Exhibit 99.1

 

Condensed Interim Consolidated
Financial Statements

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

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

(Unaudited)

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

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

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

Approved on behalf of the Board:

(Signed) “Harkirat (Raj) Grover”	(Signed) “Nitin Kaushal”
President and Chair of the Board	Director and Chair of the Audit Committee

  High Tide Inc. Condensed Interim Consolidated Statements of Financial Position As at April 30, 2021 and October 31, 2020 (Unaudited – In thousands of Canadian dollars)

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

3 

  High Tide Inc. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars)

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

Subsequent Events (Note 23)

4 

  High Tide Inc. Condensed Interim Consolidated Statements of Changes in Equity (Unaudited – In thousands of Canadian dollars)

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

5 

  High Tide Inc. Condensed Interim Consolidated Statements of Cash Flows For the six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars)

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

6 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

1. Nature of Operations

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

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

COVID-19

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

2. Accounting Policies

A. Basis of Preparation

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

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

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

B. Use of estimates

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

7 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

3. Business Combinations

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

A. Meta Growth Corp. Acquisition

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

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

In accordance with IFRS 3, Business Combinations (“IFRS 3”), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, property plant and equipment, right of use asset, non-controlling interest, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business, expanded access to capital and greater financial flexibility. For the six months ended April 30, 2021, Meta Growth accounted for $30,110 in revenues and $7,099 in net loss. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $3,422 in revenues and an increase of $401 in net loss for the six months ended April 30, 2021. The Company also incurred $1,354 in transaction costs, which have been expensed to finance and other costs during the period.

8 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

B. Smoke Cartel, Inc. Acquisition

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

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

In accordance with IFRS 3, Business Combinations (“IFRS 3”), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the business, expanded access to capital and greater financial flexibility. For the six months ended April 30, 2021, Smoke Cartel accounted for $1,692 in revenues and $86 in net income. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $4,526 in revenues and an increase of $541 in net income for the six months ended April 30, 2021. The Company also incurred $70 in transaction costs, which have been expensed to finance and other costs during the period.

9 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

C. 2686068 Ontario Inc. Acquisition

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

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

In accordance with IFRS 3, Business Combinations (“IFRS 3”), the substance of this transaction constituted a business combination. Management is in the process of gathering the relevant information that existed at the acquisition date to determine the fair value of the net identifiable assets acquired. As such, the initial purchase price was provisionally allocated based on the Company's estimated fair value of the identifiable assets acquired on the acquisition date. The values assigned are, therefore, preliminary, and subject to change. Management continues to refine and finalize its purchase price allocation for the fair value of identifiable intangible assets, income taxes and the allocation of goodwill. The goodwill is primarily related to the opportunities to grow the retail cannabis business. If the acquisition had been completed on November 1, 2020, the Company estimates it would have recorded an increase of $1,107 in revenues and an increase of $123 in net loss for the six months ended April 30, 2021.

10 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

4. Revenue from Contracts with Customers

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

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

11 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

5. Intangible Assets and Goodwill

	Software			Licenses			Lease Buyout			Brand Name			Goodwill			Total
Cost			$			$			$			$			$			$
Balance, October 31, 2019		1,848			2,594			2,557			1,539			4,466			13,004
Transition adjustment - IFRS 16		—			—			(2,557	)		—			—			(2,557	)
Additions		474			—			—			—			—			474
Additions from business combinations		—			7,382			—			—			1,896			9,278
Balance, October 20, 2020		2,322			9,976			—			1,539			6,362			20,199
Additions		103			—			—			—			—			103
Additions from business combinations		7,325			41,887			—			3,997			31,050			84,259
Balance, April 30, 2021		9,750			51,863			—			5,536			37,412			104,561
Accumulated depreciation
Balance, October 31, 2019		111			75			191			—			—			377
Transition adjustment - IFRS 16		—			—			(191	)		—			—			(191	)
Amortization		495			1,113			—			—			—			1,608
Balance, October 20, 2020		606			1,188			—			—			—			1,794
Amortization		378			8,510			—			—			—			8,888
Balance, April 30, 2021		984			9,698			—			—			—			10,682
Foreign currency translation
Balance, October 31, 2019		60			—			—			57			336			453
Recorded in other comprehensive loss		(20	)		—			—			(20	)		(35	)		(75	)
Balance, October 20, 2020		40			—			—			37			301			378
Recorded in other comprehensive loss		10			—			—			8			65			83
Balance, April 30, 2021		50			—			—			45			366			461
Balance, October 31, 2020		1,676			8,788			—			1,502			6,061			18,027
Balance, April 30, 2021		8,716			42,165			—			5,491			37,046			93,418

6. Property and Equipment

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

12 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

7. Prepaid expenses and deposits

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

8. Trade and other receivables

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

9. Finance and other costs

Finance and other costs are comprised of the following:

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

13 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

10. Convertible Debentures

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

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

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

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

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

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

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

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

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

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

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

14 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

11. Notes Payable

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

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

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

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

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

15 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

12. Share Capital

(a) Issued:

Common shares:

	Number of shares		Amount
		#	$
Balance, October 31, 2019		207,406,629	26,283
Issued to pay fees via 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 - Convertible debt		3,709,916	550
Balance, October 31, 2020		240,090,196	32,552
Acquisition - Meta Growth (Note 3)		196,063,610	35,290
Acquisition - Smoke Cartel, Inc. (Note 3)		9,540,754	8,396
Issued to pay fees via shares (i)		1,025,477	174
Issued to pay interest via shares		7,646,923	1,458
Shares issued through equity financing (ii)		47,916,665	18,237
Share issuance costs (ii)		—	(3,225)
Exercise convertible debt (Note 10)		146,936,976	40,532
Exercise warrants		22,208,027	10,644
Exercise options		2,498,160	865
Vested restricted share units (Note 13)		844,655	743
Balance, April 30, 2021		674,771,443	145,666

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

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

16 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

13. Share - Based Compensation

(a) Stock Option Plan:

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

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

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

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

(b) Restricted Share Units (“RSUs”) plan

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

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

17 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

14. Warrants

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

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

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

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

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

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

18 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

15. Loss Per Share

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

16. Financial Instruments and Risk Management

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

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

Fair value

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

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

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

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

Marketable securities

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

Credit risk

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

19 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

16. Financial Instruments and Risk Management (continued)

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

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

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

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

Liquidity risk

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

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

Interest rate risk

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

Foreign currency risk

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

20 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

16. Financial Instruments and Risk Management (continued)

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

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

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

21 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

17. Segmented Information

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

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

22 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

18. Related Party Transactions

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

Financing transactions

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

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

Operational transactions

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

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

23 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

19. Right of Use Assets and Lease Obligations

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

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

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

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

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

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

20. Contingent liability

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

24 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

21. Non-controlling interest

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

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

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

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

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

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

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

25 

  High Tide Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended April 30, 2021 and 2020 (Unaudited – In thousands of Canadian dollars, except share and per share amounts)

22. Assets held for sale

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

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

23. Subsequent events

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

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

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

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

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

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

26