BODY & MIND INC. [BMMJ] Filings

10-Q 1 bmmj_10q.htm FORM 10-Q bmmj_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number: 000-55940

BODY AND MIND INC.

(Exact name of registrant as specified in its charter)

Nevada		98-1319227
(State or other jurisdiction of organization)		(I.R.S. employer identification no.)

750 – 1095 West Pender Street

Vancouver, British Columbia, Canada

V6E 2M6

(Address of principal executive offices)

(Zip code)

(800) 361-6312

(Registrant’s telephone number, including area code)

None

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 147,686,393 shares of common stock outstanding as of June 19, 2024.

BODY AND MIND INC.

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		3

	ITEM 1 – FINANCIAL STATEMENTS (unaudited)	3
	ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	42
	ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	61
	ITEM 4 – CONTROLS AND PROCEDURES	61
	(a) Evaluation of Disclosure Controls and Procedures	61
	(b) Internal control over financial reporting	61

PART II – OTHER INFORMATION		62

	ITEM 1 – LEGAL PROCEEDINGS	62
	ITEM 1A. RISK FACTORS	62
	ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	62
	ITEM 3 – DEFAULTS UPON SENIOR SECURITIES	62
	ITEM 4 – MINE SAFETY DISCLOSURES	62
	ITEM 5 – OTHER INFORMATION	62
	ITEM 6 – EXHIBITS	63
	SIGNATURES	64

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Body and Mind Inc.			Statement 1
Condensed Consolidated Balance Sheets
(U.S. Dollars)
ASSETS	As of 30 April 2024		As of 31 July 2023
	(unaudited)
Current
Cash		$291,543		$1,460,311
Accounts receivable, net		41,932		27,234
Other amounts receivable (Note 5)		1,850,000		-
Interest receivable on convertible loan (Note 8)		342,000		294,000
Prepaids		571,108		448,341
Inventory (Note 7)		632,594		909,875
Assets held for sale – discontinued operations (Note 21)		966,835		6,290,210
Total Current Assets		4,696,012		9,429,971
Deposit(Note 6 and 20)		1,035,026		72,617
Convertible loan receivable (Note 8)		1,250,000		1,700,411
Property and equipment, net(Note 10)		1,606,266		1,827,215
Operating lease right-of-use assets(Note 15)		4,028,355		4,329,634
Brand and licenses, net(Note 12)		3,571,716		3,849,932
TOTAL ASSETS		$16,187,375		$21,209,780

LIABILITIES
Current
Bank overdraft		$-		$509,937
Accounts payable		3,343,575		2,499,181
Accrued liabilities		296,976		462,025
Income taxes payable		2,768,351		1,758,267
Due to related parties (Note 13)		87,966		93,481
Operating loans payable(Note 9 and 14)		493,333		166,001
Current portion of operating lease liabilities (Note 15)		928,195		980,265
Liabilities related to assets held for sale – discontinued operations (Note 21)		2,188,623		2,260,953
Total Current Liabilities		10,107,019		8,730,110
Long-term operating lease liabilities(Note 15)		5,968,844		6,801,711
Loans payable(Note 14)		2,300,000		7,779,659
Convertible debentures – related parties, net(Note 14)		2,569,427		2,480,522
Income taxes payable		7,173,713		4,757,387
TOTAL LIABILITIES		28,119,003		30,549,389

STOCKHOLDERS’ DEFICIT
Capital Stock– Statement 3(Note 16)
Authorized:
900,000,000 Common Shares – Par Value $0.0001
Issued and Outstanding:
147,686,393 (31July2023–146,636,974) Common Shares		14,768		14,663
Additional paid-in capital		55,338,820		55,057,531
Accumulated other comprehensive income		1,152,329		1,482,567
Accumulated Deficit		(69,596,086)		(66,829,507)
TOTAL STOCKHOLDERS’ DEFICIT ATTRIBUTABLE TO BAM STOCKHOLDERS		(13,090,169)		(10,274,746)
NON-CONTROLLING INTEREST		1,158,541		935,137
TOTAL STOCKHOLDERS’ DEFICIT		(11,931,628)		(9,339,609)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$16,187,375		$21,209,780

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Body and Mind Inc.					Statement 2
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(U.S. Dollars)

	Three Month Period Ended 30 April						Nine Month Period Ended 30 April
	2024			2023			2024			2023

Sales	$	4,406,132		$	4,171,339		$	13,393,018		$	13,237,458
Cost of sales		(2,441,826	)		(2,244,898	)		(7,338,477	)		(7,811,513	)
Gross profit		1,964,306			1,926,441			6,054,541			5,425,945
Operating Expenses
Accounting and legal		428,556			199,558			1,058,957			863,227
Business development		199,071			340,106			201,830			754,364
Consulting fees		346,025			99,553			805,907			502,920
Depreciation and amortization		93,952			261,013			286,033			800,635
Lease expense		316,250			371,215			823,869			868,869
Licenses, utilities and office administration		974,202			848,968			3,110,478			2,542,463
Management fees		93,883			100,195			323,945			304,152
Salaries and wages		851,405			988,387			2,699,342			2,614,555
Total Operating Expenses		(3,303,344	)		(3,208,995	)		(9,310,361	)		(9,251,185	)
Net Operating Loss		(1,339,038	)		(1,282,554	)		(3,255,820	)		(3,825,240	)
Other Income (Expenses)
Foreign exchange, net		16			(1,153	)		(1,252	)		1,013
Gain (loss) on fair value adjustment of convertible loan (Note 8)		(659,834	)		359,088			(450,411	)		359,088
Interest expense		(153,620	)		(483,247	)		(2,224,725	)		(1,288,907	)
Interest income		12,000			18,000			48,000			54,000
Loss on settlement of related party liability (Note 16 and 19)		(30,700	)		-			(30,700	)		-
Loss on impairment of equipment (Note 10 and 15)		-			-			(124,649	)		-
Other income		9,826			10,800			25,829			70,488
Total Other Expenses		(822,312	)		(96,512	)		(2,757,908	)		(804,318	)
Net Loss from Continuing Operations Before Income Tax	$	(2,161,350	)	$	(1,379,066	)	$	(6,013,728	)	$	(4,629,558	)
Income tax expense		(388,351	)		(449,397	)		(1,751,866	)		(1,196,343	)
Net Loss from Continuing Operations		(2,549,701	)		(1,828,463	)		(7,765,594	)		(5,825,901	)
Discontinued Operations
Net income (loss) from discontinued operations, net of tax		11,511			(1,780,309	)		(1,124,629	)		(3,476,714	)
Gain on sale of NMG OH 1, LLC, net of tax		-			-			4,058,665			-
Gain on sale of NMG, net of tax		-			-			2,288,383			-
Net Loss		(2,538,190	)		(3,608,772	)		(2,543,175	)		(9,302,615	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment		148,755			32,315			(330,238	)		(48,087	)
Comprehensive Loss	$	(2,389,435	)	$	(3,576,457	)	$	(2,873,413	)	$	(9,350,702	)
Net income (loss) from continuing operations attributable to:
Body and Mind Inc.		(2,608,402	)		(1,978,527	)		(7,988,998	)		(6,183,082	)
Non-controlling interest		58,701			150,064			223,404			357,181

Net income (loss) attributable to:
Body and Mind Inc.		(2,596,891	)		(3,758,836	)		(2,766,579	)		(9,659,796	)
Non-controlling interest		58,701			150,064			223,404			357,181

Comprehensive income (loss) attributable to:
Body and Mind Inc.		(2,448,136	)		(3,726,521	)		(3,096,817	)		(9,707,883	)
Non-controlling interest		58,701			150,064			223,404			357,181

Income (Loss) per share attributable to Body and Mind Inc. – Basic and Diluted
Continuing Operations	$	(0.02	)	$	(0.01	)	$	(0.05	)	$	(0.05	)
Discontinued Operations	$	0.00		$	(0.01	)	$	0.04		$	(0.03	)
	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.08	)

Weighted Average Number of Shares Outstanding - Continuing operations
Basic	147,416,354	146,636,974	146,519,397	130,203,817
Diluted	147,416,354	146,636,974	146,519,397	130,203,817

Weighted Average Number of Shares Outstanding - Discontinuing operations
Basic	147,416,354	146,636,974	146,519,397	130,203,817
Diluted	147,416,354	146,636,974	146,519,397	130,203,817

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Body and Mind Inc.

Statement 3

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)

(U.S. Dollars)

	Share Capital						Additional						Accumulated Other						Non-
	Common Shares						paid-in			Shares to be			comprehensive			Accumulated			controlling
	Number			Amount			capital			issued			income			Deficit			interest		Total
Balance – 31 July, 2023		146,636,974		$	14,663		$	55,057,531		$	-		$	1,482,567		$	(66,829,507	)	$	935,137	$	(9,339,609	)
Stock-based compensation (Note 16)		-			-			35,343			-			-			-			-		35,343
Foreign currency translation adjustment		-			-			-			-			(369,202	)		-			-		(369,202	)
Net income		-			-			-			-			-			84,147			79,668		163,815
Balance – 31 October, 2023		146,636,974		$	14,663		$	55,092,874		$	-		$	1,113,365		$	(66,745,360	)	$	1,014,805	$	(9,509,653	)
Shares returned to Treasury related to investment in GLDH		(1,650,974	)		(165	)		165			-			-			-			-		-
Stock-based compensation (Note 16)		-			-			18,465			-			-			-			-		18,465
Foreign currency translation adjustment		-			-			-			-			(109,791	)		-			-		(109,791	)
Net loss		-			-			-			-			-			(253,835	)		85,035		(168,800	)
Balance – 31 January, 2024		144,986,000			14,498			55,111,504			-			1,003,574			(66,999,195	)		1,099,840		(9,769,779	)
Shares issued for debt extinguishment		2,700,393			270			210,430			-			-			-			-		210,700
Stock-based compensation (Note 16)		-			-			16,886			-			-			-			-		16,886
Foreign currency translation adjustment		-			-			-			-			148,755			-			-		148,755
Net loss		-			-			-			-			-			(2,596,891	)		58,701		(2,538,190	)
Balance – 30 April, 2024		147,686,393		$	14,768		$	55,338,820		$	-		$	1,152,329		$	(69,596,086	)	$	1,158,541	$	(11,931,628	)

Balance – 31 July, 2022		113,668,613		$	11,366		$	52,344,573		$	1,853,403		$	1,224,093		$	(45,803,026	)	$	475,010	$	10,105,419
Stock-based compensation (Note 16)		-			-			32,458			-			-			-			-		32,458
Foreign currency translation adjustment		-			-			-			-			(70,060	)		-			-		(70,060	)
Net loss		-			-			-			-			-			(3,054,841	)		102,046		(2,952,795	)
Balance – 31 October, 2022		113,668,613		$	11,366		$	52,377,031		$	1,853,403		$	1,154,033		$	(48,857,867	)	$	577,056	$	7,115,022
Common stock issued in acquisition of Canopy		16,301,694			1,630			1,851,773			(1,853,403	)		-			-			-		-
Common stock issued in merger of CraftedPlants NJ		16,666,667			1,667			(1,667	)		-			-			-			-		-
Warrants issued in convertible debentures financing		-			-			592,159			-			-			-			-		592,159
Stock-based compensation (Note 16)		-			-			22,013			-			-			-			-		22,013
Foreign currency translation adjustment		-			-			-			-			(10,342	)		-			-		(10,342	)
Net loss		-			-			-			-			-			(2,846,121	)		105,071		(2,741,050	)
Balance – 31 January, 2023		146,636,974			14,663			54,841,309			-			1,143,691			(51,703,988	)		682,127		4,977,802
Stock-based compensation (Note 16)		-			-			177,642			-			-			-			-		177,642
Foreign currency translation adjustment		-			-			-			-			32,315			-			-		32,315
Net loss		-			-			-			-			-			(3,758,834	)		150,064		(3,608,770	)
Balance – 30 April, 2023		146,636,974		$	14,663		$	55,018,951		$	-		$	1,176,006		$	(55,462,822	)	$	832,191	$	1,578,989

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Body and Mind Inc.	Statement 4
Condensed Consolidated Statements of Cash Flows (unaudited)
(U.S. Dollars)

	Nine Month Period Ended 30 April
Cash Resources Provided By (Used In)	2024			2023
Operating Activities
Net loss from continuing operations	$	(7,765,594	)	$	(5,825,901	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accrued interest and accretion		1,275,913			601,775
Accrued interest income		(48,000	)		(54,000	)
Amortization of intangible assets		278,216			763,846
Operating lease expenses		301,279			868,869
Depreciation		208,120			141,055
Loss (gain) on fair value adjustment of convertible loan		450,411			(359,088	)
Loss on settlement of related party liability		30,700			-
Loss on impairment of equipment		124,649			-
Stock-based compensation		70,694			232,113
Accounts receivable and prepaids		(1,987,465	)		(36,306	)
Inventory		277,281			(74,936	)
Deposits		(962,409	)		63,309
Trade payables and accrued liabilities		833,088			1,045,327
Income taxes payable and deferred taxes		1,648,734			2,169,993
Due to related parties		(5,515	)		(15,523	)
Operating lease liabilities		(884,937	)		(916,207	)
Cash used in operating activities from continuing operations		(6,154,835	)		(1,395,674	)
Cash provided by (used in) operating activities from discontinued operations		3,906,118			(489,798	)
Cash used in operating activities		(2,248,717	)		(1,885,472	)

Investing Activities
Purchase of property and equipment		(111,820	)		(965,046	)
Net proceeds from loans payable		345,112			769,180
Cash provided by (used in) investing activities from continuing operations		233,292			(195,866	)
Cash provided by (used in) investing activities from discontinued operations		8,297,983			(36,508	)
Cash provided by (used in) investing activities		8,531,275			(232,374	)

Financing Activities
Payment of bank overdraft		(509,937	)		-
Repayments of loans payable		(6,658,190	)		(22,826	)
Proceeds from convertible debenture financing		-			3,000,000
Cash (used in) provided by financing activities		(7,168,127	)		2,977,174

Effect of exchange rate changes on cash		(330,238	)		(48,087	)
Cash transferred from assets held for sale		47,039			256,789

Net (Decrease) Increase in Cash		(1,168,768	)		1,068,030
Cash– Beginning of Period		1,460,311			1,431,697
Cash– End of Period	$	291,543		$	2,499,727

Supplemental Disclosures with Respect to Cash Flows(Note 18)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Body and Mind Inc.
Notes to Condensed Consolidated Financial Statements
For the Nine Months ended 30 April 2024
(U.S. Dollars)

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, Illinois and Arkansas (through March 15, 2024).

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
NMG Long Beach LLC (“NMG LB”)	California, USA	100%	18 December 2018
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 P1, LLC (“NMG OH P1”)	Ohio, USA	100%	30 January 2020
NMG MI C1 Inc.	Michigan, USA	100%	24 June 2021
NMG MI P1 Inc.	Michigan, USA	100%	24 June 2021
Canopy Monterey Bay, LLC (“Canopy”)	California, USA	100%	30 November 2021
NMG CA P1, LLC (“NMG CA P1”)	California, USA	100%	7 January 2020
NMG CA C1, LLC (“NMG CA C1”)	California, USA	100%	7 October 2020
BaM Body and Mind Dispensary NJ, Inc. (“BAM NJ”)	New Jersey, USA	95%	21 December 2022
NMG TX 1 LLC	Texas, USA	100%	22 March 2023
NMG IL4, LLC (“NMG IL 4”)	Illinois, USA	100%	25 April 2023

These consolidated financial statements include the Company’s wholly-owned subsidiaries of NMG MI 1, Inc. (“NMG MI 1”), NMG OH 1, LLC (“NMG OH 1”) and Nevada Medical Group LLC (“NMG”) up to the date of disposition on June 13, 2023, on October 17,2023 and on December 15, 2023, respectively (Note 21). Also see the Consolidated Variable Interest Entity accounting policy in Note 3.

All inter-company transactions and balances are eliminated upon consolidation.

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" which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after 15 December 2022. The adoption of this amendment did not have a significant impact on the consolidated financial statements.

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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.

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.

In the opinion of management, the unaudited consolidated interim financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s fiscal year 2023 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on 14 November 2023.

Consolidated Variable Interest Entity

A variable interest entity (“VIE”) is an entity that either (i) has insufficient equity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the VIE economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

If the Company determines that it has operating power over an entity and the obligation to absorb losses or receive benefits from such entity, the Company consolidates such entity as a VIE in its capacity as the primary beneficiary, and if the Company determines it does not, then the Company does not consolidate the entity. The Company’s involvement constitutes power that is most significant to the entity when it has unconstrained decision-making ability over key operational functions within the entity.

Assets recognized as a result of consolidating VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the applicable consolidated VIEs.

During the nine months ended 30 April 2024, the Company commenced consolidating Big Stone Farms AR 1, LLC (“Big Stone AR 1”) as a VIE, an Arkansas limited liability company. Also see Note 8.

Accounts 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 30 April 2024 and 31 July 2023, the Company has no allowance for doubtful accounts.

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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 cash on delivery.

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 and cost of goods sold

Inventory only consists of consumables. The Company values its consumables at the lower of the actual costs or its current estimated market value less costs to sell.

Costs incurred during the growing and production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the growing and production processes. The Company capitalizes pre-harvest costs.

The Company periodically reviews its inventory for obsolete and potentially impaired items. Any identified slow moving and obsolete items are written down to its net realizable value through a charge to cost of goods sold. As of 30 April 2024 and 31 July 2023, the Company has no allowance for inventory obsolescence.

Cost of goods sold includes the costs directly attributable to product sales and includes amounts paid for finished goods, such as flower, edibles and concentrates, packaging and other supplies, fees for services and processing, and allocated overhead, such as allocations of rent, administrative salaries, utilities and related costs.

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 had indefinite lives; therefore, no amortization was recognized. The Company’s brands and licenses acquired by NMG SD have a finite life of 10 years, licenses acquired by Canopy have a finite life of 10 years and are amortized over these estimated useful lives on a straight-line basis. Brands acquired by Canopy have indefinite lives.

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Impairment of long-lived assets

The Company reviews long-lived assets, including property and equipment and definite life intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group.

Impairment of indefinite-lived assets

Goodwill and indefinite-lived intangible assets are not amortized. Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying amount in accordance with the provisions of ASC 350, “Intangibles—Goodwill and Other”. The Company performs an impairment test annually by comparing the fair value of the indefinite-lived intangible assets or reporting unit (for goodwill) with its carrying amount. The measurement of the impairment loss to be recognized is based on the amount by which the carrying amount exceeds the reporting unit’s fair value.

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.

The Company recognizes uncertain income tax positions at the largest amount that is more-likely-than-not to be sustained upon examination by the relevant taxing authority. An uncertain income tax position will be recognized if it has less than a 50% likelihood of being sustained. Recognition or measurement is reflected in the period in which the likelihood changes. Any interest and penalties related to unrecognized tax liabilities are presented within income tax expense in the consolidated statements of operations and comprehensive income.

Basic and diluted net income (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. As of 30 April 2024, potential common shares are comprised of 15,296,000 outstanding options, 20,800,000 outstanding warrants and 33,274,520 shares issuable on conversion of convertible debentures.

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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. For the three and nine months ended 30 April 2024 and 2023, 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 0.7275 for monetary assets and liabilities and 0.7377 as an average rate for transactions occurred during the period ended 30 April 2024. 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 loan receivable was valued using Level 3 inputs.

Other current financial assets and current financial liabilities have fair values that approximate their carrying values.

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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, if any, 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

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.

Non-controlling Interest

Non-controlling interests (“NCI”) represent equity interests owned by outside parties. NCI may be initially measured at fair value or at the NCI’s proportionate share of the recognized amounts of the acquiree's identifiable net assets. The choice of measurement is made on a transaction-by-transaction basis. The Company has elected to measure each NCI at its proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The share of net assets attributable to NCI are presented as a component of equity. NCI's share of net income or loss is recognized directly in equity. Total income or loss of subsidiaries is attributed to the shareholders of the Company and to the NCI, even if this results in the NCI having a deficit balance.

Assets and liabilities held for sale

The Company classifies assets held for sale in accordance with ASC 360, “Property, Plant and Equipment”. When the Company makes the decision to sell an asset or to stop some part of its business, the Company assesses if such assets should be classified as an asset held for sale. To classify as an asset held for sale, the asset or disposal group must meet all of the following conditions: i) management, having the authority to approve the action, commits to a plan to sell the asset, ii) the asset is available for immediate sale in its present condition subject to certain customary terms, iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated, iv) the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale, within one year, subject to certain exceptions, v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current value, and vi) actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or withdrawn. Assets held for sale are measured at the lower of their carrying amount or fair value less cost to sell (“FVLCTS”). FVLCTS is the amount obtainable from the sale of the asset in an arm’s length transaction, less the costs of disposal. Once classified as held for sale, any depreciation and amortization on an asset cease to be recorded. For long-lived assets or disposals groups that are classified as held for sale but do not meet the criteria for discontinued operations, the assets and liabilities are presented separately on the balance sheet of the initial period in which it is classified as held for sale. The major classes of assets and liabilities classified as held for sale are disclosed in the notes to the consolidated financial statements.

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4. Financial Instruments

The following table represents the Company’s assets that are measured at fair value as of 30 April 2024 and 31 July 2023:

	As of 30 April 2024		As of 31 July 2023
Financial assets at fair value
Cash	$	291,543	$	1,460,311
Convertible loan receivable		1,250,000		1,700,411

Total financial assets at fair value	$	1,541,543	$	3,160,722

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 had cash of $291,543 and a working capital deficit of $5,411,007 at 30 April 2024 and the Company may require additional financing to meet all current and future financial obligations which causes substantial doubt about its ability to continue as a going concern for a period of one year from the issuance of these financial statements. Management believes that the Company has access to capital resources through future payments for assets held for sale as well as potential public or private issuances of debt or equity securities to further contribute to growth.

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.

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5. Other amounts receivable

Other amounts receivable consisted of the following as of 30 April 2024 and 31 July 2023:

	30 April 2024		31 July 2023

NMG disposition receivable (Note 21)	$	1,750,000	$	-
NMG OH 1 disposition receivable held in escrow (Note 21)		100,000		-

Total	$	1,850,000	$	-

6. Deposit

The Company’s deposit of $1,035,026 as of 30 April 2024 (31 July 2023 - $72,617) consisted of the prepaid architect fees and construction costs for the transaction with NMG IL 1, LLC (Note 11 and 20).

7. Inventory

	30 April 2024		31 July 2023

Consumables	$	632,594	$	909,875

Total	$	632,594	$	909,875

8. 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 2024. Under no circumstances the maturity date of the convertible loan agreement shall 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. However, as of March 15, 2024, the management agreement between NMG and CCG ended and was not extended.

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 preferred units of CCG that carry 66.7% voting interest, subject to approval of the Arkansas Medical Marijuana Commission.

The Company had advanced $1,250,000 (31 July 2023 - $1,250,000) at 30 April 2024, and accrued interest income of $12,000 (2023 - $18,000) and $48,000 (2023 - $54,000) for the three and nine months ended 30 April 2024, respectively. As of 30 April 2024, total interest receivable was $342,000 (31 July 2023 - $294,000).

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On or around August 22, 2023, DEP assigned the convertible loan agreement to a related entity, Big Stone AR 1, an Arkansas limited liability company, which is controlled by the Company’s Chief Operating Officer and Director, in exchange for an option to purchase the outstanding interests of Big Stone AR 1 for a purchase price of $1.00. Big Stone AR 1 was consolidated as a VIE for the period due to the fact that it was controlled by the Company’s Chief Operating Officer. See Note 3, Consolidated Variable Interest Entity. The terms of the convertible loan agreement remain the same. On or around September 18, 2023, Big Stone AR 1 exercised the conversion feature of the Convertible Loan Agreement to convert into preferred units of CCG at a conversion price equal to the current indebtedness under the Convertible Loan Agreement constituting forty percent (40%) of the overall ownership interests of CCG with the following preferred rights: (i) the right to an allocative share of sixty-six and 67/100 percent (66.67%) of the net profits of CCG and the right to distributions equal to sixty-six and 67/100 percent (66.67%) of the net profits on a monthly basis; (ii) the right to a sixty-six and 67/100 percent (66.67%) share of CCG’s assets upon dissolution of CCG; and (iii) the right to sixty-six and 67/100 percent (66.67%) of all voting rights of members of CCG. On or around September 18, 2023, CCG members approved certain actions to allow Big Stone AR 1 to become a member of CCG through preferred units, to elect Big Stone AR 1 as the manager of CCG and to amend the operating agreement. On or about February 15, 2024, the sole shareholder of Big Stone sold 45% of equity in Big Stone to Big Stone Acquisition LLC, in exchange for $100 cash payment plus a promissory note of $2,400,000. The transfer of ownership as a result of conversion of the Convertible Loan Agreement is before the Arkansas regulator.

CCG issued a cheque of $1,250,000 dated March 15, 2024 to Big Stone AR 1, which the Company does not intend to cash as all the CCG members provided written consent on September 18, 2023 to assign the convertible agreement to Big Stone Farms AR 1, admit Big Stone Farms AR 1 as a new member and manager, amend and restate the Operating Agreement. On April 2, 2024, Comprehensive Care Group LLC and Susan Williams filed a complaint for declaratory judgement in Pulaski Circuit Court with the defendants listed as Body and Mind Inc.; Nevada Medical Group LLC.; DEP Nevada Inc. and Big Stone Farms AR 1. The complaint was filed two days before the Arkansas regulator was scheduled to approve the transfer of CCG ownership and resulted in the regulator voting to table the decision to approve a transfer. The Comprehensive Care Group LLC and Susan Williams complaint seeks to refute the conversion of the previously referenced convertible note. Body and Mind Inc., Nevada Medical Group LLC., DEP Nevada Inc., and Big Stone Farms AR 1 filed a complaint for declaratory judgement and counterclaim on May 3, 2024 in Pulaski Circuit Court and named Comprehensive Care Group LLC, Susan Williams, Donald J Marshall, Valecia Ootsey-Walker and Robert DeBin as Counter-Defendants. In addition to the counter claim, counts for the following are included in the response - Declaratory Judgement, Declaratory Judgement – in the alternative, Breach of Contract – Convertible Loan Agreement, Unjust Enrichment, Promissory Estoppel, Breach of Fiduciary Duty, Fraud, Tortious Interference and Jury Demand. Compensatory damages in excess of $75,000 are also requested. On June 11, 2024, Comprehensive Care Group LLC and Susan Willams as plaintiffs filed a brief in support of motion for summary judgement against all counter claims with Body and Mind Inc., Nevada Medical Group LLC, DEP Nevada Inc and Big Stone Farms AR 1 as Defendants/Counter-Plaintiffs and Comprehensive Care Group LLC, Susan Williams, Donald J Marshall, Valecia Ootsey-Walder and Robert DeBin as Counter-Defendants. The Company and Big Stone Farms AR 1 are preparing a response and will pursue all legal options for return of management and ownership of the license.

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. The Company then estimates the fair value of the embedded conversion option. The sum of these two valuations is the fair value of the loan receivable balance.

The maturity date of the convertible loan was not extended after loss of the management agreement on March 15, 2024. Technically, the loan is due upon the request of the Company. However, management of the Company intents to convert the loan into CCG units, as always. Even though the Company and the CCG owners agreed, in principle, to convert the loan in September 2023, the Company does not consider the loan to be converted for accounting purposes until the Company receives regulatory approval, consistent with the Company’s prior accounting practices. Since CCG is offering to repay $1,250,000 (i.e. no conversion feature) as evidenced by the cheque issued to Big Stone AR 1, the fair value of the straight debt, without the embedded conversion option, is determined by management to be $1,250,000 as at 30 April 2024.

Since the Arkansas regulators have tabled any ownership change until our lawsuits with CCG owners are complete, whether and when the Arkansas regulators will approve conversion is not determinable at this point. As a result, management of the Company estimated fair value of the embedded conversion option to be $Nil as at 30 April 2024.

The sum of these two valuation models resulted in an estimated fair value of the loan receivable balance of $1,250,000 as of 30 April 2024. The change in the fair value of the convertible loan receivable has been recorded as a loss on fair value adjustment of convertible loan during the period ended 30 April 2024.

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9. Operating loans to CCG

In addition to the convertible loan receivable (Note 8), the Company provides operating loans to CCG that are non-interest bearing, unsecured and due on demand. During the nine months ended 30 April 2024, the Company advanced $749,555 (2023 - $1,054,844) to CCG and received repayments totaling $1,094,667 (2023 - $1,824,025) for a net increase in loan payable of $345,112 (2023 –$769,181). At 30 April 2024, the amount payable to CCG was $493,333 (31 July 2023 - $148,221). See also Note 14.

10. Property and Equipment

	Office Equipment		Production Equipment			Kitchen Equipment			Vault Equipment		Leasehold Improvements		Total
Cost:
Balance, 31 July 2023	$	62,892	$	235,685		$	22,052		$	8,163	$	2,150,661	$	2,479,453
Additions		-		-			-			-		111,820		111,820
Impairment		-		(235,685	)		(22,052	)		-		-		(257,737	)
Balance, 30 April 2024		62,892		-			-			8,163		2,262,481		2,333,536

Accumulated Depreciation:
Balance, 31 July 2023		25,705		120,479			12,609			2,914		490,531		652,238
Depreciation		6,744		-			-			875		200,501		208,120
Impairment		-		(120,479	)		(12,609	)		-		-		(133,088	)
Balance, 30 April 2024		32,449		-			-			3,789		691,032		727,270

Net Book Value:
At 31 July 2023		37,187		115,206			9,443			5,249		1,660,130		1,827,215
At 30 April 2024	$	30,443	$	-		$	-		$	4,374	$	1,571,449	$	1,606,266

For the nine months ended 30 April 2024, a total depreciation of $7,816 (2023 - $36,789) was included in General and Administrative Expenses and a total depreciation of $200,304 (2023 - $104,266) was included in Cost of Sales.

During the nine months ended 30 April 2024, the Company recorded an impairment loss of $124,649 related to the production equipment and kitchen equipment.

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11. Acquisitions

Canopy Monterey Bay, LLC – Business Acquisition

On 30 November 2021, the Company entered into 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, to expand our retail operations.

The first purchase agreement (“PA #1”) between DEP and 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 $4,800,000 comprised of $2,500,000 in cash (the “Cash Purchase Price”) and a secured promissory note in the amount of $2,300,000 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 and completion of the audited annual financial statements (the “Financial Statements”) of Canopy, or returned to DEP in the event of the denial of city or state approval or failure to complete the Financial Statements and the agreement is terminated, in which case the 80% membership interests will be transferred back to the Sellers and the promissory note will automatically be terminated. As of the date hereof, the city and state approvals have been received and the formal closing of the purchase of the 80% of the membership interests in Canopy closed in June 2022.

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 and completion of the Financial Statements under PA #1 in exchange for $1,000,000 to be paid in either shares of common stock of the Company (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 30 November 2021, which is US$0.3665 per share for a total of 2,728,156 shares (issued) (Note 16). 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 the Company to issue an additional $100,000 worth of shares of common stock of the Company (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. This was included as contingent consideration in the purchase price and $100,000 was recorded in accounts payable at 31 July 2022. 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.

On or around 1 December 2021, 80% of the membership interests of Canopy were transferred to DEP for purposes of applying for city and state approvals of the change in ownership of Canopy, however, the purchase price consideration of (i) $2.5 million in cash, and (ii) a promissory note in the amount of $2.3 million to be paid by DEP, were placed in escrow and not to be released to the sellers of the 80% membership interests in Canopy until the city and state approvals have been received and the Financial Statements of Canopy are completed. If the city or state approvals are not received, or the Financial Statements of Canopy are not completed, then the Buyer may terminate the membership interest purchase agreement requiring the membership interests in Canopy to be transferred back to the sellers and the escrow agent to deliver back to DEP the cash consideration and the promissory note shall automatically be terminated. As of the date hereof, the city and state approvals have been received and the formal closing of the purchase of the 80% membership interests in Canopy closed in June 2022.

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On 17 June 2022, the Company, through its wholly owned subsidiary, DEP Nevada, Inc., entered into the first amendment to PA #1 and PA #2 (the “First Amendment”) whereby the cash purchase price under PA #1 will be reduced from $2.5 million to $1.25 million and the Company will issue $1.25 million in shares of common stock of the Company to the Sellers based on the 10 day volume weighted average price (“VWAP”) for the ten (10) consecutive trading days prior to the effective date of the First Amendment (the “Effective Date”) and subject to compliance with the policies of the Canadian Securities Exchange (the “CSE”), which equates to 9,328,358 shares of common stock. The Company will also issue additional shares to Cary Stiebel equal to the difference between the amount of the shares of common stock of the Company that were issued by the Company to Mr. Stiebel on December 3, 2021 (the “PA #2 Shares”) and the amount of shares that Mr. Stiebel would have received had the VWAP for the PA #2 Shares been calculated as of the Effective Date (the “Additional PA #2 Shares”) which equates to 4,734,530 shares of common stock. Additionally, on the date that is eighteen (18) months (548 days) following the Effective Date of this First Amendment (the “Additional Share Issuance Date”) the Company will issue $100,000 worth of shares to the Sellers based on the ten (10) day VWAP and subject to compliance with the policies of the CSE, calculated as of the Additional Share Issuance Date. This $100,000 was recorded as consulting fees for the year ended 31 July 2022. Furthermore, DEP shall cause the Company to issue to Mr. Stiebel $300,000 worth of shares of common stock of the Company within three (3) days following the Effective Date of this First Amendment, and subject to compliance with the policies of the CSE (the “Additional True up Shares”) which equates to 2,238,806 shares of common stock. Prior to the conclusion of the calculation of the actual working capital in accordance with PA #1 and PA #2, Sellers shall complete, execute and deliver to DEP Schedule D to the First Amendment, which shall set forth the amount of Additional True-up Shares each Seller is entitled to (as applicable) and such Additional True-up Shares shall be retitled in accordance with Schedule D to the First Amendment. In the event Schedule D to the First Amendment is not completed, executed and delivered to DEP prior to the conclusion of the calculation of the actual working capital, DEP shall have no obligation to retitle the shares and all Sellers hereby waive any claims against DEP and the Company in connection with such issuance made in accordance with Section 2(b)(v) of the First Amendment. Upon conclusion of the calculation of the actual working capital in accordance with PA #1 and PA #2, the parties agree as follows:

(a) If the actual working capital is less than the target working capital of $nil, the Purchase Price (as defined in PA #2) shall be reduced by an amount equal to the difference between the target working capital and the actual working capital and all of the Additional True-up Shares shall be forfeited and retuned to Company for cancellation;

(b) If the actual working capital is greater than the target working capital of $nil and the Additional True-up Shares are sufficient to cover the difference between the actual working capital and the target working capital (the “DEP Deficit”), the parties agree that all or a portion of the Additional True-up Shares (valued at the ten (10) day VWAP calculated as of the Effective Date of the First Amendment and subject to compliance with the policies of the CSE) shall be issued to Sellers to satisfy the DEP Deficit owed by DEP to the Sellers in accordance with Section 2.02(b) of PA #2;

(c) If the actual working capital is greater than the target working capital and the Additional True-up Shares are insufficient to cover the DEP Deficit, all of the Additional True-up Shares shall be issued to Sellers and the parties agree that any additional amounts owed to the Sellers shall be paid by DEP to the Sellers via additional shares of common stock of the Company.

In addition to the terms of the First Amendment, the parties have agreed that the release of any Additional True-up Shares hereunder shall be subject to the Sellers providing written direction to DEP for the release of the Additional True-up Shares payable under the First Amendment.

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On December 7, 2022, pursuant to the previously announced (i) membership interest purchase agreement (“MIPA #1”), dated November 30, 2021, as amended on June 17, 2022, entered into between the Company’s wholly-owned subsidiary, DEP Nevada, Inc. (“DEP”), Canopy Monterey Bay, LLC (“Canopy”) and the membership interest owners of Canopy, Carey Stiebel (the “Continuing Owner”), Jana Stiebel, Jayme Rivard, Adrian Dermicek and Laurie Johnson (collectively, the “Sellers”) to purchase eighty percent (80%) of the issued and outstanding membership interests of Canopy, and (ii) membership interest purchase agreement (“MIPA #2”), dated November 30, 2021, as amended on June 17, 2022, entered into between DEP and the Continuing Owner to purchase the remaining twenty percent (20%) of the issued and outstanding membership interests of Canopy, the Company through DEP completed the acquisition of all of the membership interests of Canopy from the Sellers and closed MIPA #1, as amended, and MIPA #2, as amended.

Pursuant to the closing of MIPA #1, as amended, and MIPA #2, as amended, the Company issued an aggregate of 16,301,694 shares of common stock to the Sellers in accordance with their instructions at a deemed price of US$0.134 per share. 2,238,806 of the 16,301,694 shares are being held in escrow pending the results of a working capital adjustment in accordance with MIPA #1 and MIPA #2.

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. For accounting purposes, the acquisition date is the date that the Company obtained full control over the operations, although not all conditions for closing the acquisition had occurred as of 1 December 2021. 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 Canopy made by the Company:

Purchase consideration
Cash	$	1,250,000
Promissory note		2,300,000
Shares of common stock (Note 16)		2,189,544
Contingent consideration		100,000
Total consideration		5,839,544

Assets acquired:
Cash		378,503
Prepaid expenses		241,449
Inventory		630,039

Liabilities assumed:
Trade payable and accrued liabilities		(266,307	)
Income taxes payable		(1,229,213	)

Net assets acquired		(245,529	)
Brand and licenses		1,240,000
Goodwill		4,845,073
TOTAL	$	5,839,544

During the year ended 31 July 2022, the Company also recorded a loss on settlement of contingent consideration of $503,179 resulting from the fair value adjustment of the Company’s shares of common stock that have not been issued at 31 July 2022 and also recorded a consulting fee of $100,000 to be paid to the sellers in shares that was not included in the purchase consideration.

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CraftedPlants NJ Corp (“Merger”) – Asset Acquisition from a Related Party

On December 21, 2022, the Company, its wholly owned subsidiary, DEP Nevada, Inc. (“DEP”), BaM Body and Mind Dispensary NJ Inc., a New Jersey corporation and wholly owned subsidiary of DEP (the “Merger Sub”), CraftedPlants NJ Corp., a New Jersey corporation (the “Surviving Entity”), an entity controlled by a Director of the Company, and those certain shareholders of the Surviving Entity (the “Sellers”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) whereby the Merger Sub merged with and into the Surviving Entity, and following the consummation of the merger, which occurred on December 21, 2022, the Surviving Entity became a wholly owned subsidiary of DEP and changed its name to BaM Body and Mind Dispensary NJ, Inc. (the “Merged Entity”).

CraftedPlants NJ Corp. had a lease in Lawrenceville, New Jersey that was already zoned for cannabis retail store. There is no operational history for CraftedPlants NJ Corp. and is essentially comprised of one operating lease asset. The lease agreement does not include any provision that would revoke the approval for a cannabis retail store in a change of ownership of CraftedPlants NJ. Management is not aware of any laws and regulations that would revoke the zoning approval upon change of ownership. The purpose of the merger is expansion into the New Jersey adult use market through merging with an entity with a lease in New Jersey with local preapproval for an adult us cannabis location. The compensation for merger is contingent on success milestones including granting of pending license approval from the State of New Jersey Cannabis Regulatory Commission and opening of the business as a recreational cannabis dispensary.

The Company also entered into a three-year strategic advisory services agreement with Bengal Impact Partners, LLC (“Bengal Capital”) dated 5 January 2023 (“Bengal Advisory Agreement”). The Company shall pay Bengal Capital $240,000 on each anniversary, of which $60,000 is to be paid in cash and $180,000 is to be paid in cash, common stock, or warrants to purchase shares of the Company’s common stock, in such proportions as are determined by the Company. In addition, if the Company successfully obtains a cultivation license in New Jersey during the term of the Bengal Advisory Agreement, the Company will owe a fee of $1,000,000, which will be payable in the form of the Company’s common stock or a warrant to purchase shares of the Company’s common stock, in either case as requested by Bengal Capital.

Bengal Catalyst Funds and CraftedPlants NJ Corp were both owned or managed by the principals of the Bengal Capital Group and Bengal Catalyst Fund also participated in the 19 December 2022 convertible debenture financings (Note 14). Joshua Rosen is a managing principal of the Bengal Capital Group and he was involved in both transactions of the convertible note investment and the merger acquisition of Crafted Plants NJ Corp. Joshua Rosen was appointed as a director of the Company effective 1 February 2023, and therefore this transaction is considered a related party transaction.

Pursuant to the terms of the Merger Agreement, on the closing DEP delivered a cash payment of $50,000 to the Sellers, with a delayed payment of approximately $120,000 to be paid to the Sellers upon funding of the project buildout which is anticipated to occur after receipt of the New Jersey state license and local construction approvals.

Further, pursuant to the terms of the Merger Agreement, on December 21, 2022, the Company issued to the Sellers an aggregate of 16,666,667 shares of its common stock (the “Merger Consideration Shares”). The Merger Consideration Shares will be held in escrow and will not be released to the Sellers until the Surviving Entity achieves certain milestones, however, the Sellers will still maintain the voting and participation rights with respect to the Merger Consideration Shares while being held in escrow. The post-closing milestones are as follows:

	1.	If, within two (2) years of the closing date, the Surviving Entity’s application is approved and is granted pending license approval from the New Jersey Cannabis Regulatory Commission (the “CRC”), 70% of the Merger Consideration Shares will be release from escrow.

	2.	If, within three (3) years of the closing date, the Surviving Entity opens for business as a recreational cannabis dispensary, 30% of the Merger Consideration Shares will be released from escrow.

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If either or both of the milestones are not achieved within the time periods after the closing date (the “Milestone Dates”), the Company shall have the option to cancel the Merger Consideration Shares attributable to the failed milestone by delivering written notice to Sellers and in the event of such cancellation, the portion of the Merger Consideration Shares attributable to the failed milestone shall be surrendered and cancelled without any further action required by the parties. Notwithstanding the foregoing, if either or both of the milestones are not achieved (or if it becomes obvious that they will not be achieved) by their respective Milestone Dates because of delays that are not caused by the Sellers, the Sellers may, before the applicable Milestone Dates, provide notice to the Company, and the applicable Milestone Date will be extended to such date as is reasonably necessary for the milestone to be achieved. The parties will work together in mutual good faith to determine the dates by when the milestones can be reasonably achieved. If the Company fails to diligently pursue issuance of the state recreational licenses at any time prior to the second anniversary, and the Company fails to cure such failures in accordance with the Merger Agreement, the Company will owe to Sellers a termination fee equal to 25% of the Merger Consideration Shares.

The likelihood of achieving both milestones is uncertain at this time and, as such, the Company recorded the Merger Consideration Shares at par value.

The acquisition was accounted for as an asset acquisition since the Surviving Entity did not meet the definition of a business in accordance with ASC 805, as it had no outputs and did not have a substantive process that could significantly contribute to the ability to create outputs. In accordance with ASC 805-50 and measurement of share-based payment in ASC 718, the acquisition should be measured on the date on which the acquirer obtains control of the acquiree. The date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree.

The Company obtained 100% ownership and control over the Merged Entity and the lease asset on 21 December 2022. The purchase price, as measured on 21 December 2022, was $170,000 which was included in the lease liability and right-of-use assets calculation for the lease acquired in the State of New Jersey (see Note 15).

On September 22, 2023, DEP sold 5% of the outstanding shares (the “Subject Shares”) of BaM Body and Mind Dispensary NJ, Inc. (“BaM NJ”) to an individual who resides in New Jersey (the “Purchaser”) in exchange for $1.00, and concurrently therewith, DEP and the Purchaser entered into an option agreement (the “Option”) whereby the Purchaser granted DEP the option to acquire the Subject Shares for the purchase price of $1.00. In addition, in connection with the sale of the Subject Shares to the Purchaser and the Option, the Purchaser, DEP and BaM NJ entered into a consulting agreement (the “Consulting Agreement”) whereby the Purchaser shall assist BaM NJ with its pre-license matters with the New Jersey Cannabis Regulator Commission and post-license operational matters to maintain the license. Pursuant to the Consulting Agreement, and provided that BaM NJ is issued a commercial cannabis retain license in and from the State of New Jersey, BaM NJ shall pay to the Purchaser an aggregate amount of $50,000 for the services to be provided by the Purchaser to BaM NJ.

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NMG IL 4, LLC – Asset Acquisition from a Related Party

In 2019, the Company’s wholly owned subsidiary, DEP Nevada, Inc. (“DEP”), executed definitive agreements with NMG Illinois, LLC (“Management Company”), IL Resident, LLC (“IL Resident”), an entity which is controlled by our social equity partner, and other NMG entities in Illinois, NMG IL 1, LLC (“NMG IL 1”) and NMG IL 4, LLC (“NMG IL 4”), in connection with a proposed business combination (the “Transaction”). NMG IL 1 and NMG IL 4 were originally owned by Tall Bird, LLC (“Tall Bird”), a company owned by our social equity partner, and Big Stone, LLC (“Big Stone”), a company controlled by the Company’s Chief Operating Officer.

The Transaction with NMG IL 4 expands our retail operation in the limited license jurisdiction and ownership has been transferred to DEP, which state regulatory approval has been received, however, the Company through DEP controls NMG IL 4 and is consolidating the financial information from NMG IL 4 from the opening day of the dispensary on April 25, 2023 as described in more detail below.

	a)	DEP entered into a Convertible Credit Facility Agreement (the “Convertible Note”) with NMG IL 4 on December 26, 2019 to build-out the facility for up to $1,500,000 in lieu of converting into 99,900 membership units of NMG IL 4;
	b)	DEP also entered into a Membership Interest Purchase Agreement (the “MIPA”) on December 26, 2019 with both Tall Bird and Big Stone to purchase the remaining 100 units for $10 per unit;
	c)	Upon receipt of the Illinois license, NMG IL 4 entered into a management agreement with Management Company and would be paid a management fee equal to 30% of net profits;
	d)	NMG IL 4 was granted the operational license on April 20, 2023;
	e)	On April 25, 2023, DEP converted the Convertible Note for 99,900 units and purchased 100 units for $1,000 pursuant to the MIPA, after the opening of the Markham dispensary on or about April 25, 2023;
	f)	Upon the conversion, DEP obtained 100% ownership (or 100,000 units) of NMG IL 4, subject to regulatory approval (approved);
	g)	The Management Agreement has been dissolved concurrently with the conversion, in the meanwhile, the Company took control of operations of NMG IL 4.

The acquisition of NMG IL 4 was accounted for as an asset acquisition with a related party since NMG IL 4 did not meet the definition of a business in accordance with ASC 805.

The purchase price, as measured on 25 April 2023, was $995,035 in advances under the Convertible Note.

The following table summarizes the assets acquired and the liabilities assumed:

Assets acquired:
Cash		100,707
Prepaid and deposits		70,230
Inventory		194,075
Property and equipment		918,492

Liabilities assumed:
Trade payable and accrued liabilities		(288,469	)
Net assets acquired	$	995,035

As the acquisition of NMG IL 4 was from a related party, the Company did not recognize any fair value increase in assets acquired or liabilities assumed, nor recognized any intangible assets. The excess of the amount paid over the fair value of the net assets acquired was included in Business Development expenses during the period NMG IL 4 was acquired.

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12. Intangible Assets, Net

					As of 30 April 2024
	Gross carrying amount		Weighted average life (years)		Accumulated amortization			Net carrying amount
Indefinite life intangible assets:
Brand	$	220,000		-	$	-		$	220,000

Amortizable intangible assets:
Licenses		4,683,508		10.0		(1,331,792	)		3,351,716

Total intangible assets	$	4,903,508			$	(1,331,792	)	$	3,571,716

					As of 31 July 2023
	Gross carrying amount		Weighted average life (years)		Accumulated amortization			Net carrying amount
Indefinite life intangible assets:
Brand	$	220,000		-	$	-		$	220,000

Amortizable intangible assets:
Licenses		4,683,508		10.0		(1,053,576	)		3,629,932

Total intangible assets	$	4,903,508			$	(1,053,576	)	$	3,849,932

Amortization expense for intangible assets was $278,216 (2023 - $763,846) for the nine months ended 30 April 2024.

The expected amortization of the intangible assets, as of 30 April 2024, for each of the next five years and thereafter is as follows:

2024	$	93,415
2025		370,616
2026		370,616
2027		370,616
2028		371,632
Thereafter		1,774,821
	$	3,351,716

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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 and nine months ended 30 April 2024 and 2023 are as follows:

	For the three months ended 30 April 2024		For the three months ended 30 April 2023		For the nine months ended 30 April 2024		For the nine months ended 30 April 2023
A company controlled by the President, Chief Executive Officer and a director Management fees	$	53,280	$	52,727	$	196,534	$	159,948
A company controlled by the Chief Financial Officer and a director Management fees		40,603		30,667		127,411		93,030
A company controlled by the former Corporate Secretary Management fees		-		16,801		-		51,174
	$	93,883	$	100,195	$	323,945	$	304,152

At 30 April 2024, amounts owing to related parties of $87,966 (31 July 2023 - $93,481) are as follows:

	a)	As of 30 April 2024, the Company owed $64,157 (31 July 2023 - $61,777) to the Chief Executive Officer of the Company and a company controlled by him.

	b)	As of 30 April 2024, the Company owed $Nil (31 July 2023 - $31,704) to the Chief Operating Officer.

	c)	As of 30 April 2024, the Company owed $23,809 (31 July 2023 - $Nil) to the Chief Financial Officer of the Company and a company controlled by him.

	d)	See also Note 11 for merger agreement and Note 14 for convertible debentures financing with entities controlled by the Company’s Director.

	e)	See also Note 11 for the acquisition of NMG IL 4.

	f)	The Company is committed to pay a commission fee of 2.5% of the transaction total to Bengal Impact Partners LLC, a company controlled by Josh Rosen, in connection with the disposition of NMG OH 1 (Note 21).

The above amounts owing to related parties are unsecured, non-interest bearing and are due on demand.

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14. Loans Payable and Convertible Debenture

As of 30 April 2024 and 31 July 2023, the following loans payable are outstanding:

	30 April 2024			31 July 2023
FocusGrowth loan	$	-		$	6,666,667
Long Beach loan		-			10,728
Operating loan - CCG		493,333			148,221
Canopy loan
Secured promissory note		2,300,000			2,300,000
Unsecured loan balance		-			7,052
Total principal amount	$	2,793,333		$	9,132,668
Debt discount		-			(1,187,008	)
Outstanding balance, net	$	2,793,333		$	7,945,660
Current portion		(493,333	)		(166,001	)
Long-term portion	$	2,300,000		$	7,779,659

FocusGrowth loan

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 December 2021, 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 was held in escrow to be 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 Company did not draw on the Delayed Draw Term Loan, and the warrants were cancelled.

The Company also paid agent fees, legal fees and other fees in the amount of $175,758. The 4,800,000 Warrants had a relative fair value of $1,037,146 and when combined with the $175,758 in fees and the $666,667 origination discount, resulted in a debt discount of $1,883,901.

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.

On 15 June 2022, the Company entered into a second amendment to the Loan Agreement (“Amendment No. 2 to Loan Agreement”) to extend the maturity date by one year to 19 July 2026. Additionally, Amendment No. 2 to Loan Agreement allows the outside date for the Company to draw on the delayed draw term loan of US$4.44 million to be extended from June 1, 2022 to March 31, 2023, whereby US$4 million in funds will be advanced to the Company. The ability of the Company to draw on the delayed draw term loan was subject to compliance with certain provisions in Loan Agreement including provision of a satisfactory budget approved at the sole discretion of the Lender. The Company did not draw or extend the Delayed Draw Term Loan and has expired.

The Amendment No. 2 to Loan Agreement increases the interest rate on the advanced funds from 13% to 15% per annum, which additional 2% interest may be paid in kind, with the interest being payable on the first day of each month.

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Amendment No. 2 to Loan Agreement provides for an exit fee equal to 1.5% of the principal balance, which is due and payable upon any payment, in part or in full, of the initial term loan and the delayed draw term loan. As partial consideration for Amendment No. 2 to Loan Agreement, the Company has issued 1,000,000 common stock purchase warrants (each, a “Warrant”) to the Lender. Each Warrant entitles the holder to acquire one share of common stock (each, a “Warrant Share”) at an exercise price of US$0.16 per Warrant Share until June 14, 2027.

The Amendment No. 2 to Loan Agreement was accounted for as a modification consistent with ASC 470-50, Debt Modification, where the lender fees, including 1,000,000 additional common stock purchase warrants valued at $79,585 and the exit fee of $100,000, are capitalized as additional debt discount and amortized as par to the effective yield.

On December 12, 2022, the Company, the Guarantors (collectively, the “Loan Parties”) the Agent and the Lender entered into a Limited Waiver and Amendment to Loan Agreement (the “Limited Waiver and Amendment to Loan Agreement”) to deal with certain events of default that occurred under the Loan Agreement, as amended, with respect to (i) the Company’s failure to deliver to Agent the audited annual financial statements of the Company and its subsidiaries for the fiscal year ended July 31, 2022, on or before ninety (90) days after the end of such fiscal year in accordance with Section 7.2(c) of the Loan Agreement (the “First Specified Default”) and (ii) the Agent being informed that the Company anticipates that it will fail to deliver the quarterly financial statements of the Company and its subsidiaries for the fiscal quarter ending October 31, 2022, in form and substance acceptable to Agent, on or before forty-five (45) days after the end of such fiscal quarter, in accordance with Section 7.2(b) (the “Second Specified Default”, and together with the First Specified Default, the “Specified Defaults”).

Pursuant to the Limited Waiver and Amendment to Loan Agreement, the Agent and the Lender each waive the Specified Defaults on a limited one-time basis subject to the terms and conditions thereof until (i) with respect to the First Specified Default, 5:00 PM EST on December 30, 2022, and (ii) with respect to the Second Specified Default, 5:00 PM EST on January 13, 2023 (the “Waiver Period”); provided that if the Loan Parties do not deliver each of the Amended Deliverables (as defined below) on or before expiration of their respective Waiver Period; the waiver shall no longer be of any effect, and the Lender shall be entitled to enforce all remedies set forth in the Loan Agreement as of the date each Specified Default first occurred.

Subsequent to entering into the Limited Waiver and Amendment to Loan Agreement, the parties verbally agreed and confirmed via email on December 20, 2022, that Waiver Period for the First Specified Default shall be extended from December 30, 2022 to January 17, 2023, and the Waiver Period for the Second Specified Default shall be extended from January 13, 2023 to January 27, 2023; and that the corresponding amendments shall be made to sections 7.2(b) and 7.2(c) of the Loan Agreement as set forth above.

During the nine months ended 30 April 2024, in connection with the disposition of NMG OH 1 (Note 21), the Company fully repaid the loan in the amount of $7,335,722, which included the principal balance of $6,666,666, accrued interest of $326,512, and prepayment premium of $342,543 included in interest expense on the consolidated statements of operations and comprehensive loss.

BODY & MIND INC. [BMMJ] Filings
10-Q	[2024-06-20]
10-Q	[2024-03-25]
10-Q	[2023-12-20]
10-K	[2023-11-14]
10-Q	[2023-06-20]
10-Q	[2023-03-22]
10-Q	[2023-01-24]
10-K	[2023-01-17]
10-Q	[2022-06-21]
10-Q	[2022-03-17]
10-Q	[2021-12-15]
10-K	[2021-11-19]
10-Q	[2021-06-21]
10-Q	[2021-03-17]
10-Q	[2021-02-01]
10-K	[2020-12-15]
10-Q	[2020-07-28]
10-Q	[2020-03-23]
S-1	[2020-03-13]
10-Q	[2019-12-23]
10-K	[2019-11-13]
10-Q	[2019-06-19]
10-Q	[2019-03-25]
10-Q	[2018-12-24]
10-K	[2018-11-14]
10-Q	[2018-10-29]