Item 7.01 Regulation FD Disclosure
On December 1, 2021, Body and Mind Inc. (the "Company" or "BaM") issued a news
release to announce 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.
"We are excited about the opportunity to add revenue and expand our retail and
brand deeper into the California market with the acquisition of this limited
license dispensary," stated Michael Mills, CEO of Body and Mind. "The Reef was
opened in 2018 and is located in downtown Seaside close to Monterey State Beach
with a large local and visitor clientele for both in store and curbside pickup.
The Reef has a history of supporting creative projects in the community and has
an extensive retail delivery operation. We see numerous synergies to grow our
footprint in the California market with the knowledgeable and professional team
at The Reef and are excited about the excellent talent addition to the Body and
Mind team." "Body and Mind will takeover management of The Reef operations
effective December 1, 2021 and anticipates consolidating revenues from the
acquisition as soon as local and state approvals have been granted."
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 ($100,000.00) 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.
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Michigan Dispensary
The Michigan dispensary is near completion of renovations with final
installation of security systems and point of sale equipment. The Company has
hired an experienced manager and staff training has commenced in preparation for
opening in December pending all final approvals.
Arkansas Cultivation
Body and Mind flower is now available at the Body and Mind dispensary in West
Memphis, AR. This is the first flower from the Arkansas cultivation operations.
Amendment to Loan Agreement
The Company and Focus Growth Agency Lending LLC have amended the loan agreement
(see news release July 20, 2021) to extend the delayed draw request period 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.
Capital Markets Advisory
The Company has 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. Skanderbeg Capital Advisors is a boutique merchant bank and
capital advisor firm, which is focused on identifying companies with highly
prospective business opportunities in the natural resource, technology, biotech
and special situations sectors. The Company will pay a monthly fee of CAD$ 7,500
and a one-time payment of 200,000 options priced at CAD$ 0.44.
Grant of Stock Options to Executives
The Company has granted 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
were granted to BaM's CEO and COO.
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.
A copy of the news release is attached as Exhibit 99.1 hereto.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Description
99.1 News Release dated December 1, 2021.
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BODY AND MIND INC. 
