November 20, 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. 2 to Registration Statement on Form 10-12G
Filed October 30, 2018
File No. 000-55940
Form 10-K for Fiscal Year Ended July 31, 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 and any amendment you may file in response
to these
comments, we may have additional comments.
Form 10-12G/A filed October 30, 2018
Item 2 Financial Information
Management's Discussion and Analysis of Financial Conditions and Results of
Operations
Revenues, page 23
1. In regard to your disclosure based on prior comment 5, please revise to
separately quantify
the impact of each factor cited for the significant difference in gross
margin in future
filings. Please refer to Item 303(a) of Regulation S-K and Section I.B.
of our release 33-
8350, which can be found at https://www.sec.gov/rules/interp/33-8350.htm.
Darren Tindale
FirstNameMind, Inc.
Body and LastNameDarren Tindale
Comapany 20, 2018 and Mind, Inc.
November NameBody
November 20, 2018 Page 2
Page 2
FirstName LastName
Note 12 Business Acquisition, page 64
2. Your response to prior comment six related to your indefinite-lived
intangibles appears to
present only the factors you believe are in favor of your conclusion
and does not
adequately the factors that would refute your conclusion. Please
provide an updated
analysis of the factors that provide both positive and negative
evidence for
your conclusion that your brands and licenses meet the threshold for
an indefinite life
under ASC 350-30-35-3 or revise your conclusion accordingly. As part
of your analysis,
specifically address the following:
Your response acknowledges that your brands as well as the licensing
and regulatory
programs in each of these states are relatively new but does not
appear to acknowledge
the significant weight against your conclusion that these facts
warrant.
You state that the renewal costs of the licenses are immaterial;
however, in light of
your negative cash flows, it appears that the combined costs of
renewing and
maintaining the licenses are not necessarily immaterial to your
current operations and
liquidity.
You state that you expect the licenses to contribute to cash flows
indefinitely;
however, the nascent stage of the license program and market
combined with the fact
that your activity under these licenses has not yet produced
positive cash flows from
operations must also be considered.
The example you cited from ASC 350-30-55 is for a "prominent women's
sportswear
line under Brand W." It is not clear that your brands are
prominently recognized and
widely established in the sense of this example, and therefore that
example does not
appear analogous to your situation.
The inherent and fundamental legal questions surrounding the
interplay between
federal and state law create additional uncertainties warrant
consideration as part of
your conclusion about an indefinite life for your brands and
licenses.
The news reports of recent market saturation and reduced pricing
experienced in
certain markets where cannabis products have been legalized is an
indication that
competition is still an important factor to consider in these
markets.
While the growth potential of the markets for your brands and
licenses is a positive
attribute in their valuation, the overall uncertainty of the
markets must be carefully and
appropriately considered when determining whether they have an
indefinite life.
Consolidated Annual Financial Statements of Body and Mind Inc.
Note 6 Loans Payable, page 80
3. Please address the following regarding to your response to prior
comment seven:
The restated amount pursuant to your response and the Note 13 on
page 84 of this
filing is $10,091 in fiscal year 2017. However, you disclose that
$4,138 was
recognized as a capital transaction in fiscal 2017 in the Note 6.
Also, you disclose that
the gain from forgiveness of debt were $18,345, $19,903, and
$19,668 in fiscal year
2017. The sum of those three amounts is not equal to $51,963 from
your response and
Darren Tindale
FirstNameMind, Inc.
Body and LastNameDarren Tindale
Comapany 20, 2018 and Mind, Inc.
November NameBody
November 20, 2018 Page 3
Page 3
FirstName LastName
the Note 13. Please revise to reconcile the differences.
Please have your independent auditor provide an updated audit
report that references
the restatement and is dual dated to acknowledge the changes in
the financial
statements.
Form 10-K for the Year Ended July 31, 2018
Consolidated Financial Statements of Body and Mind Inc.
Note 11. Business Acquisition, page 52
4. Please address the following regarding your prior comment six about
your intangible
impairment analysis:
You state that your intangible assets would be tested for impairment
as of July 31.
Please provide us with the summary of the impairment analysis for
your brand and
license intangibles as well as your goodwill as of July 31, 2018.
Revise to disclose the date you last tested intangibles and goodwill
for impairment for
the reporting units.
Clearly identify the level of your reporting units used for
impairment testing.
Tell us and disclose whether any of your reporting units had a fair
value that was not
substantially in excess of carrying value.
For those reporting units, tell us and disclose the percentage by
which fair value
exceeded carrying value as of the date of the most recent test.
Disclose a description of the methods and key assumptions used and
how the key
assumptions were determined.
Revise to provide a discussion of the degree of uncertainty
associated with the key
assumptions. The discussion regarding uncertainty should provide
specifics to the
extent possible (e.g., the valuation model assumes recovery from a
business downturn
within a defined
period of time).
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.
Darren Tindale
Body and Mind, Inc.
November 20, 2018
Page 4
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
November 20, 2018 Page 4
cc: Michael Shannon, Esq.
FirstName LastName