XML 29 R17.htm IDEA: XBRL DOCUMENT

FAIR VALUE MEASUREMENTS

6 Months Ended

Dec. 31, 2020

11.	Fair Value Measurements

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition.

Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized in income.

Financial instruments including receivables, accounts payable and accrued liabilities, and related party loans are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

The following tables present information about the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 and June 30, 2020, respectively, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical instruments. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates, and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the financial instrument and include situations where there is little, if any, market activity for the instrument.

	As of December 31, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	133	$	133	$	—	$	—
Equity securities		9		9		—		—
Total	$	142	$	142	$	—	$	—
Liabilities:
Derivative liability, convertible debt	$	62	$	—	$	—	$	62
Total	$	62	$	—	$	—	$	62

	As of June 30, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	307	$	307	$	—	$	—
Equity securities		7		7		—		—
Total	$	314	$	314	$	—	$	—
Liabilities:
Convertible debt	$	38	$	—	$	—	$	38
Derivative liability, convertible debt		33		—		—		33
Total	$	71	$	—	$	—	$	71

The Company measures the fair market value of the Level 3 components using the Black Scholes model and discounted cash flows, as appropriate. These models take into account management’s best estimate of the conversion price of the stock, an estimate of the expected time to conversion, an estimate of the stock’s volatility, and the risk-free rate of return expected for an instrument with a term equal to the duration of the convertible debt.

The following table sets forth a reconciliation of changes in the fair value of the Company’s convertible debt components classified as Level 3 in the fair value hierarchy:

Balance, June 30, 2020	$	71
Additions to convertible debt		—
Conversions to equity		(38	)
Realized and unrealized losses		29
Balance, December 31, 2020	$	62

As discussed in Note 5, the Nordmin Note was initially recorded at fair value, which represents a nonrecurring fair value measurement using a Level 3 input. The significant unobservable valuation inputs for the Nordmin Note includes an expected return of 7%.