High Tide Inc.: exhibit 4.26 - Filed by newsfilecorp.com


    

     

    

     

    Condensed Interim Consolidated
Financial Statements

    For the three and six months ended April 30, 2021 and 2020
(Stated in thousands of Canadian dollars, except share and per share amounts)
(Unaudited)

    


    
        	 	 


    

    

    
        		High Tide Inc.
Condensed Interim Consolidated Financial Statement
For the three and six months ended April 30, 2021 and 2020


    

     

     

    Condensed Interim Consolidated Financial Statements for the three and six months ended April 30, 2021 and 2020.

     

    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.

     

     

    Approved on behalf of the Board:

     

    	
                (Signed) "Harkirat (Raj) Grover"

            	
                (Signed) "Nitin Kaushal"

            
	
                President and Chair of the Board

            	
                Director and Chair of the Audit Committee

            


     

    
        	 	 


    

    

    
        		High Tide Inc.

                    Condensed Interim Consolidated Statements of Financial Position

                    As at April 30, 2021 and October 31, 2020

                    (Unaudited – In thousands of Canadian dollars)

                


    

    	 	Notes	 	2021	 	 	2020	 
	 	 	 	$	 	 	$	 
	Assets	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 
	      Cash	 	 	29,353	 	 	7,524	 
	      Marketable securities	16	 	1,185	 	 	50	 
	      Trade and other receivables	8	 	4,804	 	 	2,861	 
	      Inventory	 	 	11,851	 	 	5,702	 
	      Prepaid expenses and deposits	7	 	5,981	 	 	3,070	 
	      Current portion of loans receivable	 	 	1,482	 	 	74	 
	      Assets classified as held for sale	22	 	1,674	 	 	-	 
	   Total current assets	 	 	56,330	 	 	19,281	 
	Non-current assets	 	 	 	 	 	 	 
	      Loans receivable	 	 	230	 	 	230	 
	      Property and equipment	6	 	21,520	 	 	13,085	 
	      Net Investment - Lease	19	 	842	 	 	1,716	 
	      Right-of-use assets, net	19	 	25,969	 	 	16,413	 
	      Long term prepaid expenses and deposits	7	 	1,511	 	 	809	 
	      Deferred tax asset	 	 	250	 	 	250	 
	      Intangible assets and goodwill	3, 5	 	93,418	 	 	18,027	 
	   Total non-current assets	 	 	143,740	 	 	50,530	 
	Total assets	 	 	200,070	 	 	69,811	 
	Liabilities	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 
	      Accounts payable and accrued liabilities	 	 	12,373	 	 	6,421	 
	      Notes payable current	11	 	4,068	 	 	1,939	 
	      Deferred liability	 	 	1,700	 	 	1,700	 
	      Current portion of convertible debentures	10	 	3,403	 	 	14,446	 
	      Current portion of lease liabilities	19	 	5,152	 	 	2,194	 
	      Derivative liability	14	 	15,236	 	 	764	 
	      Liabilities held for sale	22	 	1,090	 	 	-	 
	   Total current liabilities	 	 	43,022	 	 	27,464	 
	Non-current liabilities	 	 	 	 	 	 	 
	      Notes payable	11	 	12,568	 	 	2,589	 
	      Convertible debentures	10	 	9,187	 	 	11,376	 
	      Lease liabilities	19	 	20,938	 	 	14,474	 
	      Deferred tax liability	 	 	7,813	 	 	2,185	 
	   Total non-current liabilities	 	 	50,506	 	 	30,624	 
	Total liabilities	 	 	93,528	 	 	58,088	 
	Shareholders' equity	 	 	 	 	 	 	 
	      Share capital	12	 	145,666	 	 	32,552	 
	      Warrants	14	 	8,671	 	 	5,796	 
	      Contributed surplus	 	 	11,197	 	 	4,704	 
	      Convertible debentures - equity	 	 	1,511	 	 	1,965	 
	      Accumulated other comprehensive income	 	 	(406	)	 	(487	)
	      Accumulated deficit	 	 	(63,561	)	 	(34,359	)
	Equity attributable to owners of the Company	 	 	103,078	 	 	10,171	 
	      Non-controlling interest	21	 	3,464	 	 	1,552	 
	Total shareholders' equity	 	 	106,542	 	 	11,723	 
	Total liabilities and shareholders' equity	 	 	200,070	 	 	69,811	 


    

    
        	 	3


    

    

    
        		High Tide Inc.

                    Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars)

                


    

    

    	 	 	 	Three months ended	 	 	Six months ended	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Notes	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	 	$	 	 	$	 	 	$	 	 	$	 
	Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 
	Merchandise sales	 	 	37,620	 	 	19,729	 	 	73,906	 	 	32,736	 
	Other revenue	 	 	3,248	 	 	842	 	 	5,281	 	 	1,550	 
	Total Revenue	4	 	40,868	 	 	20,571	 	 	79,187	 	 	34,286	 
	Cost of sales	 	 	(25,870	)	 	(12,816	)	 	(49,421	)	 	(21,738	)
	Gross profit 	 	 	14,998	 	 	7,755	 	 	29,766	 	 	12,548	 
	Expenses 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Salaries, wages and benefits	 	 	(6,205	)	 	(3,357	)	 	(12,055	)	 	(6,531	)
	Share-based compensation	13	 	(1,517	)	 	(72	)	 	(2,070	)	 	(99	)
	General and administration	 	 	(3,035	)	 	(1,537	)	 	(5,943	)	 	(2,983	)
	Professional fees	 	 	(534	)	 	(853	)	 	(1,670	)	 	(1,617	)
	Advertising and promotion	 	 	(244	)	 	(160	)	 	(315	)	 	(247	)
	Depreciation and amortization	5,6,19	 	(7,714	)	 	(1,545	)	 	(13,808	)	 	(2,814	)
	Interest and bank charges	 	 	(260	)	 	(75	)	 	(461	)	 	(218	)
	Total expenses	 	 	(19,509	)	 	(7,599	)	 	(36,322	)	 	(14,509	)
	(Loss) income from operations	 	 	(4,511	)	 	156	 	 	(6,556	)	 	(1,961	)
	Other income (expenses)	 	 	 	 	 	 	 	 	 	 	 	 	 
	Loss on extinguishment of debenture	10	 	-	 	 	(186	)	 	(516	)	 	(186	)
	Debt restructuring gain	11	 	-	 	 	-	 	 	1,145	 	 	-	 
	Loss on sale of marketable securities	 	 	-	 	 	(1,186	)	 	-	 	 	(1,186	)
	Revaluation of marketable securities	 	 	(159	)	 	(477	)	 	(144	)	 	(477	)
	Impairment loss	 	 	-	 	 	(247	)	 	-	 	 	(247	)
	Finance  and other costs	9	 	(3,727	)	 	(2,702	)	 	(8,010	)	 	(5,058	)
	Revaluation of derivative liability	10,14	 	(3,988	)	 	(125	)	 	(14,472	)	 	314	 
	Foreign exchange (loss) gain	 	 	(5	)	 	17	 	 	(94	)	 	21	 
	Total other expenses	 	 	(7,879	)	 	(4,906	)	 	(22,091	)	 	(6,819	)
	Loss before taxes	 	 	(12,390	)	 	(4,750	)	 	(28,647	)	 	(8,780	)
	Current income tax recovery (expense)	 	 	124	 	 	(162	)	 	(464	)	 	(77	)
	Net loss	 	 	(12,266	)	 	(4,912	)	 	(29,111	)	 	(8,857	)
	Other comprehensive income (loss)	 	 	 	 	 	 	 	 	 	 	 	 	 
	Translation difference on foreign subsidiary	 	 	(23	)	 	103	 	 	82	 	 	171	 
	Total comprehensive loss	 	 	(12,289	)	 	(4,809	)	 	(29,029	)	 	(8,686	)
	Net income (loss) and comprehensive income (loss) attributable to:	 	 	 	 	 	 	 	 	 	 
	Owners of the Company	 	 	(12,355	)	 	(4,754	)	 	(29,120	)	 	(8,634	)
	Non-controlling interest	 	 	66	 	 	(55	)	 	91	 	 	(52	)
	 	 	 	(12,289	)	 	(4,809	)	 	(29,029	)	 	(8,686	)
	Loss per share 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic	15	 	(0.02	)	 	(0.02	)	 	(0.06	)	 	(0.04	)


    Subsequent Events (Note 23)

    
        	 	4


    

    

    
        		High Tide Inc.

                    Condensed Interim Consolidated Statements of Changes in Equity 

                    (Unaudited – In thousands of Canadian dollars)

                


    

    	 	 	 	 	 	 	 	 	 	 	 	 	Equity	 	 	Accumulated	 	 	 	 	 	Attributable	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 portion of 	 	 	other	 	 	 	 	 	 to owners	 	 	 	 	 	 	 
	 	 	 	Share	 	 	 	 	 	Contributed	 	 	convertible	 	 	comprehensive	 	 	Accumulated	 	 	of the	 	 	 	 	 	 	 
	 	Note	 	 capital	 	 	Warrants	 	 	surplus	 	 	 debt	 	 	income (loss)	 	 	deficit	 	 	 Company	 	 	NCI	 	 	Total	 
	 	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Opening balance, November 1, 2019	 	 	26,283	 	 	6,609	 	 	2,119	 	 	1,637	 	 	(366	)	 	(26,696	)	 	9,586	 	 	(179	)	 	9,407	 
	Fee paid in shares	 	 	860	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	860	 	 	-	 	 	860	 
	Warrants	 	 	-	 	 	1,543	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,543	 	 	-	 	 	1,543	 
	Share-based compensation	 	 	-	 	 	-	 	 	99	 	 	-	 	 	-	 	 	-	 	 	99	 	 	-	 	 	99	 
	Equity portion of convertible debentures	 	 	-	 	 	-	 	 	-	 	 	241	 	 	-	 	 	-	 	 	241	 	 	-	 	 	241	 
	Cumulative translation adjustment	 	 	-	 	 	-	 	 	-	 	 	-	 	 	171	 	 	-	 	 	171	 	 	-	 	 	171	 
	Prepaid Interest paid in shares	 	 	848	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	848	 	 	-	 	 	848	 
	Purchase of minority interest - KushBar Inc.	 	 	500	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(695	)	 	(195	)	 	187	 	 	(8	)
	Acquisition - 2680495 Ontario Inc.	 	 	1,100	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,100	 	 	-	 	 	1,100	 
	Acquisition - Saturninus Partners	 	 	1,218	 	 	316	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,534	 	 	930	 	 	2,464	 
	Acquisition - 102088460 Saskatchewan Ltd.	 	 	975	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	975	 	 	-	 	 	975	 
	Asset acquisition	 	 	104	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	104	 	 	-	 	 	104	 
	Comprehensive loss for the period	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(8,805	)	 	(8,805	)	 	(55	)	 	(8,860	)
	Balance, April 30, 2020	 	 	31,888	 	 	8,468	 	 	2,218	 	 	1,878	 	 	(195	)	 	(36,196	)	 	8,061	 	 	883	 	 	8,944	 
	Opening balance, November 1, 2020	 	 	32,552	 	 	5,796	 	 	4,704	 	 	1,965	 	 	(487	)	 	(34,359	)	 	10,171	 	 	1,552	 	 	11,723	 
	Acquisition - Meta Growth	3	 	35,290	 	 	2,739	 	 	240	 	 	9,008	 	 	-	 	 	-	 	 	47,277	 	 	1,821	 	 	49,098	 
	Prepaid Interest paid in shares	 	 	1,458	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,458	 	 	-	 	 	1,458	 
	Share-based compensation	13	 	-	 	 	-	 	 	2,070	 	 	-	 	 	-	 	 	-	 	 	2,070	 	 	-	 	 	2,070	 
	Equity portion of convertible debentures	 	 	-	 	 	-	 	 	-	 	 	157	 	 	-	 	 	-	 	 	157	 	 	-	 	 	157	 
	Exercise options	13	 	865	 	 	-	 	 	(167	)	 	-	 	 	-	 	 	-	 	 	698	 	 	-	 	 	698	 
	Warrants expired	14	 	-	 	 	(4,725	)	 	4,725	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 
	Issued to pay fees in shares	 	 	174	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	174	 	 	-	 	 	174	 
	Extension of convertible debenture	 	 	-	 	 	-	 	 	340	 	 	-	 	 	-	 	 	-	 	 	340	 	 	-	 	 	340	 
	Conversion of convertible debentures	 	 	40,532	 	 	-	 	 	-	 	 	(9,619	)	 	-	 	 	-	 	 	30,913	 	 	-	 	 	30,913	 
	Warrants	14	 	10,644	 	 	(1,631	)	 	28	 	 	-	 	 	-	 	 	-	 	 	9,041	 	 	-	 	 	9,041	 
	Cumulative translation adjustment	 	 	-	 	 	-	 	 	-	 	 	-	 	 	81	 	 	-	 	 	81	 	 	-	 	 	81	 
	Acquisition - Smoke Cartel, Inc.	 	 	8,396	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	8,396	 	 	-	 	 	8,396	 
	Shares issued through equity financing	 	 	18,237	 	 	6,492	 	 	-	 	 	-	 	 	-	 	 	-	 	 	24,729	 	 	-	 	 	24,729	 
	Share issuance costs	 	 	(3,225	)	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(3,225	)	 	-	 	 	(3,225	)
	Vesting of RSUs (Note 13)	 	 	743	 	 	-	 	 	(743	)	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 
	Comprehensive loss for the period	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(29,202	)	 	(29,202	)	 	91	 	 	(29,111	)
	Balance, April 30, 2021	 	 	145,666	 	 	8,671	 	 	11,197	 	 	1,511	 	 	(406	)	 	(63,561	)	 	103,078	 	 	3,464	 	 	106,542	 


     

    
        	 	5


    

    

    
        		High Tide Inc.

                    Condensed Interim Consolidated Statements of Cash Flows

                    For the six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars)

                


    

    

    	 	Notes	 	2021	 	 	2020	 
	 	 	 	$	 	 	$	 
	Operating activities	 	 	 	 	 	 	 
	Net loss	 	 	(29,111	)	 	(8,857	)
	Adjustments for items not effecting cash and cash equivalents	 	 	 	 	 	 	 
	Income tax expense	 	 	464	 	 	77	 
	Accretion expense	 	 	3,597	 	 	2,673	 
	Fee for services and interest paid in shares and warrants	12	 	1,632	 	 	746	 
	Acquisition costs paid in shares	 	 	-	 	 	600	 
	Depreciation and amortization	5,6,19	 	13,808	 	 	2,814	 
	Revaluation of derivative liability	10,14	 	14,472	 	 	(314	)
	Debt restructuring gain	11	 	(1,145	)	 	-	 
	Impairment loss	 	 	-	 	 	247	 
	Foreign exchange gain (loss)	 	 	94	 	 	(21	)
	Share-based compensation 	13	 	2,070	 	 	99	 
	Loss on extinguishment of debenture	10	 	516	 	 	186	 
	Loss on sale of marketable securities	 	 	-	 	 	1,186	 
	Revaluation of marketable securities	 	 	144	 	 	477	 
	 	 	 	6,541	 	 	(87	)
	Changes in non-cash working capital	 	 	 	 	 	 	 
	Trade and other receivables	 	 	72	 	 	174	 
	Inventory	 	 	(2,483	)	 	541	 
	Prepaid expenses and deposits	 	 	(1,153	)	 	460	 
	Accounts payable and accrued liabilities	 	 	(5,580	)	 	2,046	 
	Net cash (used in) provided by operating activities	 	 	(2,603	)	 	3,134	 
	 	 	 	 	 	 	 	 
	Investing activities 	 	 	 	 	 	 	 
	Purchase of property and equipment 	6	 	(3,793	)	 	(627	)
	Purchase of intangible assets 	5	 	(103	)	 	(289	)
	Proceeds from sale of marketable securities	 	 	-	 	 	1,458	 
	Loans receivables	 	 	(340	)	 	-	 
	Cash paid for business combination, net of cash acquired	3	 	3,370	 	 	(2,484	)
	Net cash used in investing activities	 	 	(866	)	 	(1,942	)
	 	 	 	 	 	 	 	 
	Financing activities	 	 	 	 	 	 	 
	Repayment of finance lease obligations	 	 	(11	)	 	(3	)
	Proceeds from convertible debentures net of issue costs 	10	 	980	 	 	8,855	 
	Proceeds from equity financing	 	 	21,590	 	 	-	 
	Proceeds from notes payable	 	 	-	 	 	200	 
	Repayment of convertible debentures	 	 	(3,613	)	 	(1,867	)
	Interest paid on debentures and loans	 	 	(985	)	 	-	 
	Lease liability payments	19	 	(2,353	)	 	(2,139	)
	Warrants exercised	 	 	9,005	 	 	-	 
	Options exercised	 	 	685	 	 	-	 
	Net cash provided by financing activities	 	 	25,298	 	 	5,046	 
	 	 	 	 	 	 	 	 
	Net increase in cash	 	 	21,829	 	 	6,238	 
	Cash, beginning of period	 	 	7,524	 	 	806	 
	Cash, end of period	 	 	29,353	 	 	7,044	 


    

    
        	 	6


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    1. Nature of Operations

    High Tide Inc. (the "Company" or "High Tide") is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company's shares are listed on the Nasdaq Capital Market ("Nasdaq") under the symbol "HITI"(listed as of June 2, 2021), the TSX Venture Exchange ("TSXV") under the symbol "HITI", and on the Frankfurt Stock Exchange ("FSE") under the securities identification code 'WKN: A2PBPS' and the ticker symbol "2LYA". 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.

    COVID-19

    The Company's business could be significantly adversely affected by the effects of the recent outbreak of novel coronavirus ("COVID-19"). Several significant measures have been implemented in Canada and the rest of the world in response to the increased impact from COVID-19. The Company cannot accurately predict the impact COVID-19 will have on third parties' ability to meet their obligations with the Company, including due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In particular, the continued spread of COVID-19 globally could materially and adversely impact the Company's business including without limitation, employee health, workplace productivity, and other factors that will depend on future developments beyond the Company's control. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries resulting in an economic downturn that could negatively impact the Company's financial position, financial performance, cash flows, and its ability to raise capital.  Since the initial outset of the pandemic, the Company did not experience a significant decline in sales for most of the operating businesses. 

    2. Accounting Policies

    A. Basis of Preparation

    These 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, 2020 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 loss and comprehensive income (loss) to conform with current period's presentation.

    These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on June 28, 2021.

    B. Use of estimates 

    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, 2020.

    
        	 	7


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    3. Business Combinations 

    In accordance with IFRS 3, Business Combinations, these transactions meet the definition of a business combination and, accordingly, the assets acquired, and the liabilities assumed have been recorded at their respective estimated fair values as of the acquisition date.

    A. Meta Growth Corp. Acquisition 

    	Total consideration	 	$	 
	Common shares	 	35,290	 
	Conversion feature of convertible debt	 	9,008	 
	Warrants	 	2,739	 
	Options	 	86	 
	Restricted stock units	 	154	 
	 	 	47,277	 
	Purchase price allocation	 	 	 
	Cash and cash equivalents	 	10,209	 
	Trade and other receivables	 	2,015	 
	Inventory	 	3,547	 
	Prepaid expenses	 	2,479	 
	Marketable securities	 	635	 
	Notes receivable	 	312	 
	Property and equipment	 	6,849	 
	Loan receivable	 	756	 
	Intangible assets - license	 	37,700	 
	Right of use asset	 	12,490	 
	Goodwill	 	26,462	 
	Non-controlling interest	 	(1,821	)
	Accounts payable and accrued liabilities	 	(6,336	)
	Deferred tax liability	 	(2,998	)
	Lease liability	 	(12,887	)
	Convertible debenture	 	(18,809	)
	Notes payable	 	(13,326	)
	 	 	47,277	 


    On November 18, 2020, the Company closed the acquisition of 100% of the outstanding common shares of Meta Growth Corp ("Meta Growth" or "META"). Pursuant to the terms of the Arrangement, holders of common shares of META ("META Shares") received 0.824 (the "Exchange Ratio") High Tide Shares for each META Share held. In total, High Tide acquired 237,941,274 META Shares in exchange for 196,063,610 High Tide Shares, resulting in former META shareholders holding approximately 45.0% of the total number of issued and outstanding High Tide Shares.

    In accordance with IFRS 3, Business Combinations ("IFRS 3"), the substance of this transaction constituted a business combination. 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, right of use asset, non-controlling interest, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business, expanded access to capital and greater financial flexibility. For the six months ended April 30, 2021, Meta Growth accounted for $30,110 in revenues and $7,099 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $3,422 in revenues and an increase of $401 in net loss for the six months ended April 30, 2021. The Company also incurred $1,354 in transaction costs, which have been expensed to finance and other costs during the period.

    
        	 	8


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    B. Smoke Cartel, Inc. Acquisition 

    	Total consideration	 	$	 
	Cash	 	2,600	 
	Common shares	 	8,396	 
	Contingent consideration	 	1,366	 
	 	 	12,362	 
	Purchase price allocation	 	 	 
	Cash and cash equivalents	 	1,738	 
	Intangible assets - Brand	 	3,997	 
	Intangible assets - Software	 	7,325	 
	Goodwill	 	2,017	 
	Deferred tax liability	 	(1,521	)
	Accounts payable and accrued liabilities	 	(1,194	)
	 	 	12,362	 


    On March 24, 2021, the Company closed the acquisition of 100% of the outstanding common shares of Smoke Cartel Inc. ("Smoke Cartel"). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) 9,540,754 common shares of High Tide, having an aggregate value of $8,396; (ii) $2,600 in cash; and (iii) a contingent consideration depending on certain revenue targets being achieved by December 31, 2021. Contingent consideration was calculated using Monte Carlo simulation due to the uncertain nature of the potential future revenue of the Company.

    In accordance with IFRS 3, Business Combinations ("IFRS 3"), the substance of this transaction constituted a business combination. 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, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the six months ended April 30, 2021, Smoke Cartel accounted for $1,692 in revenues and $86 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $4,526 in revenues and an increase of $541 in net income for the six months ended April 30, 2021. The Company also incurred $70 in transaction costs, which have been expensed to finance and other costs during the period.

    
        	 	9


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    C. 2686068 Ontario Inc. Acquisition 

    	Total consideration	 	$	 
	Cash	 	5,980	 
	 	 	5,980	 
	Purchase price allocation	 	 	 
	Cash and cash equivalents	 	3	 
	Inventory	 	120	 
	Property and equipment	 	274	 
	Intangible assets - license	 	4,187	 
	Right of use asset	 	1,148	 
	Goodwill	 	2,570	 
	Lease liability	 	(1,148	)
	Accounts payable and accrued liabilities	 	(65	)
	Deferred tax liability	 	(1,109	)
	 	 	5,980	 


    On April 28, 2021, the Company closed the acquisition of 100% of the outstanding common shares of 2686068 Ontario Inc. ("2686068"). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) $5,980 in cash.

    In accordance with IFRS 3, Business Combinations ("IFRS 3"), the substance of this transaction constituted a business combination. 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, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $1,107 in revenues and an increase of $123 in net loss for the six months ended April 30, 2021.

    
        	 	10


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    4. Revenue from Contracts with Customers

    	For the three months ended April 30	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	Retail	 	 	Retail	 	 	Wholesale	 	 	Wholesale	 	 	Corporate	 	 	Corporate	 	 	Total	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Primary geographical markets (i)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Canada	 	33,827	 	 	16,706	 	 	1,184	 	 	772	 	 	19	 	 	90	 	 	35,030	 	 	17,568	 
	            USA	 	4,365	 	 	1,888	 	 	1,303	 	 	888	 	 	-	 	 	-	 	 	5,668	 	 	2,776	 
	            International	 	170	 	 	227	 	 	-	 	 	-	 	 	-	 	 	-	 	 	170	 	 	227	 
	Total revenue	 	38,362	 	 	18,821	 	 	2,487	 	 	1,660	 	 	19	 	 	90	 	 	40,868	 	 	20,571	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Major products and services	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Cannabis	 	29,570	 	 	15,339	 	 	-	 	 	-	 	 	-	 	 	-	 	 	29,570	 	 	15,339	 
	            Consumption accessories	 	5,571	 	 	2,815	 	 	2,479	 	 	1,575	 	 	-	 	 	-	 	 	8,050	 	 	4,390	 
	            Data analytics services	 	2,874	 	 	448	 	 	-	 	 	-	 	 	-	 	 	-	 	 	2,874	 	 	448	 
	            Other revenue	 	347	 	 	219	 	 	8	 	 	85	 	 	19	 	 	90	 	 	374	 	 	394	 
	Total revenue	 	38,362	 	 	18,821	 	 	2,487	 	 	1,660	 	 	19	 	 	90	 	 	40,868	 	 	20,571	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Timing of revenue recognition	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Transferred at a point in time	 	38,362	 	 	18,821	 	 	2,487	 	 	1,660	 	 	19	 	 	90	 	 	40,868	 	 	20,571	 
	Total revenue	 	38,362	 	 	18,821	 	 	2,487	 	 	1,660	 	 	19	 	 	90	 	 	40,868	 	 	20,571	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	For the six months ended April 30	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	Retail	 	 	Retail	 	 	Wholesale	 	 	Wholesale	 	 	Corporate	 	 	Corporate	 	 	Total	 	 	Total	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Primary geographical markets (i)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Canada	 	67,109	 	 	27,474	 	 	2,092	 	 	1,643	 	 	30	 	 	307	 	 	69,231	 	 	29,424	 
	            USA	 	7,631	 	 	3,081	 	 	1,946	 	 	1,395	 	 	-	 	 	-	 	 	9,577	 	 	4,476	 
	            International	 	379	 	 	386	 	 	-	 	 	-	 	 	-	 	 	-	 	 	379	 	 	386	 
	Total revenue	 	75,119	 	 	30,941	 	 	4,038	 	 	3,038	 	 	30	 	 	307	 	 	79,187	 	 	34,286	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Major products and services	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Cannabis	 	59,947	 	 	24,996	 	 	-	 	 	-	 	 	-	 	 	-	 	 	59,947	 	 	24,996	 
	            Consumption accessories	 	9,953	 	 	4,845	 	 	4,006	 	 	2,895	 	 	-	 	 	-	 	 	13,959	 	 	7,740	 
	            Data analytics services	 	4,362	 	 	448	 	 	-	 	 	-	 	 	-	 	 	-	 	 	4,362	 	 	448	 
	            Other revenue	 	857	 	 	652	 	 	32	 	 	143	 	 	30	 	 	307	 	 	919	 	 	1,102	 
	Total revenue	 	75,119	 	 	30,941	 	 	4,038	 	 	3,038	 	 	30	 	 	307	 	 	79,187	 	 	34,286	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Timing of revenue recognition	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	            Transferred at a point in time	 	75,119	 	 	30,941	 	 	4,038	 	 	3,038	 	 	30	 	 	307	 	 	79,187	 	 	34,286	 
	Total revenue	 	75,119	 	 	30,941	 	 	4,038	 	 	3,038	 	 	30	 	 	307	 	 	79,187	 	 	34,286	 


    (i) Represents revenue based on geographical locations of the customers who have contributed to the revenue generated in the applicable segment.

    
        	 	11


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    5. Intangible Assets and Goodwill

    	 	 	Software	 	 	Licenses	 	 	Lease Buyout	 	 	Brand Name	 	 	Goodwill	 	 	Total	 
	Cost	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance, October 31, 2019	 	1,848	 	 	2,594	 	 	2,557	 	 	1,539	 	 	4,466	 	 	13,004	 
	      Transition adjustment - IFRS 16	 	-	 	 	-	 	 	(2,557	)	 	-	 	 	-	 	 	(2,557	)
	      Additions	 	474	 	 	-	 	 	-	 	 	-	 	 	-	 	 	474	 
	      Additions from business combinations	 	-	 	 	7,382	 	 	-	 	 	-	 	 	1,896	 	 	9,278	 
	Balance, October 20, 2020	 	2,322	 	 	9,976	 	 	-	 	 	1,539	 	 	6,362	 	 	20,199	 
	      Additions	 	103	 	 	-	 	 	-	 	 	-	 	 	-	 	 	103	 
	      Additions from business combinations	 	7,325	 	 	41,887	 	 	-	 	 	3,997	 	 	31,049	 	 	84,258	 
	Balance, April 30, 2021	 	9,750	 	 	51,863	 	 	-	 	 	5,536	 	 	37,411	 	 	104,560	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, October 31, 2019	 	111	 	 	75	 	 	191	 	 	-	 	 	-	 	 	377	 
	      Transition adjustment - IFRS 16	 	-	 	 	-	 	 	(191	)	 	-	 	 	-	 	 	(191	)
	      Amortization	 	495	 	 	1,113	 	 	-	 	 	-	 	 	-	 	 	1,608	 
	Balance, October 20, 2020	 	606	 	 	1,188	 	 	-	 	 	-	 	 	-	 	 	1,794	 
	Amortization	 	378	 	 	8,510	 	 	-	 	 	-	 	 	-	 	 	8,888	 
	Balance, April 30, 2021	 	984	 	 	9,698	 	 	-	 	 	-	 	 	-	 	 	10,682	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Foreign currency translation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, October 31, 2019	 	60	 	 	-	 	 	-	 	 	57	 	 	336	 	 	453	 
	      Recorded in other comprehensive loss	 	(20	)	 	-	 	 	-	 	 	(20	)	 	(35	)	 	(75	)
	Balance, October 20, 2020	 	40	 	 	-	 	 	-	 	 	37	 	 	301	 	 	378	 
	      Recorded in other comprehensive loss	 	10	 	 	-	 	 	-	 	 	8	 	 	64	 	 	82	 
	Balance, April 30, 2021	 	50	 	 	-	 	 	-	 	 	45	 	 	365	 	 	460	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, October 31, 2020	 	1,676	 	 	8,788	 	 	-	 	 	1,502	 	 	6,061	 	 	18,027	 
	Balance, April 30, 2021	 	8,716	 	 	42,165	 	 	-	 	 	5,491	 	 	37,046	 	 	93,418	 


    6. Property and Equipment

    	 	 	Office equipment	 	 	Leasehold	 	 	 	 	 	 	 	 	 	 
	 	 	and computers	 	 	improvements	 	 	Vehicles	 	 	Buildings	 	 	Total	 
	Cost	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Balance, October 31, 2019	 	452	 	 	10,505	 	 	167	 	 	2,800	 	 	13,924	 
	      Additions	 	306	 	 	1,989	 	 	-	 	 	-	 	 	2,295	 
	      Additions from business combinations	 	31	 	 	1,180	 	 	-	 	 	-	 	 	1,211	 
	      Impairment loss	 	(11	)	 	(694	)	 	-	 	 	-	 	 	(705	)
	Balance, October 20, 2020	 	778	 	 	12,980	 	 	167	 	 	2,800	 	 	16,725	 
	      Additions	 	159	 	 	3,634	 	 	-	 	 	-	 	 	3,793	 
	      Additions from business combinations	 	1,691	 	 	5,432	 	 	-	 	 	-	 	 	7,123	 
	      Assets classified as held for sale	 	-	 	 	(646	)	 	-	 	 	-	 	 	(646	)
	Balance, April 30, 2021	 	2,628	 	 	21,400	 	 	167	 	 	2,800	 	 	26,995	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accumulated depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, October 31, 2019	 	127	 	 	1,265	 	 	148	 	 	2	 	 	1,542	 
	      Depreciation	 	125	 	 	1,953	 	 	10	 	 	10	 	 	2,098	 
	Balance, October 20, 2020	 	252	 	 	3,218	 	 	158	 	 	12	 	 	3,640	 
	      Depreciation	 	506	 	 	1,322	 	 	2	 	 	5	 	 	1,835	 
	Balance, April 30, 2021	 	758	 	 	4,540	 	 	160	 	 	17	 	 	5,475	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance, October 31, 2020	 	526	 	 	9,762	 	 	9	 	 	2,788	 	 	13,085	 
	Balance, April 30, 2021	 	1,870	 	 	16,860	 	 	7	 	 	2,783	 	 	21,520	 


     

    
        	 	12


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    7. Prepaid expenses and deposits

    	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	$	 
	Deposits on cannabis retail outlets	 	767	 	 	809	 
	Prepaid insurance and other	 	2,753	 	 	311	 
	Prepayment on inventory	 	3,972	 	 	2,759	 
	Total	 	7,492	 	 	3,879	 
	Less current portion	 	(5,981	)	 	(3,070	)
	Long-term	 	1,511	 	 	809	 


    8. Trade and other receivables

    	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	$	 
	Trade accounts receivable	 	4,535	 	 	2,673	 
	Sales tax receivable	 	269	 	 	188	 
	Total	 	4,804	 	 	2,861	 


    9. Finance and other costs

    Finance and other costs are comprised of the following:

    	 	 	Three months ended April 30	 	 	Six months ended April 30	 
	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	Accretion convertible debt	 	1,016	 	 	1,312	 	 	1,820	 	 	2,136	 
	Interest on convertible debenture	 	129	 	 	843	 	 	1,150	 	 	1,426	 
	Interest on notes payable	 	496	 	 	82	 	 	793	 	 	164	 
	Accretion notes payable	 	625	 	 	35	 	 	736	 	 	56	 
	Accretion of lease liability	 	572	 	 	257	 	 	1,041	 	 	481	 
	Transaction cost	 	819	 	 	149	 	 	1,046	 	 	171	 
	Acquisition costs	 	70	 	 	24	 	 	1,424	 	 	624	 
	Total	 	3,727	 	 	2,702	 	 	8,010	 	 	5,058	 


    

    
        	 	13


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    10. Convertible Debentures 

    
        	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	$	 
	Convertible debentures, beginning of year	 	25,822	 	 	19,664	 
	Debt assumed(i)	 	18,809	 	 	-	 
	Gain (loss) on extinguishment of debenture(ii)	 	516	 	 	(3,808	)
	Cash advances from debt (iii)	 	980	 	 	9,115	 
	Debt issuance to settle liabilities	 	-	 	 	2,700	 
	Debt issuance costs paid in cash	 	-	 	 	(260	)
	Conversion of debenture into equity(iv)	 	(30,822	)	 	(550	)
	Transfer of warrants component to equity	 	-	 	 	(420	)
	Transfer of conversion component to equity(v)	 	(717	)	 	(523	)
	Transfer of conversion component to derivative liability	 	-	 	 	(921	)
	Repayment of debt(vi)	 	(3,818	)	 	(1,637	)
	Accretion on convertible debentures(vii)	 	1,820	 	 	2,462	 
	Total	 	12,590	 	 	25,822	 
	Less current portion	 	(3,403	)	 	(14,446	)
	Long-term	 	9,187	 	 	11,376	 


    

    (i) During the six-months ended, April 30, 2021, the Company assumed convertible debt through the acquisition of Meta, refer to note 3.

    (ii) During the six-months ended, April 30, 2021, the Company incurred a gain of $516 in relation to the amendment and the extinguishment of convertible debentures within this period.

    (iii) During the six months ended, the Company drew $980 from the Windsor convertible debt.

    (iv) During the six months ended, the Company converted $30,822 of convertible debentures into 146,505,958 shares.

    (v) As of April 30, 2021, $717 was recorded as the equity component related to the extensions of the convertible debenture throughout the period.

    (vi) During the six months ended, April 30, 2021, the Company made payments on the principal balances of $3,533 on unsecured convertible debentures and $285 on secured convertible debentures.

    (vii) For the six months ended April 30, 2021 the Company recorded accretion of $1,820 related to convertible debentures.

    (viii) For the six months ended April 30, 2021, the Windsor loan was amended and resulted in the embedded derivative liability component to be removed which resulted in a gain of $498.

    During the six months ended April 30, 2021, the Company entered into restructuring agreements for two of the unsecured convertible debenture agreements and the Windsor loan agreement that resulted in a total loss on the extinguishment of debentures of $516 (April 30, 2020 - loss of $186).

    On April 18, 2021, the Company entered into a debt restructuring agreement of $2,000 of the Company's outstanding debt under an 10% senior unsecured convertible debenture issued in April 2019. As part of the debt restructuring, the parties have also (i) extended the maturity date of the amended debenture to April 18, 2023, (ii) amended the conversion price such that the deferred amount is convertible into common shares of High Tide ("HITI shares") at a conversion price of $0.75 per HITI share, (iii) lowered the interest rate from 10% to 7%. Management calculated the fair value of the liability component as $1,774 using a discount rate of 15% along with forecasted scheduled payments, with the residual amount of $225 net of deferred tax of $52 being allocated to equity.

    
        	 	14


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    11. Notes Payable

    	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	$	 
	Vendor loan	 	1,600	 	 	1,600	 
	Term loan	 	1,974	 	 	1,939	 
	OCN - notes payable	 	11,804	 	 	-	 
	Loan to partners (Note 3)	 	494	 	 	-	 
	Dreamweavers - notes payable	 	139	 	 	162	 
	Saturninus Partners - notes payable	 	540	 	 	690	 
	Long term contract liability	 	50	 	 	53	 
	Government loan	 	35	 	 	84	 
	Total	 	16,636	 	 	4,528	 
	Less current portion	 	(4,068	)	 	(1,939	)
	Long-term	 	12,568	 	 	2,589	 


    During the six months ended, April 30, 2021, the Company incurred accretion of $736 (April 30, 2020 - $56) and paid interest in the amount of $793 (April 30, 2020 - $164) in relation to the outstanding notes payable.

    During the second quarter of 2020, the Company obtained a government loan under the Canada Emergency Response Benefit, part of Canada's COVID-19 economic response plan. The loan bears no interest and has a maturity date of December 31, 2025. During the six-months ended April 30, 2021, the Company repaid $40 towards the principal amount. Due to early payment, $20 was forgiven and was recognized in the statement of net loss and comprehensive loss for the period ended April 30, 2021 as other income.

    On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation ("OCN"). Notes payable were valued at $12,783 at the date of acquisition by discounting it over two years at market interest rate of 15%. On January 6, 2021, the Company entered into another amended loan agreement with OCN to remove the annual administration fee and extend the maturity date of the loan until December 31, 2024. As a result of the debt restructuring, the Company recognized a $1,145 debt restructuring gain in the statement of net loss and comprehensive loss for the period ended April 30, 2021. The carrying value of the loan balance as at April 30, 2021 amounts to $11,804. During the six-months ended April 30, 2021, the Company made $853 in payment towards the outstanding balance.

    On January 6, 2021, the Company entered into an Amended Loan Agreement with OCN to remove the annual administration fee and to extend the maturity date of the original notes payable, dated November 18, 2020, until December 31, 2024.  As a result of the debt restructuring the Company recognized a $1,145 debt restructuring gain in the statement of net loss and comprehensive loss for the period ending April 30, 2021.

    
        	 	15


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    12. Share Capital

    (a) Issued:

    Common shares:

    	 	 	Number of shares	 	 	Amount	 
	 	 	#	 	 	$	 
	Balance, October 31, 2019	 	207,406,629	 	 	26,283	 
	Issued to pay fees in shares	 	3,852,319	 	 	860	 
	Issued to pay interest via shares	 	6,782,011	 	 	1,168	 
	Acquisition - KushBar	 	2,645,503	 	 	500	 
	Acquisition - 2680495	 	4,761,905	 	 	1,048	 
	Acquisition - Saturninus	 	5,319,149	 	 	1,064	 
	Acquisition - 102088460	 	5,000,000	 	 	975	 
	Lease acquisition - Canmore	 	612,764	 	 	104	 
	Exercise - Convertibile Debt	 	3,709,916	 	 	550	 
	Balance, October 31, 2020	 	240,090,196	 	 	32,552	 
	Acquisition - Meta Growth (Note 3)	 	196,063,610	 	 	35,290	 
	Acquisition - Smoke Cartel, Inc. (Note 3)	 	9,540,754	 	 	8,396	 
	Issued to pay fees via shares (i)	 	1,025,477	 	 	174	 
	Issued to pay interest via shares	 	7,646,923	 	 	1,458	 
	Shares issued through equity financing (ii)	 	47,916,665	 	 	18,237	 
	Conversion of convertible debentures (Note 10)	 	146,936,976	 	 	40,532	 
	Share issuance costs (ii)	 	-	 	 	(3,225	)
	Excersie options (Note 13)	 	2,498,160	 	 	865	 
	Excersie warrants	 	22,208,027	 	 	10,644	 
	Vested restricted share units (Note 13)	 	844,655	 	 	743	 
	Balance, April 30, 2021	 	674,771,443	 	 	145,666	 


     

    (i) During the six months period ended April 30, 2021, Company settled payables of $174 through issuance of 1,025,477 common shares of the Company. The fair value of $174 was based on the closing price of $0.175 on the date of issuance.

    (ii) On February 22, 2021, the Company issued, on a bought deal basis, 47,916,665 units of the Company at a price of $0.48 per unit. The Company closed the offering for total gross proceeds of $23,000. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at a price of $0.58 for a period of 36 months from the closing date of the offering. The warrants were attributed a relative fair value of $4,968 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.58; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30%. The underwriters received a cash commission fee of 6% of gross proceeds and 3% of gross proceeds for the presidents list in cash and respectively same percentage of broker warrants for the number of units issued because of conducting the bought deal financing. The broker units issued included one and a half warrants, totaling 3,920,587 warrants. The 2,613,725 broker warrants were attributed a fair value of $1,046 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.48; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30% and the remaining 1,306,862 broker warrants were attributed a fair value of $478 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.58; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30%

    
        	 	16


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    13. Share - Based Compensation

    (a) Stock Option Plan:

    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. 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:

    	 	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	Number of
options	 	 	Weighted Average
Exercise Price ($)	 	 	Number of
options	 	 	Weighted Average
Exercise Price ($)	 
	Balance, beginning of year	 	9,310,000	 	 	0.50	 	 	10,610,000	 	 	0.50	 
	Granted (i)	 	29,733,280	 	 	0.38	 	 	200,000	 	 	0.50	 
	Forfeited	 	(7,100,000	)	 	0.50	 	 	(1,500,000	)	 	0.50	 
	Exercised	 	(2,498,160	)	 	0.20	 	 	-	 	 	-	 
	Balance, end of period	 	29,445,120	 	 	0.38	 	 	9,310,000	 	 	0.50	 
	Exercisable, end of period	 	9,942,450	 	 	0.38	 	 	7,370,625	 	 	0.50	 


    For the period ended April 30, 2021, the Company recorded share-based compensation of $1,790 (2020 - $99) related to stock options.

    (i) On November 18, 2020, the Company acquired all the issued and outstanding shares of Meta which resulted in acquiring 3,683,280 options outstanding on the date of closing. The fair value of the options acquired were calculated using the Black-Scholes option pricing model valued using the Black-Scholes model and the following assumptions were used: stock price of $0.18; expected life of 1 years; $nil dividends; expected volatility of 100%; exercise price as per the plan times the exchange ratio of 0.824; and a risk-free interest rate of 0.52%. During the six months ended April 30, 2021 the Company granted 26,050,000 options to directors, officers, employees and consultants of the Company and its subsidiaries. The 18,950,000 options issued on November 20, 2020 were valued using the Black-Scholes model and the following assumptions were used: stock price of $0.19; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $0.20; and a risk-free interest rate of 0.52%. The 6,100,000 options issued on March 19, 2021 were valued using the Black-Scholes model and the following assumptions were used: stock price of $0.81; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $0.81; and a risk-free interest rate of 0.52%.

    (b) Restricted Share Units ("RSUs") plan

    On November 18, 2020, the Company acquired all the issued and outstanding shares of Meta which resulted in acquiring 943,579 RSUs outstanding on the date of closing based on the exchange ratio of 0.824 agreed upon in the arrangement agreement. The Company's RSU plan is applicable to directors, officers, and employees of the Company. The RSUs are equity-settled and each RSU can be settled for one common share for no consideration. These RSUs were recorded in contributed surplus using the Black-Scholes model and the following assumptions were used: stock price of $0.18; expected life of 0.35 years; $nil dividends; expected volatility of 70%; exercise price of $0.18; and a risk-free interest rate of 0.52%.

    On March 12, 2021, the Company granted 1,000,000 RSUs to directors of the Company and were valued at $780. For the period ended April 30, 2021, the Company recorded share-based compensation of $280 (2020 - nil) related to RSUs. The number of RSUs outstanding at April 30, 2021 amounts to 1,000,000.

    
        	 	17


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    14. Warrants

    	 	 	Number of warrants	 	 	Warrants
amount	 	 	Derivative
liability amount	 	 	Weighted
average
exercise price	 	 	Weighted
average
number of
years to
expiry	 	 	Expiry dates	 
	 	 	#	 	 	$	 	 	$	 	 	$	 	 	 	 	 	 	 
	Opening balance, November 1, 2019	 	43,677,333	 	 	6,609	 	 	-	 	 	0.6083	 	 	0.43	 	 	 	 
	Re-class warrants on convertible debt to equity	 	-	 	 	(660	)	 	-	 	 	-	 	 	-	 	 	 	 
	Issued warrants for services	 	300,000	 	 	64	 	 	-	 	 	0.3800	 	 	-	 	 	September 3, 2021	 
	Issued warrants for services	 	3,500,000	 	 	204	 	 	-	 	 	0.3000	 	 	0.01	 	 	November 12, 2021	 
	Issued warrants for services	 	1,000,000	 	 	111	 	 	-	 	 	0.3000	 	 	-	 	 	November 12, 2021	 
	Issued warrants on convertible debt November 14, 2019	 	7,936,507	 	 	80	 	 	-	 	 	0.5000	 	 	0.03	 	 	November 14, 2021	 
	Issued warrants on convertible debt December 4, 2019	 	8,392,857	 	 	109	 	 	-	 	 	0.5000	 	 	0.04	 	 	December 4, 2021	 
	Issued warrants on convertible debt December 14, 2019	 	7,936,508	 	 	135	 	 	-	 	 	0.5000	 	 	0.04	 	 	December 12, 2021	 
	Issued warrants for acquisition - Saturninus	 	3,750,000	 	 	100	 	 	-	 	 	0.4000	 	 	0.02	 	 	January 26, 2022	 
	Issued warrants on convertible debt January 6, 2020	 	58,823,529	 	 	-	 	 	266	 	 	0.2550	 	 	0.30	 	 	December 31, 2021	 
	Issued warrants on debt September 14, 2020	 	1,600,000	 	 	55	 	 	-	 	 	0.3000	 	 	0.01	 	 	September 30, 2021	 
	Warrants terminated	 	(1,600,000	)	 	(105	)	 	-	 	 	-	 	 	-	 	 	 	 
	Warrants expired	 	(4,252,620	)	 	(906	)	 	-	 	 	-	 	 	-	 	 	 	 
	Balance October 31, 2020	 	131,064,114	 	 	5,796	 	 	266	 	 	0.4043	 	 	0.88	 	 	 	 
	Warrants expired	 	(28,682,303	)	 	(4,725	)	 	-	 	 	-	 	 	-	 	 	 	 
	Issued warrants for acquisition - Meta	 	741,600	 	 	3	 	 	-	 	 	1.3110	 	 	-	 	 	December 14, 2021	 
	Issued warrants for acquisition - Meta	 	37,454,590	 	 	2,445	 	 	-	 	 	0.3520	 	 	0.49	 	 	February 6, 2023	 
	Issued warrants for acquisition - Meta	 	2,621,821	 	 	171	 	 	-	 	 	0.3520	 	 	0.03	 	 	February 6, 2023	 
	Issued warrants for acquisition - Meta	 	4,120,000	 	 	120	 	 	-	 	 	1.1040	 	 	0.06	 	 	April 11, 2023	 
	Issued warrants on convertible debt January 6, 2020	 	-	 	 	-	 	 	14,970	 	 	-	 	 	-	 	 	December 31, 2022	 
	Warrants issued - equity financing	 	26,572,057	 	 	6,014	 	 	-	 	 	0.5800	 	 	0.55	 	 	February 22, 2024	 
	Warrants issued - equity financing	 	1,306,862	 	 	478	 	 	-	 	 	0.4800	 	 	0.03	 	 	February 22, 2024	 
	Warrants cancelled	 	(23,529,412	)	 	-	 	 	-	 	 	-	 	 	-	 	 	 	 
	Warrants exercised	 	(23,594,259	)	 	(1,631	)	 	-	 	 	-	 	 	-	 	 	 	 
	Balance April 30, 2021	 	128,075,070	 	 	8,671	 	 	15,236	 	 	0.4559	 	 	2.01	 	 	 	 


    As at April 30, 2021, 126,768,208 warrants were exercisable.

    i) The Company issued 300,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.38. The warrants were valued at $64 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.37; expected life of two years; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.38; and a risk-free interest rate of 1.6%.

    ii) The Company issued 3,500,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.30. The warrants were valued at $204 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.22; expected life of two years; $nil dividends; expected volatility of 70% based on comparable companies; exercise price of $0.30; and a risk-free interest rate of 1.6%.

    iii) The Company issued 1,000,000 warrants for business development consultancy. Each warrant will allow the holder to acquire one common share at $0.30. The warrants were valued at $111 using the Black-Scholes model, as the fair value of the services provided cannot be measured reliably and the following assumptions were used: stock price of $0.22; expected life of two years; $nil dividends; expected volatility of 111% based on comparable companies; exercise price of $0.30; and a risk-free interest rate of 1.6%.

    iv) The Company measured the derivative liability to be $15,236 and recognized $14,970 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss for the period ended April 30, 2021.

    
        	 	18


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    15. Loss Per Share

    	 	 	Three months ended	 	 	Six months ended	 
	 	 	 	 	 	April 30	 	 	 	 	 	April 30	 
	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	Net loss for the period	 	(12,266	)	 	(4,912	)	 	(29,111	)	 	(8,857	)
	Non-controlling interest	 	(66	)	 	55	 	 	(91	)	 	52	 
	Net income (loss) for the period attributable to owners of the Company	 	(12,332	)	 	(4,857	)	 	(29,202	)	 	(8,805	)
	 	 	#	 	 	#	 	 	#	 	 	#	 
	Weighted average number of common shares - basic	 	619,812,908	 	 	219,221,313	 	 	509,073,969	 	 	213,832,523	 
	Basic income (loss) per share	 	(0.02	)	 	(0.02	)	 	(0.06	)	 	(0.04	)


    16. Financial Instruments and Risk Management

    The Company's activities expose it to a variety of financial risks. The Company is exposed to credit, liquidity, and market risk due to holding certain financial instruments. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.

    Risk management is carried out by senior management in conjunction with the Board of Directors.

    Fair value

    The Company's financial instruments consist of cash and cash equivalents, accounts receivable, marketable securities, loans receivable, accounts payable and accrued liabilities, notes payable, convertible debentures, contingent consideration and derivative liabilities.

    IFRS 13 establishes a three-level hierarchy that prioritizes the inputs relative to the valuation techniques used to measure fair value. Fair values of assets and liabilities included in Level 1 of the hierarchy are determined by reference to quoted prices in active markets for identical assets and liabilities. Fair value of assets and liabilities in Level 2 are determined using inputs other than quoted prices for which all significant outputs are observable, either directly or indirectly. Fair value of assets and liabilities in Level 3 are determined based on inputs that are unobservable and significant to the overall fair value measurement. Accordingly, the Company has categorized its financial instruments carried at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The Company's cash and cash equivalents are subject to Level 1 valuation.

    The marketable securities have been recorded at fair value based on level 1 inputs and derivative liability have been recorded at fair value based on level 2 inputs. The carrying values of accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these financial instruments. The carrying value of the notes payable and convertibile debentures approximate their fair value as they are discounted using a market rate of interest.

    Loans receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The fair value of these assets were estimated on discounted future interest and principal payments using current market interest rates of instruments using similar terms.

    Marketable securities

    In connection with the Company's acquisition of META on November 18, 2020, the Company acquired 1,350,000 shares of THC Global Group Limited ("THC"). The fair value of the THC shares amounting to $606 has been recognized as a marketable security, based on the trading price of THC's shares. In addition, to this the Company has also recorded $245 in GICs as a marketable security. 

    Credit risk

    Credit risk arises when a party to a financial instrument will cause a financial loss for the counter party by failing to fulfill its obligation. Financial instruments that subject the Company to credit risk consist primarily of cash, accounts receivable, marketable securities and loans receivable. The credit risk relating to cash and cash equivalents and restricted marketable securities balances is limited because the counterparties are large commercial banks. The amounts reported for accounts receivable in the statement of consolidated financial position is net of expected credit loss and the net carrying value represents the Company's maximum exposure to credit risk. Accounts receivable credit exposure is minimized by entering into transactions with creditworthy counterparties and monitoring the age and balances outstanding on an ongoing basis. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk.

    
        	 	19


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    16. Financial Instruments and Risk Management (continued)

    The following table sets forth details of the aging profile of accounts receivable and the allowance for expected credit loss:

    	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	$	 
	Current (for less than 30 days)	 	3,400	 	 	1,822	 
	31 - 60 days	 	386	 	 	246	 
	61 - 90 days	 	298	 	 	202	 
	Greater than 90 days	 	620	 	 	762	 
	Less allowance	 	(169	)	 	(359	)
	 	 	4,535	 	 	2,673	 


    For the six months ended April 30, 2021, $190 in trade receivables were written off against the loss allowance due to bad debts (year ended October 31, 2020 - $1,280). Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The remaining accounts receivable are evaluated by the Company based on parameters such as interest rates, specific country risk factors, and individual creditworthiness of the customer. Based on this evaluation, allowances are taken into account for the estimated losses of these receivables.

    The Company performs a regular assessment of collectability of accounts receivables. In determining the expected credit loss amount, the Company considers the customer's financial position, payment history and economic conditions. For the period ended April 30, 2021, management reviewed the estimates and have not created any additional loss allowances on trade receivable.

    Liquidity risk

    Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company generally relies on funds generated from operations, equity and debt financings to provide sufficient liquidity to meet budgeted operating requirements and to supply capital to expand its operations. The Company continues to seek capital to meet current and future obligations as they come due. Maturities of the Company's financial liabilities are as follows:

    	 	 	Contractual cash flows	 	 	Less than one year	 	 	1-5 years	 	 	Greater than 5 years	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	October 31, 2020	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	6,421	 	 	6,421	 	 	-	 	 	-	 
	Notes payable	 	4,528	 	 	1,939	 	 	2,589	 	 	-	 
	Convertible debentures	 	25,822	 	 	14,446	 	 	11,376	 	 	-	 
	Total	 	36,771	 	 	22,806	 	 	13,965	 	 	-	 
	April 30, 2021	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	12,373	 	 	12,373	 	 	-	 	 	-	 
	Notes payable	 	16,636	 	 	4,068	 	 	12,568	 	 	-	 
	Convertible debentures	 	12,590	 	 	3,403	 	 	9,187	 	 	-	 
	Total	 	41,599	 	 	19,844	 	 	21,755	 	 	-	 


    Interest rate risk

    The Company is not exposed to significant interest rate risk as its interest-bearing financial instruments carry a fixed rate of interest. 

    Foreign currency risk

    Foreign currency risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company maintains cash balances and enters into transactions denominated in foreign currencies, which exposes the Company to fluctuating balances and cash flows due to variations in foreign exchange rates.

    
        	 	20


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    16. Financial Instruments and Risk Management (continued)

    The Canadian dollar equivalent carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities as at April 30, 2021 was as follows:

    	(Canadian dollar equivalent amounts of US dollar and Euro balances)	 	April 30, 2021
(Euro)	 	 	April 30, 2021
(USD)	 	 	April 30, 2021
Total    	 	 	October 31,
2020	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	Cash	 	380	 	 	17,549	 	 	17,929	 	 	975	 
	Accounts receivable	 	-	 	 	364	 	 	364	 	 	653	 
	Accounts payable and accrued liabilities	 	(1,132	)	 	(2,173	)	 	(3,305	)	 	(1,728	)
	Net monetary assets	 	(752	)	 	15,740	 	 	14,988	 	 	(100	)


    Assuming all other variables remain constant, a fluctuation of +/- 5.0 percent in the exchange rate between the United States dollar and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $787 (October 31, 2020 - $34). Maintaining constant variables, a fluctuation of +/- 5.0 percent in the exchange rate between the Euro and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $38 (October 31, 2020 - $39). To date, the Company has not entered into financial derivative contracts to manage exposure to fluctuations in foreign exchange rates.

    
        	 	21


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    17. Segmented Information

    Segments are identified by management based on the allocation of resources, which is done on a basis of selling channel rather than by legal entity.  As such, the Company has established two main segments, being retail and wholesale, with a Corporate segment which includes oversight and start up operations of new entities until such time as revenue generation commences. The reportable segments are managed separately because of the unique characteristics and requirements of each business.

    	 	 	Retail	 	 	Retail	 	 	Wholesale	 	 	Wholesale	 	 	Corporate	 	 	Corporate	 	 	Total	 	 	Total	 
	For the three months ended April 30,	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 
	Total revenue	 	38,362	 	 	18,821	 	 	2,487	 	 	1,660	 	 	19	 	 	90	 	 	40,868	 	 	20,571	 
	Gross profit	 	14,188	 	 	7,093	 	 	790	 	 	572	 	 	20	 	 	90	 	 	14,998	 	 	7,755	 
	Income (loss) from operations	 	(1,058	)	 	1,757	 	 	25	 	 	(356	)	 	(3,478	)	 	(1,245	)	 	(4,511	)	 	156	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total assets	 	86,532	 	 	46,678	 	 	6,331	 	 	5,972	 	 	107,207	 	 	17,161	 	 	200,070	 	 	69,811	 
	Total liabilities	 	54,598	 	 	22,893	 	 	2,055	 	 	1,894	 	 	36,875	 	 	33,301	 	 	93,528	 	 	58,088	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Canada	 	 	Canada	 	 	USA	 	 	USA	 	 	Europe	 	 	Europe	 	 	Total	 	 	Total	 
	For the three months ended April 30,	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 
	Total revenue	 	34,386	 	 	18,488	 	 	3,638	 	 	-	 	 	2,844	 	 	2,083	 	 	40,868	 	 	20,571	 
	Gross profit	 	12,389	 	 	6,559	 	 	1,325	 	 	-	 	 	1,284	 	 	1,196	 	 	14,998	 	 	7,755	 
	Income (loss) from operations	 	(5,199	)	 	56	 	 	125	 	 	(204	)	 	563	 	 	304	 	 	(4,511	)	 	156	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total assets	 	174,127	 	 	46,678	 	 	17,233	 	 	5,972	 	 	8,710	 	 	17,161	 	 	200,070	 	 	69,811	 
	Total liabilities	 	88,260	 	 	22,893	 	 	3,676	 	 	1,894	 	 	1,592	 	 	33,301	 	 	93,528	 	 	58,088	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Retail	 	 	Retail	 	 	Wholesale	 	 	Wholesale	 	 	Corporate	 	 	Corporate	 	 	Total	 	 	Total	 
	For the six months ended April 30,	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 
	Total revenue	 	75,119	 	 	30,941	 	 	4,038	 	 	3,038	 	 	30	 	 	307	 	 	79,187	 	 	34,286	 
	Gross profit	 	28,383	 	 	11,199	 	 	1,352	 	 	1,043	 	 	31	 	 	306	 	 	29,766	 	 	12,548	 
	Income (loss) from operations	 	180	 	 	1,119	 	 	(197	)	 	(732	)	 	(6,539	)	 	(2,348	)	 	(6,556	)	 	(1,961	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Canada	 	 	Canada	 	 	USA	 	 	USA	 	 	Europe	 	 	Europe	 	 	Total	 	 	Total	 
	For the six months ended April 30,	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 	 	2021	 	 	2020	 
	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 	 	($)	 
	Total revenue	 	68,588	 	 	30,785	 	 	4,281	 	 	-	 	 	6,318	 	 	3,501	 	 	79,187	 	 	34,286	 
	Gross profit	 	25,373	 	 	10,621	 	 	1,544	 	 	-	 	 	2,849	 	 	1,927	 	 	29,766	 	 	12,548	 
	Income (loss) from operations	 	(7,688	)	 	(1,691	)	 	11	 	 	(385	)	 	1,121	 	 	115	 	 	(6,556	)	 	(1,961	)


     

    
        	 	22


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    18. Related Party Transactions

    As at April 30, 2021, the Company had the following transactions with related parties as defined in IAS 24 - Related Party Disclosures, except those pertaining to transactions with key management personnel in the ordinary course of their employment and/or directorship arrangements and transactions with the Company's shareholders in the form of various financing.

    Financing transactions

    A Director of the Company is Chief of the Opaskwayak Cree Nation ("OCN"). On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation ("OCN"). As at April 30, 2021, the Company has drawn $13,000 and has $6,750 available to be drawn under the credit facility.

    On February 22, 2021, the Company issued, on a bought deal basis, 47,916,665 units of the Company at a price of $0.48 per unit. Two of the officers and the corporate secretary of the Company, collectively participated in the offering and acquired an aggregate of 3,112,084 units pursuant to the Offering.

    Operational transactions

    An office and warehouse unit has been developed by Grover Properties Inc., a company that is related through a common controlling shareholder and the President & CEO of the company. The office and warehouse space were leased to High Tide to accommodate the Company's operational expansion. The lease was established by an independent real estate valuations services company at prevailing market rates and has annual lease payments totalling $386 per annum. The primary lease term is 5 years with two additional 5-year term extensions exercisable at the option of the Company.

    An office and warehouse unit located in Savannah, Georgia has been leased out by 2G Realty, LLC, a company that is related through the Chief Technology Officer of the company. The office and warehouse space were leased to accommodate the Company's operational needs for Smoke Cartel. The lease was established at prevailing market rates and has annual lease payments totalling $52 per annum. The primary lease term is 1 year with one additional 1-year term extension exercisable at the option of the Company.

    
        	 	23


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    19. Right of Use Assets and Lease Obligations 

    The Company entered into various lease agreements predominantly to execute its retail platform strategy. The Company leases properties such as various retail stores and offices. Lease contracts are typically made for fixed periods of 5 to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

    	Right of use assets 	 	 	 
	 	 	$	 
	Balance at November 1, 2020	 	16,413	 
	Net additions	 	13,669	 
	Right of use assets - held for sale	 	(1,028	)
	Depreciation expense for the period	 	(3,085	)
	Balance at April 30, 2021	 	25,969	 


    

    	Lease Liabilities 	 	 	 
	 	 	$	 
	Balance at November 1, 2020	 	16,668	 
	Lease Liabilities associated with - assets held for sale	 	(1,090	)
	Net additions	 	11,824	 
	Cash outflows in the period	 	(2,353	)
	Accretion (Interest) expense for the period ended	 	1,041	 
	Balance at April 30, 2021	 	26,090	 
	Current	 	(5,152	)
	Non-current	 	20,938	 


    As at April 30, 2021, $842 is due to the Company in respect of sublease arrangements for franchise cannabis retail locations. For the period ended April 30, 2021, $195 was received in respect of sublease arrangements, which was recognized as other revenue. During the period ended April 30, 2021, the Company also paid $1,415 in variable operating costs associated to the leases which are expensed under general and adminstrative expenses.

    The following is a summary of the contractual undiscounted cash outflows for lease obligations as of April 30, 2021:

    	 	 	$	 
	Less than one year	 	7,840	 
	Between one and five years	 	20,447	 
	Greater than five years	 	5,297	 
	 	 	33,584	 


    20. Contingent liability

    In the normal course of business, the Company and its subsidiaries may become defendants in certain employment claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount can be reasonably estimated.  The Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company's business, financial condition or results of the operations.

    
        	 	24


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    21. Non-controlling interest

    The following table presents the summarized financial information for the Company's subsidiaries which have non-controlling interests. This information represents amounts before intercompany eliminations.

    	 	 	2021	 	 	2020	 
	 	 	$	 	 	$	 
	Total current assets	 	5,486	 	 	2,540	 
	Total non-current assets	 	4,097	 	 	3,696	 
	Total current liabilities	 	(5,761	)	 	(942	)
	Total non-current liabilities	 	(1,145	)	 	(1,080	)
	Revenues for the year ended	 	6,508	 	 	6,011	 
	Net income for the year ended	 	774	 	 	1,320	 


    The net change in non-controlling interests is as follows:

    	As at	 	April 30, 2021	 	 	October 31, 2020	 
	 	 	$	 	 	        $	 
	Balance, beginning of the year	 	1,552	 	 	(179	)
	Share of income for the period	 	91	 	 	614	 
	Purchase of minority interest - KushBar Inc.	 	-	 	 	187	 
	Purchase of - Saturninus Partners	 	-	 	 	930	 
	Purchase of - Meta (Note 3)	 	1,821	 	 	-	 
	 	 	3,464	 	 	1,552	 


    As of October 31, 2019, the Company held a 50.1% ownership interest in KushBar, with $179 NCI. As well, the Company owed the non-controlling interest shareholder $701 (2018 - $36). The loan carries no interest and is due on demand. 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").

    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 arrangement as a joint venture with controlling interest.

    On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included four joint ventures with controlling interest. These joint ventures operate as a licensed cannabis retail store in Manitoba.

    
        	 	25


    

    

    
        		High Tide Inc.

                    Notes to the Condensed Interim Consolidated Financial Statements

                    For the three and six months ended April 30, 2021 and 2020

                    (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

                


    

    22. Assets held for sale

    On September 2, 2020, the Company entered into an amended asset sale agreement with Halo Labs Inc. ("Halo"), under which High Tide will sell its KushBar retail cannabis assets and the rights to three permitted retail cannabis stores to Halo. All regulatory approval required for the sale was received by Halo during the second quarter of 2021, therefore the Company classified the following assets and liabilities as held for sale:

    	 	 	$	 
	Leasehold improvements	 	646	 
	Right of use assets	 	1,028	 
	Total Assets held for sale	 	1,674	 
	Lease liabilities	 	1,090	 
	Total liabilities held for sale	 	1,090	 


    23. Subsequent events

    (i) On May 10, 2021, the Company acquired 80% of Fab Nutrition, LLC, operating as FABCBD ("FABCBD") for US$20,640, and has been granted a three-year option to acquire the remaining 20% of FABCBD at any time. The consideration was comprised of: (i) 15,608,727 common shares of High Tide (the "HT Shares"), having an aggregate value of US$8,080; and (ii) US$12,560 in cash. The cash portion of the Transaction has been funded entirely with cash on hand. In addition, pursuant to the acquisition agreement the vendor may be entitled to an earn out bonus of US$612 if FABCBD exceeds gross revenues of at least US$13,500 in 2021, which will be paid, if due, in High Tide Shares based on the volume weighted average price per High Tide Share for the 10 consecutive trading days preceding payment, subject to a maximum of 1,425,106 High Tide Shares.

    (ii) On May 14, 2021, the Company announce that it will be consolidating all of its issued and outstanding common shares ("Common Shares") on the basis of one post-consolidation Common Share for fifteen pre-consolidation Common Shares (the "Share Consolidation"). The Share Consolidation represented another major step towards the listing of the Common Shares on The Nasdaq Stock Market LLC ("Nasdaq") by meeting the minimum share price requirement set by Nasdaq. The Company listed on Nasdaq on June 2, 2021.

    (iii) On May 19, 2021, the Company closed its previously announced "bought deal" short-form prospectus offering (the "Offering") units of the Company (the "Units"), including the exercise in full of the underwriters' over-allotment option. In connection with the Offering, the Company issued an aggregate of 2,100,000 Units at a price of $9.60 per Unit, for aggregate gross proceeds of $20,160. The over-allotment option allowed to purchase an additional 315,000 Units at a price of $9.60 per Unit, for aggregate gross proceeds of $3,024. Each Unit is comprised of one common share of the Company (each, a "Common Share") and one half of one Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of $12.25, for a period of 36 months following the closing of the Offering.

    (iv) On June 25, 2021, the Company entered into a defininitve agreement pursuant to which the Company, will acquire 100% of the issued and outstanding shares of DHC Supply LLC operating as Daily High Club. The consideration will be comprised of: (i) common shares of High Tide ("High Tide Shares"), having an aggregate value of US$6,750 on the basis of a deemed price per High Tide Share equal to the volume weighted average price per High Tide Share on Nasdaq for the 10 consecutive trading days preceding the closing of the Transaction; and (ii) US$3,250 in cash. The cash portion of the transaction will be funded entirely with cash on hand.

    (v) Subsequent to the period ended April 30, 2021, $2,680 of debt was converted into common shares.

    (vi) Subsequent to the period ended April 30, 2021, 1,754 warrants were converted to 115,903 common shares for net proceeds of $831.

    
        	 	26