for the nine months ended April 30, 2023 and the year ended July 31, 2022
Expressed in U.S. dollars
(Unaudited)
Body and Mind Inc.
Pro Forma Consolidated Statement of Financial Position
(Expressed in U.S. dollars, unless otherwise stated)
(Unaudited)
Body and
Mind Inc.
Pro Forma
Pro Forma
as at
As of
April 30, 2023
Adjustments
Notes
April 30, 2023
Assets
Current assets
Cash
$
2,665,516
8,225,000
2A
10,762,357
(128,159
)
2A
Accounts receivable
782,238
-
782,238
Interest receivable on convertible loan
276,000
-
276,000
Prepaids
751,148
(80,540
)
2A
670,608
Inventory
2,711,626
(234,792
)
2A
2,476,834
Loan receivable
20,804
-
20,804
Total current assets
7,207,332
7,781,509
14,988,841
Deposit
50,519
-
50,519
Convertible loan receivable
1,609,088
-
1,609,088
Property and equipment, net
5,347,159
(494,660
)
2A
4,852,499
Operating lease right-of-use assets
7,509,730
(166,121
)
2A
7,343,609
Brand and licenses, net
10,888,159
(1,967,831
)
2A
8,920,328
Total Assets
$
32,611,987
5,152,897
37,764,884
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
$
3,839,554
(297,234
)
2A
3,542,320
Accrued liabilities
318,568
-
318,568
Income taxes payable
5,277,165
-
5,277,165
Due to related parties
148,339
-
148,339
Loans payable
28,656
-
28,656
Current portion of operating lease liabilities
1,138,855
(31,690
)
2A
1,107,165
Total current liabilities
10,751,137
(328,924
)
10,422,213
Long-term operating lease liabilities
8,756,001
(138,434
)
2A
8,617,567
Loans payable
7,766,060
-
7,766,060
Convertible debentures – related parties, net
2,450,671
-
2,450,671
Income taxes payable
966,992
-
966,992
Deferred tax liability
342,137
-
342,137
Total Liabilities
31,032,998
(467,358
)
30,565,640
Stockholders’ equity
Capital stock
14,663
-
14,663
Additional paid-in capital
55,018,951
-
55,018,951
Accumulated other comprehensive income
1,176,006
-
1,176,006
Accumulated deficit
(55,462,822
)
5,620,255
2A
(49,842,567
)
Total stockholders’ equity attributable to shareholders
746,798
5,620,255
6,367,053
Non-controlling interest
832,191
-
832,191
Total stockholders’ equity
1,578,989
5,620,255
7,199,244
Total Liabilities and stockholders’ equity
$
32,611,987
5,152,897
37,764,884
The accompanying notes are an integral part of the pro forma consolidated financial statements
2
Body and Mind Inc.
Pro Forma Consolidated Statement of Loss and Comprehensive Loss
(Expressed in U.S. dollars, unless otherwise stated)
(Unaudited)
Body and
Mind Inc.
Pro Forma
Pro Forma
as at
For the nine months ended
April 30, 2023
Adjustments
Notes
April 30, 2023
Sales
$
22,886,446
(5,162,288
)
2A
17,724,158
Cost of sales
(16,903,718
)
3,033,823
2A
(13,869,895
)
Gross profit
5,982,728
(2,128,465
)
3,854,263
Operating expenses
Accounting and legal
884,052
1,145
2A
885,197
Business development
754,364
-
754,364
Consulting fees
502,920
-
502,920
Depreciation
1,075,985
(239,765
)
2A
836,220
Lease expense
1,006,189
(38,439
)
2A
967,750
Licenses, utilities and office administration
3,523,126
(391,666
)
2A
3,131,460
Management fees
304,152
-
304,152
Salaries and wages
3,300,611
(437,247
)
2A
2,863,364
Total operating expenses
(11,351,399
)
1,105,972
(10,245,427
)
Net operating loss
(5,368,671
)
(1,022,493
)
(6,391,164
)
Other income (expenses)
Foreign exchange, net
1,013
-
1,013
Gain on fair value adjustment of convertible loan
359,088
-
359,088
Interest expense
(1,291,069
)
1,248
2A
(1,289,821
)
Interest income
54,000
-
54,000
Loss on impairment
(944,015
)
-
(944,015
)
Other income
72,203
(1,715
)
2A
70,488
Gain on disposition
-
6,631,273
2A
6,631,273
Total other expenses
(1,748,780
)
6,630,806
4,882,026
Net loss before income tax
(7,117,451
)
5,608,313
(1,509,138
)
Income tax expense
(2,185,164
)
11,942
2A
(2,173,222
)
Net loss
$
(9,302,615
)
$
5,620,255
$
(3,682,360
)
Other comprehensive income
Foreign currency translation adjustment
(48,087
)
-
(48,087
)
Comprehensive loss
$
(9,350,702
)
$
5,620,255
$
(3,730,447
)
Net income (loss) attributable to:
Body and Mind Inc.
(9,659,796
)
5,620,255
(4,039,541
)
Non-controlling interest
357,181
-
357,181
Comprehensive loss attributable to:
Body and Mind Inc.
(9,707,883
)
5,620,255
(4,087,628
)
Non-controlling interest
357,181
-
357,181
Loss per share – basic and diluted
$
(0.07
)
$
0.04
$
(0.03
)
Weighted average number of shares outstanding – basic and diluted
130,203,817
130,203,817
130,203,817
The accompanying notes are an integral part of the pro forma consolidated financial statements
3
Body and Mind Inc.
Pro Forma Consolidated Statement of Loss and Comprehensive Loss
(Expressed in U.S. dollars, unless otherwise stated)
(Unaudited)
Body and
Mind Inc.
Pro Forma
Pro Forma
as at
For the year ended
July 31, 2022
Adjustments
Notes
July 31, 2022
Sales
$
31,638,163
(8,025,889
)
2A
23,612,274
Cost of sales
(20,694,217
)
4,639,143
2A
(16,055,074
)
Gross profit
10,943,946
(3,386,746
)
7,557,200
Operating expenses
Accounting and legal
948,719
(57,184
)
2A
891,535
Business development
669,471
-
669,471
Consulting fees
967,860
-
967,860
Depreciation and amortization
1,490,516
(320,190
)
2A
1,170,326
Lease expense
856,697
(51,254
)
2A
805,443
Licenses, utilities and office administration
4,627,009
(628,648
)
2A
3,998,361
Management fees
559,937
-
559,937
Salaries and wages
4,343,237
(512,457
)
2A
3,830,780
Total operating expenses
(14,463,446
)
1,569,733
(12,893,713
)
Net operating loss
(3,519,500
)
(1,817,013
)
(5,336,513
)
Other income (expenses)
Foreign exchange, net
323
-
323
Interest expense
(1,372,208
)
229
2A
(1,371,979
)
Interest income
72,000
-
72,000
Loss on impairment
(20,517,192
)
-
(20,517,192
)
Loss on settlement
(460,001
)
-
(460,001
)
Other income
161,639
(14,182
)
2A
147,457
Gain on disposition
-
6,859,025
2A
6,859,025
Total other expenses
(22,115,439
)
6,845,072
(15,270,367
)
Net loss before income tax
(25,634,939
)
5,028,059
(20,606,880
)
Income tax expense
(2,593,165
)
74,233
2A
(2,518,932
)
Net loss
(28,228,104
)
5,102,292
(23,125,812
)
Other comprehensive income
Foreign currency translation adjustment
96,380
-
96,380
Comprehensive loss
(28,131,724
)
5,102,292
(23,029,432
)
Net income (loss) attributable to:
Body and Mind Inc.
(28,676,516
)
5,102,292
(23,574,224
)
Non-controlling interest
448,412
-
448,412
Comprehensive loss attributable to:
Body and Mind Inc.
(28,580,136
)
5,102,292
(23,477,844
)
Non-controlling interest
448,412
-
448,412
Loss per share – basic and diluted
(0.25
)
(0.04
)
(0.21
)
Weighted average number of shares outstanding – basic and diluted
112,209,254
112,209,254
112,209,254
The accompanying notes are an integral part of the pro forma consolidated financial statements
4
Body and Mind Inc.
Notes to the Pro Forma Consolidated Financial Statements
(Expressed in U.S. dollars, unless otherwise stated)
(Unaudited)
1. BASIS OF PRESENTATION
The unaudited pro forma consolidated statement of financial position of Body and Mind Inc. (“BAM” or the “Company”) has been prepared by management in accordance with accounting principles generally accepted in the United States of America for inclusion in Form 8-K, Item 2.01.
These pro forma consolidated financial statements include:
A.
A pro forma consolidated statement of financial position as of April 30, 2023 prepared from the unaudited consolidated statement of financial position of the Company as of April 30, 2023 giving effect as if the disposition of NMG OH 1, LLC (“NMG OH”), as described in Note 2, occurred on April 30, 2023.
B.
A pro forma consolidated statement of loss and comprehensive loss for the nine months ended April 30, 2023 prepared from the unaudited consolidated statement of loss and comprehensive loss of the Company, as if the disposition of NMG OH occurred on August 1, 2022.
C.
A pro forma consolidated statement of loss and comprehensive loss for the year ended July 31, 2022 prepared from the audited consolidated statement of loss and comprehensive loss of the Company, as if the disposition of NMG OH occurred on August 1, 2021.
The unaudited pro forma interim consolidated financial statements are not necessarily indicative of the financial position and the financial results that may be attained in the future. The actual pro forma adjustments will depend on a number of factors which could result in a change to the unaudited pro forma interim consolidated financial statements and should be read in conjunction with the financial information referred to above.
The unaudited pro forma interim consolidated financial statements have been compiled using the significant accounting policies as set out in the audited consolidated financial statements of the Company for the year ended July 31, 2022 It is management’s opinion that the unaudited pro forma interim consolidated financial statements include all adjustments necessary for the fair presentation, in all material respects, of the disposition of NMG OH 1, LLC by the Company on a basis consistent with the Company accounting policies.
Amounts in these pro forma interim consolidated financial statements are denominated in U.S. dollars.
No adjustments have been made to reflect potential cost savings that may occur subsequent to completion of the disposition. The pro forma consolidated financial statements does not reflect non-recurring charges or credits directly attributable to the transaction.
5
Body and Mind Inc.
Notes to the Pro Forma Consolidated Financial Statements
(Expressed in U.S. dollars, unless otherwise stated)
(Unaudited)
2. PRO FORMA ASSUMPTIONS
The unaudited pro forma consolidated interim financial statements gives effect to the following transactions and assumptions, which are presented in the adjusting entries column:
A.
Disposition of NMG OH 1, LLC
Pursuant to the equity purchase agreement with FarmaceuticalRX, LLC (the “Purchaser”), DEP agreed to sell all of the issued and outstanding interests, equity, or profit interests (the “Interests”) in NMG OH 1, LLC (“NMG OH”), which owns and operates the Body and Mind Ohio dispensary, to the Purchaser. The Body and Mind Ohio dispensary opened in 2019 and has now been sold to the Purchaser for an initial purchase price for the Interests of US$8.225 million, subject to a working capital adjustment and other customary adjustments. The transaction also includes a contingent of a US$2.5 million bonus payment to DEP for each additional dispensary license granted to NMG OH by the State of Ohio Board of Pharmacy in the future (excluding any adult use license for the existing dispensary).
Gain on disposition is calculated as the difference between the proceeds of $8,225,000 and the net assets of NMG OH as of April 30, 2023 or July 31, 2022, as applicable.
Contingent bonus payments are not considered in these pro forma interim consolidated financial statements due to the uncertainties.
Income tax provisions for the period ended April 30, 2023 or the year ended July 31, 2022 have not been recalculated to determine the portion allocable to NMG OH for the purposes of these unaudited pro forma adjustments.
3. LOSS PER SHARE – BASIC AND DILUTED
The calculation of the pro forma consolidated basic and diluted loss per share in the pro forma consolidated statement of loss and comprehensive loss for the nine months ended April 30, 2023 and for the year ended July 31, 2022 are based upon the same calculation as described in the respective consolidated financial statements of the Company. There were no shares issued as part of the transaction.
4. PRO FORMA STATUTORY INCOME TAX RATE
No provision for loss carry-forward and the resulting income tax benefit has been made for the combined entity in the unaudited pro forma consolidated interim financial statements. The tax rate is expected to be 21%.
5. PRO FORMA EQUITY STRUCTURE
The equity structure remains the same and there are no effect to the capital stock and or any other equity accounts arising from the disposition of the NMG OH.
6
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