FINANCIAL ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2024

6.1 Categories of financial assets and financial liabilities

The classification of financial instruments is summarized as follows:


	Classifications	September 30, 2024	December 31, 2023
		$	$
FINANCIAL ASSETS
Cash	Amortized cost	26,287,968	29,892,966
Trade receivables	Amortized cost	22,429,860	40,621,997
Incentives and other government assistance receivable	Amortized cost	22,854,384	26,625,156
FINANCIAL LIABILITIES
Trade and other payables	Amortized cost	41,109,133	71,856,894
Long-term debt and other debts	Amortized cost	292,636,055	224,942,365
Share warrant obligations	FVTPL	5,521,709	29,582,203
Conversion options on convertible debt instruments	FVTPL	4,041,036	25,034,073

The Company is a party to claims and litigation arising in the normal course of operations. The Company does not expect the resolution of these matters to have a material adverse effect on the financial position or results of operations of the Company.

6.2 Fair value of financial instruments

Current financial instruments that are not measured at fair value in the consolidated statements of financial position are represented by cash, trade receivables, incentives and other government assistance receivable, trade and other payables and long-term debt and other debts. Their carrying values are considered to be a reasonable approximation of their fair value because of their short-term maturity and / or the contractual terms of these instruments.

As of September 30, 2024 and December 31, 2023, the fair values of long-term debt and other debts based on discounted cash flows were not materially different from their carrying values because there were no material changes in the assumptions used for fair value determination at inception, with the exception of the loan from Strategic Innovation Fund of the Government of Canada (Note 8.3) and from Investissement Quebec (Note 8.2).

The combined carrying value of Strategic Innovation Fund of the Government of Canada and Investissement Quebec loans amounted to $42,763,037 (December 31, 2023: $38,697,354) while their combined fair value amounted to $35,584,549 (December 31, 2023: $27,744,314). As of September 30, 2024 and December 31, 2023, the fair values of the warrants issued to a customer, the private Business Combination warrants, the warrants issued as part of 2023 Debenture Financing (as defined in Note 8.7) and the conversion options on convertible debt instruments were determined using the Black-Scholes or the binomial option pricing model and the fair value of the public Business Combination warrants and December 2022 warrants (see Note 10) was determined using their market value.

6 - FINANCIAL ASSETS AND LIABILITIES (CONTINUED)

6.2 Fair value of financial instruments (continued)

As at September 30, 2024, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair values of the private share warrants, the warrants issued to a customer and the warrants issued as part of 2023 Debenture Financing (as defined in Note 8.7) with a corresponding increase in consolidated net loss of $342,159 (September 30, 2023: increase in consolidated net loss by $1,962,781) and a 5.0% decrease in the value would have an impact of decreasing the consolidated net loss by $327,980 (September 30, 2023: decrease in consolidated net loss by $1,920,539).

As at September 30, 2024, the impact of a 5.0% increase or decrease in the value of the Company’s share price would have an impact of $91,131 on the fair value of the public warrants, with a corresponding impact on the consolidated net loss (September 30, 2023: $712,629). As at September 30, 2024, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair value of the conversion options on convertible debt instruments with a corresponding increase in consolidated net loss of $412,020 (September 30, 2023: not applicable) and a 5.0% decrease in the value would have an impact of decreasing the consolidated net loss by $394,838 (September 30, 2023: not applicable).

6.3 Fair Value Hierarchy

Fair value measurements are categorized in accordance with the following levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability; and

Level 3: Inputs are unobservable inputs for the asset or liability.

The Group’s financial instruments are categorized as follows on the fair value hierarchy:


			Fair Value Hierarchy
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Share warrant obligations- public			Level 1
Share warrant obligations- private			Level 2
Share warrant obligations- warrants issued to a customer			Level 3
Share warrant obligations- July 2023 warrants			Level 2
Conversion options on convertible debt instruments			Level 3
FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST
Long-term debt and other debts			Level 2

See Note 10 for share warrants obligation, Note 9 for the conversion options on convertible debt instrument and Note 8 for long-term debt and other debts for additional information related to the inputs used in the fair value calculation and the reconciliation between opening and closing balances.