Discontinued Operations |
20.
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Discontinued Operations
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|
On November 19, 2020 the Company entered a definitive asset sale agreement through its wholly owned subsidiary Lexaria Canpharm ULC to sell certain non-core business assets for gross proceeds of C$3,850,000.
On December 10, 2020 the sale closed. The Company received from Hill Street Beverage Company C$350,000 in cash, 6,031,363 restricted common shares at a deemed price of C$0.0829 per share as the first required equity-based payment, a promissory note having a principal amount of C$2,000,000 and bearing interest at the rate of 10% per annum. Pursuant to the terms of the transaction, the Company will receive another C$1,000,000 worth of common shares over a period sixteen months in C$500,000 issuances eight months and sixteen months after the closing date. The C$ were converted at the spot rate of 0.78107 at the closing date. The promissory note was included at its nominal value of $NIL.
|
Gain on asset disposal
|
|
$
|
|
Book value of assets sold
|
|
|
— |
|
Cash consideration
|
|
|
273,373 |
|
Shares received
|
|
|
468,264 |
|
Shares receivable
|
|
|
781,067 |
|
Promissory note
|
|
|
— |
|
|
|
|
1,522,704 |
|
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The financial results of the group of assets sold are presented as income (loss) from discontinued operations, net of income taxes in our consolidated statement of income. The following table presents financial results of the assets:
|
|
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SIX MONTHS ENDED
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|
|
|
February 28
|
|
|
February 29
|
|
|
|
2021
|
|
|
2020
|
|
Revenue
|
|
$ |
3,000 |
|
|
$ |
69,750 |
|
Operating Expenses
|
|
|
25,000 |
|
|
|
5,566 |
|
Net Income
|
|
$ |
(22,000 |
) |
|
$ |
64,184 |
|
|
The following table presents cash flows of discontinued operations:
|
|
|
SIX MONTHS ENDED
|
|
|
|
February 28
|
|
February 29
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows used in discontinued operating activities
|
|
|
|
|
|
|
Net income
|
|
$ |
(22,000 |
)
|
|
$ |
64,184 |
|
Change in working capital
|
|
|
105,000 |
|
|
|
(99,000 |
) |
Net cash provided by (used in) discontinued operating activities
|
|
$ |
83,000 |
|
|
$ |
(34,816 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) discontinued operations
|
|
|
83,000 |
|
|
$ |
(34,816 |
) |
|
The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of the assets:
|
|
|
February 28
|
|
|
August 31
|
|
|
|
2021
|
|
|
2020
|
|
Current Assets
|
|
|
|
|
|
|
Accounts receivable
|
|
$ |
— |
|
|
$ |
105,250 |
|
Total assets classified as discontinued operations in the consolidated balance sheet
|
|
|
— |
|
|
|
105,250 |
|
|
|
|
|
|
|
|
|
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Current Liabilities
|
|
|
|
|
|
|
|
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Accounts payable
|
|
$ |
— |
|
|
$ |
250 |
|
Total liabilities classified as discontinued operations in the consolidated balance sheet
|
|
|
— |
|
|
|
250 |
|
|