| 24. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value: •Level 1 - defined as observable inputs such as quoted prices in active markets; •Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and •Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The fair value measurement is categorized in its entirety by reference to its lowest level of significant input. The Company records cash, accounts receivable, interest receivable and, accounts payable, and other accrued expenses and liabilities at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include items such as property, plant and equipment, goodwill and other intangible assets, equity and other investments and other assets. The Company determines the fair value of these items using Level 3 inputs, as described in the related sections below. The following table represents the Company’s financial assets and liabilities measured at estimated fair value on a recurring basis:
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Fair value measurement using |
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Quoted |
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Significant |
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prices in |
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other |
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Significant |
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active |
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observable |
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unobservable |
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markets |
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inputs |
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inputs |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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Total |
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(As Restated) |
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March 31, 2026 |
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Assets: |
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Restricted short-term investments |
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$ |
5,046 |
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$ |
- |
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$ |
- |
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$ |
5,046 |
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Other investments |
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46 |
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- |
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105,979 |
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106,025 |
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Liabilities: |
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Warrant derivative liability |
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- |
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- |
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27,522 |
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27,522 |
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March 31, 2025 |
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Assets: |
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Short-term investments |
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$ |
17,656 |
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$ |
- |
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$ |
- |
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$ |
17,656 |
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Restricted short-term investments |
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6,410 |
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- |
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- |
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6,410 |
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Other investments |
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46 |
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- |
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177,827 |
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177,873 |
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Liabilities: |
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Warrant derivative liability |
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- |
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- |
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8,647 |
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8,647 |
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The following table summarizes the valuation techniques and significant unobservable inputs in the fair value measurement of significant level 3 financial instruments:
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Financial asset / financial liability |
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Valuation techniques |
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Significant unobservable inputs |
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Relationship of unobservable inputs to fair value |
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Canopy USA, LLC Equity Method Investment |
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Asset based approach |
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Probability and timing of US legalization |
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Increase or decrease in probability of US legalization will result in an increase or decrease in fair value |
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Discount rate |
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Increase or decrease in discount rate will result in a decrease or increase in fair value |
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Expected future cash flows |
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Increase or decrease in expected future cash flows will result in an increase or decrease in fair value |
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Volatility of Wana and Jetty equity |
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Increase or decrease in volatility will result in an increase or decrease in fair value |
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Canopy USA LPs Equity Method Investment |
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Asset based approach |
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Probability and timing of US legalization |
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Increase or decrease in probability of US legalization will result in an increase or decrease in fair value |
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Elevate Loan Receivable |
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Lesser of discounted cash flow and debtor net assets |
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Equity value of Canopy USA |
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Increase or decrease in equity value will result in an increase or decrease in fair value |
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Acreage and Wana Debt |
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Lesser of discounted cash flow and debtor net assets |
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Equity value of Canopy USA |
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Increase or decrease in equity value will result in an increase or decrease in fair value |
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Warrant derivative liability |
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Black-Scholes option pricing model |
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Volatility of Canopy Share price |
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Increase or decrease in volatility will result in an increase or decrease in fair value |
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