PEI Cannabis 2023 Annual Report

PRINCE EDWARD ISLAND CANNABIS MANAGEMENT CORPORATION Notes to Financial Statements Year Ended March 31, 2023

15. FINANCIAL INSTRUMENTS (continued)

2023

2022

Financial liabilities Other financial liabilities measured at amortized cost Non-current Lease liabilities

$ 1,644,651

$ 1,182,750

1,644,651

1,182,750

Current Accounts payable and accrued liabilities Current portion of lease liabilities Due to Province of Prince Edward Island

2,850,048 219,547 5,304,141 8,373,736

3,518,301 160,060 3,383,297 7,061,658

$ 10,018,387

$ 8,244,408

16. FAIR VALUE Financial assets and liabilities are measured at fair value on initial recognition except for certain related party transactions. Measurement in subsequent periods is based on fair value through profit and loss or at amortized cost using the effective interest rate method. Financial assets and liabilities recorded in the statement of financial position at fair market value are categorized based on the fair value hierarchy of inputs. The Level 1 hierarchy is unadjusted quoted prices in active markets for identical assets and liabilities. This level of inputs is used to measure the fair value of cash. Fair value for accounts receivable, accounts payable and accrued liabilities, amounts due to/from related parties approximate their carrying amounts due to their short term natures. The fair value of debentures payable and lease liabilities are not materially different from their carrying value as there has not been a significant fluctuation in interest rates. 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, 2023. (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, $378,786 (2022 - $532,768 ) which is summarized below: 2023 2022 Accounts receivable $ 378,786 $ 532,768 (continues)

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PEICMC 2022-2023 Annual Report

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