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High Tide Inc. – ‘40FR12B’ on 3/19/21 – ‘EX-99.20’

On:  Friday, 3/19/21, at 9:42pm ET   ·   As of:  3/22/21   ·   Accession #:  1213900-21-16760   ·   File #:  1-40258

Previous ‘40FR12B’:  None   ·   Next:  ‘40FR12B/A’ on 4/1/21   ·   Latest:  ‘40FR12B/A’ on 5/28/21   ·   5 References:   By:  High Tide Inc. – ‘F-10/A’ on 9/20/21 By:  High Tide Inc. – ‘F-10’ on 9/17/21 By:  High Tide Inc. – Latest ‘40FR12B/A’ on 5/28/21 By:  High Tide Inc. – ‘40FR12B/A’ on 5/25/21 By:  High Tide Inc. – Next ‘40FR12B/A’ on 4/1/21 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/22/21  High Tide Inc.                    40FR12B     3/19/21  155:68M                                    EdgarAgents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 40FR12B     Registration Statement by a Canadian Issuer         HTML    123K 
 2: EX-99.1     MD&A Dated for the Year Ended October 31, 2019      HTML    176K 
11: EX-99.10    Report of Exempt Distribution Excluding Schedule 1  HTML     39K 
                of 45-106F1 Dated December 19, 2019                              
101: EX-99.100   News Release Dated December 14, 2020                HTML     49K  
102: EX-99.101   News Release Dated December 29, 2020                HTML     48K  
103: EX-99.102   News Release Dated January 4, 2021                  HTML     46K  
104: EX-99.103   News Release Dated January 7, 2021                  HTML     46K  
105: EX-99.104   Ni 44-101 Notice of Intent to Qualify Dated         HTML     38K  
                January 6, 2021                                                  
106: EX-99.105   News Release Dated January 10, 2021                 HTML     46K  
107: EX-99.106   Report of Exempt Distribution Excluding Schedule 1  HTML     38K  
                of 45-106F1 Dated January 13, 2021                               
108: EX-99.107   Business Acquisition Report Dated January 15, 2021  HTML     46K  
109: EX-99.108   News Release Dated January 22, 2021                 HTML     43K  
110: EX-99.109   News Release Dated January 25, 2021                 HTML     55K  
12: EX-99.11    News Release Dated December 27, 2019                HTML     46K 
111: EX-99.110   News Release Dated February 1, 2021                 HTML     47K  
112: EX-99.111   News Release Dated February 1, 2021                 HTML     43K  
113: EX-99.112   News Release Dated February 2, 2021                 HTML     48K  
114: EX-99.113   Amended and Restated Bought Deal Offering of Units  HTML    111K  
                Dated February 2, 2021                                           
115: EX-99.114   Cover Letter From Newsfile Corp. Dated February 2,  HTML     40K  
                2021                                                             
116: EX-99.115   Letter From Foreign Issuer Dated February 2, 2021   HTML     38K  
117: EX-99.116   Term Sheet Dated February 1, 2021                   HTML     46K  
118: EX-99.117   Amended and Restated Term Sheet Dated February 2,   HTML     45K  
                2021                                                             
119: EX-99.118   Qualification Certificate Dated February 5, 2021    HTML     43K  
120: EX-99.119   Preliminary Short Form Prospectus Dated February    HTML    424K  
                5, 2021                                                          
13: EX-99.12    Loan Agreement Dated January 6, 2020                HTML    243K 
121: EX-99.120   Decision Document Dated February 5, 2021            HTML     38K  
122: EX-99.121   Marketing Materials Dated February 9, 2021          HTML     47K  
123: EX-99.122   Other Material Contract(S) Dated February 9, 2021   HTML    123K  
124: EX-99.123   News Release Dated February 10, 2021                HTML     44K  
125: EX-99.124   News Release Dated February 16, 2021                HTML     46K  
126: EX-99.125   Undertaking to File Documents and Material          HTML     39K  
                Contracts Dated February 16, 2021                                
127: EX-99.126   Government of Alberta Certificate of Amendment and  HTML     52K  
                Registration of Restated Articles                                
128: EX-99.127   Consent Letter of Underwriters' Legal Counsel       HTML     42K  
                Dated February 16, 2021                                          
129: EX-99.128   Consent Letter of Issuer's Legal Counsel            HTML     39K  
130: EX-99.129   Auditors' Consent Letter Dated February 16, 2021    HTML     39K  
14: EX-99.13    News Release Dated January 7, 2020                  HTML     48K 
131: EX-99.130   Auditors' Consent Letter Dated February 16, 2021    HTML     39K  
132: EX-99.131   Underwriting or Agency Agreement Dated February     HTML    303K  
                16, 2021                                                         
133: EX-99.132   Final Short Form Prospectus Dated February 16,      HTML    440K  
                2021                                                             
134: EX-99.133   Decision Document Dated February 17, 2021           HTML     38K  
135: EX-99.134   News Release Dated February 18, 2021                HTML     47K  
136: EX-99.135   News Release Dated February 22, 2021                HTML     48K  
137: EX-99.136   2021 Warrant Indenture Dated February 22, 2021      HTML    309K  
138: EX-99.137   News Release Dated February 23, 2021                HTML     48K  
139: EX-99.138   On Form 13-502F1 (Class 1 and 3B Reporting Issuers  HTML     37K  
                - Participation Fee) Dated March 1, 2021                         
140: EX-99.139   Consolidated Financial Statements for the Years     HTML    485K  
                Ended October 31, 2020 and 2019                                  
15: EX-99.14    News Release Dated January 7, 2020                  HTML     48K 
141: EX-99.140   Ab Form 13-501F1 (Class 1 and 3B Reporting Issuers  HTML     38K  
                - Participation Fee) Dated March 1, 2021                         
142: EX-99.141   MD&A for the Year Ended October 31, 2020            HTML    152K  
143: EX-99.142   52-109Fv1 - Certification of Annual Filings - CFO   HTML     41K  
                (E) Dated March 1, 2021                                          
144: EX-99.143   52-109Fv1 - Certification of Annual Filings - CEO   HTML     41K  
                (E) Dated March 1, 2021                                          
145: EX-99.144   News Release Dated March 1, 2021                    HTML     76K  
146: EX-99.145   News Release Dated March 4, 2021                    HTML     44K  
147: EX-99.146   News Release Dated March 5, 2021                    HTML     43K  
148: EX-99.147   News Release Dated March 8, 2021                    HTML     44K  
149: EX-99.148   News Release Dated March 10, 2021                   HTML     43K  
150: EX-99.149   Annual Information Form Dated March 5, 2021         HTML    410K  
16: EX-99.15    Early Warning Report Dated January 9, 2020          HTML     61K 
151: EX-99.150   52-109F1 - Aif - Certification of Filings With      HTML     41K  
                Voluntarily Filed Aif - CFO (E) Dated March 11,                  
                2021                                                             
152: EX-99.151   52-109F1 - Aif - Certification of Filings With      HTML     42K  
                Voluntarily Filed Aif - CEO (E) Dated March 11,                  
                2021                                                             
153: EX-99.152   News Release Dated March 15, 2021                   HTML     43K  
154: EX-99.153   Consent of Independent Registered Public            HTML     38K  
                Accounting Firm Dated March 19, 2021 From Mnp LLP                
155: EX-99.154   Consent of Independent Registered Public            HTML     38K  
                Accounting Firm Dated March 19, 2021 From Ernst &                
                Young LLP                                                        
17: EX-99.16    Report of Exempt Distribution Excluding Schedule 1  HTML     38K 
                of 45-106F1 Dated January 16, 2020                               
18: EX-99.17    News Release Dated January 27, 2020                 HTML     49K 
19: EX-99.18    News Release Dated January 28, 2020                 HTML     48K 
20: EX-99.19    News Release Dated January 31, 2020                 HTML     46K 
 3: EX-99.2     News Release Dated November 7, 2019                 HTML     45K 
21: EX-99.20    Condensed Interim Consolidated Financial            HTML    330K 
                Statements for the Three Months Ended January 31,                
                2020 and 2019                                                    
22: EX-99.21    MD&A for the Three Months Ended January 31, 2020    HTML    144K 
                and 2019                                                         
23: EX-99.22    Report of Exempt Distribution Excluding Schedule 1  HTML     39K 
                of 45-106F1 Dated February 6, 2020                               
24: EX-99.23    News Release Dated February 14, 2020                HTML     50K 
25: EX-99.24    News Release Dated February 21, 2020                HTML     48K 
26: EX-99.25    On Form 13-502F1 (Class 1 and 3B Reporting          HTML     37K 
                Issueers - Participation Fee) Dated February 28,                 
                2020                                                             
27: EX-99.26    Audited Annual Financial Statements Dated February  HTML    437K 
                28, 2020                                                         
28: EX-99.27    Ab Form 13-501F1 (Class 1 and 3B Reporting Issuers  HTML     37K 
                - Participation Fee) Dated February 27, 2020                     
29: EX-99.28    51-109Fv1 - Certification of Annual Filings - CFO   HTML     41K 
                (E) Dated February 28, 2020                                      
30: EX-99.29    51-109Fv1 - Certification of Annual Filings - CEO   HTML     41K 
                (E) Dated February 28, 2020                                      
 4: EX-99.3     News Release Dated November 15, 2019                HTML     45K 
31: EX-99.30    News Release Dated March 2, 2020                    HTML     74K 
32: EX-99.31    News Release Dated March 31, 2020                   HTML     61K 
33: EX-99.32    52-109Fv2 - Certification of Interim Filings - CFO  HTML     41K 
                (E) Dated March 30, 2020                                         
34: EX-99.33    52-109Fv2 - Certification of Interim Filings - CEO  HTML     41K 
                (E) Dated March 30, 2020                                         
35: EX-99.34    News Release Dated April 6, 2020                    HTML     46K 
36: EX-99.35    News Release Dated April 8, 2020                    HTML     45K 
37: EX-99.36    News Release Dated April 13, 2020                   HTML     44K 
38: EX-99.37    News Release Dated April 20, 2020                   HTML     45K 
39: EX-99.38    News Release Dated April 22, 2020                   HTML     45K 
40: EX-99.39    Condensed Interim Consolidated Financial            HTML    386K 
                Statements for the Three and Six Months Ended                    
                April 30, 2020 and 2019                                          
 5: EX-99.4     News Release Dated November 21, 2019                HTML     47K 
41: EX-99.40    MD&A for the Three and Six Months Ended April 30,   HTML    164K 
                2020 and 2019                                                    
42: EX-99.41    Report of Exempt Distribution Excluding Schedule 1  HTML     40K 
                of 45-106F1 Dated May 1, 2020                                    
43: EX-99.42    News Release Dated May 4, 2020                      HTML     45K 
44: EX-99.43    News Release Dated May 8, 2020                      HTML     44K 
45: EX-99.44    News Release Dated May 14, 2020                     HTML     44K 
46: EX-99.45    Notice of the Meeting and Record Dated, Dated May   HTML     42K 
                21, 2020                                                         
47: EX-99.46    News Release Dated May 25, 2020                     HTML     44K 
48: EX-99.47    News Release Dated June 9, 2020                     HTML     44K 
49: EX-99.48    News Release Dated June 15, 2020                    HTML     39K 
50: EX-99.49    News Release Dated June 17, 2020                    HTML     65K 
 6: EX-99.5     Report of Exempt Distribution Excluding Schedule 1  HTML     86K 
                of 45-106F1                                                      
51: EX-99.50    52-109Fv1 - Certification of Interim Filings - CFO  HTML     41K 
                (E) Dated June 16, 2020                                          
52: EX-99.51    52-109Fv1 - Certification of Interim Filings - CEO  HTML     41K 
                (E) Dated June 16, 2020                                          
53: EX-99.52    Notice of Meeting Dated June 19, 2020               HTML     42K 
54: EX-99.53    Management Information Circular Dated June 19,      HTML    176K 
                2020                                                             
55: EX-99.54    Form of Proxy                                       HTML     48K 
56: EX-99.55    Report of Exempt Distribution Excluding Schedule 1  HTML     40K 
                of 45-106F1 Dated July 2, 2020                                   
57: EX-99.56    Security Agreement Dated July 22, 2020              HTML    144K 
58: EX-99.57    Debt Restructuring Agreement Dated July 22, 2020    HTML     84K 
59: EX-99.58    News Release Dated July 24, 2020                    HTML     48K 
60: EX-99.59    News Release Dated July 31, 2020                    HTML     46K 
 7: EX-99.6     News Release Dated November 27, 2019                HTML     44K 
61: EX-99.60    Letter From Former Auditor Dated July 31, 2020      HTML     38K 
62: EX-99.61    Notice of Change of Auditor Dated July 31, 2020     HTML     39K 
63: EX-99.62    Condensed Interim Consolidated Financial            HTML    401K 
                Statements for the Three and Nine Months Ended                   
                July 31, 2020 and 2019                                           
64: EX-99.63    MD&A for the Three and Nine Months Ended July 31,   HTML    155K 
                2020 and 2019                                                    
65: EX-99.64    Letter From Ernst & Young Regarding Change of       HTML     38K 
                Auditor Notice Dated July 31, 2020                               
66: EX-99.65    News Release Dated August 7, 2020                   HTML     43K 
67: EX-99.66    News Release Dated August 10, 2020                  HTML     43K 
68: EX-99.67    Arrangement Agreement Dated August 20, 2020         HTML    465K 
69: EX-99.68    Support and Voting Agreement Dated August 20, 2020  HTML     81K 
70: EX-99.69    News Release Dated August 21, 2020                  HTML     61K 
 8: EX-99.7     News Release Dated December 5, 2019                 HTML     45K 
71: EX-99.70    Material Change Report Dated August 28, 2020        HTML     50K 
72: EX-99.71    Amended and Restated Asset Purchase Agreement       HTML    205K 
                Dated September 1, 2020                                          
73: EX-99.72    News Release Dated September 1, 2020                HTML     50K 
74: EX-99.73    News Release Dated September 1, 2020                HTML     50K 
75: EX-99.74    News Release Dated September 8, 2020                HTML     43K 
76: EX-99.75    News Release Dated September 14, 2020               HTML     43K 
77: EX-99.76    52-109Fv2 - Certification of Interim Filings - CFO  HTML     41K 
                (E) Dated September 16, 2020                                     
78: EX-99.77    52-109Fv2 - Certification of Interim Filings - CEO  HTML     41K 
                (E) Dated September 16, 2020                                     
79: EX-99.78    News Release Dated September 16, 2020               HTML     68K 
80: EX-99.79    News Release Dated September 16, 2020               HTML     70K 
 9: EX-99.8     Share Purchase Agreement Dated December 9, 2019     HTML    157K 
81: EX-99.80    News Release Dated September 22, 2020               HTML     47K 
82: EX-99.81    Management Information Circular Dated September     HTML   1.08M 
                23, 2020                                                         
83: EX-99.82    Report of Exempt Distribution Excluding Schedule 1  HTML     85K 
                of 45-106F1 (Amended) Dated October 19, 2020                     
84: EX-99.83    News Release Dated October 28, 2020                 HTML     47K 
85: EX-99.84    News Release Dated November 3, 2020                 HTML     44K 
86: EX-99.85    First Supplemental Warrant Indenture Dated          HTML    107K 
                November 16, 2020                                                
87: EX-99.86    First Supplemental Debenture Indenture Dated        HTML     78K 
                November 16, 2020                                                
88: EX-99.87    News Release Dated November 17, 2020                HTML     46K 
89: EX-99.88    News Release Dated November 17, 2020                HTML     46K 
90: EX-99.89    Support and Voting Agreement Dated November 18,     HTML     76K 
                2020                                                             
10: EX-99.9     News Release Dated December 10, 2019                HTML     49K 
91: EX-99.90    Articles of Arrangement Dated November 18, 2020     HTML    142K 
92: EX-99.91    News Release Dated November 23, 2020                HTML     44K 
93: EX-99.92    News Release Dated November 25, 2020                HTML     44K 
94: EX-99.93    Material Change Report Dated November 25, 2020      HTML     45K 
95: EX-99.94    News Release Dated November 30, 2020                HTML     49K 
96: EX-99.95    News Release Dated December 3, 2020                 HTML     43K 
97: EX-99.96    Report of Exempt Distribution Excluding Schedule 1  HTML     41K 
                of 45-106F1 Dated December 4, 2020                               
98: EX-99.97    News Release Dated December 8, 2020                 HTML     43K 
99: EX-99.98    News Release Dated December 9, 2020                 HTML     45K 
100: EX-99.99    Report of Exempt Distribution Excluding Schedule 1  HTML     41K  
                of 45-106F1 Dated December 10, 2020                              

EXHIBIT 99.20

Condensed Interim Consolidated
Financial Statements

For the three months ended January 31, 2020 and 2019

(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, 2020 and 2019

Notice of no auditor review of Condensed Interim Consolidated Financial Statements for the three months ended January 31, 2020 and 2019.

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the condensed interim consolidated financial statements have not been reviewed by an auditor.

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.

The Company’s independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim condensed financial statements by the entity’s auditor.  

Approved on behalf of the Board:

High Tide Inc. Condensed Interim Consolidated Statements of Financial Position  As at January 31, 2020 and October 31, 2019 (Unaudited – In thousands of Canadian dollars)

High Tide Inc. Condensed Interim Consolidated Statements of Comprehensive Loss For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars)

Subsequent Events (Note 22)

High Tide Inc. Condensed Interim Consolidated Statements of Changes in Equity (Unaudited – In thousands of Canadian dollars)

High Tide Inc. Condensed Interim Consolidated Statements of Cash Flows For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars)

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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.

These unaudited 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, 2019 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 loss to conform with current period’s presentation.

The principles and accounting policies used to prepare the financial statements are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of IFRS 16.

These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on March 30, 2020.

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, 2019.

IFRS 16 Leases

On January 13, 2016, the IASB published a new standard, IFRS 16 Leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. The standard is effective for annual periods beginning on or after January 1, 2019. Under the new standard, a lessee recognizes a right-of-use asset and a lease liability.

On November 1, 2019 the Company, adopted IFRS 16 Leases. The Company has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 Leases.

As a result of adopting IFRS 16, the Company has recognized a significant increase to both assets and liabilities on our Condensed Interim Consolidated Statements of Financial Position, as well as a decrease to operating expenses (for the removal of base rent expense and operating costs for leases), an increase to depreciation (due to the depreciation of the right-of use asset), and an increase to finance costs (due to accretion of the lease liability). Lease inducements, store closure costs and average rent adjustments (which were previously included in accounts payable and accrued liabilities) and onerous lease provisions are no longer recognized as separate liabilities and are included in the calculation of right-of-use assets under IFRS 16.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

Applying IFRS 16, for all leases, the Company:

On adoption of IFRS 16, the Company recognized lease assets and liabilities in relation to leases previously classified as ‘operating leases’ under the principles of IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted using the related incremental borrowing rate as of November 1, 2019. The incremental borrowing rate applied is 8%. The associated right-of-use assets were measured as equal to the lease liability and prepaid rent, discounted using the incremental borrowing rates as of November 1, 2019 adjusted for the effects of provisions for onerous leases.

Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. In the context of transition to IFRS 16, the Company recognized right-of-use assets of $19,638 and lease liabilities of $19,543 as at November 1, 2019. The Company capitalized prepaid lease deposits and lease inducements amounting to $95 to right of use assets on November 1, 2019 in accordance with IFRS 16.

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

A reconciliation of lease commitments as at October 31, 2019, outlining the effect of transition to IFRS 16 is outlined below.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

Accounting policy

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets are measured at cost, which is calculated as the amount of the initial measurement of lease liability plus any lease payments made at or before the commencement date, any initial direct costs and related restoration costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset. The depreciation is recognized from the commencement date of the lease. To assess whether a contract conveys the right to control the use of an identified asset, we assess whether:

Estimates

The Company estimates the incremental borrowing rate used to measure our lease liability for each lease contract. This includes estimation in determining the asset-specific security impact. There is also estimation uncertainty arising from certain leases containing variable lease terms that are linked to operational results or an index or rate.

Judgments

The Company estimates the lease term by considering the facts and circumstances that can create an economic incentive to exercise an extension option, or not exercise a termination option by assessing relevant factors such as store profitability. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows have not been included in the lease liability because it is not reasonably certain that the lease will be extended. The assessment of the lease term is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment and that is within the control of the lessee.

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 Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

On January 24, 2020, the Company completed the acquisition of 2680495 Ontario Inc. (“2680495”) which operates a licensed retail cannabis store in Hamilton, Ontario. As consideration for the acquisition, the Company paid to the vendor $2,903 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 2680495.

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, and the allocation of goodwill. None of the goodwill arising on this acquisition is expected to be deductible for tax purposes. For the three months ended January 31, 2020, 2680495 accounted for $516 in revenues and $93 in net income. The Company also incurred $600 in transaction costs, which have been expensed during the period.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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 acquistion as a joint operation. The activity of the joint operation constitutes a business, as defined in IFRS 3 Business Combinations, it shall apply, to the extent of its share in accordance with all of the principles on business combinations accounting. As consideration for the transaction, the Company issued to nominees of the partners of the partnership an aggregate of 5,319,149 common shares of the Company, 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 Saturninus, a royalty of 1% of the gross revenues of the Sudbury store. Contingent consideration was calculated using the present value of expected payment, discounting using 22% discount rate. The expencted payment is determined by considering the 1% share of forecasted revenue.

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, and the allocation of goodwill. None of the goodwill arising on this acquisition is expected to be deductible for tax purposes. For the three months ended January 31, 2020, Saturninus accounted for $56 in revenues and ($5) in net loss.

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”). 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 to settle the shareholder loan and 2,645,503 number of common shares in the capital of High Tide (“Shares”) having an aggregate fair 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 book value of the non-controlling interest at the time of the purchase was negative $187. The incremental amount of the fair value of the consideration paid over the book value of the non-controlling interest at December 10, 2019, of $500 was recognized as an adjustment to contributed surplus and $187 to accumulated deficit.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

Finance and other costs are comprised of the following:

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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.

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.

On December 4, 2019, the Company repaid $1,500 towards the principal of the convertible debt.

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 $128 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, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

Management calculated the fair value of the liability component as $1,707 using a discount rate of 22%, with the residual amount of $292 net of deferred tax of $79 being allocated to warrants, recorded in equity. 

Management calculated the fair value of the liability component as $1,806 using a discount rate of 22%, with the residual amount of $309 net of deferred tax of $83 being allocated to warrants, recorded in equity. 

In accordance with IFRS 9, the equity conversion option embedded in the convertible debenture was determined to be a derivative liability, which has been recognized separately at its fair value of $461. 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 a monte-carlo simulation and the following assumptions: stock price: $0.17; expected life of 2 year; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.25; and risk-free interest rate of 1.65%. The debt host has been recognized at its amortized cost of $239, which represents the remaining fair value allocated from the amount of shareholder loan settled of $700. As of January 31, 2020, the conversion option had a fair value of $470 and the Company recognized a $9 unrealized gain on the derivative liability. The fair value of the equity conversion option was determined using the a monte-carlo simulation and the following assumptions: stock price: $0.20; expected life of 1.88 year; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.25; and risk-free interest rate of 1.65%.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

Management calculated the fair value of the liability component as $1,708 using a discount rate of 22%, with the residual amount of $292 net of deferred tax of $79 being allocated to warrants, recorded in equity. 

Gross proceeds were $5,000 and net proceeds were $4,743, net of cash transaction costs of $257. The gross proceeds were allocated on a relative fair value basis to the warrants for $327, the host debt component for $1,571, and the embedded derivatives for $3,102. In accordance with IFRS 9, the equity conversion option embedded in the convertible debenture was determined to be a derivative liability, which has been recognized separately at its fair value of $3,102. 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 a monte-carlo simulation and the following assumptions: stock price: $0.16; expected life of 1 year; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.25; and risk-free interest rate of 1.65%. Management elected to capitalize transaction costs, which are directly attributable to the issuance of the loan agreement. As of January 31, 2020, the conversion option had a fair value of $2,793 and the Company recognized a $309 unrealized gain on the derivative liability. The fair value of the equity conversion option was determined using the a monte-carlo simulation and the following assumptions: stock price: $0.20; expected life of 0.93 year; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.25; and risk-free interest rate of 1.65%.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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, 2020, the Company incurred accretion of $9.

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 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. During, the three-month ended January 31, 2020, the Company incurred accretion of $12. The loan was personally guaranteed by the CEO.

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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%. On Decemeber 14, 2019, the Company settled the derivative liability of $2,121 by issuance of $2,000 convertibile debt and recgonized a gain of $121 as revaluation of derivative liability.

Common shares:

High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended January 31, 2020 and 2019 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

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:

For the period ended January 31, 2020, the Company recorded share-based compensation of $27 (2019 -$1,232) related to stock options.