(Stated in thousands of Canadian dollars, except share and per share amounts)

(Unaudited)

High Tide Inc.

Condensed Interim Consolidated Financial Statement

For the three and nine months ended July 31, 2021 and 2020

Condensed Interim Consolidated Financial Statements for the three and nine months ended July 31, 2021 and 2020.

The accompanying unaudited condensed interim consolidated financial statements of High Tide Inc. ('High Tide' or the 'Company') have been prepared by and are the responsibility of the Company's management and have been approved by the Audit Committee and Board of Directors of the Corporation.

Approved on behalf of the Board:

(Signed) 'Harkirat (Raj) Grover'

(Signed) 'Nitin Kaushal'

President and Chair of the Board

Director and Chair of the Audit Committee

High Tide Inc.

Condensed Interim Consolidated Statements of Financial Position

As at July 31, 2021 and October 31, 2020

(Unaudited - In thousands of Canadian dollars)

Notes

2021

2020

$

$

Assets

Current assets

Cash

26,640

7,524

Marketable securities

17

1,251

50

Trade and other receivables

8

5,689

2,861

Inventory

15,049

5,702

Prepaid expenses and deposits

7

5,161

3,070

Current portion of loans receivable

9

1,432

74

Total current assets

55,222

19,281

Non-current assets

Loans receivable

9

1,623

230

Property and equipment

6

22,389

13,085

Net Investment - Lease

20

875

1,716

Right-of-use assets, net

20

26,197

16,413

Long term prepaid expenses and deposits

7

1,606

809

Deferred tax asset

250

250

Intangible assets and goodwill

3, 5

126,020

18,027

Total non-current assets

178,960

50,530

Total assets

234,182

69,811

Liabilities

Current liabilities

Accounts payable and accrued liabilities

13,107

6,421

Notes payable current

12

3,939

1,939

Deferred liability

-

1,700

Current portion of convertible debentures

11

946

14,446

Current portion of lease liabilities

20

5,729

2,194

Derivative liability

3,15

10,377

764

Total current liabilities

34,098

27,464

Non-current liabilities

Notes payable

12

12,034

2,589

Convertible debentures

11

9,008

11,376

Lease liabilities

20

21,091

14,474

Deferred tax liability

11,140

2,185

Total non-current liabilities

53,273

30,624

Total liabilities

87,371

58,088

Shareholders' equity

Share capital

13

188,180

32,552

Warrants

15

11,487

5,796

Contributed surplus

12,362

4,704

Convertible debentures - equity

1,469

1,965

Accumulated other comprehensive income

(401)

(487)

Accumulated deficit

(69,777)

(34,359)

Equity attributable to owners of the Company

143,320

10,171

Non-controlling interest

22

3,491

1,552

Total shareholders' equity

146,811

11,723

Total liabilities and shareholders' equity

234,182

69,811

3

High Tide Inc.

Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

For the three and nine months ended July 31, 2021 and 2020

(Unaudited - In thousands of Canadian dollars)

Three months ended

Nine months ended

Notes

2021

2020

2021

2020

$

$

$

$

Revenue

Merchandise sales

43,761

23,173

117,667

55,909

Other revenue

4,308

930

9,589

2,480

Total Revenue

4

48,069

24,103

127,256

58,389

Cost of sales

(31,390)

(14,564)

(80,811)

(36,302)

Gross profit

16,679

9,539

46,445

22,087

Expenses

Salaries, wages and benefits

(7,318)

(3,642)

(19,373)

(10,173)

Share-based compensation

14

(508)

(2)

(2,578)

(101)

General and administration

(5,316)

(1,539)

(11,259)

(4,522)

Professional fees

(721)

(712)

(2,391)

(2,329)

Advertising and promotion

(1,364)

(99)

(1,679)

(346)

Depreciation and amortization

5,6,20

(8,299)

(1,771)

(22,107)

(4,585)

Interest and bank charges

(420)

(150)

(881)

(368)

Total expenses

(23,946)

(7,915)

(60,268)

(22,424)

(Loss) income from operations

(7,267)

1,624

(13,823)

(337)

Other income (expenses)

Gain on disposal of assets

5,6

2,997

-

2,997

-

Loss on extinguishment of debenture

11

-

-

(516)

(186)

Debt restructuring gain

12

-

-

1,145

-

Gain on sale of marketable securities

-

4,762

-

3,576

Revaluation of marketable securities

(112)

477

(256)

-

Impairment loss

(57)

-

(57)

(247)

Finance and other costs

10

(3,034)

(2,649)

(11,044)

(7,707)

Revaluation of derivative liability

3,11,15

5,919

(67)

(8,553)

247

Foreign exchange (loss) gain

28

(4)

(66)

17

Total other income (expenses)

5,741

2,519

(16,350)

(4,300)

(Loss) income before taxes

(1,526)

4,143

(30,173)

(4,637)

Current income tax expense

(224)

(317)

(688)

(394)

Net (loss) income

(1,750)

3,826

(30,861)

(5,031)

Other comprehensive income (loss)

Translation difference on foreign subsidiary

4

(36)

86

135

Total comprehensive (loss) income

(1,746)

3,790

(30,775)

(4,896)

Comprehensive (loss) income attributable to:

Owners of the Company

(1,677)

3,836

(30,797)

(4,798)

Non-controlling interest

(69)

(46)

22

(98)

(1,746)

3,790

(30,775)

(4,896)

(Loss) income per share

Basic and diluted

16

(0.03)

0.25

(0.79)

(0.33)

Subsequent Events (Note 23)

4

High Tide Inc.

Condensed Interim Consolidated Statements of Changes in Equity

For the nine months ended July 31, 2021 and 2020

(Unaudited - In thousands of Canadian dollars)

Equity

Accumulated

portion of

other

Attributable

Contributed

convertible

comprehensive

Accumulated

to owners of

Note

Share capital

Warrants

surplus

debt

income (loss)

deficit

the Company

NCI

Total

$

$

$

$

$

$

$

$

$

Opening balance, November 1, 2019

26,283

6,609

2,119

1,637

(366)

(26,696)

9,586

(179)

9,407

Fee paid in shares

860

-

-

-

-

-

860

-

860

Warrants

-

856

401

-

-

-

1,257

-

1,257

Share-based compensation

-

-

100

-

-

-

100

-

100

Equity portion of convertible debentures

-

-

-

1,755

-

-

1,755

-

1,755

Cumulative translation adjustment

-

-

-

-

135

-

135

-

135

Prepaid Interest paid in shares

1,168

-

-

-

-

-

1,168

-

1,168

Purchase of minority interest - KushBar Inc.

500

-

-

-

-

(695)

(195)

187

(8)

Acquisition - 2680495 Ontario Inc.

1,100

-

-

-

-

-

1,100

-

1,100

Acquisition - Saturninus Partners

1,218

210

-

-

-

-

1,428

930

2,358

Acquisition - 102088460 Saskatchewan Ltd.

975

-

-

-

-

-

975

-

975

Asset acquisition

104

-

-

-

-

-

104

-

104

Comprehensive loss for the period

-

-

-

-

-

(4,933)

(4,933)

(55)

(4,988)

Balance, July 31, 2020

32,208

7,675

2,620

3,392

(231)

(32,324)

13,340

883

14,223

Opening balance, November 1, 2020

32,552

5,796

4,704

1,965

(487)

(34,359)

10,171

1,552

11,723

Acquisition - Meta Growth

3

35,290

2,739

240

9,008

-

-

47,277

1,821

49,098

Acquisition - Smoke Cartel, Inc.

3

8,396

-

-

-

-

-

8,396

-

8,396

Acquisition - Fab Nutrition, LLC.

3

9,243

-

-

-

-

(4,535)

4,708

988

5,696

Acquisiton - DHC Supply LLC

3

7,751

-

-

-

-

-

7,751

-

7,751

Sale of controlling interest

5

-

-

-

-

-

-

-

(892)

(892)

Prepaid Interest paid in shares

1,458

-

-

-

-

-

1,458

-

1,458

Share-based compensation

14

-

-

2,578

-

-

-

2,578

-

2,578

Equity portion of convertible debentures

-

-

-

157

-

-

157

-

157

Exercise options

14

1,005

-

(179)

-

-

-

826

-

826

Warrants expired

15

-

(5,394)

5,394

-

-

-

-

-

-

Issued to pay fees in shares

468

-

-

-

-

-

468

-

468

Extension of convertible debenture

-

-

340

-

-

-

340

-

340

Conversion of convertible debentures

43,317

-

-

(9,661)

-

-

33,656

-

33,656

Warrants exercised

15

15,045

(1,676)

28

-

-

-

13,397

-

13,397

Cumulative translation adjustment

-

-

-

-

86

-

86

-

86

Shares and warrants issued through equity financing

38,447

10,022

-

-

-

-

48,469

-

48,469

Share issuance costs

(5,535)

-

-

-

-

-

(5,535)

-

(5,535)

Vesting of RSUs

14

743

-

(743)

-

-

-

-

-

-

Comprehensive loss for the period

-

-

-

-

-

(30,883)

(30,883)

22

(30,861)

Balance, July 31, 2021

188,180

11,487

12,362

1,469

(401)

(69,777)

143,320

3,491

146,811

5

High Tide Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three and nine months ended July 31, 2021 and 2020

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

Notes

2021

2020

$

$

Operating activities

Net loss

(30,861)

(5,031)

Adjustments for items not effecting cash and cash equivalents

Income tax expense

688

394

Accretion expense

10

4,575

4,263

Fee for services and interest paid in shares and warrants

13

1,926

1,424

Acquisition costs paid in shares

-

624

Depreciation and amortization

5,6,20

22,107

4,585

Revaluation of derivative liability

3,11,15

8,553

(247)

Loss on extinguishment of debenture

11

516

186

Debt restructuring gain

12

(1,145)

-

Impairment loss

57

247

Foreign exchange gain (loss)

66

(17)

Share-based compensation

14

2,578

101

Gain on disposal of assets

5,6

(2,997)

-

Loss on sale of marketable securities

-

(3,576)

Revaluation of marketable securities

256

-

6,319

2,953

Changes in non-cash working capital

Trade and other receivables

(944)

(1,774)

Inventory

(3,973)

1,117

Loans receivables

(161)

817

Prepaid expenses and deposits

(390)

453

Accounts payable and accrued liabilities

(8,687)

2,243

Net cash (used in) provided by operating activities

(7,836)

5,809

Investing activities

Net additions of property and equipment

6

(6,206)

(1,837)

Net additions of intangible assets

5

(124)

(427)

Proceeds from sale of marketable securities

-

1,458

Proceeds from sale of assets

2,300

-

Cash paid for business combination, net of cash acquired

3

(14,172)

(2,484)

Net cash used in investing activities

(18,202)

(3,290)

Financing activities

Repayment of finance lease obligations

(11)

(5)

Proceeds from convertible debentures net of issue costs

11

1,273

8,855

Proceeds from equity financing

43,250

-

Proceeds from notes payable

-

200

Repayment of convertible debentures

(3,813)

(1,867)

Interest paid on debentures and loans

(985)

-

Lease liability payments

20

(5,270)

(3,400)

Warrants exercised

9,885

-

Options exercised

825

-

Net cash provided by financing activities

45,154

3,783

Net increase in cash

19,116

6,302

Cash, beginning of period

7,524

806

Cash, end of period

26,640

7,108

6

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

1.

Nature of Operations

High Tide Inc. (the 'Company' or 'High Tide') is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company's shares are listed on the Nasdaq Capital Market ('Nasdaq') under the symbol 'HITI'(listed as of June 2, 2021), the TSX Venture Exchange ('TSXV') under the symbol 'HITI', and on the Frankfurt Stock Exchange ('FSE') under the securities identification code 'WKN: A2PBPS' and the ticker symbol '2LYA'. The address of the Company's corporate and registered office is # 120 - 4954 Richard Road SW, Calgary, Alberta T3E 6L1.

High Tide does not engage in any U.S. cannabis-related activities as defined by the Canadian Securities Administrators Staff Notice 51-352.

COVID-19

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

2.

Accounting Policies

A.

Basis of Preparation

These condensed interim consolidated financial statements ('Financial Statements') have been prepared in accordance with International Accounting Standard ('IAS') 34 Interim Financial Reporting as issued by the International Accounting Standards Board ('IASB'). They are condensed as they do not include all of the information required for full annual financial statements, and they should be read in conjunction with the audited consolidated financial statements of the Company for the year ended October 31, 2020 which are available on SEDAR at www.sedar.com.

For comparative purposes, the Company has reclassified certain immaterial items on the comparative condensed interim consolidated statement of financial position and the condensed interim consolidated statement of (loss) income and comprehensive (loss) income to conform with current period's presentation.

On May 13, 2021, the Company completed a one-for-fifteen (1:15) reverse share split of all of its issued and outstanding common shares ('Share Consolidation'), resulting in a reduction in the issued and outstanding shares from 690,834,719 to 46,055,653. Shares reserved under the Company's equity and incentive plans were adjusted to reflect the Share Consolidation.

These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on September 14, 2021.

B.

Use of estimates

The estimates and assumptions are reviewed on an ongoing basis. Revisions in accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. Significant judgements, estimates, and assumptions within these condensed interim consolidated financial statements remain the same as those applied to the consolidated financial statements for the year ended October 31, 2020.

7

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

2.

Accounting Policies (continued)

C.

New Accounting Pronouncements not yet adopted

Costs Necessary to Sell Inventories (IAS 2) Agenda Decision

At its June 2021 meeting, the IFRS Interpretations Committee finalized an agenda decision about the costs an entity includes as the 'estimated costs necessary to make the sale' when calculating net realizable value of inventories, which is used in determining if inventory balances are impaired. The Committee concluded that when determining the net realizable value of inventories, an entity estimates the costs necessary to make the sale in the ordinary course of business, which requires the exercise of judgement. The Company is assessing the impact of this agenda decision on its results of operations, financial position and disclosures

8

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

3.

Business Combinations

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

A.

Meta Growth Corp. Acquisition

Total consideration

$

Common shares

35,290

Conversion feature of convertible debt

9,008

Warrants

2,739

Options

86

Restricted stock units

154

47,277

Purchase price allocation

Cash and cash equivalents

10,209

Trade and other receivables

2,015

Inventory

3,547

Prepaid expenses

2,479

Marketable securities

635

Notes receivable

312

Property and equipment

6,849

Loan receivable

756

Intangible assets - license

37,700

Right of use asset

12,490

Goodwill

25,913

Non-controlling interest

(1,821)

Accounts payable and accrued liabilities

(6,336)

Deferred tax liability

(2,449)

Lease liability

(12,887)

Convertible debenture

(18,809)

Notes payable

(13,326)

47,277

On November 18, 2020, the Company closed the acquisition of 100% of the outstanding common shares of Meta Growth Corp ('Meta Growth' or 'META'). Pursuant to the terms of the Arrangement, holders of common shares of META ('META Shares') received 0.824 (the 'Exchange Ratio') High Tide Shares for each META Share held. In total, High Tide acquired 237,941,274 META Shares in exchange for 196,063,610 High Tide Shares pre-consolidation (13,070,907 post-consolidation shares), resulting in former META shareholders holding approximately 45.0% of the total number of issued and outstanding High Tide Shares.

In accordance with IFRS 3, Business Combinations ('IFRS 3'), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, property plant and equipment, right of use asset, non-controlling interest, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business, expanded access to capital and greater financial flexibility. For the nine months ended July 31, 2021, Meta Growth accounted for $45,670 in revenues and $12,669 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $3,422 in revenues and an increase of $401 in net loss for the nine months ended July 31, 2021. The Company also incurred $1,359 in transaction costs, which have been expensed to finance and other costs during the period.

9

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

B.

Smoke Cartel, Inc. Acquisition

Total consideration

$

Cash

2,600

Common shares

8,396

Contingent consideration

1,366

12,362

Purchase price allocation

Cash and cash equivalents

1,738

Intangible assets - Brand

3,997

Intangible assets - Software

7,325

Goodwill

2,017

Deferred tax liability

(1,194)

Accounts payable and accrued liabilities

(1,521)

12,362

On March 24, 2021, the Company closed the acquisition of 100% of the outstanding common shares of Smoke Cartel Inc. ('Smoke Cartel'). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) 9,540,754 common shares of High Tide pre-consolidation (636,050 post-consolidation shares), having an aggregate value of $8,396; (ii) $2,600 in cash; and (iii) a contingent consideration depending on certain revenue targets being achieved by December 31, 2021. Contingent consideration of $1,366 was calculated using Monte Carlo simulation due to the uncertain nature of the potential future revenues of the Company.

In accordance with IFRS 3, Business Combinations ('IFRS 3'), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the nine months ended July 31, 2021, Smoke Cartel accounted for $4,790 in revenues and $316 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $4,526 in revenues and an increase of $541 in net income for the nine months ended July 31, 2021. The Company also incurred $97 in transaction costs, which have been expensed to finance and other costs during the period.

10

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

C.

2686068 Ontario Inc. Acquisition

Total consideration

$

Cash

5,980

5,980

Purchase price allocation

Cash and cash equivalents

3

Inventory

120

Property and equipment

274

Intangible assets - license

4,187

Right of use asset

1,148

Goodwill

2,570

Lease liability

(1,148)

Accounts payable and accrued liabilities

(65)

Deferred tax liability

(1,109)

5,980

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

In accordance with IFRS 3, Business Combinations ('IFRS 3'), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business. For the nine months ended July 31, 2021, 2686068 accounted for $473 in revenues and $128 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $1,107 in revenues and an increase of $123 in net loss for the nine months ended July 31, 2021.

11

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

D.

Fab Nutrition, LLC. Acquisition

Total consideration

$

Cash

15,193

Common Shares

9,243

24,436

Purchase price allocation

Cash and cash equivalents

642

Accounts receivable

334

Inventory

404

Property and equipment

22

Intangible assets - brand

7,765

Goodwill

20,486

Accounts payable and accrued liabilities

(260)

Deferred tax liability

(3,969)

Non-controlling interest

(988)

24,436

On May 10, 2021, the Company closed the acquisition of 80% of the outstanding common shares of Fab Nutrition, LLC. ('FABCBD'). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) $15,193 in cash; and (ii) 15,154,109 pre-consolidation common shares of High Tide (1,010,274 post-consolidation), having an aggregate value of $9,243.

The acquisition agreement also includes a call and put option that could result in the Company acquiring the remaining 20% of common shares in FABCBD not acquired upon initial acquisition. The Company analyzed the value in the call option and considers it to be at fair value, and therefore has no value related to the acquisition. As the put option is a contractual obligation, it gives rise to a financial liability calculated with reference to the agreement and is discounted to its present value at each reporting date using the discounted cash flow model. The initial obligation under the put option was recorded as a current liability with the offset recorded as equity on the Condensed Interim Consolidated Statements of Financial Position, at its fair value at acquisition of $4,535 assuming a risk-free rate of 15% and an exercise date of May 2, 2023. For the period ended July 31, 2021, the Company recognized $145 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss.

In accordance with IFRS 3, Business Combinations ('IFRS 3'), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes, the allocation of goodwill and the non-controlling interest. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the nine months ended July 31, 2021, FABCBD accounted for $2,294 in revenues and $563 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $7,790 in revenues and an increase of $205 in net income for the nine months ended July 31, 2021. The Company also incurred $872 in transaction costs, which have been expensed to finance and other costs during the period.

12

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

E.

DHC Supply LLC. Acquisition

Total consideration

$

Cash

4,045

Common Shares

7,751

11,796

Purchase price allocation

Cash and cash equivalents

1,054

Trade and other receivables

69

Inventory

1,303

Prepaid expenses

18

Property and equipment

10

Intangible assets - brand

10,927

Right of use asset

592

Lease liability

(592)

Accounts payable and accrued liabilities

(1,585)

11,796

On July 6, 2021, the Company closed the acquisition of 100% of the outstanding common shares of DHC Supply LLC. ('DHC'). Pursuant to the terms of the Arrangement, the consideration was comprised of: (i) 839,820 post-consolidation commons shares of High Tide (12,597,300 pre-consolidation), having an aggregate value of $7,751; (ii) $4,045 in cash.

In accordance with IFRS 3, Business Combinations ('IFRS 3'), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes and the allocation of goodwill. For the nine months ended July 31, 2021, DHC accounted for $1,180 in revenues and $171 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $7,666 in revenues and an increase of $226 in net loss for the nine months ended July 31, 2021.

13

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

4.

Revenue from Contracts with Customers

For the three months ended July 31

2021

2020

2021

2020

2021

2020

2021

2020

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

$

$

$

$

$

$

$

$

Primary geographical markets (i)

Canada

37,695

17,088

676

1,139

5

36

38,376

18,263

USA

8,467

4,090

1,105

1,489

-

-

9,572

5,579

International

121

261

-

-

-

-

121

261

Total revenue

46,283

21,439

1,781

2,628

5

36

48,069

24,103

Major products and services

Cannabis

32,031

16,151

-

-

-

-

32,031

16,151

Consumption accessories

9,962

4,523

1,773

2,497

-

-

11,735

7,020

Data analytics services

3,839

641

-

-

-

-

3,839

641

Other revenue

451

124

8

131

5

36

464

291

Total revenue

46,283

21,439

1,781

2,628

5

36

48,069

24,103

Timing of revenue recognition

Transferred at a point in time

46,283

21,439

1,781

2,628

5

36

48,069

24,103

Total revenue

46,283

21,439

1,781

2,628

5

36

48,069

24,103

For the nine months ended July 31

2021

2020

2021

2020

2021

2020

2021

2020

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

$

$

$

$

$

$

$

$

Primary geographical markets (i)

Canada

104,804

44,562

2,768

2,782

35

343

107,607

47,687

USA

16,098

7,171

3,051

2,884

-

-

19,149

10,055

International

500

647

-

-

-

-

500

647

Total revenue

121,402

52,380

5,819

5,666

35

343

127,256

58,389

Major products and services

Cannabis

91,978

40,514

-

-

-

-

91,978

40,514

Consumption accessories

19,915

10,001

5,779

5,392

-

-

25,694

15,393

Data analytics services

8,201

1,089

-

-

-

-

8,201

1,089

Other revenue

1,308

776

40

274

35

343

1,383

1,393

Total revenue

121,402

52,380

5,819

5,666

35

343

127,256

58,389

Timing of revenue recognition

Transferred at a point in time

121,402

52,380

5,819

5,666

35

343

127,256

58,389

Total revenue

121,402

52,380

5,819

5,666

35

343

127,256

58,389

(i)

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

14

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

5.

Intangible Assets and Goodwill

Software

Licenses

Lease Buyout

Brand Name

Goodwill

Total

Cost

$

$

$

$

$

$

Balance, October 31, 2019

1,848

2,594

2,557

1,539

4,466

13,004

Transition adjustment - IFRS 16

-

-

(2,557)

-

-

(2,557)

Additions

474

-

-

-

-

474

Additions from business combinations

-

7,382

-

-

1,896

9,278

Balance, October 31, 2020

2,322

9,976

-

1,539

6,362

20,199

Additions

124

-

-

-

-

124

Additions from business combinations

7,325

41,887

-

22,689

50,986

122,887

Disposals (i)

-

(1,200)

-

-

-

(1,200)

Balance, July 31, 2021

9,771

50,663

-

24,228

57,348

142,010

Accumulated depreciation

Balance, October 31, 2019

111

75

191

-

-

377

Transition adjustment - IFRS 16

-

-

(191)

-

-

(191)

Amortization

495

1,113

-

-

-

1,608

Balance, October 31, 2020

606

1,188

-

-

-

1,794

Amortization

1,042

12,908

-

-

-

13,950

Disposals (i)

-

(160)

-

-

-

(160)

Balance, July 31, 2021

1,648

13,936

-

-

-

15,584

Foreign currency translation

Balance, October 31, 2019

60

-

-

57

336

453

Recorded in profit and loss

(20)

-

-

(20)

(35)

(75)

Balance, October 31, 2020

40

-

-

37

301

378

Recorded in profit and loss

3

-

-

3

22

28

Balance, July 31, 2021

43

-

-

40

323

406

Balance, October 31, 2020

1,676

8,788

-

1,502

6,061

18,027

Balance, July 31, 2021

8,080

36,727

-

24,188

57,025

126,020

(i)

During the nine months ended July 31, 2021, the Company sold it's 49% interest in one of the joint ventures under META that operates as a retail cannabis store in Manitoba, resulting in a loss of control. As a result of the loss in control, the Company has deconsolidated all net assets related to the joint venture and derecognized related non-controlling interest of $892 for the period ending July 31, 2021 and recognized $343 as a gain on the sale.

15

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

6.

Property and Equipment

Office equipment

Leasehold

and computers

improvements

Vehicles

Buildings

Total

Cost

$

$

$

$

$

Balance, October 31, 2019

452

10,505

167

2,800

13,924

Additions

306

1,989

-

-

2,295

Additions from business combinations

31

1,180

-

-

1,211

Impairment loss

(11)

(694)

-

-

(705)

Balance, October 31, 2020

778

12,980

167

2,800

16,725

Additions

378

5,828

-

-

6,206

Additions from business combinations

1,723

5,432

-

-

7,155

Disposal (i) (ii)

(146)

(1,061)

-

-

(1,207)

Balance, July 31, 2021

2,733

23,179

167

2,800

28,879

Accumulated depreciation

Balance, October 31, 2019

127

1,265

148

2

1,542

Depreciation

125

1,953

10

10

2,098

Balance, October 31, 2020

252

3,218

158

12

3,640

Depreciation

779

2,439

5

7

3,230

Disposal (i) (ii)

(89)

(291)

-

-

(380)

Balance, July 31, 2021

942

5,366

163

19

6,490

Balance, October 31, 2020

526

9,762

9

2,788

13,085

Balance, July 31, 2021

1,791

17,813

4

2,781

22,389

(i)

During the nine months ended July 31, 2021, the Company sold it's 49% interest in one of the joint ventures under META that operates as a retail cannabis store in Manitoba. The Company has recognized $343 as a gain on the sale.

(ii)

On July 15, 2021, the Company completed the sale of three of its KushBar retail cannabis stores to Halo Labs Inc. ('Halo') for total gross proceeds of $5,700. In the prior year, the Company was paid a deposit of $3,500 by way of issuance of 13,461,538 common shares of Halo at a deemed price of $0.26 per common share. During the fiscal year 2020, the Company had sold those shares and received a net amount of $1,700. On the date of close, July 15, 2021, the Company received a convertible promissory note (Note 9) issued by Halo Labs Inc. in the principal amount of $1,800 with a conversion rate of $0.16 per Halo common share. The promissory note is recorded at a fair value through profit and loss of $1,522 based on risk adjusted discount rate of 15%. For the nine months ended July 31, 2021, the Company recognized $2,654 as a gain on the sale of assets.

7.

Prepaid expenses and deposits

As at

July 31, 2021

October 31, 2020

$

$

Deposits on cannabis retail outlets

677

809

Prepaid insurance and other

3,054

311

Prepayment on inventory

3,036

2,759

Total

6,767

3,879

Less current portion

(5,161)

(3,070)

Long-term

1,606

809

16

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

8.

Trade and other receivables

As at

July 31, 2021

October 31, 2020

$

$

Trade accounts receivable

5,163

2,673

Sales tax receivable

526

188

Total

5,689

2,861

9.

Note receivable

As at

July 31, 2021

October 31, 2020

$

$

Term loans (i)

251

304

Loans receivable (ii)

1,282

-

Halo - Note receivable (iii)

1,522

-

Total

3,055

304

Less current portion

(1,432)

(74)

Long-term

1,623

230

(i)

Term loans are due from franchisees and relate to acquisitions of the sub-lease location from the Company and initial inventory. Term loans are secured by promissory notes, bear interest between 6.95% and 8.00% per annum and required blended payments of principal and interest between $4 and $10 monthly. The Company maintains the head lease of a franchisee location.

(ii)

As part of the acquisition of META, the Company acquired a loan receivable of $1,282 that was advanced to one of the winners of the Ontario cannabis lottery for new cannabis retail locations in Guelph, Scarborough and Toronto to fund the build out and start-up operations of the retail locations. Pursuant to the terms of the agreement, the loan has an interest rate of 3% per annum. The principal balance is due and payable on the fifth anniversary date of the loan.

(iii)

As part of total consideration received for the sale of the KushBar assets, a note receivable was issued to the Company in the amount of $1,800. The note has a two year term and bears an interest rate of 6% per annum payable monthly with a maturity date of July 23, 2023. The Company has the option to convert this note into common shares of Halo for $0.16 per share. The note fails the solely payment of principal and interest test ('SPPI') due to the conversion feature of the promissory note, therefore this note will be subsequently recognized at fair value through profit or loss. The note has been recorded at its fair value of $1,522 using a discount rate of 15% over 2 years.

10.

Finance and other costs

Finance and other costs are comprised of the following:

Three months ended July 31

Nine months ended July 31

2021

2020

2021

2020

$

$

$

$

Accretion convertible debt

412

1,272

2,232

3,408

Interest on convertible debenture

79

797

1,229

2,223

Interest on notes payable

38

69

831

233

Accretion notes payable

29

52

765

108

Accretion of lease liability

537

266

1,578

747

Transaction cost

1,939

193

4,409

988

Total

3,034

2,649

11,044

7,707

17

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

11.

Convertible Debentures

As at

July 31, 2021

October 31, 2020

$

$

Convertible debentures, beginning of year

25,822

19,664

Debt assumed(i)

18,809

-

Revaluation on amendment of debenture(ii)

515

(3,808)

Cash advances from debt (iii)

980

9,115

Debt issuance to settle liabilities

-

2,700

Debt issuance costs paid in cash

-

(260)

Conversion of debenture into equity(iv)

(33,564)

(550)

Transfer of warrants component to equity

-

(420)

Transfer of conversion component to equity(v)

(717)

(523)

Transfer of conversion component to derivative liability

-

(921)

Repayment of debt(vi)

(4,123)

(1,637)

Accretion on convertible debentures(vii)

2,232

2,462

Total

9,954

25,822

Less current portion

(946)

(14,446)

Long-term

9,008

11,376

(i)

During the nine-months ended, July 31, 2021, the Company assumed convertible debt through the acquisition of Meta, refer to note 3.

(ii)

During the nine-months ended, July 31, 2021, the Company amended convertible debentures resulting in a revaluation of $515.

(iii)

During the nine months ended, the Company drew $980 from the Windsor convertible debt.

(iv)

During the nine months ended, the Company converted $33,564 of convertible debentures into 10,877,083 shares post-consolidation (163,156,245 shares pre-consolidation).

(v)

As of July 31, 2021, $717 was recorded as the equity component related to the extensions of the convertible debenture throughout the period.

(vi)

During the nine months ended, July 31, 2021, the Company made payments on the principal balances of $3,733 on unsecured convertible debentures and $390 on secured convertible debentures.

(vii)

For the nine months ended July 31, 2021 the Company recorded accretion of $2,232 related to convertible debentures.

During the nine months ended July 31, 2021, the Company entered into restructuring agreements for two of the unsecured convertible debenture agreements and the Windsor loan agreement that resulted in a total loss on the extinguishment of debentures of $516 (July 31, 2020 - loss of $186). Due to the amendment of the Windsor loan the embedded derivate liability component was removed which resulted in a gain of $498.

On April 18, 2021, the Company entered into a debt restructuring agreement of $2,000 of the Company's outstanding debt under a 10% senior unsecured convertible debenture issued in April 2019. As part of the debt restructuring, the parties have also (i) extended the maturity date of the amended debenture to April 18, 2023, (ii) amended the conversion price such that the deferred amount is convertible into common shares of High Tide ('HITI shares') at a conversion price of $0.75 per HITI share pre-consolidation ($11.25 per HITI share post-consolidation), (iii) lowered the interest rate from 10% to 7%. Management calculated the fair value of the liability component as $1,774 using a discount rate of 15% along with forecasted scheduled payments, with the residual amount of $225 net of deferred tax of $52 being allocated to equity.

18

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

12.

Notes Payable

As at

July 31, 2021

October 31, 2020

$

$

Term loans

3,594

3,539

OCN - notes payable (i)

11,887

-

Loan from partners (ii)

345

-

Dreamweavers - notes payable

68

162

Saturninus Partners - notes payable (iii)

-

690

Long term contract liability

39

53

Government loan (iv)

40

84

Total

15,973

4,528

Less current portion

(3,939)

(1,939)

Long-term

12,034

2,589

(i)

On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation ('OCN'). Notes payable were valued at $12,783 at the date of acquisition by discounting it over two years at market interest rate of 15%. On January 6, 2021, the Company entered into another amended loan agreement with OCN to remove the annual administration fee and extend the maturity date of the loan until December 31, 2024. As a result of the debt restructuring, the Company recognized a $1,145 debt restructuring gain in the statement of net loss and comprehensive loss for the period ended July 31, 2021. The carrying value of the loan balance as at July 31, 2021 amounts to $11,887.

(ii)

During the nine months ended July 31, 2021, the Company sold its 49% interest in one of the joint ventures under META that operates as a retail cannabis store in Manitoba, resulting in a loss of control. As a result, the Company deconsolidated all net assets of the joint venture as of the date of disposal. Included in total net assets was a Loan from Partners of $149. The Remaining balance of Loans from Partners represents funds received in relation to the other joint ventures under META that operate as retail cannabis stores.

(iii)

During the nine months ended July 31, 2021, the Company fully repaid $690 on the note payable to Saturninus Partners.

(iv)

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

During the nine months ended, July 31, 2021, the Company incurred accretion of $765 (July 31, 2020 - $108) and paid interest in the amount of $831 (July 31, 2020 - $233) in relation to the outstanding notes payable.

19

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

13.

Share Capital

(a)

Issued:

Common shares:

Number of shares

Amount

#

$

Balance, October 31, 2019

207,406,629

26,283

Issued to pay fees in shares

3,852,319

860

Issued to pay interest via shares

6,782,011

1,168

Acquisition - KushBar

2,645,503

500

Acquisition - 2680495

4,761,905

1,048

Acquisition - Saturninus

5,319,149

1,064

Acquisition - 102088460

5,000,000

975

Lease acquisition - Canmore

612,764

104

Exercise - Convertibile Debt

3,709,916

550

Balance, October 31, 2020

240,090,196

32,552

Acquisition - Meta Growth (Note 3)

196,063,610

35,290

Acquisition - Smoke Cartel, Inc. (Note 3)

9,540,754

8,396

Acquisition - FAB Nutrition (Note 3)

15,154,109

9,243

Issued to pay fees via shares (i)

1,480,099

468

Issued to pay interest via shares

7,646,923

1,458

Shares issued through equity financing (ii)

47,916,665

18,237

Conversion of convertible debentures (Note 11)

147,391,521

40,532

Share issuance costs (iv)

-

(3,225)

Exercise options (Note 14)

2,498,160

865

Exercise warrants (Note 15)

22,208,027

10,644

Vested restricted share units (Note 14)

844,655

743

Balance, May 13, 2021 - pre-consolidation

690,834,719

155,203

Balance, May 13, 2021 - post-consolidation

46,055,653

155,203

Acquisition - Daily High Club (Note 3)

839,820

7,751

Shares issued through equity financing (iii)

2,415,000

20,210

Conversion of convertible debentures (Note 11)

1,050,980

2,785

Share issuance costs (iv)

-

(2,310)

Exercise options (Note 14)

33,825

140

Exercise warrants (Note 15)

815,903

4,401

Balance, July 31, 2021

51,211,181

188,180

(i)

During the nine months period ended July 31, 2021, Company settled payables of $174 through issuance of 1,025,477 pre-consolidation (68,365 shares post-consolidation) common shares of the Company. The fair value of $174 was based on the closing price of $0.175 on the date of issuance.

(ii)

On February 22, 2021, the Company issued, on a bought deal basis, pre-consolidation, 47,916,665 units (3,194,445 units post-consolidation) of the Company at a price of $0.48 per unit pre-consolidation ($7.20 per unit post-consolidation). The Company closed the offering for total gross proceeds of $23,000. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at a price of $0.58 for a period of 36 months from the closing date of the offering. The warrants were attributed a relative fair value of $4,968 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.58; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30%. The underwriters received a cash commission fee of 6% of gross proceeds and 3% of gross proceeds for the presidents list in cash and respectively same percentage of broker warrants for the number of units issued because of conducting the bought deal financing. The broker units issued included one and a half warrants, totaling 3,920,587 warrants. The 2,613,725 broker warrants were attributed a fair value of $1,046 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.48; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30% and the remaining 1,306,862 broker warrants were attributed a fair value of $478 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $0.70; exercise price of options of $0.58; expected life of three years; 71% volatility; and a risk-free interest rate of 1.30%

20

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

13.

Share Capital (continued)

(iii)

On May 25, 2021, the Company issued, on a bought deal basis, 2,415,000 post-consolidation units (36,225,000 units pre-consolidation) of the Company at a price of $9.60 per unit post-consolidation ($0.64 per unit pre-consolidation). The Company closed the offering for total gross proceeds of $23,184. Each unit consist of one common share of the Company and one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at a price of $12.25 for a period of 36 months from the closing date of the offering. The warrants were attributed a relative fair value of $2,973 using Black-Scholes option pricing model with the following assumptions: fair value of common shares of $9.16; exercise price of options of $12.25; expected life of three years; 56% volatility; and a risk-free interest rate of 1.30%. The underwriters received a cash commission fee of 6% of gross proceeds and 3% of gross proceeds for the presidents list in cash and respectively same percentage of broker warrants for the number of units issued because of conducting the bought deal financing. The broker units issued include one and a half warrants, totaling 206,348 warrants. The 137,565 broker warrants were attributed a fair value of $371 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $9.16; exercise price of options of $12.25; expected life of three years; 56% volatility; and a risk-free interest rate of 1.30% and the remaining 68,783 broker warrants were attributed a fair value of $185 using the Black-Scholes option pricing model with the following assumptions: fair value of common shares of $9.16; exercise price of $12.25; expected life of three years; 56% volatility; and a risk-free interest rate of 1.30%.

(iv)

During the nine months ended July 31, 2021, the Company incurred a total of $5,535 of share issuance costs, of which $4,979 related to the shares issued through equity financing on February 22, 2021 and May 25, 2021. These costs incurred a deferred tax asset of $1,145, which has been offset against the Company's prior year tax loss carry-forwards.

14.

Share - Based Compensation

(a)

Stock Option Plan:

The Company's stock option plan limits the number of common shares reserved under the plan from exceeding a 'rolling maximum' of ten (10%) percent of the Company's issued and outstanding common shares from time to time. The stock options vest at the discretion of the Board of Directors, upon grant to directors, officers, employees and consultants of the Company and its subsidiaries. All options that are outstanding will expire upon maturity, or earlier, if the optionee ceases to be a director, officer, employee or consultant or there is a merger, amalgamation or change in control of the Company. The maximum exercise period of an option shall not exceed 10 years from the grant date. Changes in the number of stock options, with their weighted average exercise prices, are summarized below:

July 31, 2021

October 31, 2020

Number of

Weighted Average

Number of

Weighted Average

options

Exercise Price ($)

options

Exercise Price ($)

Balance, beginning of year

620,666

7.50

707,333

7.50

Granted (i)

2,058,885

5.54

13,333

7.50

Forfeited

(657,768)

9.55

(100,000)

7.50

Exercised

(277,276)

4.18

-

-

Balance, end of period

1,744,507

5.69

620,666

7.50

Exercisable, end of period

679,165

6.95

491,375

7.50

For the three month period ended July 31, 2021, the Company recorded share-based compensation of $459 (2020 - $2) related to stock options, and $2,249 (2020 - $101) for the nine month period ended July 31, 2021.

(i)

On November 18, 2020, the Company acquired all the issued and outstanding shares of Meta which resulted in acquiring 245,552 post-consolidation options outstanding on the date of closing. The fair value of the options acquired were calculated using the Black-Scholes option pricing model valued using the Black-Scholes model and the following assumptions were used: stock price of $0.18 pre-consolidation ($2.70 post-consolidation); expected life of 1 years; $nil dividends; expected volatility of 100%; exercise price as per the plan times the exchange ratio of 0.824; and a risk-free interest rate of 0.52%. During the nine months ended July 31, 2021 the Company granted 1,813,333 post-consolidation options to directors, officers, employees and consultants of the Company and its subsidiaries. The 1,330,000 options issued on November 20, 2020 were valued using the Black-Scholes model and the following assumptions were used: stock price of $2.85; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $3.00; and a risk-free interest rate of 0.52%. The 406,667 options issued on March 19, 2021 were valued using the Black-Scholes model and the following assumptions were used: stock price of $12.15; expected life of 3 years; $nil dividends; expected volatility of

21

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

14.

Share - Based Compensation (continued)

140%; exercise price of $12.15; and a risk-free interest rate of 0.52%. The 63,333 options issued on May 10, 2021 were valued using the Black-Scholes model and the following assumption were used: stock price $9.15; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $9.00; and a risk-free interest rate of 0.52%. The 13,333 options issued on July 6, 2021 were valued using the Black-Scholes model and the following assumptions were used: stock price $9.27; expected life of 3 years; $nil dividends; expected volatility of 140%; exercise price of $9.45; and a risk-free interest rate of 0.52%.

(ii)

Number of stock options and share award disclosures have been retrospectively restated for all periods to reflect the Share Consolidation effected on May 13, 2021 (Note 2(a)).

(b)

Restricted Share Units ('RSUs') plan

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

On March 12, 2021, the Company granted 66,667 post-consolidation RSUs to directors of the Company and were valued at $780. On July 29, 2021, the Company granted 35,000 RSUs to consultants of the Company and were valued at $287. For the three month period ended July 31, 2021, the Company recorded share-based compensation of $49 (2020 - nil) related to RSUs, and $329 (2020 - nil) for the nine month period ended July 31, 2021. The number of RSUs outstanding at July 31, 2021 amounts to 101,667.

22

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

15.

Warrants

Weighted

Number of

Warrants

Derivative

Weighted

average

warrants

amount

liability

average

number of

Expiry dates

amount

exercise price

years to

expiry

#

$

$

$

Opening balance, November 1, 2019

43,677,333

6,609

-

0.6083

0.43

Re-class warrants on convertible debt to equity

-

(660)

-

-

-

Issued warrants for services (i)

300,000

64

-

0.3800

-

September 3, 2021

Issued warrants for services (ii)

3,500,000

204

-

0.3000

0.01

November 12, 2021

Issued warrants for services (iii)

1,000,000

111

-

0.3000

-

November 12, 2021

Issued warrants on convertible debt November 14, 2019

7,936,507

80

-

0.5000

0.03

November 14, 2021

Issued warrants on convertible debt December 4, 2019

8,392,857

109

-

0.5000

0.04

December 4, 2021

Issued warrants on convertible debt December 14, 2019

7,936,508

135

-

0.5000

0.04

December 12, 2021

Issued warrants for acquisition - Saturninus

3,750,000

100

-

0.4000

0.02

January 26, 2022

Issued warrants on convertible debt January 6, 2020

58,823,529

-

266

0.2550

0.30

December 31, 2021

Issued warrants on debt September 14, 2020

1,600,000

55

-

0.3000

0.01

September 30, 2021

Warrants terminated

(1,600,000)

(105)

-

-

-

Warrants expired

(4,252,620)

(906)

-

-

-

Balance October 31, 2020

131,064,114

5,796

266

0.4043

0.88

Issued warrants for acquisition - Meta

741,600

3

-

1.3110

-

December 14, 2021

Issued warrants for acquisition - Meta

40,076,411

2,616

-

0.3520

0.49

February 6, 2023

Issued warrants for acquisition - Meta

4,120,000

120

-

1.1040

0.06

April 11, 2023

Issued warrants on convertible debt January 6, 2020

-

-

11,697

-

-

December 31, 2022

Warrants issued - equity financing

27,878,919

6,492

-

0.5800

0.55

February 22, 2024

Warrants issued - equity financing

1,413,848

3,530

-

12.2500

0.03

May 26, 2024

Warrants cancelled

(59,278,382)

(5,394)

-

-

-

Warrants exercised

(42,885,013)

(1,676)

(6,266)

-

-

Balance July 31, 2021

103,131,497

11,487

5,697

2.5995

2.01

As at July 31, 2021, 103,131,497 warrants were exercisable, on a basis of 15 warrants for 1 common share, with the exception of warrants issued through the acquisition of META, which were exercisable on a basis of 18.2 warrants for 1 common share.

i)

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

ii)

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

iii)

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

iv)

The Company measured the derivative liability to be $5,697 and recognized $8,409 as a loss on revaluation of derivative liability in the statement of net loss and comprehensive loss for the period ended July 31, 2021.

23

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

16.

Loss Per Share

(a)

Current Period Earnings Per Share

Three months ended

Nine months ended

July 31,

July 31,

2021

2020

2021

2020

$

$

$

$

Net (loss) income for the period

(1,750)

3,826

(30,861)

(5,031)

Non-controlling interest

69

46

(22)

98

Net (loss) income for the period attributable to owners of the Company

(1,681)

3,872

(30,883)

(4,933)

#

#

#

#

Weighted average number of common shares - basic and diluted

48,366,031

15,633,929

38,965,149

15,124,342

Basic and Diluted (loss) income per share

(0.03)

0.25

(0.79)

(0.33)


​​

(b)

Restatement of a Prior Quarter

During the third quarter of 2021, the Company restated the second quarter 2021 earnings per share note disclosure. This adjustment is due to the 1:15 reverse share split that occurred May 13, 2021, which was included as a subsequent event in the financial statements for the second quarter of 2021. When there is a share consolidation subsequent to period end, but prior to the release of the financial statements it needs to be retrospectively adjusted in the current quarter financial statements. Comparative information for the second quarter, first quarter, 2020 and 2019 year ends have been adjusted accordingly.

Three months ended

Six months ended

April 30

April 30

2021

2020

2021

2020

$

$

$

$

Net (loss) income for the period

(12,266)

(4,912)

(29,111)

(8,857)

Non-controlling interest

(66)

55

(91)

52

Net loss for the period attributable to owners of the Company

(12,332)

(4,857)

(29,202)

(8,805)

#

#

#

#

Weighted average number of common shares - basic and diluted

41,320,861

14,614,754

33,938,246

14,255,502

Basic and Diluted loss per share

(0.30)

(0.33)

(0.86)

(0.62)

Three months ended

January 31

Year ended October 31

2021

2020

2019

$

$

$

Net (loss) income for the period

(16,845)

(6,354)

(26,292)

Non-controlling interest

(24)

(614)

166

Net loss for the period attributable to owners of the Company

(16,869)

(6,968)

(26,126)

#

#

#

Weighted average number of common shares - basic and diluted

27,090,872

15,267,032

13,212,113

Basic and Diluted loss per share

(0.62)

(0.46)

(1.98)

24

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

17.

Financial Instruments and Risk Management

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

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

Fair value

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

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

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

The Halo convertible promissory note receivable is a non-derivative financial asset with fixed or determinable payments that are not quoted in an active market and is recorded at fair value based on level 2 inputs. The fair value of these assets were estimated on discounted future interest and principal payments using current market interest rates of instruments using similar terms. The promissory note failed the SPPI test due to the conversion feature of the note, therefore this note will be subsequently recognized at fair value through profit or loss.

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

The derivative liability associated with the put option included in the acquisition of FABCBD has been recorded at fair value based on level 3 inputs. The value of the put is calculated using discounted cash flows. The valuation model considers the present value of the future obligation using a multiple of forecasted trailing twelve month EBITDA and a risk-adjusted discount rate. Significant unobservable inputs include expected cash flows and the risk adjusted interest rate. The estimated fair value would increase (decrease) if the expected cash flows were higher (lower) or the risk adjusted interest rate were lower (higher).

Derivative Liability associated with Put Option

$

Balance at April 30, 2021

-

Assumed through acquisition of FABCBD

4,535

Loss included in 'Revaluation of derivative liability'

145

Balance at July 31, 2021

4,680

Sensitivity Analysis

$

Expected cash flows (10% movement)

397

Risk Adjusted discount rate (1% movement)

58

25

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

17. Financial Instruments and Risk Management (continued)

Marketable securities

In connection with the Company's acquisition of META on November 18, 2020, the Company acquired 1,350,000 shares of THC Global Group Limited ('THC'). The fair value of the THC shares amounting to $582 has been recognized as a marketable security, based on the trading price of THC's shares. In addition, to this the Company has also acquired 400,000 shares of Pathway Health Corp. ('Pathway') which were granted as part of consideration for an asset sale agreement with Meta prior to acquisition amounting to $200, as well as recorded $200 in GICs as a marketable security.

Credit risk

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

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

As at

July 31, 2021

October 31, 2020

$

$

Current (for less than 30 days)

4,067

1,822

31 - 60 days

507

246

61 - 90 days

78

202

Greater than 90 days

657

762

Less allowance

(146)

(359)

5,163

2,673

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

The Company performs a regular assessment of collectability of accounts receivables. In determining the expected credit loss amount, the Company considers the customer's financial position, payment history and economic conditions. For the period ended July 31, 2021, management reviewed the estimates and have not created any additional loss allowances on trade receivable.

26

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

17.

Financial Instruments and Risk Management (continued)

Liquidity risk

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

Contractual cash flows

Less than one year

1-5 years

Greater than 5 years

$

$

$

$

October 31, 2020

Accounts payable and accrued liabilities

6,421

6,421

-

-

Notes payable

4,528

1,939

2,589

-

Convertible debentures

25,822

14,446

11,376

-

Total

36,771

22,806

13,965

-

July 31, 2021

Accounts payable and accrued liabilities

13,107

13,107

-

-

Notes payable

15,973

3,939

12,034

-

Convertible debentures

9,954

946

9,008

-

Total

39,034

17,992

21,042

-

Interest rate risk

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

Foreign currency risk

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

The Canadian dollar equivalent carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities as at July 31, 2021 was as follows:

(Canadian dollar equivalent amounts of US dollar and Euro balances)

July 31, 2021

July 31, 2021

July 31, 2021

October 31,

(Euro)

(USD)

Total

2020

$

$

$

$

Cash

501

22,722

23,223

975

Accounts receivable

-

669

669

653

Accounts payable and accrued liabilities

(947)

(2,326)

(3,273)

(1,728)

Net monetary assets

(446)

21,065

20,619

(100)

Assuming all other variables remain constant, a fluctuation of +/- 5.0 percent in the exchange rate between the United States dollar and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $836 (October 31, 2020 - $34). Maintaining constant variables, a fluctuation of +/- 5.0 percent in the exchange rate between the Euro and the Canadian dollar would impact the carrying value of the net monetary assets by approximately +/- $15 (October 31, 2020 - $39). To date, the Company has not entered into financial derivative contracts to manage exposure to fluctuations in foreign exchange rates.

27

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

18.

Segmented Information

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

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

For the three months ended July 31,

2021

2020

2021

2020

2021

2020

2021

2020

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

46,283

21,440

1,781

2,627

5

36

48,069

24,103

Gross profit

16,216

8,595

438

909

25

35

16,679

9,539

(Loss) income from operations

(3,074)

2,431

(390)

107

(3,803)

(914)

(7,267)

1,624

Total assets

145,971

46,678

6,939

5,972

81,272

17,161

234,182

69,811

Total liabilities

56,960

22,893

2,183

1,894

28,228

33,301

87,371

58,088

Canada

Canada

USA

USA

Europe

Europe

Total

Total

For the three months ended July 31,

2021

2020

2021

2020

2021

2020

2021

2020

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

34,738

19,751

11,315

-

2,016

4,352

48,069

24,103

Gross profit

10,805

7,453

5,116

-

758

2,086

16,679

9,539

(Loss) income from operations

(7,896)

585

601

(301)

28

1,340

(7,267)

1,624

Total assets

164,823

46,678

60,961

5,972

8,398

17,161

234,182

69,811

Total liabilities

76,603

22,893

9,201

1,894

1,567

33,301

87,371

58,088

Retail

Retail

Wholesale

Wholesale

Corporate

Corporate

Total

Total

For the nine months ended July 31,

2021

2020

2021

2020

2021

2020

2021

2020

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

121,402

52,381

5,819

5,665

35

343

127,256

58,389

Gross profit

44,599

19,794

1,790

1,952

56

341

46,445

22,087

(Loss) income from operations

(2,894)

3,550

(587)

(625)

(10,342)

(3,262)

(13,823)

(337)

Canada

Canada

USA

USA

Europe

Europe

Total

Total

For the nine months ended July 31,

2021

2020

2021

2020

2021

2020

2021

2020

($)

($)

($)

($)

($)

($)

($)

($)

Total revenue

103,326

50,536

15,596

-

8,334

7,853

127,256

58,389

Gross profit

36,178

18,074

6,660

-

3,607

4,013

46,445

22,087

(Loss) income from operations

(15,584)

(1,106)

612

(686)

1,149

1,455

(13,823)

(337)

28

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

19.

Related Party Transactions

As at July 31, 2021, the Company had the following transactions with related parties as defined in IAS 24 - Related Party Disclosures, except those pertaining to transactions with key management personnel in the ordinary course of their employment and/or directorship arrangements and transactions with the Company's shareholders in the form of various financing.

Financing transactions

A Director of the Company is Chief of the Opaskwayak Cree Nation ('OCN'). On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included notes payable to Opaskwayak Cree Nation ('OCN'). As at July 31, 2021, the Company has drawn $13,000.

On February 22, 2021, the Company issued, on a bought deal basis pre-consolidation, 47,916,665 units (3,194,445 units post-consolidation) of the Company at a price of $0.48 per unit pre-consolidation ($7.20 per unit post-consolidation). Two of the officers and the corporate secretary of the Company, collectively participated in the offering and acquired an aggregate of 3,112,084 units pre-consolidation (207,472 units post-consolidation) pursuant to the Offering.

On May 26, 2021, the Company issued, on a bought deal basis post-consolidation, 2,415,000 units (36,225,000 units pre-consolidation) of the Company at a price of $9.60 per unit post-consolidation ($0.64 per unit pre-consolidation). One of the officers and the corporate secretary of the Company, collectively participated in the offering and acquired an aggregate of 105,000 units post-consolidation (1,575,000 pre-consolidation) pursuant to the Offering.

Operational transactions

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

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

29

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

20.

Right of Use Assets and Lease Obligations

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

Right of use assets

$

Balance at November 1, 2020

16,413

Net additions

14,711

Depreciation expense for the period

(4,927)

Balance at July 31, 2021

26,197

Lease Liabilities

$

Balance at November 1, 2020

16,668

Net additions

13,844

Cash outflows in the period

(5,270)

Accretion (Interest) expense for the period ended

1,578

Balance at July 31, 2021

26,820

Current

(5,729)

Non-current

21,091

As at July 31, 2021, $875 (October 31, 2020 - $1,716) is due to the Company in respect of sublease arrangements for franchise cannabis retail locations. For the period ended July 31, 2021, $451 was received in respect of sublease arrangements, which was recognized as other revenue. During the period ended July 31, 2021, the Company also paid $2,174 in variable operating costs associated to the leases which are expensed under general and administrative expenses.

The following is a summary of the contractual undiscounted cash outflows for lease obligations as of July 31, 2021:

$

Less than one year

7,766

Between one and five years

18,034

Greater than five years

7,454

33,254

21.

Contingent liability

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

30

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

22.

Non-controlling interest

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

2021

2020

$

$

Total current assets

3,946

2,540

Total non-current assets

3,724

3,696

Total current liabilities

(4,073)

(942)

Total non-current liabilities

(475)

(1,080)

Revenues for the year ended

11,844

6,011

Net income for the year ended

1,507

1,320

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

As at

July 31, 2021

October 31, 2020

$

$

Balance, beginning of the year

1,552

(179)

Share of income for the period

22

614

Purchase of minority interest - KushBar Inc.

-

187

Purchase of - Saturninus Partners

-

930

Purchase of - Meta (Note 3)

1,821

-

Purchase of - FABCBD (Note 3)

988

-

Loss of Control (Note 5)

(892)

-

3,491

1,552

As of October 31, 2019, the Company held a 50.1% ownership interest in KushBar, with $179 NCI. As well, the Company owed the non-controlling interest shareholder $701 (2018 - $36). The loan carries no interest and is due on demand. On December 10, 2019, the Company entered into a definitive share purchase agreement with 2651576 Ontario Inc. (the 'Minority Shareholder'), a private Ontario company, to acquire the remaining 49.9% interest (the 'Minority Interest') in High Tide's majority-owned subsidiary, KushBar Inc. ('KushBar').

On January 27, 2020, the Company acquired a 50% interest in the Saturninus Partners ('Saturninus') which operates a licensed retail cannabis store in Sudbury, Ontario. The Company has classified this arrangement as a joint venture with controlling interest.

On November 18, 2020, the Company acquired all of the issued and outstanding shares of Meta which included four joint ventures with controlling interest. These joint ventures operate as a licensed cannabis retail store in Manitoba. During the nine months ended July 31, 2021, the Company sold its 49% interest in one joint venture, which resulted in a loss of control. As a result, the Company has deconsolidated the net assets of the joint venture no longer under the Company's control.

31

High Tide Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended July 31, 2021 and 2020

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

23.

Subsequent events

(i)

On August 6, 2021, the Company acquired all of the issued and outstanding shares of 102105699 Saskatchewan Ltd. ('102 Saskatchewan') which owns five retail cannabis locations in Regina, Saskatchewan, for $2,700. The consideration was comprised of: (i) 254,520 common shares of High Tide, having an aggregate value of $2,002; and (ii) $698 in cash. Under IFRS 3, if the acquisition date of a business combination is after the end of the reporting period, but prior to the publication of the consolidated financial statements, the Company must provide the information required under IFRS 3 unless the initial accounting for the business combination is incomplete. Due to the nature of the acquisition, the allocation of the purchase price has not been provided because that information has not yet been finalized.

(ii)

On August 12, 2021, the Company acquired all of the issued and outstanding shares of DS Distribution Inc., operating as DankStop.com ('DankStop') for US$3,850. The consideration was comprised of 612,087 common shares of High Tide on the basis of a deemed price per High Tide Share of $7.88, being equal to the volume weighted average price per High Tide Share on the TSX Venture Exchange for the ten consecutive trading days preceding the closing of the acquisition. Pursuant to the terms of the acquisition agreement, 153,021 High Tide Shares, which represents 25% of the High Tide Shares issued to DankStop shareholders, has been placed in escrow for a period of up to 12 months from closing. Under IFRS 3, if the acquisition date of a business combination is after the end of the reporting period, but prior to the publication of the consolidated financial statements, the Company must provide the information required under IFRS 3 unless the initial accounting for the business combination is incomplete. Due to the nature of the acquisition, the allocation of the purchase price has not been provided because that information has not yet been finalized.

(iii)

Subsequent to the period ended July 31, 2021, $800 of debt was converted into common shares, which eliminates all remaining outstanding convertible debentures originally issued by Meta Growth Corp.

32

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High Tide Inc. published this content on 14 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 September 2021 20:21:09 UTC.