|12 Months Ended|
Dec. 31, 2021
13. DERIVATIVE LIABILITIES
Purchase Consideration and Contingent Consideration
As part of the purchase price of the Qualifying Transaction, the Company entered into make-whole provisions relating to the Exchangeable Shares issued. The Company uses a Monte-Carlo simulation model to estimate the fair value of the make-whole provision liability. Upon initial recognition, the Company recorded a derivative liability of $2,813,718. On November 20, 2019, the Company issued a total of 389,905 Exchangeable Shares with a value of $3,245,180 as a partial settlement of the make-whole liability. On May 18, 2020, the Company issued the remaining shares related to the make-whole liability, a total of 614,515 Exchangeable Shares with a value of $3,765,927.
The earn-out provision related to the acquisition of Sira is measured at fair value by taking a probability-weighted average of possible outcomes, as estimated by management, and discounting the payment to a present value. Upon initial recognition, the fair value of the contingent consideration liability was recorded as $21,821,132. As of December 31, 2021 and 2020, the fair value was $25,315,871 and $22,961,411, respectively.
The earn-out provisions related to the acquisitions of Oasis, GSD, and PA Natural are measured at fair value using a Monte-Carlo simulation to estimate the fair value through the end of the earn-out period. Upon initial recognition, the fair value of the contingent consideration liabilities were recorded as $117,615,000, $89,561,000, and $39,041,245, respectively.
As of December 31, 2021, the fair value of Oasis’s earn-out provision was $28,667,000. As of December 31, 2021, the fair value of GSD’s provision was $91,671,000. As of December 31, 2021, the fair value of PA Natural’s provision was $39,868,080.
The fair value adjustment relating to derivative liabilities has been reflected in the financial statements under “Fair value gain (loss) on financial liabilities” as detailed below:
The disclosure of derivative financial instruments. [Refer: Derivatives [member]]
Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef