Cover
Cover - shares | 3 Months Ended | |
Oct. 31, 2021 | Dec. 14, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | BODY AND MIND INC. | |
Entity Central Index Key | 0001715611 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Oct. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity Ex Transition Period | true | |
Entity Common Stock Shares Outstanding | 113,349,464 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-55940 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 98-1319227 | |
Entity Address Address Line 1 | 750 – 1095 West Pender Street | |
Entity Address City Or Town | Vancouver | |
Entity Address Country | CA | |
Entity Address Postal Zip Code | V6E 2M6 | |
City Area Code | 800 | |
Local Phone Number | 361-6312 | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Interim
Condensed Consolidated Interim Balance Sheets - USD ($) | Oct. 31, 2021 | Jul. 31, 2021 |
Current | ||
Cash | $ 7,433,086 | $ 7,374,194 |
Amounts receivable | 1,445,876 | 1,544,957 |
Interest receivable on convertible loan (Note 6) | 168,000 | 150,000 |
Prepaids | 545,044 | 413,246 |
Inventory (Note 5) | 3,374,911 | 2,936,156 |
Convertible loan receivable (Note 6) | 1,810,827 | 1,648,816 |
Other loan receivable (Note 7) | 239,834 | 239,834 |
Total Current Assets | 15,017,578 | 14,307,203 |
Deposit (Note 19) | 470,546 | 470,546 |
Loan receivable from NMG Ohio LLC (Note 8) | 0 | 891,279 |
Property and Equipment, net (Note 10) | 5,594,541 | 4,893,790 |
Operating lease right-of-use assets (Note 15) | 3,179,713 | 2,539,023 |
Brand and Licenses, net (Note 12) | 19,552,813 | 19,855,068 |
Goodwill (Note 12) | 5,168,902 | 5,168,902 |
TOTAL ASSETS | 48,984,093 | 48,125,811 |
LIABILITIES | ||
Accounts payable | 1,546,481 | 1,686,376 |
Accrued liabilities | 130,000 | 105,538 |
Income taxes payable | 4,501,689 | 3,832,078 |
Due to related parties (Note 13) | 54,166 | 52,074 |
Loan payable (Note 14) | 15,050 | 16,874 |
Current portion of operating lease liabilities (Note 15) | 407,446 | 761,415 |
Total Current Liabilities | 6,654,832 | 6,454,355 |
Long-term operating lease liabilities (Note 15) | 2,781,617 | 2,323,525 |
Loan payable (Note 14) | 4,916,615 | 4,798,871 |
Deferred tax liability | 229,080 | 198,339 |
TOTAL LIABILITIES | 14,582,144 | 13,775,090 |
STOCKHOLDERS' EQUITY | ||
Capital Stock - Statement 3 (Note 16) Authorized 900,000,000 Common Shares - Par Value $0.0001 Issued and Outstanding 110,621,308 31 July 2021 - 109,077,778) Common Shares | 11,061 | 10,907 |
Additional paid-in capital | 51,004,060 | 50,312,013 |
Other comprehensive income | 1,163,994 | 1,127,713 |
Deficit | (17,915,599) | (17,126,510) |
TOTAL STOCKHOLDERS' EQUITY ATTRIBUTABLE TO BAM | 34,236,516 | 34,324,123 |
NON-CONTROLLING INTEREST | 138,433 | 26,598 |
TOTAL EQUITY | 34,401,949 | 34,350,721 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 48,984,093 | $ 48,125,811 |
Condensed Consolidated Interi_2
Condensed Consolidated Interim Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2021 | Jul. 31, 2020 |
Condensed Consolidated Interim Balance Sheets | ||
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares, Outstanding | 110,621,308 | 109,077,778 |
Common stock, shares issued | 110,621,308 | 109,077,778 |
Condensed Consolidated Interi_3
Condensed Consolidated Interim Statements of Operations - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Condensed Consolidated Interim Statements of Operations | ||
Sales | $ 7,570,816 | $ 5,294,358 |
Cost of sales | (4,080,600) | (3,494,304) |
Total Sales | 3,490,216 | 1,800,054 |
General and Administrative Expenses | ||
Accounting and legal | 259,144 | 167,077 |
Business development | 94,759 | 1,409 |
Consulting fees | 143,235 | 85,731 |
Depreciation | 331,544 | 245,337 |
Insurance | 70,761 | 72,720 |
Lease expense | 126,339 | 88,603 |
Licenses, utilities and office administration | 781,614 | 575,245 |
Management fees | 168,379 | 132,226 |
Regulatory, filing and transfer agent fees | 0 | 6,576 |
Rent | 32,082 | 38,351 |
Salaries and wages | 991,717 | 782,618 |
Stock-based compensation | 145,175 | 287,631 |
Travel | 30,158 | 11,839 |
Total Operating Expenses | (3,174,907) | (2,495,363) |
Net Operating Income (Loss) Before Other Income (Expenses) | 315,309 | (695,309) |
Other Income (Expenses) | ||
Foreign exchange, net | (13) | 39 |
Interest expense | (338,764) | (735) |
Interest income | 18,000 | 106,143 |
Other income (expenses) | 30,386 | 88,422 |
Gain on bargain purchase | 0 | 208,176 |
Equity-method investement change from earnings | 0 | 24,872 |
Net Income (Loss) Before Income Tax | 24,918 | (268,392) |
Income tax expense | (702,172) | 509,975 |
Net Loss for the period | (677,254) | (778,367) |
Other Comprehensive Income | ||
Foreign currency translation adjustment | 36,281 | 268,097 |
Comprehensive Loss for the Period | (640,973) | (510,270) |
Net income (loss) attributable to: | ||
Body and Mind Inc. | (789,089) | (792,545) |
Non-controlling interest | 111,835 | 14,178 |
Comprehensive income (loss) attributable to: | ||
Body and Mind Inc. | (752,808) | (524,448) |
Non-controlling interest | $ 111,835 | $ 14,178 |
Loss per Share - Basic and Diluted | $ (0.01) | $ (0.01) |
Weighted Average Number of Shares Outstanding - Basic and Diluted | 109,748,878 | 107,600,058 |
Condensed Consolidated Interi_4
Condensed Consolidated Interim Statements of Changes in Stockholders Equity - USD ($) | Total | Common Stock | Additional Paid-In Capital | Shares To Be Issued | Other Comprehensive Income | Deficit | Noncontrolling Interest |
Balance, shares at Jul. 31, 2020 | 107,513,812 | ||||||
Balance, amount at Jul. 31, 2020 | $ 33,304,449 | $ 10,751 | $ 47,665,678 | $ 19,703 | $ 731,768 | $ (14,865,608) | $ (257,843) |
Common stock issued in acquisition of NMG Ohio LLC (Note 16), shares | 793,466 | ||||||
Common stock issued in acquisition of NMG Ohio LLC (Note 16), amount | 297,042 | $ 79 | 296,963 | 0 | 0 | 0 | 0 |
Stock-based compensation (Note 16) | 287,631 | 0 | 287,631 | 0 | 0 | 0 | 0 |
Foreign currency translation adjustment | 268,097 | 0 | 0 | 0 | 268,097 | 0 | 0 |
Loss for the period | (778,367) | $ 0 | 0 | 0 | 0 | (792,545) | 14,178 |
Balance, shares at Oct. 31, 2020 | 108,307,278 | ||||||
Balance, amount at Oct. 31, 2020 | 33,378,852 | $ 10,830 | 48,250,272 | 19,703 | 999,865 | (15,658,153) | (243,665) |
Balance, shares at Jul. 31, 2021 | 109,077,778 | ||||||
Balance, amount at Jul. 31, 2021 | 34,350,721 | $ 10,907 | 50,312,013 | 0 | 1,127,713 | (17,126,510) | 26,598 |
Stock-based compensation (Note 16) | 145,175 | 0 | 145,175 | 0 | 0 | 0 | 0 |
Foreign currency translation adjustment | 36,281 | $ 0 | 0 | 0 | 36,281 | 0 | 0 |
Loss for the period | (677,254) | 0 | 0 | 0 | (789,089) | 111,835 | |
Common stock issued for operating leases, shares | 1,543,530 | ||||||
Common stock issued for operating leases, amount | 547,026 | $ 154 | 546,872 | 0 | 0 | 0 | 0 |
Balance, shares at Oct. 31, 2021 | 110,621,308 | ||||||
Balance, amount at Oct. 31, 2021 | $ 34,401,949 | $ 11,061 | $ 51,004,060 | $ 0 | $ 1,163,994 | $ (17,915,599) | $ 138,433 |
Condensed Consolidated Interi_5
Condensed Consolidated Interim Statements of Cash Flows - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Cash Resources Provided By (Used In) Operating Activities | ||
Net loss for the period | $ (677,254) | $ (778,367) |
Items not affecting cash: | ||
Amortization of debt discounts | 117,744 | 74,435 |
Accrued interest income | (18,000) | (106,143) |
Amortization of licenses | 302,255 | 225,508 |
Non-cash costs - operating leases | 77,037 | 52,959 |
Depreciation | 202,394 | 125,727 |
Foreign exchange | 0 | (112,139) |
Equity-method investment change from earnings | 0 | (24,872) |
Gain on bargain purchase | 0 | (208,176) |
Stock-based compensation | 145,175 | 287,631 |
Amounts receivable and prepaids | 6,294 | (152,046) |
Inventory | (416,118) | 259,435 |
Trade payables and accrued liabilities | (118,882) | 34,962 |
Income taxes payable | 700,352 | 508,850 |
Due to related parties | 2,092 | (8,807) |
Operating lease liabilities | (66,578) | (117,656) |
Loan to NMG Ohio LLC | 0 | (228,736) |
Cash provided by (used in) operating activities | 256,511 | (167,435) |
Investing Activities | ||
Investment in NMG Ohio, LLC, net of cash received | (54,415) | (136,326) |
Investment in GLDH | 0 | 251,189 |
Purchase of property and equipment | (15,650) | (99,619) |
Convertible loan receivable | (162,011) | (134,729) |
Cash used in investing activities | (232,076) | (119,485) |
Financing Activities | ||
Loans repaid | (1,824) | (4,460) |
Cash used in financing activities | (1,824) | (4,460) |
Effect of exchange rate changes on cash | 36,281 | 268,097 |
Net Decrease in Cash | 58,892 | (23,283) |
Cash- Beginning of the Period | 7,374,194 | 1,352,130 |
Cash- End of Year | $ 7,433,086 | $ 1,328,847 |
Nature and Continuance of Opera
Nature and Continuance of Operations | 3 Months Ended |
Oct. 31, 2021 | |
Nature and Continuance of Operations | |
1. Nature and Continuance of Operations | 1. Nature and Continuance of Operations Body and Mind Inc. (the “Company”) was incorporated on 5 November 1998 in the State of Delaware, USA, under the name Concept Development Group, Inc. In May 2004, the Company acquired 100% of Vocalscape, Inc. and changed its name to Vocalscape, Inc. On October 28, 2005, the Company changed its name to Nevstar Precious Metals Inc. On October 23, 2008, the Company changed its name to Deploy Technologies Inc. (“Deploy Tech”) and, on September 15, 2010, the Company incorporated a wholly-owned subsidiary, Deploy Acquisition Corp. (“Deploy”) under the laws of the State of Nevada, USA. On September 17, 2010, the Company merged with and into Deploy under the laws of the State of Nevada. Deploy, as the surviving corporation of the merger, assumed all the assets, obligations and commitments of Deploy Tech, and we were effectively re-domiciled in the State of Nevada. Upon the completion of the merger, Deploy assumed the name “Deploy Technologies Inc.”, and all of the issued and outstanding common stock of Deploy Tech was automatically converted into and became Deploy’s issued and outstanding common stock. On 14 November 2017, the Company acquired Nevada Medical Group, LLC (“NMG”) and changed its name to Body and Mind Inc. The Company is now a supplier and grower of medical and recreational cannabis in the state of Nevada, and has retail operations in California, Ohio, and Arkansas. Principles of Consolidation These consolidated financial statements include the financial statements of the Company and its subsidiaries as follows: Name Jurisdiction Ownership Date of acquisition or formation DEP Nevada Inc. (“DEP Nevada”) Nevada, USA 100 % 10 August 2017 Nevada Medical Group LLC (“NMG”) Nevada, USA 100 % 14 November 2017 NMG Long Beach LLC (“NMG LB”) California, USA 100 % 18 December 2018 NMG Cathedral City LLC California, USA 100 % 4 January 2019 NMG San Diego LLC (“NMG SD”) California, USA 60 % 30 January 2019 NMG Ohio LLC (“NMG Ohio”) Ohio, USA 100 % 27 April 2017 NMG OH 1, LLC (“NMG OH 1”) Ohio, USA 100 % 30 January 2020 NMG OH P1, LLC (“NMG OH P1”) Ohio, USA 100 % 29 January 2020 NMG MI 1, Inc. (“NMG MI 1”) Michigan, USA 100 % 24 June 2021 NMG MI C1 Inc. Michigan, USA 100 % 24 June 2021 NMG MI P1 Inc. Michigan, USA 100 % 24 June 2021 All inter-company transactions and balances are eliminated upon consolidation. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Oct. 31, 2021 | |
Recent Accounting Pronouncements | |
2. Recent Accounting Pronouncements | 2. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Revenue from Contracts with Customers The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2021 | |
Recent Accounting Pronouncements | |
3. Significant Accounting Policies | 3. Significant Accounting Policies The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements. Basis of presentation These condensed consolidated interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is 31 July. Amounts receivable Amounts receivable represents amounts owed from customers for sale of medical and recreational cannabis and sales tax recoverable. Amounts are presented net of the allowance for doubtful accounts, which represents the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable balance. The Company determines the allowance for doubtful accounts based on historical experience and current economic conditions. The Company reviews the adequacy of its allowance for doubtful accounts on a quarterly basis. As of 31 October 2021 and 31 July 2021, the Company has no allowance for doubtful accounts. Revenue recognition The Company recognizes revenue from product sales when our customers obtain control of our products. This determination is based on the customer specific terms of the arrangement for wholesale operations. Upon transfer of control, the Company has no further performance obligations. All retail sales are considered COD. Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC 606. The Company’s revenues accounted for under ASC 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. See Note 17 for revenue disaggregation table. Inventory Inventory consists of raw material, work in progress (live plants and plants in the drying process), finished goods, and consumables. The Company values its raw material, finished goods and consumables at the lower of the actual costs or its current estimated market value less costs to sell. The Company values its work in progress at cost. The Company periodically reviews its inventory for obsolete and potentially impaired items. As of 31 October 2021 and 31 July 2021, the Company has no allowance for inventory obsolescence. Loans receivable The Company carries its loans receivable at cost and are reviewed for indicators of impairment at least annually. Property and equipment Property and equipment are stated at cost and are amortized over their estimated useful lives on a straight-line basis as follows: Office equipment 7 years Cultivation equipment 7 years Production equipment 7 years Kitchen equipment 7 years Vehicles 7 years Vault equipment 7 years Leasehold improvements shorter of useful life or the term of the lease Intangible assets Intangible assets acquired from third parties are measured initially at fair value and either classified as indefinite life or finite life depending on their characteristics. Intangible assets with indefinite lives are tested for impairment at least annually and intangible assets with finite lives are reviewed for indicators of impairment at least annually. The Company’s brands and licenses acquired from NMG have indefinite lives; therefore no amortization is recognized. The Company’s brands and licenses acquired by NMG SD have a finite life of 10 years, brands and licenses acquired by NMG LB and NMG OH 1 have a finite life of 10 years, customer relationships acquired by NMG OH 1 have a finite life of five years and are amortized over these estimated useful lives on a straight-line basis. Goodwill Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired in our business combinations. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events or changes in circumstances that could trigger an impairment review include a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations. The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, additional impairment testing is not required. The Company tests for goodwill impairment annually during its fourth quarter on July 31. Deferred income taxes are reported for timing differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. Basic and diluted net loss per share The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Potentially dilutive options of 9,855,000 and warrants of 17,215,284 existed at 31 October 2021 and have been excluded, as their effect is anti-dilutive. This figure does not include 3,200,000 warrants issued to the Agent pursuant to the Loan Agreement, which warrants are held in escrow by us and are to be released to the Agent if we draw on the Delayed Draw Term Loan by 1 June 2022, or cancelled if we do not draw on the Delayed Draw Term Loan. Each warrant, if released to the Agent, will entitle the holder to acquire one share of common stock at an exercise price of US$0.45 per share until 19 July 2025. Comprehensive loss ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive income/loss and its components in the consolidated financial statements. As of 31 October 2021 and 31 July 2021, the Company reported foreign currency translation adjustments as other comprehensive income or loss and included a schedule of comprehensive income/loss in the consolidated financial statements. Foreign currency translation The Company’s functional currency is the Canadian dollar and its reporting currency is in U.S. dollars. The Company’s subsidiaries have a functional currency in U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Exchange gains and losses on inter-company balances that form part of the net investment in foreign operations are included in other comprehensive income. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. The exchange rates used to translate Canadian dollar to U.S. dollar was 0.8085 for monetary assets and liabilities and 0.7959 as an average rate for transactions occurred during the period ended 31 October 2021. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of net loss. Stock-based compensation The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes Option Pricing Model. The fair value determined represents the cost for the award and is recognized over the required service period, generally defined as the vesting period. The Company’s accounting policy is to recognize forfeitures as they occur. Fair value measurements The Company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ● Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. ● Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. ● Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include investments in other private entities, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. The Company measures equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. The convertible note receivable was valued using Level 3 inputs. Other current financial assets and current financial liabilities have fair values that approximate their carrying values. Use of estimates and assumptions The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates. Lease accounting The Company adopted ASC 842, leases effective 1 August 2019 using a modified retrospective approach. Under ASC 842, leases are separated into two classifications: operating leases and financial leases. Lease classification under ASC 842 is relatively similar to ASC 840. For a lease to be classified as a finance lease, it must meet one of the five finance lease criteria: (1) transference of title/ownership to the lessee, (2) purchase option, (3) lease term for major part of the remaining economic life of the asset, (4) present value represents substantially all of the fair value of the asset, and (5) asset specialization. Any lease that does not meet these criteria is classified as an operating lease. ASC 842 requires all leases to be recognized on the Company’s balance sheet. Specifically, for operating leases, the Company recognize a right-of-use asset and a corresponding lease liability upon lease commitment. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Oct. 31, 2021 | |
Financial Instruments | |
4. Financial Instruments | 4. Financial Instruments The following table represents the Company’s assets that are measured at fair value as of 31 October 2021 and 31 July 2021: As of 31 October 2021 As of 31 July 2021 Financial assets at fair value Cash $ 7,433,086 $ 7,374,194 Convertible loan receivable 1,810,827 1,648,816 Total financial assets at fair value $ 9,243,913 $ 9,023,010 Management of financial risks The financial risk arising from the Company’s operations include credit risk, liquidity risk, interest rate risk and currency risk. These risks arise from the normal course of operations and all transactions undertaken are to support the Company’s ability to continue as a going concern. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company reduces its exposure to credit risk by maintaining its cash with major financial institutions. Credit risk associated with the convertible loans receivable arises from the possibility that the principal and/or interest due may become uncollectible. The Company mitigates this risk by managing and monitoring the underlying business relationship. 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 ensures, as far as reasonably possible, that it will have sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash. The Company has cash flows from operations of $256,511 for the three months ended 31 October 2021, and had working capital of $8,362,746 at 31 October 2021. The Company anticipates that current cashflow positive operations, cash on hand and working capital will ensure coverage for all expenses associated with current operations for at least the next 15 months from the issuance of these financial statements. Management believes that the Company has access to capital resources through potential public or private issuances of debt or equity securities to further contribute to the growth of the company. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as it does not hold financial instruments that will fluctuate in value due to changes in interest rates. Currency risk Currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company is exposed to currency risk by incurring expenditures and holding assets denominated in currencies other than its functional currency. |
Inventory
Inventory | 3 Months Ended |
Oct. 31, 2021 | |
Inventory | |
5. Inventory | 5. Inventory 31 October 2021 31 July 2021 Work in progress $ 615,899 $ 503,215 Finished goods 1,843,717 1,547,493 Consumables 915,295 885,448 Total $ 3,374,911 $ 2,936,156 |
Convertible loan receivable
Convertible loan receivable | 3 Months Ended |
Oct. 31, 2021 | |
Convertible loan receivable | |
6. Convertible loan receivable | 6. Convertible loan receivable Effective March 15, 2019, the Company, through its wholly owned subsidiaries, DEP Nevada and NMG, entered into a convertible loan agreement and a management agreement with Comprehensive Care Group LLC (“CCG”), an Arkansas limited liability company, with respect to the development of a medical cannabis dispensary facility in West Memphis, Arkansas. The convertible loan agreement can be extended by either party and the current agreement has a maturity date of 30 March 2022. Under no circumstances shall the maturity date of the convertible loan agreement extend beyond the expiration of the management agreement as described below. Pursuant to the management agreement, NMG will provide operations and management services, including management, staffing, operations, administration, oversight, and other related services. Under the management agreement, NMG will be required to obtain approval from CCG for any key decisions as defined in the agreement and accordingly the Company does not control CCG. NMG will be paid a monthly management fee equal to 66.67% of the monthly net profits of CCG, subject to conversion of the convertible loan as discussed below upon which the monthly management fee shall be $6,000 per month, unless otherwise agreed by the parties in writing. The management agreement has an expiration of 15 March 2024 and can be mutually extendable. The convertible loan agreement is for an amount up to $1,250,000 from DEP to CCG with proceeds to be used to fund construction of a facility, working capital and initial operating expenses. The loan bears interest at a fixed rate of $6,000 per month until the parties mutually agree to increase the interest. Upon the latter of one year of granting of a medical cannabis dispensary license by the appropriate authorities or one year after entering into the convertible loan agreement, DEP may elect to convert the loan into preferred units of CCG equal to 40% of all outstanding units of CCG, subject to approval of the Arkansas Medical Marijuana Commission. The Company evaluated the convertible loan receivable’s settlement provisions and elected the fair value option in accordance with ASC 825 “Financial Instruments”, to value this instrument. Under such election, the loan receivable is measured initially and subsequently at fair value, with any changes in the fair value of the instrument being recorded in the consolidated financial statements as a change in fair value of the financial instruments. The Company estimates the fair value of this instrument by first estimating the fair value of the straight debt portion, excluding the embedded conversion option, using a discounted cash flow model. The Company then estimates the fair value of the embedded conversion option using the Black-Scholes Option Pricing Model. The sum of these two valuations is the fair value of the loan receivable balance of $1,810,827. Management believes that the accretion of the straight debt portion and embedded derivative related to the conversion option are not material due to the short term maturity of the loan. At 31 October 2021, the Company had advanced $1,810,827 (31 July 2021 - $1,648,816) and accrued interest income of $18,000 (2020 - $18,000) for the three months ended 31 October 2021. As of 31 October 2021, total interest receivable was $168,000 (31 July 2021 - $150,000). |
Loan receivable
Loan receivable | 3 Months Ended |
Oct. 31, 2021 | |
Convertible loan receivable | |
7. Loan receivable | 7. Loan receivable The loan receivable at 31 October 2021 in the amount of $239,834 acquired from NMG LB is due from an arm’s length party that is unsecured, non-interest bearing and due on demand. |
Loan receivable from NMG Ohio L
Loan receivable from NMG Ohio LLC | 3 Months Ended |
Oct. 31, 2021 | |
Loan receivable from NMG Ohio LLC | |
8. Loan receivable from NMG Ohio LLC | 8. Loan receivable from NMG Ohio LLC On 7 June 2018, the Company acquired a 30% interest in NMG Ohio, which had a cannabis dispensary and a provisional production license. On 31 January 2019, the Company entered into a definitive agreement (“Definitive Agreement”) to acquire 100% ownership of NMG Ohio, or the remaining 70% interest for total cash payments of $1,575,000 and issuance of 3,173,864 common shares of the Company. On 17 September 2021, the Company closed the acquisition of the remaining 70% interest in NMG Ohio. The transaction included the transfer of a dispensary license for the Clubhouse Dispensary in Elyria, Ohio to our wholly owned subsidiary, NMG OH 1, which became effective on 4 September 2020 (Note 11). The transaction also included the final award of a production license which has now been transferred to our wholly owned subsidiary, NMG OH P1. As a result of the closing of this acquisition, the Company now owns 100% of NMG Ohio. Three Months Ended 31 October 2021 Year Ended 31 July 2021 Loan receivable (payable) to NMG Ohio Opening balance $ 891,279 $ (466,495 ) Advances provided to NMG Ohio 64,598 1,120,015 Foreign exchange - 4,671 Transferred to NMG OH 1 and eliminated on consolidation - 233,088 Acquisition of NMG Ohio (Note 11) (955,877 ) - Loan receivable from NMG Ohio $ - $ 891,279 |
Investment in and advances to G
Investment in and advances to GLDH | 3 Months Ended |
Oct. 31, 2021 | |
Investment in and advances to GLDH | |
9. Investment in and advances to GLDH | 9. Investment in and advances to GLDH On 3 July 2019, the Company entered into the following agreements with GLDH and other third parties to acquire two dispensaries located in Long Beach and San Diego: 1. a definitive asset purchase agreement (the “Purchase Agreement”) between the Company’s wholly owned subsidiary, NMG LB, GLDH and Airport Collective, Inc. to acquire 100% ownership interest in GLDH’s Long Beach, California dispensary (Note 11). The Purchase Agreement was executed under the following terms: The purchase price is USD$6,700,000 (the “Purchase Price”). The consideration under the Purchase Agreement includes the following on closing: i. The USD$5,200,000 Note and accrued interest; and ii. USD$1,500,000 to be paid in common shares of the Company at a price of CAD$0.7439 per common share to a maximum of 2,681,006 common shares (the “Share Payment”) (issued and held in escrow) (Note 16) upon NMG LB receiving the transfer of all licenses, permits and BCC authorizations for NMG LB to conduct medical and adult-use commercial cannabis retail operations. The Share Payment is subject to reduction equal to the net liability of GLDH and Airport Collective. The Share Payment reduction is pending and, as a result, the related shares have not been released from escrow. 2. a settlement agreement (“NMG SD Settlement Agreement”) between the Company and its subsidiaries, and GLDH and its subsidiaries, to acquire a 60% ownership interest in GLDH’s San Diego, California dispensary. The NMG SD Settlement Agreement’s consideration includes the following on closing: i. USD$500,000 to be paid in common shares (624,380 common shares issued) (Note 16) to SGSD at a share price equal to the maximum allowable discount pursuant to Canadian Securities Exchange policies, upon execution of the settlement agreement; ii. USD$750,000 to be paid in common shares (issued) (Note 16) to Barakett at a price of CAD$0.7439 per 4common share to a maximum of 1,340,502 Common Shares (the “DB Share Payment”) upon NMG SD receiving all licenses, permits and authorizations for NMG SD to conduct medical commercial cannabis retail operations; and iii. USD$750,000 to be paid in common shares (issued) (Note 16) to Barakett at a price of CAD$0.7439 per common share to a maximum of 1,340,502 common shares (the “DB Additional Shares Payment”) upon NMG SD receiving all licenses, permits and authorizations for NMG SD to conduct adult-use commercial cannabis retail operations. 3. a lease assignment (the “Lease Assignment Agreement”) on the San Diego operation between the Company’s 60%-owned subsidiary, NMG SD, Green Road, LLC, Show Grow San Diego, LLC (“SGSD”), and SJJR LLC. The Lease Assignment Agreement was executed under the following terms: The Company is required to issue cash and share payments to the landlord as follows: i. USD$700,000, payable in common shares (1,031,725 common shares issued) (Note 16) at a share price equal to the maximum allowable discount pursuant to Canadian Securities Exchange policies, upon execution of the assignment agreement; ii. USD$783,765, payable in cash (paid), within 5 business days following execution of the assignment agreement (paid); and In April 2020, the Company fulfilled all obligations under the NMG SD Settlement Agreement and the Lease Assignment Agreement and completed the acquisition of a 60% owned dispensary located in San Diego (the “SD Transaction”). The SD Transaction was accounted for as an asset acquisition. The Company acquired the rights to an existing lease that was zoned for use as a cannabis dispensary. The Company owns the dispensary through a 60% owned subsidiary, NMG SD. The Company consolidated 100% of the assets, liabilities and the operations of NMG SD with 40% disclosed as a non-controlling interest. Additionally: 1. The Company is to provide a loan to GLDH in the amount of USD$200,000 at an interest rate of 12% per annum, accrued and compounded quarterly and due within 3 years (provided); 2. The Company is to enter into a consulting agreement with Barakett through NMG LB to provide certain consulting and advisory services to NMG LB, agreeing to pay Barakett a total of USD$200,000 ($50,000 paid in fiscal 2019 and additional $150,000 paid during the year ended 31 July 2020); 3. The Company will forgive approximately USD$800,000 for prior operating loans advanced by the Company to GLDH; and; 4. The Company licenses certain intellectual property from Green Light District Management, LLC and GLDH (collectively referred to as “Licensor”). The Licensor grants the Company a perpetual license to utilize its operational intellectual property consisting of customer data, sales data, customer outreach strategies standard operating procedures, and other proprietary operational intellectual property. Licensor grants the Company a license for 2 years to utilize intellectual property such as trademarks and branding (the “Branding IP”). As consideration for the licenses, the Company has agreed to utilize the Branding IP until 19 June 2021 at the Company’s premises and at the San Diego retail locations for a period of 2 years from operations commencing at that location. Additionally, the Company agreed to pay the Licensor 3% of gross receipts from sales at the Long Beach dispensary. The Company’s total investment in GLDH was as follows: Note receivable $ 5,200,000 Share issuances 4,092,175 Share payment reduction (793,416 ) Interest income accrued on the Note 1,821,476 Advances for working capital 2,813,515 Lease Assignment Agreement payment 1,533,765 Amount transferred to Property and Equipment (1,431,585 ) Amount transferred to Brand and Licenses (3,585,483 ) Expensed during the year (690,741 ) Foreign exchange (46,973 ) 8,912,733 Impairment loss (534,165 ) Acquisition of ShowGrow Long Beach dispensary (Note 11) $ (8,378,568 ) |
Property and Equipment
Property and Equipment | 3 Months Ended |
Oct. 31, 2021 | |
Property and Equipment | |
10. Property and Equipment | 10. Property and Equipment Office Equipment Cultivation Equipment Production Equipment Kitchen Equipment Vehicles Vault Equipment Leasehold Improvements Total Cost: Balance, 31 July 2021 $ 401,571 $ 466,110 $ 570,702 $ 51,108 $ 38,717 $ 10,335 $ 5,055,799 $ 6,594,342 Additions 22,739 - - - - - 880,406 903,145 Balance, 31 October 2021 424,310 466,110 570,702 51,108 38,717 10,335 5,936,205 7,497,487 Accumulated Depreciation: Balance, 31 July 2021 49,765 250,544 210,166 21,722 24,328 1,790 1,142,237 1,700,552 Depreciation 14,729 17,218 19,253 1,840 1,394 1,244 146,716 202,394 Balance, 31 October 2021 64,494 267,762 229,419 23,562 25,722 3,034 1,288,952 1,902,946 Net Book Value: At 31 July 2021 351,806 215,566 360,536 29,386 14,389 8,545 3,913,562 4,893,790 At 31 October 2021 $ 359,816 $ 198,348 $ 341,283 $ 27,546 $ 12,995 $ 7,301 $ 4,647,252 $ 5,594,541 For the three months ended 31 October 2021, a total depreciation of $27,826 (2020 - $19,828) was included in General and Administrative Expenses and a total depreciation of $174,568 (2020 - $105,899) was included in Cost of Sales. |
Business Acquisitions
Business Acquisitions | 3 Months Ended |
Oct. 31, 2021 | |
Business Acquisitions | |
11. Business Acquisition | 11. Business Acquisitions The Clubhouse dispensary On 4 September 2020, NMG OH 1 received all approvals and final license and name transfer from the Ohio Department of Pharmacy for Clubhouse dispensary located in Elyria, Ohio. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The acquisition of The Clubhouse dispensary allows the Company to expand into the State of Ohio. This acquisition was the first part of the acquisition of the remaining 70% interest in NMG Ohio. The remaining production licenses were transferred to NMG OH P1 in the asset acquisition (Note 8) resulting in the completion of the acquisition of NMG Ohio. The following table summarizes the fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of NMG OH 1 made by the Company: Purchase consideration $ 3,814,788 Assets acquired: Cash 257,462 Amounts receivable 510,367 Prepaid expenses 4,965 Inventory 178,898 Property and equipment 763,951 Licenses and customer relationships 2,710,000 Liabilities assumed: Trade payable and accrued liabilities (443,589 ) Net assets acquired 3,982,054 Bargain purchase (167,266 ) TOTAL $ 3,814,788 ShowGrow Long Beach dispensary The acquisition of ShowGrow Long Beach dispensary allows the Company to enter the California market. On 28 August 2020, NMG LB received all approvals and final license transfer for the ShowGrow Long Beach dispensary. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. The following table summarizes the fair value of the assets acquired and the liabilities assumed, which were recorded as of the acquisition date, as well as the aggregate consideration for the acquisition of NMG LB made by the Company: Purchase consideration $ 8,378,568 Assets acquired: Cash 65,340 Prepaid expenses 15,264 Inventory 177,930 Property and equipment 5,402 Loan receivable (Note 7) 239,834 Liabilities assumed: Trade payable and accrued liabilities (732,262 ) Income taxes payable (423,931 ) Loans payable (Note 14) (12,190 ) Net liabilities acquired (664,613 ) Brand and licenses 6,510,000 Goodwill 2,533,181 TOTAL $ 8,378,568 Pro Forma The following table summarizes the results of operations of both The Clubhouse Dispensary and NMG LB since the acquisition dates included in the Company’s consolidated results of operations for three months ended 31 October 2021: The Clubhouse Dispensary NMG LB Revenue $ 2,075,285 $ 1,646,847 Net income $ 518,924 $ 67,719 The following table summarizes our consolidated results of operations for the three months ended 31 October 2020 as though the acquisitions of The Clubhouse Dispensary and NMG LB had occurred on 1 August 2020. Three months ended 31 October 2020 As Reported Pro Forma (unaudited) Revenue $ 5,294,358 $ 6,388,537 Net income $ (778,367 ) $ (626,693 ) The unaudited pro forma information set forth above is for informational purposes only and include all adjustments necessary for the fair presentation, in all material respects, of the Company’s combined operations including The Clubhouse Dispensary and NMG LB as if the business combinations occurred on 1 August 2020. No adjustments have been made to reflect potential cost savings that may occur subsequent to completion of the transactions. The unaudited pro forma financial information is not intended to reflect the results of operations of the Company which would have actually resulted had the proposed transaction been effected on the date indicated above. Further, the unaudited pro forma financial information is not necessarily indicative of the results of operations that may be obtained in the future. The actual pro forma adjustments will depend on a number of factors, and could result in a change to the unaudited pro forma financial information. |
Intangible Assets Net
Intangible Assets Net | 3 Months Ended |
Oct. 31, 2021 | |
Intangible Assets Net | |
12. Intangible Assets, Net | 12. Intangible Assets, Net Gross Weighted As of 31 October 2021 carrying amount average life (years) Accumulated amortization Net carrying amount Amortizable intangible assets: Brand $ 247,000 - $ - $ 247,000 Licenses 20,718,508 10.0 (1,481,895 ) 19,236,613 Customer relationships 90,000 5.0 (20,800 ) 69,200 Total intangible assets $ 21,055,508 $ (1,502,695 ) $ 19,552,813 Gross Weighted As of 31 July 2021 carrying amount average life (years) Accumulated amortization Net carrying amount Amortizable intangible assets: Brand $ 247,000 - $ - $ 247,000 Licenses 20,718,508 10.0 (1,184,175 ) 19,534,333 Customer relationships 90,000 5.0 (16,265 ) 73,735 Total intangible assets $ 21,055,508 $ (1,200,440 ) $ 19,855,068 Amortization expense for intangible assets was $302,255 and $225,508 for the three months ended 31 October 2021 and 2020, respectively. Included in the licenses is $7,925,000 of indefinite lived assets. The expected amortization of the intangible assets, as of 31 October 2021, for each of the next five years and thereafter is as follows: 2022 (remaining) $ 896,908 2023 1,199,162 2024 1,202,448 2025 1,199,162 2026 1,272,897 Thereafter 5,610,237 $ 11,380,814 |
Related Party Balances and Tran
Related Party Balances and Transactions | 3 Months Ended |
Oct. 31, 2021 | |
Related Party Balances and Transactions | |
13. Related Party Balances and Transactions | 13. Related Party Balances and Transactions In addition to those disclosed elsewhere in these consolidated financial statements, related party transactions paid/accrued for the three months ended 31 October 2021 and 2020 are as follows: For the three months ended 31 October 2021 For the three months ended 31 October 2020 A company controlled by the President, Chief Executive Officer and a director Management fees $ 119,596 $ 37,525 A company controlled by the Chief Financial Officer and a director Management fees 30,602 22,686 A company controlled by a former director and former President of NMG Management fees - 55,000 A company controlled by the Corporate Secretary Management fees 18,181 17,015 $ 168,379 $ 132,226 Amounts owing to related parties at 31 October 2021 and 31 July 2021 are as follows: a) As of 31 October 2021, the Company owed $32,039 (31 July 2021 - $26,841) to the Chief Executive Officer of the Company and a company controlled by him. b) As of 31 October 2021, the Company owed $10,000 (31 July 2021 - $18,914) to the Chief Financial Officer of the Company and a company controlled by him. c) As of 31 October 2021, the Company owed $12,127 (31 July 2021 - $6,319) to the Corporate Secretary of the Company and a company controlled by him. The above amounts owing to related parties are unsecured, non-interest bearing and are due on demand. |
Loan Payable
Loan Payable | 3 Months Ended |
Oct. 31, 2021 | |
Loan Payable | |
14. Loan Payable | 14. Loans Payable The loan payable at 31 October 2021 in the amount of $15,050 assumed from NMG LB is unsecured, non-interest bearing and has no set terms of repayment. On 19 July 2021, the Company entered into and closed a loan agreement (the “Loan Agreement”) with FG Agency Lending LLC (the “Agent”) and Bomind Holdings LLC (the “Lender”). Upon entering into the Loan Agreement, the Lender provided the initial term loan (the “Initial Term Loan”) in the face amount of $6,666,667 of which $6,000,000 was advanced to the Company with the 10% representing an origination discount as consideration for the use or forbearance of money. The Company may draw upon the remaining face amount of $4,444,444 (the “Delayed Draw Term Loan”) upon providing a 30-day request to the Agent by 1 June 2022, whereby $4,000,000 will be advanced to the Company after applying the 10% origination discount. The Initial Term Loan and the Delayed Draw Term Loan mature on 19 July 2025 and bear interest at a rate of 13% per annum payable on the first day of each month hereafter. Pursuant to the Loan Agreement, the Company issued an aggregate of 8,000,000 common stock purchase warrants (each, a “Warrant”) to the Agent of which (i) 4,800,000 Warrants will entitle the holder to acquire shares of common stock (each, a “Warrant Share”) at an exercise price of $0.40 per Warrant Share until July 19, 2025, and (ii) 3,200,000 Warrants will be held in escrow by us and released to the Agent at the time the Company draws on the Delayed Draw Term Loan, or cancelled if we do not draw on the Delayed Draw Term Loan, which will entitle the holder to acquire a Warrant Share at an exercise price of $0.45 per Warrant Share until July 19, 2025. The 4,800,000 Warrants were valued at $1,037,146 using the Black Scholes Option Pricing Model using the following assumptions: Expected life of the options 4.00 years Expected volatility 139 % Expected dividend yield 0 % Risk-free interest rate 0.55 % The Company also paid an agent fee, legal fees and other fees in the amount of $175,758. The Initial Term Loan is secured by certain of the Company’s assets, equity interest in subsidiaries and various agreements, under the Security Agreement, the Pledge Agreement and the Omnibus Collateral Assignment. |
Operating Leases
Operating Leases | 3 Months Ended |
Oct. 31, 2021 | |
Operating Leases | |
15. Operating Leases | 15. Operating Leases a) On 10 November 2017, NMG entered into a revised five-year lease agreement for the property located at 3375 Pepper Lane, Las Vegas, NV, containing approximately 18,000 square feet. The Company has four options to extend the lease and each option is for five years. The monthly rent was $12,500 plus common area expenses, which now increased to $13,395 plus common area expenses. The guaranteed minimum monthly rent is subject to a 2% increase on each anniversary date of the lease. b) On 9 April 2019, NMG entered into a three-year lease agreement for the property located at 6420 Sunset Corporate Drive, Las Vegas, NV, containing approximately 7,700 square feet. The Company has one option to extend the lease for an additional three-year term and an option to purchase the property at any point during the initial term. The monthly rent is $6,026 plus $1,129 in common area expenses, totaling $7,156 every month. The monthly rent now increased to $6,478. c) On 24 April 2020, the Company assumed a five-year lease dated 1 December 2018, as amended on 13 June 2019, for the property located at 7625 Carroll Road, San Diego, CA. The Company has three options to extend the lease and each option is for five years. The monthly rent is $15,450 per month increasing by 3% every year until 1 December 2022. The rent is now $16,390. The lease contains a sale bonus provision of $1,000,000 or 10% of the purchase price of the entire business, whichever is greater, in the event of sale or assignment of the lease. d) On August 2, 2018, NMG Ohio, LLC entered into a three-year lease agreement for the property located at 709 Sugar Lane, Elyria, Ohio 44035, containing approximately 4,100 square feet. The Company has three options to extend the lease and each option is for three years. The rent is $4,000 per month increasing by5% starting on 1 July 2021 and 1 July 2024. e) On 28 August 2020, the Company assumed a five-year lease dated 10 January 2017, as amended on 7 September 2018, for the property located at 3411 E. Anaheim St., Long Beach, California. The Company has one option to extend the lease for five years. The rent is $7,317 per month increasing by 3% every year until 10 January 2022. f) On 14 September 2021, the Company assumed a three-year lease dated 1 October 2019 for the property located at 719 Sugar Lane, Elyria, Ohio (Note 8). The Company has three options to extend the lease and each option is for three years. The rent is $4,000 per month. g) On 23 April 2021, the Company’s subsidiary NMG MI 1 entered into a five-year lease for the property located at 885 E. Apple Ave., Muskegon, Michigan. The Company has three options to extend the lease and each option is for five years. The rent is $5,000 per month increasing by 2% every year. The lease is contingent upon NMG MI 1 receiving one or more commercial marihuana municipal licenses from the City of Muskegon. The license(s) would allow NMG MI 1 to operate a dispensary for the distribution of adult-use and/or medical marihuana and all activities permissible under the Michigan and Muskegon Marihuana Laws. The Company took possession of the property effective 1 October 2021. Upon NMG MI 1 receiving one or more licenses, NMG MI 1 agrees to cause the Company to issue common shares having a value of up to $150,000 to Kendal, with portions of the common shares to be issued upon the achievement of certain milestones as follows: i. 25% of the common shares to be issued within 30 days following NMG MI 1’s receipt of a local commercial medical marihuana retail license from the city of Muskegon, MI and a state commercial medical marihuana retail license from the state of Michigan; ii. 25% of the common shares to be issued within 30 days following NMG MI 1 passing final inspections at the Leased premises regarding the commercial medical marihuana retail license and receiving its local operating permit allowing NMG MI 1 to begin medical marihuana operations at the premises; iii. 25% of the common shares to be issued within 30 days following NMG MI 1’s receipt of a local commercial adult-use marihuana retail license from the city of Muskegon, MI and a state commercial adult-use marihuana retail license from the state of Michigan; iv. 25% of the common shares to be issued within 30 days following NMG MI 1 passing final inspections at the Leased premises regarding the commercial adult-use marihuana retail license and receiving its local operating permit allowing NMG MI 1 to begin adult-use marihuana operations at the premises; During the three months ended 31 October 2021, the Company accrued $75,000 for milestones (i) and (iii) above. On 21 September 2021, the Company issued the necessary common shares to settle this liability. The Company expects milestones (ii) and (iv) to be met in the next quarter. h) The Company also has other lease agreements in Manistee, Michigan (Note 19). The Company has not yet taken possession of the premises. During the three months ended 31 October 2021, the Company recorded a total lease expense of $162,801 related to the accretion of lease liabilities and the depreciation of right-of-use assets of which $126,339 was included in General and Administrative Expenses and $36,462 was included in Cost of Sales. Supplemental cash flow information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 152,340 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 717,727 Weighted-average remaining lease term – operating leases 6.47 years Weighted-average discount rate – operating leases 12 % The discount rate of 12% was determined by the Company as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Maturities of lease liabilities were as follows: Year Ending 31 July Operating Leases 2022 (remaining) $ 589,079 2023 704,273 2024 715,262 2025 725,942 2026 and thereafter 1,877,632 Total lease payments $ 4,619,688 Less imputed interest (1,430,625 ) Total $ 3,189,063 Less current portion (407,446 ) Long term portion 2,781,617 For operating lease commitments that have not yet commenced, see Note 19, Commitments. |
Capital Stock
Capital Stock | 3 Months Ended |
Oct. 31, 2021 | |
Capital Stock | |
16. Capital Stock | 16. Capital Stock The Company’s authorized share capital comprises 900,000,000 Common Shares, with a $0.0001 par value per share. On 21 October 2020, the Company issued 793,466 common shares valued at $297,042 in relation to acquiring the remaining 70% interest in NMG Ohio. On 21 September 2021, the Company issued 238,929 common shares to one entity based on the terms and conditions of the certain lease agreement for the Muskegon, Michigan premises and issued an aggregate of 1,304,601 common shares to another entity based on the terms and conditions of the two lease agreements for the Manistee, Michigan premises (Notes 18 and 19). Pursuant to the Purchase Agreement (Note 9), the Company issued 2,681,006 common shares in escrow. The share consideration remains subject to reduction with reference to the liabilities of the business that will be outstanding on the closing date, which is expected to occur in the near future (Notes 11 and 19). Stock options The Company previously approved an incentive stock option plan, pursuant to which the Company may grant stock options up to an aggregate of 10% of the issued and outstanding common shares in the capital of the Company from time to time. The Company recorded total stock-based compensation expense of $145,175 and $287,631 for the three months ended 31 October 2021 and 2020, respectively, in connection with the issuance of options to purchase common stock. Stock-based compensation expense is included in general and administrative expenses on the accompanying statements of operations. Number of options Weighted average exercise price Weighted average contractual term remaining (in years) Aggregate intrinsic value Outstanding at 31 July 2021 and 31 October 2021 9,855,000 CAD$0.70 2.51 CAD$ 3,750 Vested and fully exercisable at 31 October 2021 8,336,250 CAD$0.67 2.25 CAD$ 19,438 Share Purchase Warrants As of 31 October 2021 and 31 July 2021, the following warrants are outstanding: Number of warrants outstanding and exercisable Exercise price Expiry dates 11,780,134 CAD$1.50 17 May 2023 635,150 CAD$1.25 16 May 2023 4,800,000 USD$0.40 19 July 2025 17,215,284 (1) CAD$1.21 (1) This figure does not include 3,200,000 warrants issued to the Agent pursuant to the Loan Agreement, which warrants are held in escrow by us and are to be released to the Agent if we draw on the Delayed Draw Term Loan by 1 June 2022, or cancelled if we do not draw on the Delayed Draw Term Loan. Each warrant, if released to the Agent, will entitle the holder to acquire one share of common stock at an exercise price of US$0.45 per share until July 19, 2025 |
Segmented Information and Major
Segmented Information and Major Customers | 3 Months Ended |
Oct. 31, 2021 | |
Segmented Information and Major Customers | |
17. Segmented Information and Major Customers | 17. Segmented Information and Major Customers In its operation of the business, management, including our chief operating decision marker, who is also our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis not consistent with GAAP. During the periods presented, the Company reported its financial performance based on the following segments: · Wholesale; · Retail; and · All others Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain costs incurred by one segment may benefit other segments. In addition, certain costs incurred at a corporate level are not allocated to our segments. Segment revenue and operating income were as follows during the three months ended 31 October 2021: 31 October 2021 Revenue Wholesale $ 1,755,799 Retail 5,815,017 All others - Total $ 7,570,816 Operating income (loss) Wholesale $ 803,782 Retail 866,230 All others (2,347,266 ) Total $ (677,254 ) During the three months ended 31 October 2021, the Company had no major customer over 10% of its revenues. |
Supplemental Disclosures with R
Supplemental Disclosures with Respect to Cash Flows | 3 Months Ended |
Oct. 31, 2021 | |
Supplemental Disclosures with Respect to Cash Flows | |
18. Supplemental Disclosures with Respect to Cash Flows | 18. Supplemental Disclosures with Respect to Cash Flows Three Months Ended 31 October 2021 2020 Cash paid during the period for interest $ 219,074 $ - Cash paid during the period for income taxes $ 1,896 $ - Pursuant to certain licensing milestones being achieved under a lease agreement for a premises in Muskegon, Michigan and certain licensing and operational milestones being achieved under two lease agreements for a premises in Manistee, Michigan, on 21 September 2021, the Company issued 238,929 shares of common stock to one entity based on the terms and conditions of the certain lease agreement for the Muskegon, Michigan premises and issued an aggregate of 1,304,60 shares of common stock to another entity based on the terms and conditions of the two lease agreements for the Manistee, Michigan premises (Notes 16 and 19). On the assumption of an additional lease in Elyria, Ohio and Muskegon, Michigan, the Company recognized right-of-use assets (Note 15), and a corresponding increase in lease liabilities, in the amount of $717,727 which represented the present value of future lease payments using a discount rate of 12% per annum. |
Commitments
Commitments | 3 Months Ended |
Oct. 31, 2021 | |
Commitments | |
19. Commitments | 19. Commitments In connection with the strategic investment agreement with Australis dated 30 October 2018 (the “Investment Agreement”) (Note 20), the Company agreed to pay a monthly service fee of $10,000 to Australis. In connection with the Company’s investment in GLDH and the promissory note provided by Australis, the Company agreed to increase the monthly services fee to Australis to $16,500 per month for 5 years unless ownership held by Australis drops below 10% in which the fee will cease. Following the repayment of the promissory note, the monthly service fee to Australis was reduced to $12,000 commencing June 2019. In September 2021, Australis sold 9,900,000 of our restricted common shares in a private transaction which resulted in Australis’ beneficial ownership dropping below 10% of our outstanding common shares. As a result of Australis’ beneficial ownership falling below 10%, the Investment Agreement was terminated and monthly commercial advisory and consulting fees paid from the Company to Australis were terminated along with Australis’ entitlement to nominate a director to the board of directors of our Company. On 10 February 2020, the Company’s subsidiary NMG MI C1 executed a lease agreement with 254 River Street LLC (“River Street”) to lease commercial space located at 254 River Street, Manistee, MI, 49660. The term of the lease is for a period of 60 months and the lease includes rent abatement and reduced rent periods during construction and start up. Final rent is approximately US$22,500 per month and is contingent upon NMG MI C1 receiving one or more commercial marihuana municipal licenses from the City of Manistee. The license(s) would allow NMG MI C1 to operate a cultivation facility for adult use and/or medical marihuana and all activities permissible under the Michigan and Manistee Marihuana Laws. On 10 February 2020, the Company’s subsidiary NMG MI P1 executed a lease agreement with 254 River Street LLC (“River Street”) to lease commercial space located at 254 River Street, Manistee, MI, 49660. The term of the lease is for a period of 60 months and the lease includes rent abatement and reduced rent periods during construction and start up. Final rent is approximately US$7,500 per month and is contingent upon NMG MI P1 receiving one or more commercial marihuana municipal licenses from the City of Manistee. The license(s) would allow NMG MI P1 to operate a production facility for adult-use and/or medical marihuana and all activities permissible under the Michigan and Manistee Marihuana Laws. Leases for 254 River St., Manistee, Michigan 49660 and 885 E. Apple Ave., Muskegon, Michigan 49442 were subject to the Company subsidiaries receiving approval by the State of Michigan and could be cancelled by the Company if licences were not awarded. The licenses for NMG MI P1 and NMG MI C1 were issued on 19 July 2021 and license for NMG MI 1 was issued on 3 August 2021. Upon NMG MI C1 receiving one or more Licenses, NMG MI C1 agrees to cause the Company to issue common shares having a value of up to $600,000 to River Street, with portions of the Common Shares to be issued upon the achievement of certain milestones as follows: i. US$200,000 of common shares to be issued within 30 days of NMG MI C1 receiving local and state commercial marihuana cultivation licenses; ii. US$200,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to cultivation and receiving local operating permit to begin commercial marihuana cultivation operations at the premises; iii. US$100,000 of common shares to be issued within 30 days of NMG MI C1 receiving local and state commercial marihuana retail licenses; and iv. US$100,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to retail operations and receiving local operating permit to begin commercial marihuana retail operations at the premises. At 31 July 2021, the Company accrued $200,000 for milestone (i) above. On 21 September 2021, the Company issued the necessary common shares to settle this liability (Note 16). Upon NMG MI P1 receiving one or more Licenses, NMG MI P1 agrees to cause the Company to issue common shares having a value of up to $400,000 to River Street, with portions of the Common Shares to be issued upon the achievement of certain milestones as follows i. US$200,000 of common shares to be issued within 30 days of NMG MI P1 receiving local and state commercial marihuana processing licenses; and ii. US$200,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to processing and receiving local operating permit to begin commercial marihuana processing operations at the premises. At 31 July 2021, the Company accrued $200,000 for milestone (i) above. On 21 September 2021, the Company issued the necessary common shares to settle this liability (Note 16). At 31 October 2021 and 31 July 2021, a total deposit of $470,546 was accrued related to the Company’s leases for the River Street. The value of the common shares will be calculated based on the lesser of: (1) the closing market price on the respective milestone achievement date and (2) a ten percent discount to the twenty-day volume weighted average price for the twenty days immediately prior to the respective milestone achievement date(s). Pursuant to the Purchase Agreement (Note 9), the Company issued 2,681,006 common shares in escrow. The share consideration remains subject to reduction with reference to the liabilities of the business that will be outstanding on the closing date, which is expected to occur in the near future. Any final settlement that is different than liabilities’ balances currently recorded will be allocated to other income or expense. |
Other Agreements
Other Agreements | 3 Months Ended |
Oct. 31, 2021 | |
20. Other Agreements | 20. Other Agreements On 6 August 2021, the Company entered into management agreements with each of NMG IL 1, LLC (“NMG IL 1”) and NMG IL 4, LLC (“NMG IL 4”) along with an option to indirectly acquire all of the membership interests in each of NMG IL 1 and NMG IL 4 pursuant to a convertible credit facility between our subsidiary, DEP and each of NMG IL 1 and NMG IL 4, and membership interest purchase agreements between DEP and the members of NMG IL 1 and NMG IL 4, subject to obtaining all required local and state regulatory authorization. Each of NMG IL 1 and NMG IL 4 have been identified in the Illinois Department of Financial and Professional Regulation (IDFPR) results of the Social Equity Justice Involved Lottery for 55 Conditional Adult-Use Cannabis Dispensary Licenses (Conditional Licenses) across the state. The certified results are from a lottery with a pool of applicants who scored 85 % or greater in their applications. NMG IL 1 and NMG IL 4 were drawn in BLS Region #5 (Chicago-Naperville-Elgin) where 36 conditional licenses are available. The applications are not tied to specified locations. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Oct. 31, 2021 | |
Subsequent Events | |
21. Subsequent Events | 21. Subsequent Events On November 12, 2021 the independent members of the Compensation Committee and Board of Directors of Body and Mind approved an Executive Bonus Program for FY2022 for the CEO, COO and CFO. The Board of Directors approved an incentive-based cash bonus program for CEO’s consulting company and for the COO of up to a maximum of $200,000 per CEO or COO based on the consolidated revenue performance of the Company for each quarter of the fiscal year ended July 31, 2022 compared to the prior quarter. Each of the CEO and COO could earn (i) $5,000 in cash for each 1% revenue growth over the prior quarter, and/or (ii) $10,000 in cash for each 1% Adjusted EBITDA growth over the prior quarter, all subject to a $50,000 maximum amount per executive that could be earned for each quarter of the fiscal year ended July 31, 2022. In addition, the Compensation Committee and the Board of Directors approved that they will consider a further discretionary cash bonus to the CEO’s consulting company and the COO at the fiscal year ended July 31, 2022, based on performance metrics of the Company over the course of the fiscal year ended July 31, 2022. Furthermore, on November 12, 2021, the independent members of Compensation Committee and the Board of Directors approved a cash bonus to be paid to the CFO’s consulting company up to a maximum of $40,000 based on the timing of the filing of Company’s periodic reports for the fiscal year ended July 31, 2022. The bonus consists of a quarterly bonus of $10,000 per quarter based on filing of the Company’s Form 10-Q’s and 10-K by the filing deadline, not including any extensions pursuant to Rule 12b-25 under the Exchange Act. On November 30, 2021, the independent members of Compensation Committee and Board of Directors of Body and Mind approved an Executive Bonus for FY2021 for the CEO, COO. The Compensation Committee and Board of Directors approved an aggregate of 448,000 stock options (the “Options”) in accordance with the Company’s stock option plan at an exercise price of CAD$0.44 per share for a term of five years expiring on November 30, 2026. The Options are subject to vesting provisions such that 25% of the Options vest six (6) months from the date of grant, 25% of the Options vest twelve (12) months from the date of grant, 25% of the Options vest eighteen (18) months from the date of grant and 25% of the Options vest twenty-four (24) months from the date of grant. In addition, on November 30, 2021, the Company and Focus Growth Agency Lending LLC amended the Loan Agreement to extend the deadline for the delayed draw request period from December 1, 2021 to June 1, 2022. The amendment provides the Company with flexibility to request funds later than the original draw date which will allow more efficient use of capital for development projects. Furthermore, on November 30, 2021, the Company signed a consulting agreement with Skanderbeg Capital Advisors Inc. to provide capital market advisory services, including introductions to prospective investors and merger and acquisition transactions and advising on capital structuring and other financial aspects of financings or strategic transactions. The Company agreed to pay the consultant a monthly fee of CAD$7,500 and issue to the consultant 200,000 stock options having an exercise price of CAD$0.44 per share for a period of three years expiring on November 3, 2024. On December 1, 2021, I Company announced the entering into of two definitive agreements with Canopy Monterey Bay, LLC (“Canopy”) and the membership interest owners (the “Sellers”) of Canopy to acquire an aggregate of 100% of Canopy, which owns a retail dispensary in the limited license jurisdiction of Seaside, California. The first purchase agreement (“PA #1”) between BaM’s subsidiary, DEP Nevada, Inc. (“DEP”), Canopy and all of the Sellers provides for the assignment of 80% of the membership interests of Canopy to DEP in exchange for a purchase price of US$4.8 million comprised of US$2.5 million in cash (the “Cash Purchase Price”) and a secured promissory note in the amount of $2.3 million bearing interest at a rate of 10% per annum compounded annually and having a maturity date of five years from the effective date of PA #1. Interest is payable for the first 6 months with the principal and accrued interest due at maturity. There are no prepayment penalties. The Cash Purchase Price is to be paid into escrow pursuant to an escrow agreement between the parties to PA #1 and Secured Trust Escrow, which Cash Purchase Price is to be released to the Sellers upon the receipt of city and state approval, or returned to DEP in the event of the denial of city and state approval and the agreement is terminated, in which case the 80% membership interests will be transferred back to the Sellers and the promissory note will be terminated. The second purchase agreement (“PA #2”) between DEP and the one continuing Seller provides for the assignment of the remaining 20% of the membership interests of Canopy to DEP following the receipt of the city and state approval under PA #1 in exchange for US$1 million to be paid in either shares of common stock of BaM (the “Consideration Shares”) or in cash at DEP’s sole option if such payment takes place within six (6) months following the execution of PA #1. If DEP elects to pay the purchase price in Consideration Shares, the amount of Consideration Shares shall be determined based on the 10 day volume weighted average price (“VWAP”) ending on November 30, 2021, which is US$0.3665 per share for a total of 2,728,156 shares. In the event that six (6) months following the execution of PA #1, the value of the Consideration Shares have decreased such that total value of the Consideration Shares is less than ninety percent (90%) of its value, DEP agrees to cause BaM to issue an additional One Hundred Thousand Dollars ($100,000) worth of shares of common stock of BaM (the “Additional Shares”) to be issued to the one continuing Seller based on the ten day VWAP calculated as of six (6) months following the closing of PA #1. PA #2 contains a working capital adjustment provision, which provides that if there is a working capital deficiency as of the closing date of PA #1, then the purchase price under PA #2 shall be reduced by the amount of the deficiency, and if there is a working capital surplus as of the closing date of PA #1, then the purchase price under PA #2 shall be increased by the amount of the surplus. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2021 | |
Recent Accounting Pronouncements | |
Basis of presentation | These condensed consolidated interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is 31 July. |
Amounts receivable | |
Revenue recognition | The Company recognizes revenue from product sales when our customers obtain control of our products. This determination is based on the customer specific terms of the arrangement for wholesale operations. Upon transfer of control, the Company has no further performance obligations. All retail sales are considered COD. Due to the nature of the Company’s revenue from contracts with customers, the Company does not have material contract assets or liabilities that fall under the scope of ASC 606. The Company’s revenues accounted for under ASC 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue streams. The sales prices are generally fixed and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. See Note 17 for revenue disaggregation table. |
Inventory | Inventory consists of raw material, work in progress (live plants and plants in the drying process), finished goods, and consumables. The Company values its raw material, finished goods and consumables at the lower of the actual costs or its current estimated market value less costs to sell. The Company values its work in progress at cost. The Company periodically reviews its inventory for obsolete and potentially impaired items. As of 31 October 2021 and 31 July 2021, the Company has no allowance for inventory obsolescence. |
Loans receivable | The Company carries its loans receivable at cost and are reviewed for indicators of impairment at least annually. |
Property and equipment | |
Intangible assets | Intangible assets acquired from third parties are measured initially at fair value and either classified as indefinite life or finite life depending on their characteristics. Intangible assets with indefinite lives are tested for impairment at least annually and intangible assets with finite lives are reviewed for indicators of impairment at least annually. The Company’s brands and licenses acquired from NMG have indefinite lives; therefore no amortization is recognized. The Company’s brands and licenses acquired by NMG SD have a finite life of 10 years, brands and licenses acquired by NMG LB and NMG OH 1 have a finite life of 10 years, customer relationships acquired by NMG OH 1 have a finite life of five years and are amortized over these estimated useful lives on a straight-line basis. |
Goodwill | Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired in our business combinations. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events or changes in circumstances that could trigger an impairment review include a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations. The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, additional impairment testing is not required. The Company tests for goodwill impairment annually during its fourth quarter on July 31. |
Income taxes | Deferred income taxes are reported for timing differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. |
Basic and diluted net loss per share | The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Potentially dilutive options of 9,855,000 and warrants of 17,215,284 existed at 31 October 2021 and have been excluded, as their effect is anti-dilutive. This figure does not include 3,200,000 warrants issued to the Agent pursuant to the Loan Agreement, which warrants are held in escrow by us and are to be released to the Agent if we draw on the Delayed Draw Term Loan by 1 June 2022, or cancelled if we do not draw on the Delayed Draw Term Loan. Each warrant, if released to the Agent, will entitle the holder to acquire one share of common stock at an exercise price of US$0.45 per share until 19 July 2025. |
Comprehensive loss | ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive income/loss and its components in the consolidated financial statements. As of 31 October 2021 and 31 July 2021, the Company reported foreign currency translation adjustments as other comprehensive income or loss and included a schedule of comprehensive income/loss in the consolidated financial statements. |
Foreign currency translation | The Company’s functional currency is the Canadian dollar and its reporting currency is in U.S. dollars. The Company’s subsidiaries have a functional currency in U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Exchange gains and losses on inter-company balances that form part of the net investment in foreign operations are included in other comprehensive income. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. The exchange rates used to translate Canadian dollar to U.S. dollar was 0.8085 for monetary assets and liabilities and 0.7959 as an average rate for transactions occurred during the period ended 31 October 2021. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of net loss. |
Stock based compensation | The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes Option Pricing Model. The fair value determined represents the cost for the award and is recognized over the required service period, generally defined as the vesting period. The Company’s accounting policy is to recognize forfeitures as they occur. |
Fair value measurements | |
Use of estimates and assumptions | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates. |
Lease accounting | The Company adopted ASC 842, leases effective 1 August 2019 using a modified retrospective approach. Under ASC 842, leases are separated into two classifications: operating leases and financial leases. Lease classification under ASC 842 is relatively similar to ASC 840. For a lease to be classified as a finance lease, it must meet one of the five finance lease criteria: (1) transference of title/ownership to the lessee, (2) purchase option, (3) lease term for major part of the remaining economic life of the asset, (4) present value represents substantially all of the fair value of the asset, and (5) asset specialization. Any lease that does not meet these criteria is classified as an operating lease. ASC 842 requires all leases to be recognized on the Company’s balance sheet. Specifically, for operating leases, the Company recognize a right-of-use asset and a corresponding lease liability upon lease commitment. |
Nature and Continuance of Ope_2
Nature and Continuance of Operations (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Nature and Continuance of Operations | |
Schedule of consolidation of entities and its ownership interest | Name Jurisdiction Ownership Date of acquisition or formation DEP Nevada Inc. (“DEP Nevada”) Nevada, USA 100 % 10 August 2017 Nevada Medical Group LLC (“NMG”) Nevada, USA 100 % 14 November 2017 NMG Long Beach LLC (“NMG LB”) California, USA 100 % 18 December 2018 NMG Cathedral City LLC California, USA 100 % 4 January 2019 NMG San Diego LLC (“NMG SD”) California, USA 60 % 30 January 2019 NMG Ohio LLC (“NMG Ohio”) Ohio, USA 100 % 27 April 2017 NMG OH 1, LLC (“NMG OH 1”) Ohio, USA 100 % 30 January 2020 NMG OH P1, LLC (“NMG OH P1”) Ohio, USA 100 % 29 January 2020 NMG MI 1, Inc. (“NMG MI 1”) Michigan, USA 100 % 24 June 2021 NMG MI C1 Inc. Michigan, USA 100 % 24 June 2021 NMG MI P1 Inc. Michigan, USA 100 % 24 June 2021 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Recent Accounting Pronouncements | |
Schedule of property and equipment estimated useful lives | Office equipment 7 years Cultivation equipment 7 years Production equipment 7 years Kitchen equipment 7 years Vehicles 7 years Vault equipment 7 years Leasehold improvements shorter of useful life or the term of the lease |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Financial Instruments | |
Schedule of financial assets at fair value | As of 31 October 2021 As of 31 July 2021 Financial assets at fair value Cash $ 7,433,086 $ 7,374,194 Convertible loan receivable 1,810,827 1,648,816 Total financial assets at fair value $ 9,243,913 $ 9,023,010 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Inventory | |
Schedule of inventory | 31 October 2021 31 July 2021 Work in progress $ 615,899 $ 503,215 Finished goods 1,843,717 1,547,493 Consumables 915,295 885,448 Total $ 3,374,911 $ 2,936,156 |
Loan receivable from NMG Ohio_2
Loan receivable from NMG Ohio LLC (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Loan receivable from NMG Ohio LLC (Tables) | |
Schedule of reconciliation and summarized financial information of Investment in NMG Ohio LLC | Three Months Ended 31 October 2021 Year Ended 31 July 2021 Loan receivable (payable) to NMG Ohio Opening balance $ 891,279 $ (466,495 ) Advances provided to NMG Ohio 64,598 1,120,015 Foreign exchange - 4,671 Transferred to NMG OH 1 and eliminated on consolidation - 233,088 Acquisition of NMG Ohio (Note 11) (955,877 ) - Loan receivable from NMG Ohio $ - $ 891,279 |
Investment in and advances to_2
Investment in and advances to GLDH (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Investment in and advances to GLDH (Tables) | |
Schedule of total investment in GLDH | Note receivable $ 5,200,000 Share issuances 4,092,175 Share payment reduction (793,416 ) Interest income accrued on the Note 1,821,476 Advances for working capital 2,813,515 Lease Assignment Agreement payment 1,533,765 Amount transferred to Property and Equipment (1,431,585 ) Amount transferred to Brand and Licenses (3,585,483 ) Expensed during the year (690,741 ) Foreign exchange (46,973 ) 8,912,733 Impairment loss (534,165 ) Acquisition of ShowGrow Long Beach dispensary (Note 11) $ (8,378,568 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Property and Equipment | |
Schedule of property and equipment | Office Equipment Cultivation Equipment Production Equipment Kitchen Equipment Vehicles Vault Equipment Leasehold Improvements Total Cost: Balance, 31 July 2021 $ 401,571 $ 466,110 $ 570,702 $ 51,108 $ 38,717 $ 10,335 $ 5,055,799 $ 6,594,342 Additions 22,739 - - - - - 880,406 903,145 Balance, 31 October 2021 424,310 466,110 570,702 51,108 38,717 10,335 5,936,205 7,497,487 Accumulated Depreciation: Balance, 31 July 2021 49,765 250,544 210,166 21,722 24,328 1,790 1,142,237 1,700,552 Depreciation 14,729 17,218 19,253 1,840 1,394 1,244 146,716 202,394 Balance, 31 October 2021 64,494 267,762 229,419 23,562 25,722 3,034 1,288,952 1,902,946 Net Book Value: At 31 July 2021 351,806 215,566 360,536 29,386 14,389 8,545 3,913,562 4,893,790 At 31 October 2021 $ 359,816 $ 198,348 $ 341,283 $ 27,546 $ 12,995 $ 7,301 $ 4,647,252 $ 5,594,541 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Schedule of Pro Forma | The Clubhouse Dispensary NMG LB Revenue $ 2,075,285 $ 1,646,847 Net income $ 518,924 $ 67,719 Three months ended 31 October 2020 As Reported Pro Forma (unaudited) Revenue $ 5,294,358 $ 6,388,537 Net income $ (778,367 ) $ (626,693 ) |
The Clubhouse dispensary. | |
Schedule of Purchase consideration | Purchase consideration $ 3,814,788 Assets acquired: Cash 257,462 Amounts receivable 510,367 Prepaid expenses 4,965 Inventory 178,898 Property and equipment 763,951 Licenses and customer relationships 2,710,000 Liabilities assumed: Trade payable and accrued liabilities (443,589 ) Net assets acquired 3,982,054 Bargain purchase (167,266 ) TOTAL $ 3,814,788 |
ShowGrow Long Beach dispensary | |
Schedule of Purchase consideration | Purchase consideration $ 8,378,568 Assets acquired: Cash 65,340 Prepaid expenses 15,264 Inventory 177,930 Property and equipment 5,402 Loan receivable (Note 7) 239,834 Liabilities assumed: Trade payable and accrued liabilities (732,262 ) Income taxes payable (423,931 ) Loans payable (Note 14) (12,190 ) Net liabilities acquired (664,613 ) Brand and licenses 6,510,000 Goodwill 2,533,181 TOTAL $ 8,378,568 |
Intangible Assets Net (Tables)
Intangible Assets Net (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Intangible Assets Net | |
Schedule of Intangible assets | Gross Weighted As of 31 October 2021 carrying amount average life (years) Accumulated amortization Net carrying amount Amortizable intangible assets: Brand $ 247,000 - $ - $ 247,000 Licenses 20,718,508 10.0 (1,481,895 ) 19,236,613 Customer relationships 90,000 5.0 (20,800 ) 69,200 Total intangible assets $ 21,055,508 $ (1,502,695 ) $ 19,552,813 Gross Weighted As of 31 July 2021 carrying amount average life (years) Accumulated amortization Net carrying amount Amortizable intangible assets: Brand $ 247,000 - $ - $ 247,000 Licenses 20,718,508 10.0 (1,184,175 ) 19,534,333 Customer relationships 90,000 5.0 (16,265 ) 73,735 Total intangible assets $ 21,055,508 $ (1,200,440 ) $ 19,855,068 |
Schedule of gross carrying amount of goodwill | |
Schedule of The expected amortization of the intangible assets | 2022 (remaining) $ 896,908 2023 1,199,162 2024 1,202,448 2025 1,199,162 2026 1,272,897 Thereafter 5,610,237 $ 11,380,814 |
Related Party Balances and Tr_2
Related Party Balances and Transactions (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Related Party Balances and Transactions | |
Schedule of related party transactions | For the three months ended 31 October 2021 For the three months ended 31 October 2020 A company controlled by the President, Chief Executive Officer and a director Management fees $ 119,596 $ 37,525 A company controlled by the Chief Financial Officer and a director Management fees 30,602 22,686 A company controlled by a former director and former President of NMG Management fees - 55,000 A company controlled by the Corporate Secretary Management fees 18,181 17,015 $ 168,379 $ 132,226 |
Loan Payable (Tables)
Loan Payable (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Loan Payable | |
Schedule of the Black Scholes Option | Expected life of the options 4.00 years Expected volatility 139 % Expected dividend yield 0 % Risk-free interest rate 0.55 % |
Operating leases (Tables)
Operating leases (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Operating Leases | |
Schedule of supplemental cash flow information related to leases | Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 152,340 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 717,727 Weighted-average remaining lease term – operating leases 6.47 years Weighted-average discount rate – operating leases 12 % |
Schedule of maturities of lease liabilities | Year Ending 31 July Operating Leases 2022 (remaining) $ 589,079 2023 704,273 2024 715,262 2025 725,942 2026 and thereafter 1,877,632 Total lease payments $ 4,619,688 Less imputed interest (1,430,625 ) Total $ 3,189,063 Less current portion (407,446 ) Long term portion 2,781,617 |
Capital Stock (Tables)
Capital Stock (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Capital Stock | |
Schedule of stock option activity | Number of options Weighted average exercise price Weighted average contractual term remaining (in years) Aggregate intrinsic value Outstanding at 31 July 2021 and 31 October 2021 9,855,000 CAD$0.70 2.51 CAD$ 3,750 Vested and fully exercisable at 31 October 2021 8,336,250 CAD$0.67 2.25 CAD$ 19,438 |
Schedule of number of warrants outstanding and exercisable | Number of warrants outstanding and exercisable Exercise price Expiry dates 11,780,134 CAD$1.50 17 May 2023 635,150 CAD$1.25 16 May 2023 4,800,000 USD$0.40 19 July 2025 17,215,284 (1) CAD$1.21 |
Segmented Information and Maj_2
Segmented Information and Major Customers (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Schedule of Segment revenue and operating income | 31 October 2021 Revenue Wholesale $ 1,755,799 Retail 5,815,017 All others - Total $ 7,570,816 Operating income (loss) Wholesale $ 803,782 Retail 866,230 All others (2,347,266 ) Total $ (677,254 ) |
Supplemental Disclosures with_2
Supplemental Disclosures with Respect to Cash Flows (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Supplemental Disclosures with Respect to Cash Flows | |
Schedule of supplemental disclosures with respect to cash flows | Three Months Ended 31 October 2021 2020 Cash paid during the period for interest $ 219,074 $ - Cash paid during the period for income taxes $ 1,896 $ - |
Nature and Continuance of Ope_3
Nature and Continuance of Operations (Details) | 3 Months Ended |
Oct. 31, 2021 | |
DEP Nevada Inc | |
Date of acquisition or formation | 10 August 2017 |
Ownership | 100.00% |
Jurisdiction | Nevada, USA |
NMG MI 1, Inc | |
Ownership | 100.00% |
Jurisdiction | Michigan, USA |
Nevada Medical Group LLC | |
Date of acquisition or formation | 14 November 2017 |
Ownership | 100.00% |
Jurisdiction | Nevada, USA |
NMG MI C1 Inc. | |
Date of acquisition or formation | 24 June 2021 |
Ownership | 100.00% |
Jurisdiction | Michigan, USA |
NMG Long Beach LLC | |
Date of acquisition or formation | 18 December 2018 |
Ownership | 100.00% |
Jurisdiction | California, USA |
NMG Cathedral City LLC | |
Date of acquisition or formation | 4 January 2019 |
Ownership | 100.00% |
Jurisdiction | California, USA |
NMG MI P1 Inc. | |
Date of acquisition or formation | 24 June 2021 |
Ownership | 100.00% |
Jurisdiction | Michigan, USA |
Nmg San Diego LLC | |
Date of acquisition or formation | 30 January 2019 |
Ownership | 60.00% |
Jurisdiction | California, USA |
NMG OH 1, LLC | |
Date of acquisition or formation | 30 January 2020 |
Ownership | 100.00% |
Jurisdiction | Ohio, USA |
NMG Ohio LLC | |
Date of acquisition or formation | 27 April 2017 |
Ownership | 30.00% |
Jurisdiction | Ohio, USA |
Nature and Continuance of Ope_4
Nature and Continuance of Operations (Details Narrative) | 3 Months Ended | |
Oct. 31, 2021 | May 31, 2004 | |
State of incorporation | Delaware | |
Represents information related to Vocalscape, Inc. | ||
Ownership | 100.00% |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 3 Months Ended |
Oct. 31, 2021 | |
Office Equipment [Member] | |
Estimated useful lives | 7 years |
Cultivation equipment [Member] | |
Estimated useful lives | 7 years |
Production Equipment [Member] | |
Estimated useful lives | 7 years |
Kitchen equipment [Member] | |
Estimated useful lives | 7 years |
Vehicles [Member] | |
Estimated useful lives | 7 years |
Vault equipment [Member] | |
Estimated useful lives | 7 years |
Leasehold Improvements [Member] | |
Estimated Useful Life | shorter of useful life or the term of the lease |
Significant Accounting Polici_5
Significant Accounting Policies (Details Narrative) | 3 Months Ended |
Oct. 31, 2021shares | |
Dilutive options and warrants existed | 17,215,284 |
Brands and licenses acquired by NMG SD | |
Dilutive options and warrants existed | 3,200,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
Brands and licenses acquired by NMG LB and NMG OH 1 | |
Dilutive options and warrants existed | 9,855,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) | Oct. 31, 2021 | Jul. 31, 2021 | Jul. 31, 2020 |
Financial Instruments | |||
Cash | $ 7,433,086 | $ 7,374,194 | |
Convertible loan receivable | 1,810,827 | $ 1,648,816 | 1,648,816 |
Total financial assets at fair value | $ 9,243,913 | $ 9,023,010 |
Financial Instruments (Details
Financial Instruments (Details Narrative) - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Financial Instruments | ||
Net cash flows from operations | $ 256,511 | $ (167,435) |
Working capital deficit | $ 8,362,746 |
Inventory (Details)
Inventory (Details) - USD ($) | Oct. 31, 2021 | Jul. 31, 2020 |
Inventory | ||
Work in progress | $ 615,899 | $ 503,215 |
Finished goods | 1,843,717 | 1,547,493 |
Consumables | 915,295 | 885,448 |
Total | $ 3,374,911 | $ 2,936,156 |
Convertible loan receivable (De
Convertible loan receivable (Details Narrative) - USD ($) | 3 Months Ended | |||
Oct. 31, 2021 | Oct. 30, 2020 | Jul. 31, 2021 | Jul. 31, 2020 | |
Loan receivable | $ 1,810,827 | $ 1,648,816 | $ 1,648,816 | |
Accrued interest income | 18,000 | $ 18,000 | ||
Interests receivable | $ 168,000 | $ 150,000 | ||
CCG | Convertible Loan Agreement | ||||
Outstanding units percentage | 40.00% | |||
Proceeds from fund construction | $ 1,250,000 | |||
NMG [Member] | ||||
Management fee (per month) | $ 6,000 | |||
Percentage of monthly management fee | 66.67% | |||
Loan bears interest per month | $ 6,000 |
Loan receivable (Details Narrat
Loan receivable (Details Narrative) | Oct. 31, 2021USD ($) |
Convertible loan receivable | |
Loan receivable | $ 239,834 |
Loan receivable from NMG Ohio_3
Loan receivable from NMG Ohio LLC (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Oct. 31, 2021 | Jul. 31, 2021 | |
Loan receivable (payable) to NMG Ohio | ||
Opening balance Loan | $ 891,279 | $ (466,495) |
Advances provided to NMG Ohio | 64,598 | 1,120,015 |
Foreign exchange | 0 | 4,671 |
Transferred to NMG OH 1 and eliminated on consolidation | 0 | 233,088 |
Acquisition of NMG Ohio (Note 11) | (955,877) | |
Loan receivable (payable) to NMG Ohio | $ 0 | $ 891,279 |
Loan receivable from NMG Ohio_4
Loan receivable from NMG Ohio LLC (Details Narrative) - NMG Ohio LLC - USD ($) | 1 Months Ended | |
Jan. 31, 2019 | Oct. 31, 2021 | |
Percentage of voting interest acquired | 100.00% | |
Purchase of remaining ownership interest percentage | 70.00% | 70.00% |
Consideration in cash to be paid for the acquisition of remaining interest | $ 1,575,000 | |
Share issue costs (in shares) | 3,173,864 | |
Ownership percentage | 30.00% |
Investment in and advances to_3
Investment in and advances to GLDH (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2021 | |
Interest income accrued on the Note | $ 18,000 | $ 106,143 | |
Lease Assignment Agreement payment | $ 152,340 | ||
Foreign exchange | 0 | $ 4,671 | |
GLDH | |||
Note receivable | 5,200,000 | ||
Share issuances | 4,092,175 | ||
Share payment reduction | (793,416) | ||
Interest income accrued on the Note | 1,821,476 | ||
Advances for working capital | 2,813,515 | ||
Lease Assignment Agreement payment | 1,533,765 | ||
Amount transferred to Property and Equipment | (1,431,585) | ||
Amount transferred to Brand and Licenses | (3,585,483) | ||
Expensed during the year | (690,741) | ||
Foreign exchange | (46,973) | ||
Total investment | 8,912,733 | ||
Impairment loss | (534,165) | ||
Acquisition of ShowGrow Long Beach dispensary (Note 11) | $ (8,378,568) |
Investment in and advances to_4
Investment in and advances to GLDH (Details Narrative) - USD ($) | Jul. 03, 2019 | Apr. 30, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | Oct. 31, 2021 |
David Barakett | |||||
Amount payable in common shares | $ 783,765 | ||||
Payment of consulting and advisory services | 200,000 | $ 50,000 | |||
Payment of consulting and advisory services in subsequent to year end | $ 150,000 | ||||
GLDH | |||||
Loan, face amount | $ 200,000 | ||||
Interest rate per annum | 12.00% | ||||
GLDH | Eligibility condition one | |||||
Amount to be paid in common shares | $ 1,500,000 | ||||
Share price per share | $ 0.7439 | ||||
Maximum number of common shares | 2,681,006 | ||||
GLDH | Eligibility condition one | David Barakett | |||||
Amount to be paid in common shares | $ 500,000 | ||||
Maximum number of common shares | 624,380 | ||||
GLDH | Eligibility condition two | David Barakett | |||||
Amount to be paid in common shares | $ 750,000 | ||||
Share price per share | $ 0.7439 | ||||
Maximum number of common shares | 1,340,502 | ||||
GLDH | Eligibility condition three | David Barakett | |||||
Amount to be paid in common shares | $ 750,000 | ||||
Share price per share | $ 0.7439 | ||||
Maximum number of common shares | 1,340,502 | ||||
GLDH | Purchase Agreement | |||||
Investment purchase price | $ 6,700,000 | ||||
Note to be applied towards the Purchase Price | $ 5,200,000 | ||||
GLDH | Type of agreement | |||||
Interest rate per annum | 5.00% | ||||
Amount payable in common shares | $ 750,000 | ||||
Green Light District Management, LLC and GLDH (collectively referred to as "Licensor"). | |||||
Licensor grants | 2 years | ||||
Payment to Licensor of gross receipts from sales | 3.00% | ||||
SGSD | Eligibility condition one | |||||
Amount to be paid in common shares | $ 700,000 | ||||
Maximum number of common shares | 1,340,502 | ||||
SGSD | Eligibility condition two | |||||
Amount to be paid in common shares | $ 783,765 | ||||
NMG San Diego LLC [Member] | |||||
Ownership percentage | 60.00% | 60.00% | |||
Percentage of consolidated assets liabilities of subsidiary | 100.00% | ||||
Percentage of disclosed non-controlling interest of subsidiary. | 40.00% | ||||
Information about Subsidiary. | GLDH | |||||
Ownership percentage | 100.00% | ||||
Information about subsidiary. | GLDH | |||||
Ownership percentage | 60.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Oct. 31, 2021 | Jul. 31, 2021 | |
Cost: | ||
Balance | $ 6,594,342 | |
Additions | 903,145 | |
Balance ending | 7,497,487 | $ 6,594,342 |
Accumulated Depreciation: | ||
Balance AD | 1,700,552 | |
Depreciation | 202,394 | |
Balance AD ending | 1,902,946 | 1,700,552 |
Net Book Value | ||
Net Book Value: | 5,594,541 | 4,893,790 |
Office Equipment [Member] | ||
Cost: | ||
Balance | 401,571 | |
Additions | 22,739 | |
Balance ending | 424,310 | 401,571 |
Accumulated Depreciation: | ||
Balance AD | 49,765 | |
Depreciation | 14,729 | |
Balance AD ending | 64,494 | 49,765 |
Net Book Value | ||
Net Book Value | 359,816 | 351,806 |
Cultivation equipment [Member] | ||
Cost: | ||
Balance | 466,110 | |
Additions | 0 | |
Balance ending | 466,110 | 466,110 |
Accumulated Depreciation: | ||
Balance AD | 250,544 | |
Depreciation | 17,218 | |
Balance AD ending | 267,762 | 250,544 |
Net Book Value | ||
Net Book Value | 198,348 | 215,566 |
Production Equipment [Member] | ||
Cost: | ||
Balance | 570,702 | |
Additions | 0 | |
Balance ending | 570,702 | 570,702 |
Accumulated Depreciation: | ||
Balance AD | 210,166 | |
Depreciation | 19,253 | |
Balance AD ending | 229,419 | 210,166 |
Net Book Value | ||
Net Book Value | 341,283 | 360,536 |
Kitchen equipment [Member] | ||
Cost: | ||
Balance | 51,108 | |
Additions | 0 | |
Balance ending | 51,108 | 51,108 |
Accumulated Depreciation: | ||
Balance AD | 21,722 | |
Depreciation | 1,840 | |
Balance AD ending | 23,562 | 21,722 |
Net Book Value | ||
Net Book Value | 29,386 | 27,546 |
Vehicles [Member] | ||
Cost: | ||
Balance | 38,717 | |
Additions | 0 | |
Balance ending | 38,717 | 38,717 |
Accumulated Depreciation: | ||
Balance AD | 24,328 | |
Depreciation | 1,394 | |
Balance AD ending | 25,722 | 24,328 |
Net Book Value | ||
Net Book Value | 12,955 | 14,389 |
Vault equipment [Member] | ||
Cost: | ||
Balance | 10,335 | |
Additions | 0 | |
Balance ending | 10,335 | 10,335 |
Accumulated Depreciation: | ||
Balance AD | 1,790 | |
Depreciation | 1,244 | |
Balance AD ending | 3,034 | 1,790 |
Net Book Value | ||
Net Book Value | 7,301 | 8,545 |
Leasehold Improvements [Member] | ||
Cost: | ||
Balance | 5,055,799 | |
Additions | 880,406 | |
Balance ending | 5,936,205 | 5,055,799 |
Accumulated Depreciation: | ||
Balance AD | 1,142,237 | |
Depreciation | 146,716 | |
Balance AD ending | 1,288,952 | 1,142,237 |
Net Book Value | ||
Net Book Value | $ 4,647,252 | $ 3,913,562 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Property and Equipment | ||
General and Administrative Expenses | $ 174,568 | $ 105,899 |
Depreciation | $ 27,826 | $ 19,828 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) | 1 Months Ended | |||
Sep. 17, 2021 | Aug. 28, 2020 | Oct. 31, 2021 | Jul. 31, 2021 | |
Liabilities assumed: | ||||
Goodwill | $ 5,168,902 | $ 5,168,902 | ||
The Clubhouse dispensary. | ||||
Purchase consideration (Note 8) | $ 3,814,788 | |||
Assets acquired: | ||||
Cash | 257,462 | |||
Amounts receivable | 510,367 | |||
Prepaid expenses | 4,965 | |||
Inventory | 178,898 | |||
Property and equipment | 763,951 | |||
Licenses and customer relationships | 2,710,000 | |||
Liabilities assumed: | ||||
Trade payable and accrued liabilities | (443,589) | |||
Net assets acquired | 3,982,054 | |||
Bargain purchase | (167,266) | |||
TOTAL | $ 3,814,788 | |||
ShowGrow Long Beach dispensary | ||||
Purchase consideration (Note 8) | $ 8,378,568 | |||
Assets acquired: | ||||
Cash | 65,340 | |||
Prepaid expenses | 15,264 | |||
Inventory | 177,930 | |||
Property and equipment | 5,402 | |||
Liabilities assumed: | ||||
Trade payable and accrued liabilities | (732,262) | |||
Net assets acquired | 8,378,568 | |||
Loan receivable (Note 7) | 239,834 | |||
Income taxes payable | (423,931) | |||
Loans payable (Note 14) | (12,190) | |||
Net liabilities acquired | (664,613) | |||
Brand and licenses | 6,510,000 | |||
Goodwill | $ 2,533,181 |
Business Acquisitions (Details
Business Acquisitions (Details 1) | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Revenue | $ 5,294,358 |
Net income | (778,367) |
NMG Long Beach LLC | |
Revenue | 1,646,847 |
Net income | 67,719 |
The Clubhouse dispensary. | |
Revenue | 2,075,285 |
Net income | $ 518,924 |
Business Acquisitions (Detail_2
Business Acquisitions (Details 2) | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Revenue | $ 5,294,358 |
Net loss | (778,367) |
Pro Forma [Member] | |
Revenue | 6,388,537 |
Net loss | $ (626,693) |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net (Details) | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Intangible Assets Net | |
Balance at July 31, 2021 | $ 5,168,902 |
Increase due to acquisitions | 2,533,181 |
Balance at July 31, 2021 and October 31, 2021 | $ 5,168,902 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended |
Oct. 31, 2021 | Jul. 31, 2021 | |
Gross carrying amount | $ 21,055,508 | $ 21,055,508 |
Accumulated amortization | (1,502,695) | (1,200,440) |
Net carrying amount | 19,552,813 | 19,855,068 |
Brand | ||
Gross carrying amount | 247,000 | 247,000 |
Accumulated amortization | 0 | 0 |
Net carrying amount | 247,000 | 247,000 |
Customer relationships | ||
Gross carrying amount | 90,000 | 90,000 |
Accumulated amortization | (20,800) | (16,265) |
Net carrying amount | $ 69,200 | $ 73,735 |
Weighted average life (years) | 5 years | 5 years |
Licenses | ||
Gross carrying amount | $ 20,718,508 | $ 20,718,508 |
Accumulated amortization | (1,481,895) | (1,184,175) |
Net carrying amount | $ 19,236,613 | $ 19,534,333 |
Weighted average life (years) | 10 years | 10 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net (Details 2) | Oct. 31, 2021USD ($) |
Intangible Assets Net | |
2022 | $ 896,908 |
2023 | 1,199,162 |
2024 | 1,202,448 |
2025 | 1,199,162 |
2026 | 1,881,172 |
Thereafter | 5,610,237 |
Total | $ 11,380,814 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net (Details Narrative) - USD ($) | 3 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 30, 2020 | |
Intangible Assets Net | |||
Amortization expenses | $ 331,544 | $ 245,337 | $ 225,508 |
License fees | $ 7,925,000 |
Related Party Balances and Tr_3
Related Party Balances and Transactions (Details) - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 30, 2020 | |
Management fees | $ 168,379 | $ 132,226 |
President And Chief Executive Officer Member | ||
Management fees | 119,596 | 37,525 |
Chief Financial Officer And Director [Member] | ||
Management fees | 30,602 | 22,686 |
This member stands for former director and former president. | ||
Management fees | 0 | 55,000 |
This member stands for corporate secretary. | ||
Management fees | $ 18,151 | $ 17,015 |
Related Party Balances and Tr_4
Related Party Balances and Transactions (Details Narrative) - USD ($) | Oct. 31, 2021 | Jul. 31, 2021 |
Due to Related Parties, Current | $ 54,166 | $ 52,074 |
Chief Executive Officer [Member] | ||
Due to Related Parties, Current | 32,039 | 26,841 |
Chief Financial Officer One [Member] | ||
Due to Related Parties, Current | 10,000 | 18,914 |
This member stands for corporate secretary. | ||
Due to Related Parties, Current | $ 12,127 | $ 6,319 |
Loan Payable (Detail)
Loan Payable (Detail) - Warrants [Member] | 3 Months Ended |
Oct. 31, 2021 | |
Expected life of the options | 4 years |
Expected volatility | 139.00% |
Expected dividend yield | 0.00% |
Risk-free interest rate | 0.55% |
Loan Payable (Details Narrative
Loan Payable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended |
Jul. 19, 2021 | Oct. 31, 2021 | |
Warrant exercise price per share | $ 0.45 | |
Legal fees and other fees | $ 175,758 | |
Warrants issued for services , amount | $ 1,037,146 | |
Warrants issued for services , shares | 4,800,000 | |
Warrants [Member] | ||
Aggregate purchase common stock shares | 8,000,000 | |
Acquire common stock shares | 4,800,000 | |
Exercise price per share | $ 0.40 | |
Escrowed shares | 3,200,000 | |
Term Loan mature | Jul. 19, 2025 |
Operating Leases (Details)
Operating Leases (Details) | 12 Months Ended |
Jul. 31, 2021USD ($) | |
Operating Leases | |
Operating cash flows from operating leases | $ 152,340 |
Operating leases | $ 717,727 |
Weighted-average discount rate - operating leases | 12.00% |
Weighted-average remaining lease term - operating leases | 6 years 5 months 19 days |
Operating Leases (Details 1)
Operating Leases (Details 1) | Jul. 31, 2021USD ($) |
Operating Leases | |
2022 (remaining) | $ 589,079 |
2023 | 704,273 |
2024 | 715,262 |
2025 | 725,942 |
2026 and thereafter | 1,877,632 |
Total lease payments | 4,619,688 |
Less imputed interest | (1,430,625) |
Total | 3,189,063 |
Less current portion | 407,446 |
Long term portion | $ 2,781,617 |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) | Feb. 10, 2020 | Apr. 09, 2019 | Aug. 02, 2018 | Nov. 10, 2017 | Aug. 28, 2020 | Apr. 24, 2020 | Oct. 31, 2021 | Sep. 14, 2021 | Jul. 31, 2021 |
Lease expense | $ 162,801 | ||||||||
Amortization of right-of-use assets included in General and Administrative Expenses | 36,462 | ||||||||
Amortization of right-of-use assets included in Cost of Sales | 126,339 | ||||||||
Lease expense (Monthly) | $ 22,500 | ||||||||
Operating lease, right-of-use asset and increase in lease liabilities | 3,179,713 | $ 2,539,023 | |||||||
Accounting Standards Update 2016-02 [Member] | |||||||||
Operating lease, right-of-use asset and increase in lease liabilities | $ 1,181,143 | ||||||||
Discount rate for present value of future lease payments | 12.00% | ||||||||
NMG [Member] | |||||||||
Periodic rent payable, amount | $ 6,026 | $ 4,000 | $ 7,317 | $ 15,450 | $ 4,000 | ||||
Description for lease option to extend | The Company has one option to extend the lease for an additional three-year term and an option to purchase the property at any point during the initial term | 5% starting on 1 July 2021 and 1 July 2024 | The Company has four options to extend the lease and each option is for five years | increasing by 3% every year until 10 January 2022 | The Company has three options to extend the lease and each option is for five years | ||||
Description for change in rent | 5% starting on 1 July 2021 and 1 July 2024 | 2% increase on each anniversary date of the lease | 3% every year until 1 December 2022 | ||||||
Description for provision of bonus | The lease contains a sale bonus provision of $1,000,000 or 10% of the purchase price of the entire business, whichever is greater, in the event of sale or assignment of the lease | ||||||||
Common area expenses | $ 1,129 | ||||||||
Expenses, total | $ 7,156 | ||||||||
Provision of bonus | $ 1,000,000 | ||||||||
Operating lease, right-of-use asset and increase in lease liabilities | $ 662,800 | ||||||||
Discount rate for present value of future lease payments | 10.00% | 12.00% | |||||||
1 October 2021 [Member] | |||||||||
Lease expense (Monthly) | $ 12,500 | $ 5,000 | |||||||
From December 1, 2019 [Member] | NMG [Member] | |||||||||
Periodic rent payable, amount | $ 13,261 | ||||||||
From January 1, 2019 [Member] | NMG [Member] | |||||||||
Periodic rent payable, amount | $ 12,875 |
Capital Stock (Details)
Capital Stock (Details) - Share-based Payment Arrangement, Option [Member] | 3 Months Ended |
Oct. 31, 2021CAD ($)$ / sharesshares | |
Opening balance | shares | 9,855,000 |
Closing balance | shares | 9,855,000 |
Number of options, Vested and fully exercisable | shares | 8,336,250 |
Weighted average exercise price, opening balance | $ / shares | $ 0.70 |
Weighted average exercise price, closing balance | $ / shares | 0.71 |
Weighted average exercise price, Vested and fully exercisable | $ / shares | $ 0.67 |
Weighted average contractual term remaining (in years) | 2 years 6 months 3 days |
Weighted average contractual term remaining (in years), Vested and fully exercisable | 2 years 3 months |
Aggregate intrinsic value, beginning | $ | $ 3,750 |
Aggregate intrinsic value, ending | $ | 3,750 |
Aggregate intrinsic value, Vested and fully exercisable | $ | $ 19,438 |
Capital Stock (Details 1)
Capital Stock (Details 1) - $ / shares | Oct. 31, 2021 | Jul. 31, 2021 |
Range Four [Member] | ||
Number of warrants outstanding and exercisable | 17,215,284 | 17,215,284 |
Warrants price per share | $ 1.21 | $ 1.21 |
Range One [Member] | ||
Number of warrants outstanding and exercisable | 11,780,134 | 11,780,134 |
Warrants price per share | $ 1.50 | $ 1.50 |
Range Two [Member] | ||
Number of warrants outstanding and exercisable | 635,150 | 635,150 |
Warrants price per share | $ 1.25 | $ 1.25 |
Range Three [Member] | ||
Number of warrants outstanding and exercisable | 4,800,000 | 4,800,000 |
Warrants price per share | $ 0.40 | $ 0.40 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Oct. 21, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Sep. 21, 2021 | Jul. 31, 2020 | |
Description of capital stock | the holder to acquire one share of common stock at an exercise price of US$0.45 per share until July 19, 2025 | ||||
Capital stock, par value | $ 0.0001 | $ 0.0001 | |||
Share based compensation expense | $ 145,175 | $ 287,631 | |||
Capital stock, shares authorized | 900,000,000 | 900,000,000 | |||
Acquiring remaining interest, percentage | 10.00% | ||||
NMG [Member] | |||||
Amount related to issued common shares | $ 297,042 | ||||
Number of common shares issued | 793,466 | ||||
Acquiring remaining interest, percentage | 70.00% | ||||
Lease agreement for a premises in Muskegon, Michigan [Member] | |||||
Common stock shares issued under agreement | 238,929 | ||||
Lease agreement for a premises in Manistee, Michigan [Member] | |||||
Common stock shares issued under agreement | 1,304,601 |
Segmented Information and Maj_3
Segmented Information and Major Customers (Details) - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Revenue | $ 7,570,816 | $ 5,294,358 |
Operating income (loss) | (677,254) | |
Retail [Member] | ||
Revenue | 5,815,017 | |
Operating income (loss) | (866,230) | |
Wholesale [Member] | ||
Revenue | 803,782 | |
Operating income (loss) | (1,755,799) | |
All others [Member] | ||
Revenue | 0 | |
Operating income (loss) | $ (2,347,266) |
Segmented Information and Maj_4
Segmented Information and Major Customers (Details Narrative) | 3 Months Ended |
Oct. 31, 2021 | |
Segmented Information and Major Customers | |
Percentage of revenues from major customer | 10.00% |
Supplemental Disclosures with_3
Supplemental Disclosures with Respect to Cash Flows (Details) - USD ($) | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Supplemental Disclosures with Respect to Cash Flows (Details) | ||
Cash paid during the year for interest | $ 219,074 | $ 0 |
Cash paid during the period for income taxes | $ 1,896 | $ 0 |
Supplemental Disclosures with_4
Supplemental Disclosures with Respect to Cash Flows (Details Narrative) | 1 Months Ended |
Sep. 21, 2021USD ($)shares | |
Lease agreement for a premises in Muskegon, Michigan [Member] | |
Common stock shares issued under agreement | 238,929 |
Lease agreement for a premises in Manistee, Michigan [Member] | |
Common stock shares issued under agreement | 1,304,601 |
Lease agreement for Elyria, Ohio and Muskegon, Michigan, [Member] | |
Discount rate used to calculate present value | 12.00% |
Change in lease liabilities | $ | $ 717,727 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Feb. 10, 2020 | Sep. 30, 2021 | Oct. 30, 2018 | Oct. 31, 2021 |
Periodic consulting fees payable | $ 10,000 | $ 12,000 | ||
Term of contract | 5 years | |||
Increased in periodic payments of consulting fees | $ 16,500 | |||
Ownership percentage for increased in monthly services fee | 10.00% | |||
Frequency of periodic payment | monthly | monthly | ||
Lease expense (Monthly) | $ 22,500 | |||
Accrued expense | $ 200,000 | |||
NMG MI P1 (i) | ||||
Lease expense (Monthly) | $ 7,500 | |||
Accrued expense | $ 200,000 | |||
Common stock, shares issued during period | 400,000 | |||
Achievement description | US$200,000 of common shares to be issued within 30 days of NMG MI P1 receiving local and state commercial marihuana processing licenses | |||
NMG MI C1 (i) | ||||
Accrued expense | $ 75,000 | |||
Common stock, shares issued during period | 600,000 | |||
Achievement description | US$200,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to cultivation and receiving local operating permit to begin commercial marihuana cultivation operations at the premises | |||
NMG MI C1 (iii) | ||||
Achievement description | US$100,000 of common shares to be issued within 30 days of NMG MI C1 receiving local and state commercial marihuana retail licenses | |||
NMG MI C1 (ii) | ||||
Achievement description | US$200,000 of common shares to be issued within 30 days of NMG MI C1 receiving local and state commercial marihuana cultivation licenses | |||
NMG MI C1 (iv) | ||||
Achievement description | US$100,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to retail operations and receiving local operating permit to begin commercial marihuana retail operations at the premises | |||
NMG MI P1 (ii) | ||||
Achievement description | US$200,000 of common shares to be issued within 30 days of passing final inspections at the premises with respect to processing and receiving local operating permit to begin commercial marihuana processing operations at the premises | |||
Australis Capital Inc. [Member] | ||||
Restricted shares issued by related party in a private transaction | 9,900,000 | |||
Ownership percentage | 10.00% | |||
Kendal [Member] | ||||
Common stock, shares issued during period | 150,000 |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - Subsequent Event [Member] | Nov. 12, 2021USD ($) | Dec. 01, 2021USD ($) | Nov. 30, 2021shares | Dec. 01, 2021CAD ($)shares |
CEO And COO [Member] | ||||
Share based compensation, stock options granted | shares | 448,000 | |||
Description for vesting of stock options | 25% of the Options vest six (6) months from the date of grant, 25% of the Options vest twelve (12) months from the date of grant, 25% of the Options vest eighteen (18) months from the date of grant and 25% of the Options vest twenty-four (24) months from the date of grant | |||
Maximum incentive based cash bonus | $ 200,000 | |||
Cash | $ 5,000 | |||
Revenue growth | 1.00% | |||
CFO [Member] | ||||
Maximum incentive based cash bonus | $ 40,000 | |||
Cash | 10,000 | |||
CEO [Member] | ||||
Maximum incentive based cash bonus | 50,000 | |||
Cash | $ 10,000 | |||
Revenue growth | 1.00% | |||
Consulting agreement with Skanderbeg Capital Advisors Inc. [Member] | ||||
One time stock options issuable under agreement | shares | 200,000 | |||
Monthly fee payable under agreement | $ 7,500 | |||
DEP Nevada Inc | ||||
Ownership interest of Canopy to be acquired by related party | 100.00% | |||
DEP Nevada Inc | First purchase agreement [Member] | ||||
Ownership interest of Canopy to be acquired by related party | 80.00% | |||
Business acquision, ownership interest acquired, puchase price | $ 4,800,000 | |||
Business acquision, consideration transferred, cash | 2,500,000 | |||
Business acquision, consideration transferred, secured promissory note | 2,300,000 | |||
Business acquision, consideration transferred, secured promissory note, interest rate | 10.00% | |||
DEP Nevada Inc | Second purchase agreement [Member] | ||||
Ownership interest of Canopy to be acquired by related party | 20.00% | |||
Business acquision, consideration transferred, cash | 2,500,000 | |||
Business acquision, consideration transferred, secured promissory note | $ 2,300,000 | |||
Business acquision, consideration transferred, secured promissory note, interest rate | 20.00% | |||
Description for consideration payable in shares | If DEP elects to pay the purchase price in Consideration Shares, the amount of Consideration Shares shall be determined based on the 10 day volume weighted average price (“VWAP”) ending on November 30, 2021, which is US$0.3665 per share for a total of 2,728,156 shares | |||
Business acquision, ownership interest acquired, puchase, payable in cash or shares | $ 1,000,000 | |||
Description for event of reduction in PA 1 consideration value | In the event that six (6) months following the execution of PA #1, the value of the Consideration Shares have decreased such that total value of the Consideration Shares is less than ninety percent (90%) of its value, DEP agrees to cause BaM to issue an additional One Hundred Thousand Dollars ($100,000) worth of shares of common stock of BaM (the “Additional Shares”) to be issued to the one continuing Seller based on the ten day VWAP calculated as of six (6) months following the closing of PA #1 |