This note provides disclosures relating to the nature and extent of the Corporation’s exposure to risks arising from financial instruments, including credit risk, foreign currency risk, interest rate risk and liquidity risk, and how the Corporation manages those risks.

 

 

Credit risk is the risk of a loss if a customer or counterparty to a financial asset fails to meet its contractual obligations. The Corporation has credit risk relating to cash and cash equivalents and short-term investments, which it manages by dealing only with highly-rated Canadian institutions. The carrying amount of financial assets, as disclosed in the statements of financial position, represents the Corporation’s credit exposure at the reporting date.

 

 

The Corporation is exposed to the financial risk related to the fluctuation of foreign exchange rates and the degrees of volatility of those rates. Foreign currency risk is limited to the portion of the Corporation's business transactions denominated in currencies other than the Canadian dollar. Fluctuations related to foreign exchange rates could cause unforeseen fluctuations in the Corporation's operating results.

 

A portion of the expenses, mainly related to research contracts and purchase of production equipment, is incurred in US dollars and in Euros, for which financial hedging is required. There is a financial risk related to the fluctuation in the value of the US dollar and the Euro in relation to the Canadian dollar. In order to minimize the financial risk related to the fluctuation in the value of the US dollar in relation to the Canadian dollar, funds continue to be invested as short-term investments in the US dollar.

 

The following table provides an indication of the Corporation’s significant foreign exchange currency exposures as stated in Canadian dollars at the following dates:

 

			March 31, 2018								March 31, 2017								February 28, 2017 (Unaudited)
			US $				Euro				US $				Euro				US $				Euro
Cash and cash equivalents			7,024				—				3,524				—				3,691				—
Marketable securities			26				—				—				—				—				—
Receivables			6				—				2				—				3				—
Trade and other payables			(3,924	)			(627	)			(503	)			(317	)			(376	)			(603	)
			3,132				(627	)			3,023				(317	)			3,318				(603	)

 

The following exchange rates are those applicable to the following periods and dates:

 

			March 31, 2018								March 31, 2017								February 28, 2017 (Unaudited)
			Average				Reporting				Average				Reporting				Average				Reporting
CA$ per US$			1.2834				1.2900				1.3134				1.3299				1.3113				1.3281
CA$ per Euro			1.5008				1.5898				1.4424				1.4251				1.4434				1.4066

 

Based on the Corporation’s foreign currency exposures noted above, varying the above foreign exchange rates to reflect a strengthening of the US dollar and Euro would have decrease in net loss as follows, assuming that all other variables remain constant:

 

			March 31, 2018				March 31, 2017				February 29, 2017 (Unaudited)
			$				$				$
Decrease in net loss			88				139				151

 

An assumed weakening of the foreign currencies would have an equal but opposite effect on the basis that all other variables remained constant.

 

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates.

 

The Corporation’s exposure to interest rate risk as at is as follows:

 

Cash and cash equivalents		Short-term fixed interest rate
Unsecured convertible debentures		Long-term fixed interest rate

 

The capacity of the Corporation to reinvest the short-term amounts with equivalent return will be impacted by variations in short-term fixed interest rates available on the market. Management believes that the risk the Corporation will realize a loss as a result of the decline in the fair value of its cash equivalents is limited because these investments have short-term maturities and are generally held to maturity.

 

 

Liquidity risk is the risk that the Corporation will be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk through the management of its capital structure and financial leverage, as outlined in Note It also manages liquidity risk by continuously monitoring actual and projected cash flows. The Board of Directors reviews and approves the Corporation's operating budgets, and reviews material transactions outside the normal course of business. Refer to Note (c).

The following are the contractual maturities of financial liabilities as at

 

																	March 31, 2018
Required payments per year					Total				Carrying amount				Less than 1 year				1 to 3 years
		Notes			$				$				$				$
Trade and other payables		10			6,697				6,697				6,697				—
Unsecured convertible debentures		12			2,303				1,612				160				2,143
					9,000				8,309				6,857				2,143

 

																	March 31, 2017
Required payments per year					Total				Carrying amount				Less than 1 year				1 to 3 years
		Notes			$				$				$				$
Trade and other payables		10			2,138				2,138				2,138				—
Unsecured convertible debentures		12			2,463				1,406				160				2,303
					4,601				3,544				2,298				2,303

 

																	February 28, 2017 (Unaudited)
Required payments per year					Total				Carrying amount				Less than 1 year				1 to 3 years
		Notes			$				$				$				$
Trade and other payables		10			2,405				2,405				2,405				—
Unsecured convertible debentures		12			2,476				1,389				160				2,316
					4,881				3,794				2,565				2,316

 

The Derivative warrant liabilities are excluded from the above tables as they will be settled in shares and by the use of liquidities.