FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

12 Months Ended

Dec. 31, 2023

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The fair value of the Company’s cash, accounts receivable, other receivables, accounts payable, and accrued expenses approximates carrying value due to their short-term nature. The Company’s lease receivables, convertible notes payable, and notes payable approximate fair value due to the instruments bearing market rates of interest. These measurements were identified as Level 1 measurements, due to the proximity of fair value to carrying values. The fair value of stock options granted were estimated based on a Black-Scholes model during the years ended December 31, 2023 and 2022. The estimated fair value of the derivative liabilities, which represent warrants classified as liabilities, represent Level 3 measurements. The assumptions that the Company used in the fair valuation of derivative liabilities are disclosed in Note 10.

The following table details the fair value measurements within the fair value hierarchy of the Company's financial instruments, which includes the Level 3 liabilities:

	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	4,550	$	—	$	—	4,550
Total liabilities	$	4,550	$	—	$	—	$	4,550

	Fair Value at December 31, 2022
	Total		Level 1		Level 2		Level 3
Liabilities:
Derivative liability	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

There were no transfers between fair value levels for the years ended December 31, 2023 and 2022.

(a)    Financial Risk Management

The Company is exposed in varying degrees to a variety of financial instruments related risks. The Board mitigates these risks by assessing, monitoring and approving the Company’s risk management processes.

(b)    Credit Risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash, accounts receivable, lease receivables, and other receivables. The risk to cash deposits is mitigated by holding these instruments with regulated financial institutions. Accounts

receivable, lease receivables, and other receivables credit risk arises from the possibility that principal and interest due may become uncollectible. The Company mitigates this risk by managing and monitoring the underlying business relationships.

The Company maintains cash with federally insured financial institutions. As of December 31, 2023 and 2022, the Company exceeded federally insured limits by $0.3 million and $10.1 million, respectively. As of December 31, 2023 and 2022, the Company held an immaterial amount of cash in a Canadian trust account that is denominated in C$.

As of December 31, 2023 and 2022, the maximum credit exposure related to the carrying amounts of accounts receivable, lease receivables, and other receivables was $12.4 million and $15.0 million, respectively.

(c)    Liquidity Risk

The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to raise sufficient capital to settle obligations and liabilities when due. The Company has raised capital as needed, however there is no guarantee the company will be able to continue to raise funds in the same manor it has historically.

The Company has the following gross contractual obligations as of December 31, 2023, which are expected to be payable in the following respective periods:

	Less than 1 year		1 to 3 years		3 to 5 years		Greater than 5 years		Total
Accounts payable and accrued liabilities	$	20,429	$	977	$	—	$	—	$	21,406
Convertible notes, notes payable and accrued interest	25,630		47,513		11,030		—		84,173
Construction finance liability	—		16,000		—		—		$	16,000
Total	$	46,059	$	64,490	$	11,030	$	—	$	121,579

(d)    Foreign Exchange Risk

The Company is exposed to exchange rate fluctuations between United States and Canadian dollars. The Company’s share price is denominated in Canadian dollars. If the Canadian dollar declines against the United States dollar, the United States dollar amounts available to fund the Company through the exercise of stock options or warrants will be reduced. The Company also has bank accounts with immaterial balances in Canadian dollars. The value of these bank balances if converted to U.S. dollars will fluctuate. While the Company maintains a head office in Canada where it incurs expenses primarily denominated in Canadian dollars, such expenses are a small portion of overall expenses incurred by the Company. The Company does not have a practice of trading derivatives and does not engage in “natural hedging” for funds held in Canada.