Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME

v3.23.2
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME
 6 Months Ended
Jun. 30, 2023
Discontinued Operations And Deconsolidation [Abstract]  
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME [Text Block]
NOTE 8:-
DISCONTINUED OPERATIONS AND DECONSOLIDATION OF TRICHOME
 
During 2022, following management strategic review of the operations of the Group, the Company decided to discontinue its operation in Canada and sell its subsidiaries in the segment, Trichome Group.
 
On November 7, 2022, Trichome Group filed and obtained an initial order under CCAA (see Note 1), which is a Canadian federal law that permits a Canadian business to restructure its affairs while carrying on its business in the ordinary course with minimal disruption to its customers, suppliers and employees.
 
Per the CCAA proceeding, the Court has appointed a monitor, which oversees management activities. The administration of the CCAA process, principally relating to the powers provided to the court and the court appointed monitor, as well as the secured debtholder interests, removed certain elements of control of the business from the Company. As a result, the Company has determined that it no longer has a controlling financial interest over Trichome Group as defined in IFRS 10, "Consolidations", and therefore has deconsolidated Trichome Group as of the date of the CCAA filing.
 
Following the deconsolidation, the carrying value of assets and liabilities of Trichome group were removed from the Company’s consolidated statements of financial position and the results of operations for the Trichome Group are classified as discontinued operations.
 
In the context of the CCAA filing, there are no remaining liabilities to the Company or any of its consolidated subsidiaries related to the Canadian entities, except withholding tax obligation of $839.
 
The results of discontinued operations of Trichome for the six and three months ended June 30, 2022 are summarized as follows:
 
   
Six months
    
Three months
  
             
Revenues
  
$
21,686
    
$
11,118
  
Cost of revenues
    
15,399
      
8,100
  
                 
Gross profit before fair value adjustments
    
6,287
      
3,018
  
                 
Fair value adjustments:
                
Unrealized change in fair value of biological assets
    
1,449
      
55
  
Realized fair value adjustments on inventory sold in the period
    
(1,757
)
    
(1,261
)
                 
Total fair value adjustments
    
(308
)
    
(1,206
)
                 
Gross profit
    
5,979
      
1,812
  
                 
General and administrative expenses
    
12,942
      
7,844
  
Selling and marketing expenses
    
3,164
      
1,905
  
Share-based compensation
    
816
      
316
  
Restructuring
    
4,779
      
4,779
  
                 
Total operating expenses
    
21,701
      
14,844
  
                 
Operating loss
    
(15,722
)
    
(13,032
)
                 
Finance expenses, net
    
(3,413
)
    
(2,416
)
                 
Loss before income taxes
    
(19,135
)
    
(15,448
)
Income tax expense (benefit)
    
(199
)
    
(171
)
                 
Net loss from discontinued operations, net of tax
  
$
(18,936
)
  
$
(15,277
)
 
Below are data of the net cash flows provided by (used in) the discontinued operations:
 
   
Six months ended June 30, 2022
    
Three month ended June 30, 2022
  
             
Operating activities
  
$
(2,772
)
  
$
(1,460
)
                 
Investing activities
  
$
(668
)
  
$
(185
)
                 
Financing activities
  
$
2,733
    
$
1,997