September 19, 2018
Darren Tindale
Chief Financial Officer
Body and Mind, Inc.
750 1095 West Pender Street
Vancouver, British Columbia
Canada V6E 2M6
Re: Body and Mind, Inc.
Amendment No. 1 to Registration Statement on Form 10-12G
Filed September 6, 2018
File No. 000-55940
Dear Mr. Tindale:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-12G/A Filed September 6, 2018
Item 1. Business, page 3
1. We note your response to prior comment 1. Please revise your risk factor
on page 21 to
include dilutive effects relating to all potential issuances, including
the common shares
you may issue pursuant to outstanding share purchase warrants.
Risk Factors
We currently have promissory notes outstanding..., page 16
2. We note that you state in this risk factor that your promissory notes
have a maturity date
of November 10, 2018, but your disclosure on page 4 says the maturity
date is February
14, 2019. Please reconcile this discrepancy.
Darren Tindale
FirstNameMind, Inc.
Body and LastNameDarren Tindale
Comapany 19, 2018 and Mind, Inc.
September NameBody
September 19, 2018 Page 2
Page 2
FirstName LastName
Item 5. Directors and Executive Officers, page 32
3. We reissue our prior comment 13. Please provide clear disclosure
regarding the business
experience of each of your executive officers and directors during the
past five years,
including in each case their principal occupation and employment, the
dates they served in
those roles and the name and business of any corporation or other
organization in which
such occupation and employment was carried on, as required by Item
401(e)(1) of
Regulation S-K
Certain Relationships and Related Transactions, and Director Independence, page
39
4. Please revise your disclosure to provide the information required by
Item 404(d), which
requires disclosure of all transactions with related persons from the
beginning of your last
fiscal year through the date of effectiveness of your Form 10. Your
current disclosure
only provides information through 7/31/17. Please ensure that your
disclosure discusses
the party to each relevant transaction, the type of transaction, and
the related person's
position(s) or relationship(s) with the entity that is party to the
transaction. Please also
provide the information required by Item 404(a)(5) for each
transaction which resulted in
indebtedness.
Consolidated Interim Financial Statements of Body & Mind Inc.
Note 3. Significant Accounting Policies
Inventory, page 54
5. Please address the following regarding your response to prior comment
25 regarding
inventory:
We note that the gross margin percentage for the three months ended
April 30, 2018 of
27.8% is significantly different than the gross margin percentage
for the nine months
ended April 30, 2018 of 39.4%. Please tell us the reason for this
difference.
Revise your MD&A to discuss the difference in margin, as well as
your expectations
for gross margin in future periods. Provide quantification of any
differences in bases
between the inventory acquired in your recent business combination
versus inventory
purchased from third parties.
We noted a similar significant difference between the gross margin
percentage for the
three months ended September 30, 2017 of 61% is significantly
different than the
gross margin percentage for the nine months ended September 30,
2017 of 40%.
Please tell us the reason for this difference.
Note 12. Business Acquisition, page 64
6. In response to prior comment 28, you disclose on page 55 that the
brands and licenses
acquired as part of your acquisition of Nevada Medical Group LLC have
indefinite lives
and therefore are not amortized. Please address the following:
Tell us how you considered the guidance of ASC 350-30-35-3 in your
determination
Darren Tindale
FirstNameMind, Inc.
Body and LastNameDarren Tindale
Comapany 19, 2018 and Mind, Inc.
September NameBody
Page 3
September 19, 2018 Page 3
FirstName LastName
that your brands have an indefinite life. Further consider the
examples in ASC 350-
30-55.
As part of your response, tell us the acquired brand names for
which you recorded an
intangible asset, the length of time they have been in use, how
you evaluated the
degree to which they are well known, and the stability of the
market for the branded
products.
Tell us how you considered the guidance of ASC 350-30-35-3 in your
determination
that acquired licenses have an indefinite life. Further consider
the examples in ASC
350-30-55.
As part of your response, tell us the licenses for which you
recorded an intangible
asset, the renewal periods and costs, the length of time they have
been in use, how you
evaluated the cash flows derived from each license, and the
stability of the market for
the products sold under the respective licenses.
Tell us the dates as of which you evaluated the brand name and
license intangible
assets for impairment pursuant to ASC 350-30-35-18, in light of
the significant
operating losses incurred.
Tell us the unit of account used for such testing and how you
determined the unit of
account based on ASC 350-30-35-21 through 35-28.
Provide us with the outcome of such impairment testing.
Consolidated Annual Financial Statements of Body & Mind Inc.
Note 6. Loans Payable, page 80
7. We note your response to prior comment 34 regarding your
classification of the
forgiveness of loans to certain related parties, including to officers
and shareholders, as a
gain. You cite the fact that some loan amounts were forgiven by
unrelated third parties as
the basis for treating all loans forgiven as gains. However, on page
80 you disclose the
$4,138 loan to a third party vendor was paid by a former director and
which was
subsequently forgiven by the former director. This transaction
exemplifies the differing
motivations and inherent interests between the former director and the
third party vendor
that warrants different accounting treatment. Further, the vast
majority of the amounts
forgiven during the two year period were payable to related parties
such that the amounts
forgiven by third party vendors does not appear to be determinative
for the accounting of
all loans forgiven. Please revise to account for the loans forgiven by
related parties as
capital transactions.
Pro Forma Condensed Financial Statements
Pro Forma Condensed Income Statement for the Nine Months Ended April 30, 2018,
page 109
8. The second column presents the 10 months of activity for the period
ended April 30, 2018
for Nevada Medical Group LLC. However, the length of the interim
period for the target
company should be the same as the length of the interim period for the
acquirer, which in
this case is nine months. Please revise your presentation here as well
as on page 115
accordingly.
Darren Tindale
Body and Mind, Inc.
September 19, 2018
Page 4
General
9. We note that your Form 10 became effective on July 31, 2018. Pursuant to
Rule 13a-
13, you were required to file a Form 10-Q for the quarter ended April 30,
2018, which is
the quarter following the most recent period included in your
registration statement at
effectiveness, within 45 days following effectiveness. Please file your
Form 10-Q
promptly.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Andi Carpenter at 202-551-3645 or Kevin Vaughn at
202-551-3494 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jeffrey Gabor at 202-551-2544 or Erin Jaskot at 202-551-3442 with any
other questions.
Sincerely,
FirstName LastNameDarren Tindale
Division of
Corporation Finance
Comapany NameBody and Mind, Inc.
Office of Healthcare
& Insurance
September 19, 2018 Page 4
cc: Michael Shannon, Esq.
FirstName LastName