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Discontinued Operations | 12 Months Ended
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Aug. 31, 2021
Discontinued Operations |
19. Discontinued Operations | 19. Discontinued Operations On November 19, 2020, the Company entered a definitive asset sale agreement through its wholly owned subsidiary Lexaria CanPharm ULC to sell certain assets for gross proceeds of C$3,850,000. The sale closed on December 10, 2020, with the Company receiving C$350,000 in cash, 6,031,363 restricted common shares at a fair value price of C$500,000 as the first of three required equity-based payments, a promissory note having a principal amount of C$2,000,000 and bearing interest at the rate of 10% per annum. The promissory note was included at its nominal value of $NIL and any future receipts of interest and principal will be recorded as income in the period. Pursuant to the terms of the transaction the Company will receive equity-based payments in two tranches of C$500,000 in common shares of Hill Street Beverage Company issued at eight months and sixteen months after the closing date. The Company received the second tranche of shares on August 9, 2021, as per the sale agreement. Based on the agreed terms, the value of the 5,882,353 shares issued was $390,533 (C$500,000). An over-allotment of 1,693,405 shares with a value of $122,426 (C$143,939) were received at this time and has been applied to the future issuance of the 3rd and final tranche with a reduction in the outstanding amount receivable. The gain on the transaction is presented below:
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 |
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:
|  | August 31 |  |  | August 31 |
|  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |
Revenue |  |  | 3,000 |  |  |  | 69,750 |
Operating expenses |  |  | (25,000 | ) |  |  | (5,566 | )
Net income (loss) |  |  | (22,000 | ) |  |  | 64,184 |
The following table presents cash flows of discontinued operations:
|  | August 31 |  |  | August 31 |
|  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |
Cash flows used in discontinued operating activities |  |  |  |  |  |
Net income |  |  | (22,000 | ) |  |  | 64,184 |
Change in working capital |  |  | 25,000 |  |  |  | (99,000 | )
Net cash provided by (used in) discontinued operating activities |  |  | 3,000 |  |  |  | (34,816 | )
Net cash provided by (used in) discontinued operations |  |  | 3,000 |  |  |  | (34,816 | )
The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of the assets:
|  | August 31 |  |  | August 31 |
|  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |
Current Assets |  |  |  |  |  |
Accounts receivable |  |  | - |  |  |  | 105,250 |
Current Liabilities |  |  |  |  |  |  |  |
Accounts payable |  |  | - |  |  |  | 250 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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