XML 70 R36.htm IDEA: XBRL DOCUMENT
v3.21.2

Financial risk management and financial instruments | 12 Months Ended
--- | ---
May 31, 2021
Financial Risk Management And Financial Instruments [Abstract] |
Financial risk management and financial instruments |
3 1. | Financial risk management and financial instruments
Financial instruments The Company has classified its financial instruments as described in Note 3 Significant accounting policies. The carrying values of accounts receivable, bank indebtedness and accounts payable and accrued liabilities approximate their fair values due to their short periods to maturity. The Company’s long-term debt of $20,358 (2020 - $19,398) is subject to fixed interest rates. The Company’s long-term debt is valued based on discounting the future cash outflows associated with the long-term debt. The discount rate is based on the incremental premium above market rates for Government of Canada securities of similar duration. In each period thereafter, the incremental premium is held constant while the Government of Canada security is based on the then current market value to derive the discount rate. Fair value hierarchy Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. Cash and cash equivalents are Level 1. The hierarchy is summarized as follows:
| Level 1 | Quoted prices (unadjusted) in active markets for identical assets and liabilities
| Level 2 | Inputs that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices) from observable market data
| Level 3 | Inputs for assets and liabilities not based upon observable market data
The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of May 31, 2021 and 2020 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:
|  |  |  |  |  |  |  |  |  |  |  |  |  | May 31, |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | 2021 |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 488,466 |  |  | $ | — |  |  | $ | — |  |  | $ | 488,466 |
Convertible notes receivable |  |  | — |  |  |  | 2,485 |  |  |  | — |  |  |  | 2,485 |
Long-term investments |  |  | 9,251 |  |  |  | 2,934 |  |  |  | — |  |  |  | 12,185 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Warrant liability |  |  | — |  |  |  | — |  |  |  | (78,168 | ) |  |  | (78,168 | )
Contingent consideration |  |  | — |  |  |  | — |  |  |  | (60,657 | ) |  |  | (60,657 | )
APHA 24 Convertible debenture |  |  | — |  |  |  | — |  |  |  | (399,444 | ) |  |  | (399,444 | )
Total recurring fair value measurements |  | $ | 497,717 |  |  | $ | 5,419 |  |  | $ | (538,269 | ) |  | $ | (35,133 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  | May 31, |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | 2020 |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 360,646 |  |  | $ | — |  |  | $ | — |  |  | $ | 360,646 |
Convertible notes receivable |  |  | — |  |  |  | 10,609 |  |  |  | — |  |  |  | 10,609 |
Long-term investments |  |  | 11,244 |  |  |  | 8,351 |  |  |  | — |  |  |  | 19,595 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
APHA 24 Convertible debenture |  |  | — |  |  |  | — |  |  |  | (196,405 | ) |  |  | (196,405 | )
Total recurring fair value measures |  | $ | 371,890 |  |  | $ | 18,960 |  |  | $ | (196,405 | ) |  | $ | 194,445 |
The Company’s financial assets and liabilities required to be measured on a recurring basis are its equity investments measured at fair value, debt securities classified as available-for-sale, acquisition-related contingent consideration, and warrant liability. Convertible notes receivable and long-term investments recorded at fair value: The estimated fair value is determined using quoted market prices, broker or dealer quotations or discounted cash flows and is classified as Level 2. Warrant liability: The warrants associated with the warrant liability are classified as Level 3 derivatives. Consequently, the estimated fair value of the warrant liability is determined using the Black Scholes pricing model. Until the warrants are exercised, expire, or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity, the warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded in change in fair value of warrant liability. Any significant adjustments to the unobservable inputs disclosed in the table below would have a direct impact on the fair value of the warrant liability. APHA 24: This instrument is held at fair value. The estimated fair value is determined using the Black Scholes option pricing model and is classified as Level 3. Contingent consideration: The contingent consideration from the acquisition of SweetWater is determined by discounting future expected cash outflows at a discount rate of 5%. The inputs into the future expected cash outflows are classified as Level 3. The opening balances of assets and liabilities categorized within Level 3 of the fair value hierarchy measured at fair value on a recurring basis are reconciled to the closing balances as follows:
|  | APHA 24 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Convertible |  |  | Warrant |  |  | Contingent |  |  |  |  |
|  | debenture |  |  | liability |  |  | consideration |  |  | Total |
Closing balance May 31, 2020 |  | $ | (196,405 | ) |  | $ | — |  |  | $ | — |  |  | $ | (196,405 | )
Additions |  |  | — |  |  |  | (79,402 | ) |  |  | (58,959 | ) |  |  | (138,361 | )
Disposals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unrealized gain (loss) on fair value |  |  | (203,039 | ) |  |  | 1,234 |  |  |  | (1,698 | ) |  |  | (203,503 | )
Closing balance May 31, 2021 |  | $ | (399,444 | ) |  | $ | (78,168 | ) |  | $ | (60,657 | ) |  | $ | (538,269 | )
The unrealized gain (loss) on fair value for the Convertible Debenture and the warrant liability is recognized in non-operating income (loss) using the following inputs:
Financial asset / financial liability |  | Valuation technique |  | Significant unobservable input |  | Inputs
APHA Convertible debentures |  | Black-Scholes |  | Volatility, expected life |  | 70% 3 years
Warrant liability |  | Black-Scholes |  | Volatility, expected life |  | 70% 4 years
Contingent consideration |  | Discounted cash flows |  | Discount rate, achievement |  | 5% 100%
Items measured at fair value on a non-recurring basis The Company's prepayments and other current assets, long lived assets, including property and equipment, goodwill and intangible assets are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized. Financial risk management The Company has exposure to the following risks from its use of financial instruments: credit; liquidity; currency rate; interest rate price; equity price risk; and capital management risk.
| (a) | Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The maximum credit exposure at May 31, 2021, is the carrying amount of cash and cash equivalents, accounts receivable, prepaids and other current assets, promissory notes receivable and convertible notes receivable. All cash and cash equivalents are placed with major financial institutions in Canada, Australia, Portugal, Germany, Colombia, Argentina and the United States. To date, the Company has not experienced any losses on its cash deposits. Accounts receivable are unsecured, and the Company does not require collateral from its customers. The Company evaluates the collectability of its accounts receivable and maintains an allowance for credit losses at an amount sufficient to absorb losses inherent in the existing accounts receivable portfolio as of the reporting dates based on the estimate of expected net credit losses. Trade receivables included an allowance for doubtful accounts of $4,571 at May 31, 2021 (2020-$2,313), and is comprised of the following aged receivables:
|  | Total |  |  | 0-30 days |  |  | 31-60 days |  |  | 61-90 days |  |  | 90+ days |
Trade receivables |  | $ | 87,309 |  |  |  | 70,997 |  |  |  | 8,253 |  |  |  | 1,051 |  |  |  | 7,008 |
|  |  |  |  |  |  | 82 | % |  |  | 9 | % |  |  | 1 | % |  |  | 8 | %
Due to the uncertainties associated with COVID-19, the Company may be unable to accurately predict the creditworthiness of its counterparties and their ability to meet their obligations. This may result in unforeseen additional credit losses.
| (b) | Liquidity risk
As at May 31, 2021, the Company’s financial liabilities consist of bank indebtedness and accounts payable and accrued liabilities, which have contractual maturity dates within one-year, long-term debt, and convertible debentures which have contractual maturities over the next five years. The Company maintains a debt service charge covenant on certain loans secured by its Aphria One facilities that is measured at year-end only. The Company maintains debt service charge and leverage covenants on certain loans secured by its Aphria Diamond facilities and 420 that are measured quarterly. The Company believes that it has sufficient operating room with respect to its financial covenants for the next fiscal year and does not anticipate being in breach of any of its financial covenants. The Company manages its liquidity risk by reviewing its capital requirements on an ongoing basis. Based on the Company’s working capital position at May 31, 2021, management regards liquidity risk to be low.
| (c) | Currency rate risk
As at May 31, 2021, a portion of the Company’s financial assets and liabilities held in Canadian dollars and Euros consist of cash and cash equivalents, convertible notes receivable, and long-term investments. The Company’s objective in managing its foreign currency risk is to minimize its net exposure to foreign currency cash flows by transacting, to the greatest extent possible, with third parties in the functional currency. The Company is exposed to currency rate risk in other comprehensive income, relating to foreign subsidiaries which operate in a foreign currency. The Company does not currently use foreign exchange contracts to hedge its exposure of its foreign currency cash flows as management has determined that this risk is not significant at this point in time.
| (d) | Interest rate price risk
The Company’s exposure to changes in interest rates relates primarily to the Company’s outstanding debt. The Company manages interest rate risk by restricting the type of investments and varying the terms of maturity and issuers of marketable securities. Varying the terms to maturity reduces the sensitivity of the portfolio to the impact of interest rate fluctuations.
| (e) | Equity price risks
As of May 31, 2021, the Company held long-term equity investments at fair value and equity investments under the measurement alternative. These investment in equities were acquired as part of our strategic transactions. Accordingly, the changes in fair values of investment in equities measured at fair value or under the measurement alternative are recognized through gain (loss) on long-term investment in the statements of net loss and comprehensive loss. Based on the fair value of investment in equities held as of May 31, 2021, a hypothetical decrease of 10% in the prices for these companies would reduce the fair values of the investments and result in unrealized loss recorded in gain (loss) on long-term investment by $1,769. Similarly, based on the fair value of our warrant liability as of May 31, 2021, a hypothetical increase of 10% in the price for our common stock would increase the change in fair value of warrant liability and result in unrealized gain recorded in non-operating income by $9,800.
| (f) | Capital management
The Company’s objectives when managing its capital are to safeguard its ability to continue as a going concern, to meet its capital expenditures for its continued operations, and to maintain a flexible capital structure which optimizes the cost of capital within a framework of acceptable risk. The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue new debt, or acquire or dispose of assets. The Company is not subject to externally imposed capital requirements. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There have been no changes to the Company’s capital management approach in the year. The Company considers its cash and cash equivalents and marketable securities as capital.

X
- Definition Financial risk management and financial instruments. + References No definition available. + Details
Name: | tlry_FinancialRiskManagementAndFinancialInstrumentsAbstract
Namespace Prefix: | tlry_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration