b) 93802601 Quebec Inc. (“Quebec Inc.”)
Quebec Inc. is a private Quebec corporation with the objective to construct a 181-acre agricultural property for cannabis growing purposes. On May 19, 2020, the Company and Quebec Inc. entered into agreements whereby the Company had the option to purchase all of the issued and outstanding common shares of Quebec Inc. for the sum of $40,000 and paid such at the same date. Prior to such acquisition, the Company made available to Quebec Inc., a $3,000,000 revolving line of credit secured by a mortgage of $3,000,000 registered against the agricultural property. The loan accrues interest at 5% per annum and is payable on demand. The proceeds of the line of credit were to be used to develop the agricultural property. The loan balance at May 19, 2020 was $3,060,956.
Effective May 19, 2020, the Company can exercise its option to acquire all of the issued and outstanding shares of Quebec Inc. for no additional consideration and accordingly, the Company was determined to have acquired control of Quebec Inc. on this date. The acquisition was to advance the Company’s goal of becoming a cannabis producer and accounted for as an asset acquisition, given Quebec Inc. did not meet the definition of business on May 19, 2020, in accordance with IFRS 3.
Funds advanced from Matica were used by Quebec Inc. to prepare the land for construction of outdoor greenhouse facilities. However, in 2020, it was determined that the construction of outdoor greenhouses was no longer determined to be economically viable, and accordingly the Company recognized a loss on acquisition.