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Note 24 - Financial Risk Management and Financial Instruments

3 Months Ended

Aug. 31, 2025

Notes to Financial Statements

Financial Instruments Disclosure [Text Block]

Note 24. Financial risk management and financial instruments

Financial instruments

The Company's classification of its financial instruments is described in Note 3 (Significant accounting policies) in the Notes to our Annual Financial Statements.

The carrying values of marketable securities, accounts receivable, bank indebtedness and accounts payable and accrued liabilities approximate their fair values due to their short periods to maturity.

On August 31, 2025 and May 31, 2025, the Company had long-term debt of $2,437 and $2,546, respectively, and the principal portion of convertible debentures payable of $100,000 and $105,000, respectively, 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 the U.S. Department of the Treasury securities of similar duration. In each period thereafter, the incremental premium is held constant while the U.S. Department of the Treasury security is based on the then current market value to derive the discount rate.

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of August 31, 2025 and May 31, 2025 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

														*August 31,*
		*Level 1*				*Level 2*				*Level 3*				*2025*
Financial assets
Cash and cash equivalents		$	264,828			$	—			$	—			$	264,828
Equity investments measured at fair value			995				1,017				8,160				10,172
Digital assets			992				—				—				992
Financial liabilities
Warrant liability			—				—				(4,762	)			(4,762	)
Contingent consideration			—				—				—				—
Total recurring fair value measurements		$	266,815			$	1,017			$	3,398			$	271,230

														*May 31,*
		*Level 1*				*Level 2*				*Level 3*				*2025*
Financial assets
Cash and cash equivalents		$	221,666			$	—			$	—			$	221,666
Marketable securities			34,697				—				—				34,697
Equity investments measured at fair value			909				1,063				8,160				10,132
Financial liabilities
Warrant liability			—				—				(1,092	)			(1,092	)
Contingent consideration			—				—				(15,000	)			(15,000	)
Total recurring fair value measurements		$	257,272			$	1,063			$	(7,932	)		$	250,403

The Company’s financial assets and liabilities required to be measured on a recurring basis are its equity investments measured at fair value, digital assets, acquisition-related contingent consideration, and warrant liability.

During the three months ended August 31, 2025, the Company purchased 9.16 units of Bitcoin. Digital assets recorded at fair value have quoted prices in active markets for identical assets and are classified as Level 1. The following table presents the Company’s digital asset holdings as of August 31, 2025:

		*Quantity*				*Cost Basis*				*Fair Value*				*Cumulative Unrealized Gain (Loss)*
Bitcoin			9.16			$	1,000			$	992			$	(8	)
Total digital assets			9.16			$	1,000			$	992			$	(8	)

Certain equity investments recorded at fair value have quoted prices in active markets for identical assets and are classified as Level 1. The Company classified securities with observable inputs as Level 2 and without a quoted market price as Level 3.

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 as the change in fair value of warrant liability within the consolidated statements of loss and comprehensive loss. 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.

A portion of the consideration to be paid in connection with the Company’s acquisition of Montauk Brewing Company (“Montauk”) is contingent upon the achievement of certain financial measures as of December 2025. If achieved, such contingent consideration is payable in cash. During the three months ended August 31, 2025, the contingent consideration amount was estimated by applying a probability of achievement of 0% on the $15,000 sales earn-out component and 0% on the remaining criteria, which is not expected to be achieved and as such resulted in a corresponding change in fair value of $15,000 for the contingent consideration liability recognized. During the three months ended August 31, 2024, the contingent consideration amount was estimated by applying a probability of achievement of 100% on the $15,000 sales earn-out component and 0% on the remaining criterion, which is not expected to be achieved. The unobservable inputs into the future expected cash outflows result in a fair value measurement classified as Level 3.

The balances of assets and liabilities categorized within Level 3 of the fair value hierarchy measured at fair value on a recurring basis are reconciled, as follows for the period ended August 31, 2025:

		Equity				Warrant				Contingent
		Investments				Liability				Consideration
Balance, May 31, 2025		$	8,160			$	(1,092	)		$	(15,000	)
Unrealized gain (loss) on fair value			—				(3,670	)			15,000
Balance, August 31, 2025		$	8,160			$	(4,762	)		$	—

The balances of assets and liabilities categorized within Level 3 of the fair value hierarchy measured at fair value on a recurring basis are reconciled, as follows for the period ended August 31, 2024:

																		*APHA 24*
		*Convertible*				*Equity*				*Warrant*				*Contingent*				*Convertible*
		*notes receivable*				*Investments*				*Liability*				*Consideration*				*Debt*
Balance, May 31, 2024		$	32,000			$	5,500			$	(3,253	)		$	(15,000	)		$	(330	)
Additions/(Repayments)			—				—				—				—				330
Unrealized gain (loss) on fair value			—				—				696				—				—
Balance, August 31, 2024		$	32,000			$	5,500			$	(2,557	)		$	(15,000	)		$	—

The unrealized gain (loss) on fair value for the convertible debenture, the warrant liability, contingent consideration, and debt securities classified under available-for-sale method is recognized in the consolidated statements of loss and comprehensive loss using the following inputs:

				*Significant*
		*Valuation*		*unobservable*
Financial asset / financial liability		*technique*		*input*		*Inputs*
Warrant liability		Black-Scholes		Volatility,		50%
				expected life (in years)		0.05
Contingent consideration		Discounted cash flows		Probability of achievement		0%
Equity investments		Discounted cash flows		Probability of achievement		70%

Items measured at fair value on a non-recurring basis

The Company's prepaids 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.

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 period. The Company considers its cash and cash equivalents and marketable securities as capital.