UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2021

Commission File Number: 001-40258

HIGH TIDE INC.

(Registrant)

11127 - 15 Street N.E., Unit 112

Calgary, Alberta

Canada T3K 2M4

(Address of Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☐         Form 40-F  ☒

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐


EXHIBIT INDEX

Exhibit

     

Description of Exhibit

99.1

 

Condensed Interim Consolidated Financial Statements for the three and nine months ended July 31, 2021 and 2020

99.2

Management’s Discussion & Analysis for the three and nine months ended July 31, 2021 and 2020

99.3

CEO Certification

99.4

CFO Certification


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

HIGH TIDE INC.

 

(Registrant)

Date: September 14, 2021

By

    

/s/ Raj Grover

 

 

 

Raj Grover

 

 

 

President and Chief Executive Officer

 

 

 

 


Exhibit 99.1

P8#YIS1

Condensed Interim Consolidated
Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

(Unaudited)


GRAPHIC

High Tide Inc.

Condensed Interim Consolidated Financial Statement

For the three and nine months ended July 31, 2021 and 2020

Condensed Interim Consolidated Financial Statements for the three and nine months ended July 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


GRAPHIC

High Tide Inc.

Condensed Interim Consolidated Statements of Financial Position

As at July 31, 2021 and October 31, 2020

(Unaudited – In thousands of Canadian dollars)

    

Notes

    

2021

    

2020

$

$

Assets

Current assets

Cash

26,640

7,524

Marketable securities

17

1,251

50

Trade and other receivables

8

5,689

2,861

Inventory

15,049

5,702

Prepaid expenses and deposits

7

5,161

3,070

Current portion of loans receivable

9

1,432

74

Total current assets

55,222

19,281

Non-current assets

Loans receivable

9

1,623

230

Property and equipment

6

22,389

13,085

Net Investment - Lease

20

875

1,716

Right-of-use assets, net

20

26,197

16,413

Long term prepaid expenses and deposits

7

1,606

809

Deferred tax asset

250

250

Intangible assets and goodwill

3, 5

126,020

18,027

Total non-current assets

178,960

50,530

Total assets

234,182

69,811

Liabilities

Current liabilities

Accounts payable and accrued liabilities

13,107

6,421

Notes payable current

12

3,939

1,939

Deferred liability

-

1,700

Current portion of convertible debentures

11

946

14,446

Current portion of lease liabilities

20

5,729

2,194

Derivative liability

3,15

10,377

764

Total current liabilities

34,098

27,464

Non-current liabilities

Notes payable

12

12,034

2,589

Convertible debentures

11

9,008

11,376

Lease liabilities

20

21,091

14,474

Deferred tax liability

11,140

2,185

Total non-current liabilities

53,273

30,624

Total liabilities

87,371

58,088

Shareholders’ equity

Share capital

13

188,180

32,552

Warrants

15

11,487

5,796

Contributed surplus

12,362

4,704

Convertible debentures – equity

1,469

1,965

Accumulated other comprehensive income

(401)

(487)

Accumulated deficit

(69,777)

(34,359)

Equity attributable to owners of the Company

143,320

10,171

Non-controlling interest

22

3,491

1,552

Total shareholders’ equity

146,811

11,723

Total liabilities and shareholders’ equity

234,182

69,811

3


GRAPHIC

High Tide Inc.

Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

For the three and nine months ended July 31, 2021 and 2020

(Unaudited – In thousands of Canadian dollars)

    

    

Three months ended

    

Nine months ended

Notes

2021

    

2020

    

2021

    

2020

$

$

$

$

Revenue

  

  

  

  

  

Merchandise sales

 

43,761

 

23,173

 

117,667

 

55,909

Other revenue

 

4,308

 

930

 

9,589

 

2,480

Total Revenue

 

4

 

48,069

 

24,103

 

127,256

 

58,389

Cost of sales

 

(31,390)

 

(14,564)

 

(80,811)

 

(36,302)

Gross profit

 

16,679

 

9,539

 

46,445

 

22,087

Expenses

 

  

 

  

 

  

 

  

 

  

Salaries, wages and benefits

 

(7,318)

 

(3,642)

 

(19,373)

 

(10,173)

Share-based compensation

 

14

 

(508)

 

(2)

 

(2,578)

 

(101)

General and administration

 

(5,316)

 

(1,539)

 

(11,259)

 

(4,522)

Professional fees

 

(721)

 

(712)

 

(2,391)

 

(2,329)

Advertising and promotion

 

(1,364)

 

(99)

 

(1,679)

 

(346)

Depreciation and amortization

 

5,6,20

 

(8,299)

 

(1,771)

 

(22,107)

 

(4,585)

Interest and bank charges

 

(420)

 

(150)

 

(881)

 

(368)

Total expenses

 

(23,946)

 

(7,915)

 

(60,268)

 

(22,424)

(Loss) income from operations

 

(7,267)

 

1,624

 

(13,823)

 

(337)

Other income (expenses)

 

  

 

  

 

  

 

  

 

  

Gain on disposal of assets

5,6

2,997

-

2,997

-

Loss on extinguishment of debenture

 

11

 

-

 

-

 

(516)

 

(186)

Debt restructuring gain

 

12

 

-

 

-

 

1,145

 

-

Gain on sale of marketable securities

 

-

 

4,762

 

-

 

3,576

Revaluation of marketable securities

 

(112)

 

477

 

(256)

 

-

Impairment loss

 

(57)

 

-

 

(57)

 

(247)

Finance and other costs

 

10

 

(3,034)

 

(2,649)

 

(11,044)

 

(7,707)

Revaluation of derivative liability

 

3,11,15

 

5,919

 

(67)

 

(8,553)

 

247

Foreign exchange (loss) gain

 

28

 

(4)

 

(66)

 

17

Total other income (expenses)

 

5,741

 

2,519

 

(16,350)

 

(4,300)

(Loss) income before taxes

 

(1,526)

 

4,143

 

(30,173)

 

(4,637)

Current income tax expense

 

(224)

 

(317)

 

(688)

 

(394)

Net (loss) income

 

(1,750)

 

3,826

 

(30,861)

 

(5,031)

Other comprehensive income (loss)

 

  

 

  

 

  

 

  

Translation difference on foreign subsidiary

 

4

 

(36)

 

86

 

135

Total comprehensive (loss) income

 

(1,746)

 

3,790

 

(30,775)

 

(4,896)

Comprehensive (loss) income attributable to:

 

  

 

  

 

  

 

  

Owners of the Company

 

(1,677)

 

3,836

 

(30,797)

 

(4,798)

Non-controlling interest

 

(69)

 

(46)

 

22

 

(98)

 

(1,746)

 

3,790

 

(30,775)

 

(4,896)

(Loss) income per share

 

  

 

  

 

  

 

  

 

  

Basic and diluted

 

16

 

(0.03)

 

0.25

 

(0.79)

 

(0.33)

Subsequent Events (Note 23)

4


GRAPHIC

High Tide Inc.

Condensed Interim Consolidated Statements of Changes in Equity

For the nine months ended July 31, 2021 and 2020

(Unaudited – In thousands of Canadian dollars)

    

    

    

    

    

Equity

    

Accumulated

    

    

    

    

    

    

portion of

other

Attributable

Contributed

convertible

comprehensive

Accumulated

to owners of

  

  

Note

Share capital

Warrants

surplus

debt

income (loss)

deficit

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

 

 

860

 

-

 

-

 

-

 

-

-

 

860

 

-

 

860

Warrants

 

 

-

 

856

 

401

 

-

 

-

-

 

1,257

 

-

 

1,257

Share-based compensation

 

 

-

 

-

 

100

 

-

 

-

-

 

100

 

-

 

100

Equity portion of convertible debentures

 

 

-

 

-

 

-

 

1,755

 

-

-

 

1,755

 

-

 

1,755

Cumulative translation adjustment

 

 

-

 

-

 

-

 

-

 

135

-

 

135

 

-

 

135

Prepaid Interest paid in shares

 

 

1,168

 

-

 

-

 

-

 

-

-

 

1,168

 

-

 

1,168

Purchase of minority interest - KushBar Inc.

 

 

500

 

-

 

-

 

-

 

-

(695)

 

(195)

 

187

 

(8)

Acquisition - 2680495 Ontario Inc.

 

 

1,100

 

-

 

-

 

-

 

-

-

 

1,100

 

-

 

1,100

Acquisition - Saturninus Partners

 

 

1,218

 

210

 

-

 

-

 

-

-

 

1,428

 

930

 

2,358

Acquisition - 102088460 Saskatchewan Ltd.

 

 

975

 

-

 

-

 

-

 

-

-

 

975

 

-

 

975

Asset acquisition

 

 

104

 

-

 

-

 

-

 

-

-

 

104

 

-

 

104

Comprehensive loss for the period

 

 

-

 

-

 

-

 

-

 

-

(4,933)

 

(4,933)

 

(55)

 

(4,988)

Balance, July 31, 2020

 

 

32,208

 

7,675

 

2,620

 

3,392

 

(231)

(32,324)

 

13,340

 

883

 

14,223

Opening balance, November 1, 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

 

1,821

 

49,098

Acquisition - Smoke Cartel, Inc.

 

3

 

8,396

 

-

 

-

 

-

 

-

-

 

8,396

 

-

 

8,396

Acquisition - Fab Nutrition, LLC.

3

9,243

-

-

-

-

(4,535)

4,708

988

5,696

Acquisiton - DHC Supply LLC

3

7,751

-

-

-

-

-

7,751

-

7,751

Sale of controlling interest

5

-

-

-

-

-

-

-

(892)

(892)

Prepaid Interest paid in shares

 

 

1,458

 

-

 

-

 

-

 

-

-

 

1,458

 

-

 

1,458

Share-based compensation

 

14

 

-

 

-

 

2,578

 

-

 

-

-

 

2,578

 

-

 

2,578

Equity portion of convertible debentures

 

 

-

 

-

 

-

 

157

 

-

-

 

157

 

-

 

157

Exercise options

 

14

 

1,005

 

-

 

(179)

 

-

 

-

-

 

826

 

-

 

826

Warrants expired

 

15

 

-

 

(5,394)

 

5,394

 

-

 

-

-

 

-

 

-

 

-

Issued to pay fees in shares

 

 

468

 

-

 

-

 

-

 

-

-

 

468

 

-

 

468

Extension of convertible debenture

 

 

-

 

-

 

340

 

-

 

-

-

 

340

 

-

 

340

Conversion of convertible debentures

 

 

43,317

 

-

 

-

 

(9,661)

 

-

-

 

33,656

 

-

 

33,656

Warrants exercised

 

15

 

15,045

 

(1,676)

 

28

 

-

 

-

-

 

13,397

 

-

 

13,397

Cumulative translation adjustment

 

 

-

 

-

 

-

 

-

 

86

-

 

86

 

-

 

86

Shares and warrants issued through equity financing

 

 

38,447

 

10,022

 

-

 

-

 

-

-

 

48,469

 

-

 

48,469

Share issuance costs

 

 

(5,535)

 

-

 

-

 

-

 

-

-

 

(5,535)

 

-

 

(5,535)

Vesting of RSUs

 

14

 

743

 

-

 

(743)

 

-

 

-

-

 

-

 

-

 

-

Comprehensive loss for the period

 

 

-

 

-

 

-

 

-

 

-

(30,883)

 

(30,883)

 

22

 

(30,861)

Balance, July 31, 2021

 

 

188,180

 

11,487

 

12,362

 

1,469

 

(401)

(69,777)

 

143,320

 

3,491

 

146,811

5


GRAPHIC

High Tide Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three and nine months ended July 31, 2021 and 2020

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

    

Notes

    

2021

    

2020

$

$

Operating activities

  

  

  

Net loss

 

 

(30,861)

 

(5,031)

Adjustments for items not effecting cash and cash equivalents

 

 

  

 

  

Income tax expense

 

 

688

 

394

Accretion expense

 

10

 

4,575

 

4,263

Fee for services and interest paid in shares and warrants

 

13

 

1,926

 

1,424

Acquisition costs paid in shares

 

 

-

 

624

Depreciation and amortization

 

5,6,20

 

22,107

 

4,585

Revaluation of derivative liability

 

3,11,15

 

8,553

 

(247)

Loss on extinguishment of debenture

11

516

186

Debt restructuring gain

 

12

 

(1,145)

 

-

Impairment loss

 

 

57

 

247

Foreign exchange gain (loss)

 

 

66

 

(17)

Share-based compensation

 

14

 

2,578

 

101

Gain on disposal of assets

5,6

(2,997)

 

-

Loss on sale of marketable securities

 

 

-

 

(3,576)

Revaluation of marketable securities

 

 

256

 

-

 

 

6,319

 

2,953

Changes in non-cash working capital

 

 

  

 

  

Trade and other receivables

 

 

(944)

 

(1,774)

Inventory

 

 

(3,973)

 

1,117

Loans receivables

(161)

 

817

Prepaid expenses and deposits

 

 

(390)

 

453

Accounts payable and accrued liabilities

 

 

(8,687)

 

2,243

Net cash (used in) provided by operating activities

 

 

(7,836)

 

5,809

 

Investing activities

 

 

  

 

  

Net additions of property and equipment

 

6

 

(6,206)

 

(1,837)

Net additions of intangible assets

 

5

 

(124)

 

(427)

Proceeds from sale of marketable securities

 

 

-

 

1,458

Proceeds from sale of assets

2,300

 

-

Cash paid for business combination, net of cash acquired

 

3

 

(14,172)

 

(2,484)

Net cash used in investing activities

 

 

(18,202)

 

(3,290)

 

Financing activities

 

 

  

 

  

Repayment of finance lease obligations

 

 

(11)

 

(5)

Proceeds from convertible debentures net of issue costs

 

11

 

1,273

 

8,855

Proceeds from equity financing

 

 

43,250

 

-

Proceeds from notes payable

 

 

-

 

200

Repayment of convertible debentures

 

 

(3,813)

 

(1,867)

Interest paid on debentures and loans

 

 

(985)

 

-

Lease liability payments

 

20

 

(5,270)

 

(3,400)

Warrants exercised

 

 

9,885

 

-

Options exercised

 

 

825

 

-

Net cash provided by financing activities

 

 

45,154

 

3,783

 

Net increase in cash

 

 

19,116

 

6,302

Cash, beginning of period

 

 

7,524

 

806

Cash, end of period

 

 

26,640

 

7,108

6


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

(Unaudited – 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 retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “HITI”(listed as of June 2, 2021), the TSX Venture Exchange (“TSXV”) under the symbol “HITI”, and on the Frankfurt Stock Exchange (“FSE”) under the securities identification code ‘WKN: A2PBPS’ and the ticker symbol “2LYA”. 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 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.

2.

Accounting Policies

A.

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 (loss) income and comprehensive (loss) income to conform with current period’s presentation.

On May 13, 2021, the Company completed a one-for-fifteen (1:15) reverse share split of all of its issued and outstanding common shares (“Share Consolidation”), resulting in a reduction in the issued and outstanding shares from 690,834,719 to 46,055,653. Shares reserved under the Company’s equity and incentive plans were adjusted to reflect the Share Consolidation.

These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on September 14, 2021.

B.

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.

7


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

2.

Accounting Policies (continued)

C.

New Accounting Pronouncements not yet adopted

Costs Necessary to Sell Inventories (IAS 2) Agenda Decision

At its June 2021 meeting, the IFRS Interpretations Committee finalized an agenda decision about the costs an entity includes as the ‘estimated costs necessary to make the sale’ when calculating net realizable value of inventories, which is used in determining if inventory balances are impaired. The Committee concluded that when determining the net realizable value of inventories, an entity estimates the costs necessary to make the sale in the ordinary course of business, which requires the exercise of judgement. The Company is assessing the impact of this agenda decision on its results of operations, financial position and disclosures

8


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

3.

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.

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

 

2,015

Inventory

 

3,547

Prepaid expenses

 

2,479

Marketable securities

 

635

Notes receivable

 

312

Property and equipment

 

6,849

Loan receivable

 

756

Intangible assets - license

 

37,700

Right of use asset

 

12,490

Goodwill

 

25,913

Non-controlling interest

 

(1,821)

Accounts payable and accrued liabilities

 

(6,336)

Deferred tax liability

 

(2,449)

Lease liability

 

(12,887)

Convertible debenture

 

(18,809)

Notes payable

 

(13,326)

 

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 pre-consolidation (13,070,907 post-consolidation 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 nine months ended July 31, 2021, Meta Growth accounted for $45,670 in revenues and $12,669 in net loss. 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 nine months ended July 31, 2021. The Company also incurred $1,359 in transaction costs, which have been expensed to finance and other costs during the period.

9


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

B.

Smoke Cartel, Inc. Acquisition

Total consideration

    

$

Cash

 

2,600

Common shares

 

8,396

Contingent consideration

 

1,366

 

12,362

Purchase price allocation

 

  

Cash and cash equivalents

 

1,738

Intangible assets - Brand

 

3,997

Intangible assets - Software

 

7,325

Goodwill

 

2,017

Deferred tax liability

 

(1,194)

Accounts payable and accrued liabilities

 

(1,521)

 

12,362

On March 24, 2021, the Company closed the acquisition of 100% of the outstanding common shares of Smoke Cartel Inc. (“Smoke Cartel”). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) 9,540,754 common shares of High Tide pre-consolidation (636,050 post-consolidation shares), having an aggregate value of $8,396; (ii) $2,600 in cash; and (iii) a contingent consideration depending on certain revenue targets being achieved by December 31, 2021. Contingent consideration of $1,366 was calculated using Monte Carlo simulation due to the uncertain nature of the potential future revenues of the Company.

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, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the nine months ended July 31, 2021, Smoke Cartel accounted for $4,790 in revenues and $316 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $4,526 in revenues and an increase of $541 in net income for the nine months ended July 31, 2021. The Company also incurred $97 in transaction costs, which have been expensed to finance and other costs during the period.

10


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

C.

2686068 Ontario Inc. Acquisition

Total consideration

    

$

Cash

 

5,980

 

5,980

Purchase price allocation

 

  

Cash and cash equivalents

 

3

Inventory

 

120

Property and equipment

 

274

Intangible assets - license

 

4,187

Right of use asset

 

1,148

Goodwill

 

2,570

Lease liability

 

(1,148)

Accounts payable and accrued liabilities

 

(65)

Deferred tax liability

 

(1,109)

 

5,980

On April 28, 2021, the Company closed the acquisition of 100% of the outstanding common shares of 2686068 Ontario Inc. (“2686068”). Pursuant to the terms of the Arrangement, the consideration was comprised of $5,980 in cash.

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, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business. For the nine months ended July 31, 2021, 2686068 accounted for $473 in revenues and $128 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $1,107 in revenues and an increase of $123 in net loss for the nine months ended July 31, 2021.

11


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

D.

Fab Nutrition, LLC. Acquisition

Total consideration

    

$

Cash

 

15,193

Common Shares

9,243

 

24,436

Purchase price allocation

 

  

Cash and cash equivalents

 

642

Accounts receivable

334

Inventory

 

404

Property and equipment

 

22

Intangible assets - brand

 

7,765

Goodwill

 

20,486

Accounts payable and accrued liabilities

 

(260)

Deferred tax liability

(3,969)

Non-controlling interest

 

(988)

 

24,436

On May 10, 2021, the Company closed the acquisition of 80% of the outstanding common shares of Fab Nutrition, LLC. (“FABCBD”). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) $15,193 in cash; and (ii) 15,154,109 pre-consolidation common shares of High Tide (1,010,274 post-consolidation), having an aggregate value of $9,243.

The acquisition agreement also includes a call and put option that could result in the Company acquiring the remaining 20% of common shares in FABCBD not acquired upon initial acquisition. The Company analyzed the value in the call option and considers it to be at fair value, and therefore has no value related to the acquisition. As the put option is a contractual obligation, it gives rise to a financial liability calculated with reference to the agreement and is discounted to its present value at each reporting date using the discounted cash flow model. The initial obligation under the put option was recorded as a current liability with the offset recorded as equity on the Condensed Interim Consolidated Statements of Financial Position, at its fair value at acquisition of $4,535 assuming a risk-free rate of 15% and an exercise date of May 2, 2023. For the period ended July 31, 2021, the Company recognized $145 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss.

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, income taxes, the allocation of goodwill and the non-controlling interest. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the nine months ended July 31, 2021, FABCBD accounted for $2,294 in revenues and $563 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $7,790 in revenues and an increase of $205 in net income for the nine months ended July 31, 2021. The Company also incurred $872 in transaction costs, which have been expensed to finance and other costs during the period.

12


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

E.

DHC Supply LLC. Acquisition

Total consideration

    

$

Cash

 

4,045

Common Shares

7,751

 

11,796

Purchase price allocation

 

  

Cash and cash equivalents

 

1,054

Trade and other receivables

69

Inventory

 

1,303

Prepaid expenses

18

Property and equipment

 

10

Intangible assets - brand

 

10,927

Right of use asset

 

592

Lease liability

 

(592)

Accounts payable and accrued liabilities

 

(1,585)

 

11,796

On July 6, 2021, the Company closed the acquisition of 100% of the outstanding common shares of DHC Supply LLC. (“DHC”). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) 839,820 post-consolidation commons shares of High Tide (12,597,300 pre-consolidation), having an aggregate value of $7,751; (ii) $4,045 in cash.

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, income taxes and the allocation of goodwill. For the nine months ended July 31, 2021, DHC accounted for $1,180 in revenues and $171 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $7,666 in revenues and an increase of $226 in net loss for the nine months ended July 31, 2021.

13


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

4.

Revenue from Contracts with Customers

For the three months ended July 31

    

2021

    

2020

    

2021

    

2020

    

2021

    

2020

    

2021

    

2020

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

$

$

$

$

$

$

$

$

Primary geographical markets (i)

Canada

37,695

17,088

676

1,139

5

36

38,376

18,263

USA

8,467

4,090

1,105

1,489

-

-

9,572

5,579

International

121

261

-

-

-

-

121

261

Total revenue

46,283

21,439

1,781

2,628

5

36

48,069

24,103

Major products and services

  

  

  

  

  

  

  

  

Cannabis

32,031

16,151

-

-

-

-

32,031

16,151

Consumption accessories

 

9,962

 

4,523

 

1,773

 

2,497

 

-

 

-

 

11,735

 

7,020

Data analytics services

 

3,839

 

641

 

-

 

-

 

-

 

-

 

3,839

 

641

Other revenue

 

451

 

124

 

8

 

131

 

5

 

36

 

464

 

291

Total revenue

 

46,283

 

21,439

 

1,781

 

2,628

 

5

 

36

 

48,069

 

24,103

Timing of revenue recognition

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Transferred at a point in time

 

46,283

 

21,439

 

1,781

 

2,628

 

5

 

36

 

48,069

24,103

Total revenue

 

46,283

 

21,439

 

1,781

 

2,628

 

5

 

36

 

48,069

 

24,103

For the nine months ended July 31

    

2021

    

2020

    

2021

    

2020

    

2021

    

2020

    

2021

    

2020

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

$

$

$

$

$

$

$

$

Primary geographical markets (i)

Canada

104,804

44,562

2,768

2,782

35

343

107,607

47,687

USA

16,098

7,171

3,051

2,884

-

-

19,149

10,055

International

500

647

-

-

-

-

500

647

Total revenue

121,402

52,380

5,819

5,666

35

343

127,256

58,389

Major products and services

  

  

  

  

  

  

  

  

Cannabis

91,978

40,514

-

-

-

-

91,978

40,514

Consumption accessories

 

19,915

 

10,001

 

5,779

 

5,392

 

-

 

-

 

25,694

15,393

Data analytics services

 

8,201

 

1,089

 

-

 

-

 

-

 

-

 

8,201

1,089

Other revenue

 

1,308

 

776

 

40

 

274

 

35

 

343

 

1,383

1,393

Total revenue

 

121,402

 

52,380

 

5,819

 

5,666

 

35

 

343

 

127,256

 

58,389

Timing of revenue recognition

 

 

 

 

 

  

 

  

 

 

Transferred at a point in time

 

121,402

 

52,380

 

5,819

 

5,666

 

35

 

343

 

127,256

58,389

Total revenue

 

121,402

 

52,380

 

5,819

 

5,666

 

35

 

343

 

127,256

 

58,389

(i)

Represents revenue based on geographical locations of the customers who have contributed to the revenue generated in the applicable segment.

14


GRAPHIC

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

5.

Intangible Assets and Goodwill

    

Software

    

Licenses

    

Lease Buyout

    

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

 

124

 

-

 

-

 

-

 

-

 

124

Additions from business combinations

 

7,325

 

41,887

 

-

 

22,689

 

50,986

 

122,887

Disposals (i)

-

 

(1,200)

 

-

 

-

 

-

(1,200)

Balance, July 31, 2021

 

9,771

 

50,663

 

-

 

24,228

 

57,348

 

142,010

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

 

1,042

 

12,908

 

-

 

-

 

-

 

13,950

Disposals (i)

-

 

(160)

 

-

 

-

 

-

(160)

Balance, July 31, 2021