Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2026

Restatement of Previously Issued Consolidated Financial Statements

In connection with the preparation of the Company’s consolidated financial statements for the fiscal year ended March 31, 2026, management of the Company identified an accounting classification error relating to certain share-settled warrants of the Company with exercise prices denominated in U.S. dollars, first issued during the fiscal year ended March 31, 2024 (the “Identified Warrants”). As a result, the Company’s previously filed: (i) audited consolidated financial statements for the fiscal year ended March 31, 2025, originally included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “2025 10-K”), (ii) audited consolidated financial statements for the fiscal year ended March 31, 2024, originally included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (the “2024 10-K”), and (iii) unaudited consolidated financial statements for the quarterly periods ended September 30, 2023, December 31, 2023, June 30, 2024, September 30, 2024, December 31, 2024, June 30, 2025, September 30, 2025 and December 31, 2025, originally included in the our Quarterly Reports on Form 10-Q for such quarterly periods (collectively, the “Form 10-Qs” and together with the 2025 10-K and the 2024 10-K, the “Prior Financial Statements”), should no longer be relied upon.

The Company determined that the Identified Warrants should have been classified as liabilities rather than equity instruments under applicable accounting standards, given the Company’s Canadian dollar functional currency. Accordingly, the Company should have recorded these instruments as liabilities on its consolidated balance sheets and measured them at fair value at each reporting date, with changes in fair value recorded in the consolidated statements of operations and comprehensive loss. The corrections (the “Restatement Items”) required to be made to the Prior Financial Statements are the result of a technical application of accounting standards.

Impact of Restatement

The Company evaluated the materiality of these misstatements both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of correcting these misstatements was material to the Prior Financial Statements. As a result of the material misstatements, we have restated our Prior Financial Statements in accordance with Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections (the “Restated Financial Statements”).

A reconciliation from the previously reported amounts in the Prior Financial Statements to the restated amounts in the Restated Financial Statements is provided for the impacted financial statement line items below for: (i) the consolidated balance sheet as of March 31, 2025 and March 31, 2024; (ii) the consolidated statement of operations and comprehensive loss for the year ended March 31, 2025 and March 31, 2024; (iii) the consolidated statement of shareholders’ equity for the year ended March 31, 2025 and March 31, 2024; and (iv) the consolidated statement of cash flows for the year ended March 31, 2025 and March 31, 2024. The previously

reported amounts in the Prior Financial Statements are labeled as “As Previously Reported” in the tables below. The amounts labelled “Restatement Adjustments” represent the effects of the restatement described above.

In connection with the restatement, certain disclosures for the year ended March 31, 2024 have been updated, where applicable, to reflect the impact of the restated amounts on affected balance sheet line items, while disclosures for other line items have not been revised as they were not impacted.

Also see Note 35, “Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements.”

The following tables present the effect of the Restatement Items on the Company’s consolidated balance sheet as of March 31,
2025 and March 31, 2024 (in thousands, except number of shares and per share data):


	March 31, 2025
	As Previously Reported			Restatement Adjustment			As Restated
Warrant derivative liability	$	-		$	8,647		$	8,647
Total current liabilities		94,404			8,647			103,051
Total liabilities		430,488			8,647			439,135
Share capital		8,796,406			(14,001	)		8,782,405
Additional paid-in capital		2,618,417			(47,472	)		2,570,945
Deficit		(10,928,145	)		52,826			(10,875,319	)
Total Canopy Growth Corporation shareholders’ equity		487,213			(8,647	)		478,566
Total shareholders’ equity		487,213			(8,647	)		478,566
Total liabilities and shareholders’ equity		917,701			-			917,701


	March 31, 2024
	As Previously Reported			Restatement Adjustment			As Restated
Warrant derivative liability	$	-		$	99,941		$	99,941
Total current liabilities		234,715			99,941			334,656
Total liabilities		799,823			99,941			899,764
Share capital		8,244,301			(24,979	)		8,219,322
Additional paid-in capital		2,602,148			(38,551	)		2,563,597
Deficit		(10,330,030	)		(36,411	)		(10,366,441	)
Total Canopy Growth Corporation shareholders’ equity		500,368			(99,941	)		400,427
Total shareholders’ equity		500,507			(99,941	)		400,566
Total liabilities and shareholders’ equity		1,300,330			-			1,300,330

The correction of the warrant classification misstatement described above resulted in a decrease in share capital and additional paid-in capital with a corresponding increase in warrant derivative liability. Additionally, the warrant derivative liability is recorded at fair value in the consolidated statements of operations and comprehensive loss and due to the changes in fair value, the correction resulted in changes to the deficit balance.

The following tables present the effect of the Restatement Items on the Company’s consolidated statement of operations and comprehensive loss for the years ended March 31, 2025 and 2024 (in thousands, except number of shares and per share data):


	Year ended March 31, 2025
	As Previously Reported			Restatement Adjustment		As Restated
Net revenue	$	268,995		$	-	$	268,995
Gross margin		79,511			-		79,511
Operating loss from continuing operations		(117,143	)		-		(117,143	)
Other income (expense), net		(479,854	)		89,237		(390,617	)
Loss from continuing operations before income taxes		(596,997	)		89,237		(507,760	)
Net loss from continuing operations		(604,138	)		89,237		(514,901	)
Net loss		(598,115	)		89,237		(508,878	)
Net loss attributable to Canopy Growth Corporation		(598,115	)		89,237		(508,878	)

Basic and diluted loss per share - continuing operations	$	(5.62	)	$	0.83	$	(4.79	)
Basic and diluted loss per share	$	(5.56	)	$	0.83	$	(4.73	)

Comprehensive loss:
Net loss from continuing operations		(604,138	)		89,237		(514,901	)
Comprehensive loss from continuing operations		(591,018	)		89,237		(501,781	)
Comprehensive loss		(584,995	)		89,237		(495,758	)
Comprehensive loss attributable to Canopy Growth Corporation		(584,995	)		89,237		(495,758	)


	Year ended March 31, 2024
	As Previously Reported			Restatement Adjustment			As Restated
Net revenue	$	297,146		$	-		$	297,146
Gross margin		80,882			-			80,882
Operating loss from continuing operations		(228,714	)		-			(228,714	)
Other income (expense), net		(242,641	)		(36,411	)		(279,052	)
Loss from continuing operations before income taxes		(471,355	)		(36,411	)		(507,766	)
Net loss from continuing operations		(483,682	)		(36,411	)		(520,093	)
Net loss		(675,795	)		(36,411	)		(712,206	)
Net loss attributable to Canopy Growth Corporation		(657,269	)		(36,411	)		(693,680	)

Basic and diluted loss per share - continuing operations	$	(6.47	)	$	(0.48	)	$	(6.95	)
Basic and diluted loss per share	$	(8.79	)	$	(0.48	)	$	(9.27	)

Comprehensive loss:
Net loss from continuing operations		(483,682	)		(36,411	)		(520,093	)
Comprehensive loss from continuing operations		(496,933	)		(36,411	)		(533,344	)
Comprehensive loss		(689,046	)		(36,411	)		(725,457	)
Comprehensive loss attributable to Canopy Growth Corporation		(670,520	)		(36,411	)		(706,931	)

The correction of the warrant classification misstatement described above resulted in a change in other income (expense), net resulting from the fair value movement of the warrant derivative liability. The valuation of the warrant derivative liability is dependent on various inputs and primarily affected by changes in the share price of Canopy Shares.

The following table presents the affect of the Restatement Items on the Company’s consolidated statement of shareholders’ equity for the years ended March 31, 2025 and 2024:


	March 31, 2025
	As Previously Reported			Restatement Adjustment			As Restated
Share capital	$	8,796,406		$	(14,001	)	$	8,782,405
Additional paid-in capital - Share-based reserve		513,229			(9,820	)		503,409
Additional paid-in capital - Warrants		2,628,137			(37,652	)		2,590,485
Deficit		(10,928,145	)		52,826			(10,875,319	)
Total shareholders’ equity		487,213			(8,647	)		478,566


	March 31, 2024
	As Previously Reported			Restatement Adjustment			As Restated
Share capital	$	8,244,301		$	(24,979	)	$	8,219,322
Additional paid-in capital - Share-based reserve		514,578			(9,820	)		504,758
Additional paid-in capital - Warrants		2,610,519			(28,731	)		2,581,788
Deficit		(10,330,030	)		(36,411	)		(10,366,441	)
Total shareholders’ equity		500,507			(99,941	)		400,566

The following table presents the effect of the Restatement Items on the Company’s consolidated statement of cash flows for the years ended March 31, 2025 and 2024:


	Year ended March 31, 2025
	As Previously Reported			Restatement Adjustment			As Restated
Cashflows from operating activities:
Net loss	$	(598,115	)	$	89,237		$	(508,878	)
Net loss from continuing operations		(604,138	)		89,237			(514,901	)
Non-cash fair value adjustments and charges related to settlement of unsecured senior notes		413,412			(89,237	)		324,175
Net cash used in operating activities - continuing operations		(165,750	)		-			(165,750	)
Net cash used in operating activities		(165,750	)		-			(165,750	)


	Year ended March 31, 2024
	As Previously Reported			Restatement Adjustment			As Restated
Cashflows from operating activities:
Net loss	$	(675,795	)	$	(36,411	)	$	(712,206	)
Net loss from continuing operations		(483,682	)		(36,411	)		(520,093	)
Non-cash fair value adjustments and charges related to settlement of unsecured senior notes		160,468			36,411			196,879
Net cash used in operating activities - continuing operations		(228,421	)		-			(228,421	)
Net cash used in operating activities		(281,950	)		-			(281,950	)

The correction of the warrant classification misstatement described above resulted in no net change to net cash used in operating activities.

The remainder of the notes to the Company’s consolidated financial statements have been updated and restated, as applicable, to reflect the impacts of the restatement described above.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity. All intercompany accounts and transactions have been eliminated on consolidation.

Variable interest entities

A variable interest entity (“VIE”) is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity’s activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a

reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Under ASC 810 – Consolidations (“ASC 810”), where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE.

Equity method investments

Investments accounted for using the equity method include those investments where the Company: (i) can exercise significant influence over the other entity and (ii) holds common shares and/or in-substance common shares of the other entity. Under the equity method, investments are carried at cost, and subsequently adjusted for the Company’s share of net income (loss), comprehensive income (loss) and distributions received from the investee. If the current fair value of an investment falls below its carrying amount, this may indicate that an impairment loss should be recorded. Any impairment losses recognized are not reversed in subsequent periods.

The Company can also elect to account for certain equity method investments at fair value where a valuation technique and various inputs are used in determining the fair value of the equity method investments each period. The fair value changes are recorded in other income (expense), net.

Use of estimates

The preparation of these consolidated financial statements and accompanying notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. Financial statement areas that require significant judgments and estimates are as follows:

Allowance for credit losses - The assessment involves judgment and incorporates estimates of loss based on available information relevant to considering the collectability and includes consideration of economic and business conditions, default trends and other internal and external factors. The amount is subject to change based on experience and new information which could result in outcomes that require adjustment to the carrying amounts affecting future periods.

Inventory reserves - The Company records inventory reserves based on the Company’s estimated forecast of product demand, production requirements, market conditions and regulatory environment. Actual losses may differ from management’s estimates.

Estimated useful lives, impairment considerations, and amortization of property, plant and equipment and intangible assets - Amortization of capital and intangible assets is dependent upon estimates of useful lives based on management’s judgment.

Goodwill and indefinite lived intangible asset impairment testing requires management to make estimates in the impairment testing model. On at least an annual basis, the Company tests whether goodwill and indefinite lived intangible assets are impaired. The reporting unit’s fair value is determined using a discounted future cash flow model, which incorporate assumptions regarding future events, specifically future cash flows, growth rates and discount rates.

Impairment of long-lived assets is influenced by judgment in defining an asset group and determining the indicators of impairment, and estimates used to measure impairment losses.

Legal proceedings - Judgment is used in determining the probability of incurring a loss in addition to determining the estimated amount. Amounts recorded are based on management’s judgment and actual amounts recorded may not be realized.

Fair value measurement of financial instruments - The use of various valuation approaches described in Note 24 may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these techniques may not be realized or realizable.

Consolidation of variable interest entities - The determination of whether the Company is the primary beneficiary of a variable interest entity requires significant judgment. The assessment requires a qualitative analysis of power and benefits of the variable interest entity.

Foreign currency translation

In preparing the financial statements of individual entities, transactions in currencies other than the entity’s functional currency are recognized at exchange rates in effect on the date of the transactions. At each reporting date monetary assets and liabilities denominated in foreign currencies are re-translated at the exchange rates applicable at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Realized and unrealized exchange gains and losses are recognized through net income (loss).

For the purposes of presenting consolidated financial statements, the assets and liabilities of foreign operations are translated into Canadian dollars at the exchange rates applicable at the balance sheet date. Income and expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from translating foreign operations are recognized in accumulated other comprehensive income (loss). Transactional exchange gains and losses are included in other income (expense), net.

Cash equivalents and short-term investments

Cash and cash equivalents consist of cash and highly liquid investments that are readily convertible into known amounts of cash with original maturities of three months or less.

Investments with maturities or redemption dates greater than 90 days at the date of purchase are included in short-term investments. The Company’s investments in debt securities, if any, have been classified and accounted for using the fair value option. Unrealized gain and losses on debt securities, if any, are recognized in net income (loss). All other short-term investments are recorded at fair value with gains or losses recognized in net income (loss).

Restricted short-term investments

The Company considers short-term investments to be restricted when withdrawal or general use is legally restricted.

Accounts receivable

Accounts receivables are recorded at the invoiced amount and arise out of the sales to customers. The Company is exposed to credit losses primarily through sales of products and maintains an allowance for credit losses at an amount sufficient to absorb losses inherent in its accounts receivable portfolio as of the reporting dates based on the projection of expected credit losses. The allowance for credit losses represents management’s best estimate of probable credit losses in accounts receivable, taking into account a combination of past events, current conditions, and supportable forecasts. The Company estimates and reserves for its allowance for credit losses based on its experience with past due accounts and collectability, write-off history, the aging of accounts receivable and an analysis of customer data.

Inventory

Inventory consists of raw materials, supplies and consumables used in the inventory process, merchandise for sale, finished goods and work-in-process such as pre-harvested cannabis plants, by-products to be extracted, oils, gel capsules and edible products. Inventory is valued at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Cost is determined using standard costs, approximating average costs, and include direct and indirect labor, consumables, materials, packaging supplies, utilities, facilities costs, quality and testing costs, production related depreciation and other overhead costs. The Company records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, age of inventory, historical experience and application of the specific identification method. The Company classifies cannabis inventory as a current asset, although part of such inventory, because of the duration of the cultivation, drying, and conversion process, ordinarily would not be utilized within one year.

Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation. Major additions and improvements are capitalized, while maintenance and repairs are expensed as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized in net income (loss).

Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are as follows:


		Years
Buildings and greenhouses		20 - 50
Production and warehouse equipment		5 - 30
Office and lab equipment		3 - 25
Computer equipment		3 - 5
Leasehold improvements		Lesser of estimated useful life or lease term

Depreciation commences upon the property, plant and equipment becoming available for its intended use. Construction in progress is measured at cost and upon completion reclassified to one of the Company’s five classes of property, plant and equipment as noted in the above table, depending on the nature of the associated assets.

Estimates of useful life and residual value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no longer appropriate. Any changes are accounted for on a prospective basis as a change in estimate.

Intangible assets

Finite lived intangible assets are recorded at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets acquired in a business combination are recognized at fair value at the date of acquisition, while intangible assets that are internally generated are recognized at cost.

Amortization is provided on a straight-line basis over the following terms:


		Years
Intellectual property		5 - 15
Distribution channel		4 - 11
Operating licenses		5 - 8
Software and domain names		3 - 5
Brands		2 - 5

The estimated useful life and amortization method are reviewed at the end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis.

Goodwill and indefinite lived intangible assets

Goodwill is allocated to the reporting unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. The Company reviews goodwill and indefinite lived intangible assets annually for impairment in the fourth quarter, or sooner, if events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If factors indicate this is the case, then a quantitative test is performed and an impairment is recorded for any excess carrying value above the reporting unit’s fair value, not to exceed the amount of goodwill.

Indefinite lived intangible assets are comprised of certain acquired brand names and operating licenses, which are carried at cost less accumulated impairment losses. The Company reviews the classification each reporting period to decide whether the assessment made about the useful life as indefinite or finite is still appropriate. Any change is accounted for on a prospective basis as a change in estimate.

Year ended March 31, 2024

For the year-end March 31, 2024, the Company deconsolidated BioSteel and classified its results as discontinued operations, (see Note 6). As a result, the Company reported its financial results for the following four reportable segments: (i) Canada cannabis; (ii) International markets cannabis; (iii) Storz & Bickel; and (iv) This Works. On December 18, 2023, the Company completed the sale of This Works and as of such date, the results of This Works are no longer included in the Company’s financial results (see Note 34). In the three months ended March 31, 2024, the Company performed its annual goodwill impairment test and recognized impairment losses in relation to its Storz & Bickel reporting unit. Refer to Note 16 for further details.

Year ended March 31, 2025

In the three months ended March 31, 2025, the Company performed its annual goodwill impairment test on its remaining goodwill balance, which is assigned to the Storz & Bickel reporting unit. No impairment was noted for the Storz & Bickel reporting unit, as the estimated fair value of the Storz & Bickel reporting unit exceeded its carrying value. Refer to Note 16 for further details.

Year ended March 31, 2026

In the three months ended March 31, 2026, the Company performed its annual goodwill impairment test on its remaining goodwill balance, which is assigned to the Storz & Bickel reporting unit. A goodwill impairment was recognized in relation to the Storz & Bickel reporting unit. Refer to Note 16 for further details.

Impairment of long-lived assets

The Company evaluates the recoverability of long-lived assets, including property, plant and equipment and finite lived intangible assets whenever events or changes in circumstances indicate a potential impairment exists. The Company groups assets at the lowest level for which cash flows are separately identifiable, referred to as an asset group. When indicators of potential impairment are present the Company prepares a projected undiscounted cash flow analysis for the respective asset or asset group. If the sum of the undiscounted cash flow is less than the carrying value of the asset or asset group, an impairment loss is recognized equal to the excess of the carrying value over the fair value, if any.

Revenue recognition

The Company’s cannabis revenue is comprised of sales of: (i) adult-use cannabis products in Canada, either to government agencies or third-party retailers under a “business-to-business” wholesale model; and (ii) medical and other cannabis products in Canada and certain other countries. The Company’s revenue is also comprised of sales of vaporizers and similar cannabis accessories, merchandise, and revenue from other sources.

The Company’s revenue-generating activities have a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs when the product is shipped or delivered to the customer, depending upon the method of distribution and shipping terms set forth in the customer contract. In accordance with contracts with certain of the Company’s Canadian provincial and territorial customers, the Company fulfills its obligations only when the customer transfers control of the product to the end consumer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of the Company’s product. Certain of the Company’s customer contracts, most notably those with the Canadian provincial and territorial agencies, may provide the customer with a right of return. In certain circumstances the Company may also provide a retrospective price adjustment to a customer. These items give rise to variable consideration, which is recognized as a reduction of the transaction price based upon the expected amounts of the product returns and price adjustments at the time revenue for the corresponding product sale is recognized. The determination of the reduction of the transaction price for variable consideration requires that the Company make certain estimates and assumptions that affect the timing and amounts of revenue recognized. The Company estimates this variable consideration by taking into account factors such as historical information, current trends, forecasts, provincial and territorial inventory levels, availability of actual results and expectations of demand. The Company recognizes a liability for sales refunds within other current liabilities, and an asset for the value of inventory which is expected to be returned is recognized within prepaid expenses and other assets on the consolidated balance sheets.

Sales of products are for cash or otherwise agreed-upon credit terms. The Company’s payment terms vary by location and customer; however, the time period between when revenue is recognized and when payment is due is not significant.

Cost of goods sold

The types of costs included in cost of goods sold are raw materials, packaging materials, manufacturing costs, plant facilities administrative support and overheads, and freight and warehouse costs, including distribution costs. Cost of goods sold also includes inventory valuation adjustments.

Advertising

Advertising costs are expensed as incurred. Advertising expenses totaled $25,889, $22,906 and $28,656 in the years ended March 31, 2026, 2025, and 2024, respectively.

Research and development

Research and development costs are expensed as incurred. Research and development expenses totaled $2,614, $2,742, and $4,611 in the years ended March 31, 2026, 2025, and 2024, respectively.

Asset impairment and restructuring costs

Asset impairment and restructuring costs consist of property, plant and equipment, intangible asset and goodwill impairment charges, asset abandonment costs, contractual and other settlement costs, and employee-related and other restructuring costs. Offsetting the charges for the year ended March 31, 2024 was a gain on sale of the Company’s production facility as sale proceeds exceeded the carrying value that was previously impaired. Refer to Note 7 for further details.

When a long-lived asset is abandoned its carrying amount is adjusted to its salvage value, if any. In determining the salvage value of the Company’s long-lived assets, management considers information from manufacturers, historical data, and industry standards. In certain cases, management may obtain third party appraisals to estimate salvage value.

Accounting for warrants

When the Company enters into arrangements pursuant to which warrants are issued by the Company, modified, or amended, the terms of the warrants are evaluated to determine the appropriate accounting and classification in accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), ASC Topic 505, Equity (“ASC 505”), ASC Topic 815, Derivatives and Hedging (“ASC 815”), and ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

Warrants that meet the criteria for liability classification under ASC 480, or that do not meet the criteria for equity classification under ASC 815 due to exercise contingencies, settlement provisions, or other contractual terms, are accounted for as derivative liabilities. These warrants are measured at fair value in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in earnings, and are presented as warrant derivative liabilities on the Company’s consolidated balance sheets. Warrants that meet the criteria for equity classification are recorded in shareholders’ equity.

Share-based compensation

The Company accounts for share-based compensation using the fair value method. With the exception of a limited number of share-based awards subject to market-based performance conditions that are valued using the Monte Carlo simulation model, the fair value of awards granted is estimated at the date of grant using the Black-Scholes model. The share-based compensation expense is based on the fair value of share-based awards at the grant date and the expense is recognized over the related service period following a graded vesting expense schedule. Forfeitures are estimated at the time of grant and revised in subsequent periods if there is a difference in actual forfeitures and the estimate.

For awards with service and/or non-market based performance conditions, the amount of compensation expense recognized is based on the number of awards expected to vest, reflecting estimated expected forfeitures, and is adjusted to reflect those awards that do ultimately vest. For awards with performance conditions, the Company recognizes the compensation expense if and when the Company concludes that it is probable that the performance condition will be achieved. The Company reassesses the probability of achieving the performance condition at each reporting date.

Income taxes

Income taxes are comprised of current and deferred taxes. These taxes are accounted for using the liability method. Current tax is recognized in connection with income for tax purposes, unrealized tax benefits and the recovery of tax paid in a prior period and measured using the enacted tax rates and laws applicable to the taxation period during which the income for tax purposes arose. Deferred tax is recognized on the difference between the carrying amount of an asset or a liability, as reflected in the financial statements, and the corresponding tax base, used in the computation of income for tax purposes (“temporary difference”) and measured using the enacted tax rates and laws as at the balance sheet date that are expected to apply to the income that the Company expects to arise for tax purposes in the period during which the difference is expected to reverse. Management assesses the likelihood that a deferred tax asset will be realized and a valuation allowance is provided to the extent that it is more likely than not that all or a portion of a deferred tax asset will not be realized. The determination of both current and deferred taxes reflects the Company’s interpretation of the relevant tax rules and judgment.

An unrealized tax benefit may arise in connection with a period that has not yet been reviewed by the relevant tax authority. A change in the recognition or measurement of an unrealized tax benefit is reflected in the period during which the change occurs.

Income taxes are recognized in the consolidated statement of operations, except when they relate to a pre-tax item that is recognized in other comprehensive income (loss) or directly in equity, respectively. Income taxes recognized in other comprehensive income (loss) or equity are reclassified to the consolidated statement of operations if the corresponding pre-tax item is reclassified to the consolidated statement of operations. Where income taxes arise from the initial accounting for a business combination, these are embedded in the pre-tax accounting for the business combination.

Interest and penalties in respect of income taxes are not recognized in the consolidated statement of operations as a component of income taxes but as a component of interest expense.

Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing reported net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share is computed by dividing earnings (loss) by the sum of the weighted average number of common shares and the number of dilutive potential common share equivalents outstanding during the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares of the Company during the reporting periods. Potential dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of warrants, vested share options, RSUs and the incremental shares issuable upon conversion of convertible notes. As at March 31, 2026, March 31, 2025, and March 31, 2024, all instruments were anti-dilutive.

Fair value measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company calculates the estimated fair value of financial instruments using quoted market prices whenever available. When quoted market prices are not available, the Company uses standard pricing models.

For other investments measured at fair value that earn interest, the Company has elected to present interest income as part of the fair value change in other income (expense), net.

Recently Adopted Accounting Pronouncements/Accounting Guidance Not Yet Adopted

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances income tax disclosures, primarily through changes to the rate reconciliation and disaggregation of income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. Adoption of ASU2023-09 did not impact our consolidated balance sheets or income statements or have a material impact on our financial statement disclosures. Refer to Note 27 for the incremental disclosures required under ASU2023-09.

Accounting Guidance Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is evaluating the impact on the consolidated financial statements and expects to implement the provisions of ASU 2024-03 for its fiscal year ending March 31, 2028.