrics as they assist in determining the ability to generate cash from operations. Investors should be cautioned that EBITDA and Adjusted EBITDA should not be construed as an alternative to net earnings or cash flows as determined under IFRS. The reconciling items between net earnings, EBITDA, and Adjusted EBITDA are as follows:

	2021⁽¹⁾			2020⁽²⁾												2019⁽³⁾
	Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2
Net Loss		(16,845	)		(1,324	)		3,827			(4,911	)		(3,945	)		(15,429	)		(3,724	)		(3,319	)
Income taxes		588			(165	)		316			163			(85	)		2,998			(1,310	)		(1,166	)
Accretion and interest		2,702			573			2,456			2,529			1,734			1,676			1,040			231
Depreciation and amortization		6,094			2,213			1,771			1,544			1,269			478			462			275
EBITDA		(7,461	)		1,297			8,370			(675	)		(1,027	)		(10,277	)		(3,532	)		(3,979	)
Foreign exchange		89			(64	)		4			(17	)		(4	)		49			(41	)		(39	)
Revaluation of derivative liability		10,484			706			67			125			(439	)		(732	)		-			-
Transaction and acquisition costs		1,581			1,729			193			173			622			(36	)		-			-
Revaluation of marketable securities		(15	)		-			(1,663	)		1,663			-			-			-			-
Debt restructuring gain		(1,145	)		-			-			-			-			-			-			-
Loss on settlement of convertible debenture		-			142			-			-			-			-			-			-
Share-based compensation		553			29			2			71			27			180			207			590
Gain on extinguishment of financial liability		-			(505	)		-			-			-			(129	)		-			-
Impairment loss		-			458			-			247			-			4,820			-			-
(Gain) Loss on extinguishment of debenture		516			(418	)		(3,576	)		186			-			-			-			-
Smoker’s Corner closure costs related to inventory		-			252			-			-			-			-			-			-
Related party balances written off		-			-			-			-			-			34			-			-
Gain on disposal of property and equipment		-			-			-			-			-			-			2			-
Discount on accounts receivable		-			-			-			-			-			87			(5	)		(58	)
Adjusted EBITDA		4,602			3,626			3,397			1,773			(821	)		(5,968	)		(3,369	)		(3,486	)

⁽¹⁾

Cash outflow for the lease liabilities during the three months ended January 31, 2021 were $1,088.

⁽²⁾

Cash outflow for the lease liabilities during the three-months ended October 31, 2020 were $987, three-months ended July 31, 2020 were $783, three-months ended April 30, 2020 were $728 and $693 for three months ended January 31, 2020.

⁽³⁾

Financial information for 2019 has not been restated for the adoption of IFRS 16.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Financial Position, Liquidity and Capital Resources

Assets

As at January 31, 2021, the Company had a cash balance of $16,576 (October 31, 2020: $7,524).

Working capital including cash as at January 31, 2021 was a deficit of $10,500 (October 31, 2020: deficit $8,183). The change is mainly due to the acquisition of META that occurred in the first quarter of fiscal 2021 and increase in derivative liability by $10,689 due to increase in market price of the common shares. Subsequent to the first quarter of 2021, the Company closed a bought deal of $23,000. These transactions and positive cash flow from operations provide the Company enough liquidity for its working capital needs and to pursue its near-term expansion plan. As of the date of this MD&A, the Company has a cash balance of approximately $33,000.

Total assets of the Company were $166,574 on January 31, 2021 compared to $69,811 on October 31, 2020. The increase in total assets is primarily due to the acquisition of META, which resulted in significant increases in intangible assets, property and equipment, and right-of-use assets. Assets also increased due to capital asset additions and prepaid lease deposits due to the expansion during the period.

Liabilities

Total liabilities increased to $112,775 at January 31, 2021 compared to $58,088 on October 31, 2020 primarily due to the acquisition of META.

Summary of Outstanding Share Data

The Company had the following securities issued and outstanding as at the date of this MD&A:

Securities ⁽¹⁾	Units Outstanding
Issued and outstanding common shares		639,912,735
Warrants		143,864,775
Stock options and RSUs		30,024,894
Convertible debentures		67,281,127

⁽¹⁾

Refer to the Company’s Consolidated Financial Statements for a detailed description of these securities.

Cash Flows

During the period ended January 31, 2021, the Company had an overall increase in cash of $9,052 (2020: $3,293).

Total cash generated from operating activities was $1,447 for the period ended January 31, 2021 (2020: $206 cash used in operating activities). The increase in operating cash inflows is primarily driven by increase in revenue, cost optimization initiatives and adoption of IFRS 16. Cash provided by investing activities was $8,226 (2020: cash used $2,771) because of $10,209 cash acquired due to the acquisitions of META. Cash used by financing activities was $621 (2020: cash provided $6,270) because of interest paid on loans and lease payments.

Liquidity

In addition to cash and non-cash working capital discussed above, the Company acquired META during the first quarter of 2021, and subsequent to the first quarter of 2021, the Company closed a bought deal for $23,000. These transactions provide the Company enough liquidity for its working capital needs and to pursue its near-term expansion plan.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Capital Management

The Company’s objectives when managing capital resources are to:

Explore profitable growth opportunities.

II.

Deploy capital to provide an appropriate return on investment for shareholders.

III.

Maintain financial flexibility to preserve the ability to meet financial obligations; and

IV.

Maintain a capital structure that provides financial flexibility to execute on strategic opportunities.

The Company’s strategy is formulated to maintain a flexible capital structure consistent with the objectives stated above as well to respond to changes in economic conditions and to the risks inherent in its underlying assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather promotes year-over-year sustainable profitable growth. The Company is not subject to any externally imposed capital requirements. The Company’s capital structure consists of equity and working capital. To maintain or alter the capital structure, the Company may adjust capital spending, take on new debt and issue share capital. The Company anticipates that it will have adequate liquidity to fund future working capital, commitments, and forecasted capital expenditures through a combination of cash flow, cash-on-hand and financings as required.

Off Balance Sheet Transactions

The Company does not have any financial arrangements that are excluded from the Financial Statements as at January 31, 2021, nor are any such arrangements outstanding as of the date of this MD&A.

Transactions Between Related Parties

Financing transactions

Included in the convertible debenture issued on December 12, 2018, was an investment by CannaIncome Fund Corporation for a total subscription amount of $250, whose CEO is a director of the Company.

A Director of the Company is Chief of the Opaskwayak Cree Nation (“OCN”). On November 18, 2020, the Company acquired all of the issued and outstanding shares of META which included notes payable to Opaskwayak Cree Nation (“OCN”). As at January 31, 2021 the Company has drawn $13,000.

Operational transactions

An office and warehouse unit, approximately 27,000 square feet, has been developed by Grover Properties Inc., a company that is related through a common controlling shareholder and the President & CEO of the Company. The office and warehouse space were leased to High Tide to accommodate the Company’s operational expansion. The lease was established by an independent real estate valuations services company at prevailing market rates and has annual lease payments totalling $386 per annum. The primary lease term is five years with two additional five-year term extensions exercisable at the option of the Company. To facilitate the mortgage for the development of this unit, a loan guarantee of up to $1,500 has been provided by a subsidiary of High Tide Inc.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Subsequent events

(i)

(ii)

Subsequent to the period ended January 31, 2021, $23,260 of debt was converted into common shares.

(iii)

Financial Instruments

The Company’s activities expose it to a variety of financial risks. The Company is exposed to credit, liquidity, and market risk because of holding certain financial instruments. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by senior management in conjunction with the Board of Directors.

Financial instruments that subject the Company to credit risk consist primarily of cash, accounts receivable, marketable securities and loans receivable. The credit risk relating to cash and cash equivalents balance is limited because the counterparties are large commercial banks. The amount reported for trade receivable in the statement of financial position is net of expected credit loss and the net carrying value represents the Company’s maximum exposure to credit risk. Trade receivable credit exposure is minimized by entering into transactions with creditworthy counterparties and monitoring the age and balances outstanding on an ongoing basis. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company generally relies on funds generated from operations as well as debt and equity financings to provide sufficient liquidity to meet budgeted operating requirements and to supply capital to expand its operations.

Outlook

With the transaction of META having closed, the Company has solidified its leadership position in Canada. High Tide remains focused on the Ontario market. While pandemic restrictions are causing a delay in construction in much of the province, the Company is encouraged by the Alcohol and Gaming Commission of Ontario’s decision on February 16, 2021 to increase the pace of Retail Store Authorizations it issues from 20 to 30 a week. The Company expects to reach 30 open stores in the province by September 30, 2021, the date on which the cap for any one retailer can own is set to increase from 30 to 75.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

While competition is increasing in the Alberta cannabis market, the Company has still been able to find pockets of areas where it believes it can profitably open new stores. With the slowdown in construction in Ontario, the Company has increased the pace of buildouts in Alberta and expects more locations to open in the province next month.

The Company has been actively following developments in the U.S. cannabis sector, and while it appears that further liberalisation regarding the federal regulatory and legislative environment is possible, our immediate strategy does not rely on regulatory change. Despite this, we remain just one transaction away from entering the bricks and mortar retail market in the U.S. when federally permissible. High Tide believes it is very well positioned to take advantage of the growing ancillary and hemp derived CBD markets and estimates its current revenue run rate in the U.S., pro forma for the Smoke Cartel acquisition, to be over $25 million today. The Company is in discussions with various parties across the federally permissible ecosystem in the U.S. which could help further expand its operations – and believes that its current financial health and application to list its shares on the Nasdaq may help accelerate its growth.

Risk Assessment

Management of High Tide defines risk as the evaluation of probability that an event might happen in the future that could negatively affect the financial condition, results of operations and/or reputation of the Company. The following section describes specific and general risks that could affect the Company. The following descriptions of risk do not include all possible risks as there may be other risks of which management is currently unaware.

Changes in Laws and Regulations

The Company is subject to a variety of applicable laws, including those relating to the marketing, acquisition, manufacturing, management, transportation, storage, sale, packaging and labeling, and disposal of cannabis and cannabis products. The Company is also subject to applicable laws relating to health and safety, the conduct of operations, taxation of products and the protection of the environment. As applicable laws pertaining to the cannabis industry are relatively new, it is possible that significant legislative amendments may still be enacted – either provincially or federally – that address current or future regulatory issues or perceived inadequacies in the regulatory framework. Changes to applicable laws could have a Material Adverse Effect.

The legislative framework pertaining to the Canadian adult-use cannabis market is subject to significant provincial and territorial regulation. The legal framework varies across provinces and territories and results in asymmetric regulatory and market environments. Different competitive pressures, additional compliance requirements, and other costs may also limit the Company’s ability to participate in such market.

Failure to Manage Growth Successfully

The Company’s business has grown rapidly in the last year. The Company’s growth places a strain on managerial, financial, and human resources. The Company will need to provide adequate operational, financial and management controls and reporting procedures to manage the continued growth in the number of employees, scope of operations and financial systems as well as the geographic area of operations. Expanding the business into new geographic areas requires the Company to incur costs, which may be significant, before any associated revenues materialize. Future growth beyond the next 12 months will depend upon several factors, including but not limited to the Company’s ability to:

●

issue further equity and/or take on further debt to fund the completion of the Company’s expansion plans, including the build-out of new recreational cannabis stores and the expansion of its client base.

●

hire, train, and manage additional employees to provide agreed upon services.

●

execute on and successfully integrate acquisitions; and

●

expand the Company’s internal management to maintain control over operations and provide support to other functional areas within High Tide.

High Tide’s inability to achieve any of these objectives could harm the Company’s business, financial condition, reputation, and operating results.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Dependence on Key Personnel

The success of High Tide is largely dependent on the performance of its key employees and directors. Failure to retain key employees and directors and to attract and retain additional key employees with necessary skills could have a material adverse impact on the Company’s growth and profitability. The departure of any key personnel could have a material adverse effect on the Company’s business, results of operations and financial condition.

Ancillary Business in the United States Cannabis Industry

The Company derives a portion of its revenues from the cannabis industry in certain States. The Company is not directly or indirectly engaged in the manufacture, importation, possession, use, sale, or distribution of cannabis in the recreational or medical cannabis industry in the U.S., however, the Company may be considered to have ancillary involvement in the U.S. cannabis industry. Due to the current Business and any future opportunities, the Company may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada. As a result, the Company may be subject to significant direct or indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company’s ability to invest in the United States or any other jurisdiction, in addition to those described in this MD&A.

Significant Risk of Enforcement of U.S. Federal Laws

There can be no assurance that the U.S. federal government will not seek to prosecute cases involving cannabis businesses, including those of the Company, notwithstanding compliance with the securities laws of the applicable state of the United States. Such proceedings could have a Material Adverse Effect.

Further, violations of any U.S. federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from civil proceedings conducted by either the U.S. federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture. This could have a Material Adverse Effect, including on its reputation and ability to conduct business, its ability to list its securities on stock exchanges, its financial position, its operating results, its profitability or liquidity or the value of its securities. In addition, the time of Management and advisors of the Company and resources that would be needed for the investigation of any such matters, or their final resolution could be substantial.

Competition

The Company faces, and will continue to face, intense competition from other companies, some of which can be expected to have longer operating histories and greater financial resources (including technical, marketing, and other resources compared to the Company). Such companies may be able to devote greater resources to the development, promotion, sale and support of their respective products and services. Such companies may also have more extensive customer bases and broader customer relationships and may make it increasingly difficult for the Company to, among other things, enter into favorable business agreements, negotiate favourable prices, recruit, or retain qualified employees, and acquire the capital necessary to fund capital investments by the Company.

In addition, Management estimates that, as of the date of this MD&A, there may be currently hundreds of applications for Retail Store Authorizations being processed by applicable cannabis regulatory authorities. The number of Authorizations granted, and the number of retail cannabis store operators ultimately authorized by applicable cannabis regulatory authorities, could have an adverse impact on the ability of the Company to compete for market share in the cannabis market within various jurisdictions in Canada. The Company also faces competition from illegal cannabis dispensaries, engaged in the sale and distribution of cannabis to individuals without valid Authorizations.

Lastly, as the cannabis market continues to mature, both domestically and internationally, the overall demand for products and the number of competitors may be expected to increase significantly. Such increases may also be accompanied by shifts in market demand, and other factors that Management cannot currently anticipate, and which could potentially reduce the market for the products of the Company, and ultimately have a Material Adverse Effect.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

To remain competitive in the evolving cannabis market, the Company will need to invest significantly in, among other things, operational efficiencies, marketing, growing distribution channels, and investing in additional human resources to support growth initiatives. If the Company is not successful in obtaining sufficient resources to invest in these areas, the ability of the Company to compete in the cannabis market may be adversely affected, which could have a Material Adverse Effect.

Failure to Secure Retail Locations

One of the factors in the growth of the Company’s Cannabis retail business depends on the Company’s ability to secure attractive locations on terms acceptable to the Company. The Company faces competition for retail locations from its competitors and from operators of other businesses. There is no assurance that future locations will produce the same results as past locations.

Cyber Risks

The Company and its third-party services provider’s information systems are vulnerable to an increasing threat of continually evolving cybersecurity risks. These risks may take the form of malware, computer viruses, cyber threats, extortion, employee error, malfeasance, system errors or other types of risks, and may occur from inside or outside of the respective organizations. The operations of the Company depend, in part, on how well networks, equipment, information technology systems and software are protected against damage from several threats. The failure of information systems or a component of information system could, depending on the nature of any such failure, could have a material adverse effect on the Company’s, business, its reputation, results of operations and financial condition.

Epidemics and Pandemics (including COVID-19)

The Company faces risks related to health epidemics, pandemics, and other outbreaks of communicable diseases, which could significantly disrupt its operations and could have a Material Adverse Effect. In particular, the Company could be adversely impacted by the effects of COVID-19, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Since December 31, 2019, the outbreak of COVID-19 has led governments worldwide to enact emergency measures to combat the spread of the virus. These measures, which include, among other things, the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally, resulting in an economic slowdown. Such events may result in a period of business disruption, and in reduced operations, any of which could have a Material Adverse Effect.

As of the date of this MD&A, the duration and the immediate and eventual impact of COVID-19 remains unknown. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its industry partners. To date, several businesses have suspended or scaled back their operations and development as cases of COVID-19 have been confirmed, for precautionary purposes or as governments have declared a state of emergency or taken other actions. However, the exact extent to which COVID-19 impacts, or will impact the Business will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat COVID-19 (including recommendations from public health officials). In particular, the continued spread of COVID-19 globally could materially and adversely impact the Business, including without limitation, store closures or reduced operational hours or service methods, employee health, workforce productivity, reduced access to supply, increased insurance premiums, limitations on travel, the availability of experts and personnel and other factors that will depend on future developments beyond the Company’s control, which could have a Material Adverse Effect. There can be no assurance that the personnel of the Company will not be impacted by these pandemic diseases and ultimately see its workforce productivity reduced or incur increased costs because of these health risks. In addition, COVID-19 represents a widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have a Material Adverse Effect.

Licenses and Permits

The ability of the Company to continue the Business is dependent on the good standing of various Authorizations from time to time possessed by the Company and adherence to all regulatory requirements related to such activities. The Company will incur ongoing costs and obligations related to regulatory compliance, and any failure to comply with the terms of such Authorizations, or to renew the Authorizations after their expiry dates, could have a Material Adverse Effect.

High Tide Inc.

Management’s Discussion and Analysis

For the three months ended January 31, 2021 and 2020

(In thousands of Canadian dollars, except share and per share amounts or otherwise stated)

Although Management believes that the Company will meet the requirements of applicable laws for future extensions or renewals of the applicable Authorizations, there can be no assurance that applicable governmental entities will extend or renew the applicable Authorizations, or if extended or renewed, that they will be extended or renewed on the same or similar terms. If the applicable governmental entities do not extend or renew the applicable Authorizations, or should they renew the applicable Authorizations on different terms, any such event or occurrence could have a Material Adverse Effect.

The Company remains committed to regulatory compliance. However, any failure to comply with applicable laws may result in additional costs for corrective measures, penalties, or restrictions on the operations of the Company. In addition, changes in applicable laws or other unanticipated events could require changes to the operations of the Company, increased compliance costs or give rise to material liabilities, which could have a Material Adverse Effect.

Cannabis Prices

A major part of the Company’s revenue is derived from the sale and distribution of cannabis in Canada, as such, the profitability of the Company may be regarded as being directly related to the price of cannabis. The cost of production, sale, and distribution of cannabis is dependent on several key inputs and their related costs, including equipment and supplies, labour and raw materials related to the growing operations of cannabis suppliers, as well other overhead costs such as electricity, water, and utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could have a Material Adverse Effect. Further, any inability to secure required supplies and services or to do so on favourable terms could have a Material Adverse Effect. This includes, among other things, changes in the selling price of cannabis and cannabis products set by the applicable province or territory. There is currently no established market price for cannabis and the price of cannabis is affected by numerous factors beyond the Company’s control. Any price decline could have a Material Adverse Effect.

The operations of the Company may be sensitive to changes in the price of cannabis and the overall condition of the cannabis industry.

Difficulty to Forecast

The Company relies, and will need to rely, largely on its own market research to forecast industry statistics as detailed forecasts are not generally obtainable, if obtainable at all, from other sources at this early stage of the adult-use cannabis industry. Failure in the demand for the adult-use cannabis products because of competition, technological change, change in the regulatory or legal landscape or other factors could have a Material Adverse Effect.

Political and Other Risks Operating in Foreign Jurisdictions

The Company has operations in various foreign markets and may have operations in additional foreign and emerging markets in the future. Such operations expose the Company to the socioeconomic conditions as well as the laws governing the controlled substances industry in such foreign jurisdictions. Inherent risks with conducting foreign operations include, but are not limited to, high rates of inflation; fluctuations in currency exchange rates, military repression, war or civil unrest, social and labour unrest, organized crime, terrorism, violent crime, expropriation and nationalization, renegotiation or nullification of existing Authorizations, changes in taxation policies, restrictions on foreign exchange and repatriation, and changes political norms, currency controls and governmental regulations that favour or require the Company to award contracts in, employ citizens of, or purchase supplies from, the jurisdiction.

Exhibit 99.164

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Rahim Kanji, the Chief Financial Officer of High Tide Inc. (the “Issuer”), certify the following:

1.	*Review:* I have reviewed the interim financial report and interim management’s discussion and analysis (together, the “interim filings”) of the Issuer for the interim period ended January 31, 2021.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: March 31, 2021

”Rahim Kanji”
Rahim Kanji
Chief Financial Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 99.165

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Harkirat Grover, the Chief Executive Officer of High Tide Inc. (the “Issuer”), certify the following:

1.	*Review:* I have reviewed the interim financial report and interim management’s discussion and analysis (together, the “interim filings”) of the Issuer for the interim period ended January 31, 2021.

Date: March 31, 2021

”Harkirat Grover”
Harkirat Grover
Chief Executive Officer

NOTE TO READER

ii)	a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

Exhibit 99.166

High Tide Reports First Quarter 2021 Financial Results Featuring a 179% Increase in Revenue and Record Adjusted EBITDA of $4.6 Million

CALGARY, AB, March 31, 2021 /CNW/ - High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (OTCQB: HITIF) (FRA: 2LY), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, filed its financial results for the first fiscal quarter of 2021 ending January 31, 2021, the highlights of which are included in this news release. The full set of Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis can be viewed by visiting High Tide’s website at www.hightideinc.com, its profile page on SEDAR at www.sedar.com.

High Tide Inc. - March 31, 2021 (CNW Group/High Tide Inc.)

First Quarter 2021 – Financial Highlights:

●

Revenue increased by 179% to $38.3 million in the first quarter of 2021 compared to $13.7 million in the same quarter last year. The first quarter of 2021 financial results incorporate the acquisition of META Growth Corp. on November 18, 2020.

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Gross profit increased by 208% to $14.8 million in the first quarter of 2021 compared to $4.8 million in the same quarter last year.

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Gross profit margin in the first quarter of 2021 was 39% compared to 35% in the same quarter last year.

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Adjusted EBITDA⁽¹⁾ for the first quarter of 2021 was $4.6 million compared to negative $0.8 million for same quarter last year.

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Geographically in the first quarter of 2021, $34.2 million of revenue was earned in Canada, $3.9 million in the United States and $0.2 million internationally.

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Segment-wise in the first quarter of 2021, $36.8 million of revenue was generated by Retail, $1.5 million by Wholesale, and an immaterial amount by Corporate.

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Cash on hand as at January 31, 2021 totaled $16.6 million compared to $7.5 million as at October 31, 2020. The Company’s cash balance has subsequently increased to approximately $33 million as of today.

“I am extremely proud of our team for delivering the highest quarterly profit in High Tide’s history. Despite facing the same challenges that all retailers have confronted during this pandemic, we recently crossed the 80-store milestone across Canada. Between the commencement of our application to list on the Nasdaq and the subsequent filing of the 40-F form with the SEC, and securing the acquisition of Smoke Cartel, the first quarter of 2021 has seen our team deliver on significant milestones that will drive future growth,” said Raj Grover, President and Chief Executive Officer. “Over the past few months, we have worked diligently to integrate META Growth into the High Tide family and as a result have already achieved 71% of our targeted synergies. As market dynamics continue to evolve in Canada, we are taking aggressive steps to adjust our business model, where appropriate, while pursuing expansion opportunities in the United States and Europe that would have an immediate positive impact on EBITDA,” added Mr. Grover.

Fiscal First Quarter 2021 – Operational Highlights:

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The Company completed the acquisition of META Growth Crop. and became the leading Canadian cannabis retailer by annualized revenue.

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The Company’s common shares moved up to the TSX Venture Exchange.

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The Company extended the maturity date on a $10.0 million credit facility with Windsor Capital to December 31, 2021 with a subsequent one-year extension to December 31, 2022 and a reduction of interest rate from 11.5% to 10.0%.

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The Company entered into a loan agreement for $6.75 million maturing on December 31, 2024 of an undrawn balance on a $20.0 million credit facility obtained through the acquisition of META Growth Corp. Additionally, the Company extended maturity of META’s existing debt to December 31, 2024 and a reduction of all-inclusive interest rate from 12.5% to 10.0%. As of the date of this press release, the $6.75 million facility remains undrawn.

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Approximately $7.4 million of debt converted into the Company’s common shares.

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The Company opened three cannabis retail locations under the Canna Cabana and META banners: one in Guelph, Ontario, one in Toronto, Ontario, and one in Calgary, Alberta.

Subsequent Events:

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The Company closed an oversubscribed bought deal equity financing for gross proceeds of $23 million.

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After the first quarter of 2021, approximately $23 million of debt converted into the Company’s common shares.

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The Company announced filing of Form 40-F with the U.S. Securities and Exchange Commission fulfilling a significant milestone for the NASDAQ listing.

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The Company completed the acquisition of Smoke Cartel, Inc. (OTCQB: SMKC) for US$8.0 million.

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Between February 1, 2021 and the date of this press release, the Company opened nine cannabis retail locations: seven in Alberta and two in Ontario.

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Through the COVID-19 pandemic, all retail branded locations have remained operational, despite the complex conditions facing the retail industry across Canada. The Company has been nimble and adapted to frequently changing regulations – often at a municipal level – including launching delivery services to continue serving customers.

Selected financial information for the first quarter ended January 31, 2021:

(Expressed in thousands of Canadian Dollars)

	Three Months Ended January 31,
	2021 $			2020 $			% Change
Revenue		38,319			13,715			179	%
Gross profit		14,768			4,793			208	%
Total operating expenses		(16,813	)		(6,910	)		143	%
Adjusted EBITDA^(a)		4,602			(821	)		NM
Loss from operations		(2,045	)		(2,117	)		(3	)%
Net loss		(16,845	)		(3,945	)		327	%
Loss per share (basic)		(0.04	)		(0.02	)		100	%
Loss per share (diluted)		(0.02	)		(0.02	)		NM

(a)

Adjusted EBITDA is a non-IFRS financial measure.

NM– Not Meaningful

The following is a reconciliation of Adjusted EBITDA to Net Loss:

	Three Months Ended
	January 31,
	2021			2020
Net loss		(16,845	)		(3,945	)
Income taxes		588			(85	)
Accretion and interest		2,702			1,734
Depreciation and amortization		6,094			1,269
EBITDA ⁽¹⁾		(7,461	)		(1,027	)
Foreign exchange		89			(4	)
Revaluation of derivative liability ⁽²⁾		10,484			(439	)
Transaction and acquisition costs		1,581			622
Revaluation of marketable securities		(15	)		-
Debt restructuring gain		(1,145	)		-
Loss on extinguishment of debenture		516			-
Share-based compensation		553			27
Adjusted EBITDA ⁽¹⁾		4,602			(821	)

(1)

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA. These measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-IFRS measures provide investors with a supplemental measure of the Company’s operating performance and therefore highlight trends in Company’s core business that may not otherwise be apparent when relying solely on IFRS measures. Management uses non-IFRS measures in measuring the financial performance of the Company.

(2)

Outlook

With the transaction of META having closed, the Company has solidified its leadership position in Canada. High Tide remains focused on the Ontario market. While pandemic restrictions caused a delay in construction in much of the province, the Company is encouraged by the Alcohol and Gaming Commission of Ontario’s decision on February 16, 2021 to increase the pace of Retail Store Authorizations it issues from 20 to 30 a week. The Company expects to reach 30 open stores in the province by September 30, 2021, the date on which the cap for any one retailer can own is set to increase from 30 to 75.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 80 branded retail cannabis locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX:APHA) (NYSE:APHA) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).

For more information about High Tide Inc., please visit www.hightideinc.com and its profile page on SEDAR at www.sedar.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this news release are forward-looking information or forward-looking statements, including, but not limited to (i) the Company’s application to list on the NASDAQ; (ii) the Company’s plans to adjust its business model and pursue expansion opportunities in the United States and Europe (iii) the Alcohol and Gaming Commission of Ontario’s intentions to increase the pace of Retail Store Authorizations it issues from 20 to 30 a week; (iv) the Company’s expectation to reach 30 open stores in Ontario by September, 30, 2021; (v) the Company’s expectations to profitably open new stores in Alberta, including several locations in the month of April; (vi) the Company’s belief that it is well positioned to take advantage of the growing ancillary and hemp derived CBD markets in the United States and estimates regarding its current revenue run rate in the United States, pro forma for the Smoke Cartel acquisition, to be over $25 million as of the date of this release; (vii) the Company’s expectations to further expand the Company’s operations in the United States through discussions with various parties across the federally permissible ecosystem in the United States; and (viii) the Company’s belief that its application to list its shares on the Nasdaq may accelerate the Company’s growth. Such information and statements, referred to herein as “forward-looking statements” are made as of the date of this news release or as of the date of the effective date of information described in this news release, as applicable. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations, or beliefs regarding future events. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (generally, forward-looking statements can be identified by use of words such as “outlook”, “expects”, “intend”, “forecasts”, “anticipates”, “plans”, “projects”, “estimates”, “envisages, “assumes”, “needs”, “strategy”, “goals”, “objectives”, or variations thereof, or stating that certain actions, events or results “may”, “can”, “could”, “would”, “might”, or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions, and other similar terminology) are not statements of historical fact and may be forward-looking statements.

Such forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to the Company’s ability to execute on its business plan and that the Company will have sufficient funds to execute on its strategic growth objectives in 2021, including the ability of the Company to pursue and finance the potential acquisitions and new store openings referenced in this release; the Company’s ability to successfully list its shares on the Nasdaq; and that the Company will not be required to implement any measures to address unanticipated developments (including developments relating to COVID-19) affecting the Company’s business, which could adversely affect the Company’s proposed business plan. However, there can be no assurance that any one or more of the government, industry, market, operational or financial targets as set out herein will be achieved. Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements, or industry results, to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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SOURCE High Tide Inc.

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%SEDAR: 00045217E

For further information: High Tide Inc., Vahan Ajamian, Capital Markets Advisor, ir@hightideinc.com, Tel. 1 (403) 770-9435; extension 116

CO: High Tide Inc.

CNW 18:25e 31-MAR-21