Pro Forma Consolidated Financial Statements
As of April 30, 2023,
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
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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
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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
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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.
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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.
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Body and Mind Inc. published this content on 23 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 October 2023 20:32:36 UTC.