PEI Cannabis 2023 Annual Report

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

17. FINANCIAL RISK MANAGEMENT (continued) 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 $0 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 $ 378,028 $ 471,971 31 - 60 days 758 59,265 61 + days - 1,532 $ 378,786 $ 532,768 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. (d) Liquidity risk Liquidity risk is the risk that the Corporation would be unable to meet its obligations. The Corporation manages liquidity needs by monitoring scheduled debt servicing payments for long term financial liabilities as well as cash inflows and outflows due in day-to-day business. The data used for analyzing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30 day outlook. Net cash requirements are compared to available borrowing facilities in order to determine any surplus or shortfall. The Corporation's objective is to maintain cash and marketable securities to meet its liquidity requirements for a minimum 60 day period. This objective was met for the reporting period. Funding for long term liquidity needs are secured by adequate amounts of committed credit facilities. The Corporation's existing cash resources, trade receivables, and cash generated from operations significantly exceed the current cash outflow requirements. (continues)

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PEICMC 2022-2023 Annual Report

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