Annual and transition report of foreign private issuers [Sections 13 or 15(d)]

DISCONTINUED OPERATIONS AND DECONSOLIDATION

v3.25.1
DISCONTINUED OPERATIONS AND DECONSOLIDATION
 12 Months Ended
Dec. 31, 2024
Discontinued Operations And Deconsolidation [Abstract]  
DISCONTINUED OPERATIONS AND DECONSOLIDATION [Text Block]
NOTE 21 -
DISCONTINUED OPERATIONS AND DECONSOLIDATION
 
Trichome Group
 
In 2022, following management strategic review of the Group's operations, the Company decided to discontinue its operation in Canada and sell its subsidiaries in the segment, Trichome Group.
 
A discontinued operation is a component of the Group that represents a separate major line of business or geographical area of operations and that either has been disposed of or is classified as held for sale. The Trichome Group comprised the geographical operating segment for Canada.
 
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of operations and other comprehensive loss.
 
The Company identified its decision as an indication of an impairment of Trichome group's CGU. The Company performed an analysis for recoverability of the CGU and recognized an impairment of $115,112, which was recorded under net loss from discontinued operations, net of tax.
 
On November 7, 2022, Trichome Group filed and obtained an initial order under CCAA, which is a Canadian federal law that permits a Canadian business to restructure its affairs while carrying on its normal course of business 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 thus has deconsolidated Trichome as of the CCAA filing date.
 
Following the deconsolidation, the carrying amount of assets and liabilities of Trichome group were derecognized from the Company’s consolidated statements of financial position. As a result, the Company recorded a loss from derecognition of net assets totaling $17,959 as a non-operating income (loss) and the investment in Trichome group decreased to $nil.
 
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. The Trichome group was a party to transactions with the Company and its consolidated subsidiaries entered into in the normal course of business; these transactions include recharge of various corporate expenses for services benefiting Trichome group and selling inventory. Up to the CCAA filing date, these transactions were eliminated on consolidation and had no impact on the Company’s consolidated statement of profit or loss. After deconsolidating Trichome group, these transactions were accounted for as third-party transactions amounted to $921 during the period commencing November 7, 2022 through December 31, 2022.
 
Trichome Group's assets and liabilities included in the consolidated statement of financial position immediately prior to the deconsolidation on November 6, 2022, are as follows:
 
   
November 6,
2022
  
ASSETS
      
       
CURRENT ASSETS:
      
Cash
  
$
406
  
Trade receivables
    
1,047
  
Other current assets
    
2,194
  
Loans receivable
    
1,010
  
Biological assets
    
444
  
Inventories
    
6,784
  
         
     
11,885
  
NON-CURRENT ASSETS:
        
Property, plant and equipment, net
    
14,645
  
Right of use assets, net
    
10,999
  
Intangible assets, net
    
17,157
  
         
     
42,801
  
         
Total assets
  
$
54,686
  
         
LIABILITIES
        
         
CURRENT LIABILITIES:
        
Trade payables
  
$
7,266
  
Bank loans and credit facilities
    
3,774
  
Other current liabilities
    
25,217
  
Current maturities of operating lease liabilities
    
869
  
         
     
37,126
  
NON-CURRENT LIABILITIES:
        
Operating lease liabilities
    
13,517
  
Deferred tax liability, net
    
2,872
  
         
     
16,389
  
         
Total liabilities
  
$
53,515
  
 
The results of discontinued operations of Trichome are summarized as follows:
 
   
Period ended
November 6,
2022
  
       
Revenue
  
$
28,171
  
Cost of revenue
    
24,227
  
         
Gross profit before fair value adjustments
    
3,944
  
         
Fair value adjustments:
        
Unrealized change in fair value of biological assets
    
399
  
Realized fair value adjustments on inventory sold
    
(2,528
)
         
Total fair value adjustments
    
(2,129
)
         
Gross profit
    
1,815
  
         
General and administrative expenses
    
38,464
  
Impairment of goodwill, intangible assets, right-of-use assets and fixed assets
    
115,112
  
Selling and marketing expenses
    
4,912
  
Restructuring expenses
    
4,506
  
Share-based compensation
    
1,130
  
         
Total operating expenses
    
164,124
  
         
Operating loss
    
(162,309
)
         
Finance expenses, net
    
(5,264
)
         
Loss before taxes on income
    
(167,573
)
Taxes on income
    
(1,194
)
         
Net loss from discontinued operations, net of tax
  
$
(166,379
)
 
Below are data on the net cash flow used in the discontinued operations:
 
   
Period ended
November 6,
2022
  
       
Operating activities
  
$
(300
)
         
Investing activities
  
$
(615
)
         
Financing activities
  
$
(1,850
)