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INVESTMENTS

3 Months Ended

Mar. 31, 2023

INVESTMENTS

6. INVESTMENTS

As at March 31, 2023, the Company’s investments consisted of common shares in an early-stage European cannabis company. The Company purchased common shares from the investee for Euro 2.0 million ($2.4 million), purchased its first tranche of warrants from existing investors in exchange for 225,000 common shares of the Company, and obtained a second tranche of warrants from the investee as an inducement to exercise some of the first tranche of warrants. As at March 31, 2023, the Company owned approximately 9.6% of the investee, or approximately 9% on a diluted basis including exercisable warrants of other investors.

The warrants allowed the holder to purchase one common share of the investee for CAD 0.30 ($0.22) for the first tranche, and CAD 1.00 ($0.74) for the second tranche. The Company did not exercise the warrants and they expired on February 1, 2023. The Company recorded the remaining value of the warrants as a loss on changes in fair value of the investment during the three months ended March 31, 2023.

The Company’s cost of the investments was recorded based on the fair value of the consideration exchanged as at the respective transaction dates. The investee is not a publicly listed entity and has no active quoted prices for its common shares or warrants. The Company has elected the measurement alternative to record the common share investment at cost and test for impairment. The Company determined that no impairment indicators were present as at March 31, 2023. The Company also considers observable transactions of the common shares for indicators of fair value but there have been none.

A schedule of the Company’s investments activity is as follows:

		Investee common shares				Warrants CAD 0.30 exercise price				Warrants CAD 1.00 exercise price				Total
Financial asset hierarchy level		Level 3				Level 3				Level 3
Balance at December 31, 2022		$	730			$	34			$	-			$	764
Loss on changes in fair value			-				(34	)			-				(34	)
Balance at March 31, 2023		$	730			$	-			$	-			$	730

The loss on changes in fair value appears in the unrealized loss on changes in fair value caption in the condensed interim consolidated statements of loss and comprehensive loss.

The value of the investee common shares appears in the investment line on the condensed interim consolidated statement of financial position.