PEI Cannabis Annual Report 2025

PRINCE EDWARD ISLAND CANNABIS MANAGEMENT CORPORATION Notes to Financial Statements Year Ended March 31, 2025

17. FINANCIAL RISK MANAGEMENT The Corporation is exposed to various risks through its financial instruments. The Corporation's financial assets and liabilities by category are summarized in Note 15. The following analysis provides information about the Corporation's risk exposure and concentration as of March 31, 2025. (a) Credit risk Credit risk is the risk that the Corporation will incur a loss because a customer fails to meet an obligation. The Corporation is exposed to this risk for financial instruments classified as financial assets measured at amortized cost by granting credit to customers. The Corporation's maximum exposure to credit risk is limited to the carrying amount of these financial assets recognized at the reporting date, $265,698 (2024 - $269,441) which is summarized below: 2025 2024 Accounts receivable $ 265,698 $ 269,441 The Corporation has mitigated its exposure to this risk through the limited extension of credit and its contractual relationships with its business partners. The Corporation's management considers that an allowance of $38,204 (2024 - $34,173) is required for the above receivables to be fairly stated. The receivables are shown net of the allowance. Some of the unimpaired financial assets measured at amortized costs are past due as at the reporting date. The aging of unimpaired assets is as follows: 0 - 30 days $ 214,079 $ 224,141 31 - 60 days 430 805 61 + days 51,189 44,495 $ 265,698 $ 269,441 With respect to financial assets measured at amortized cost, the Corporation is not exposed to any significant credit risk exposure to any single supplier. Trade receivables consist of a large number of customers in various industries and geographical areas. Management considers the credit quality of trade receivables to be good. (b) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency rate risk, interest rate risk and other price risk. The Corporation's market risk management focuses on the unpredictability of financial and economic markets and seeks to minimize potential effects on the Corporation's financial performance. The Corporation's financial instruments are not subject to significant price risk or currency risk. (c) Interest rate risk Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The Corporation's policy is to minimize interest rate cash flow risk exposures on long term financial. Long term borrowing is at fixed rates. (continues)

PLEASE DON’T DRIVE IMPAIRED

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PEICMC 2024-2025 Annual Report

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