INMED PHARMACEUTICALS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
YEAR ENDED JUNE 30, 2020 AND 2019
(Expressed in U.S. Dollars)
15.
|
FINANCIAL RISK MANAGEMENT (contd)
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Foreign Currency Risk:
Foreign currency risk is the risk that the future cash flows or fair value of the Companys financial instruments that are
denominated in a currency that is not the Companys functional currency (C$) will fluctuate due to changes in foreign exchange rates. Portions of the Companys cash and cash equivalents and accounts payable and accrued liabilities are
denominated in U.S. dollars. Accordingly, the Company is exposed to fluctuations in the U.S. and Canadian dollar exchange rates.
As at June 30, 2020, the Company has a net excess of U.S. dollar denominated cash and cash equivalents in excess of U.S.
dollar denominated accounts payable and accrued liabilities of U.S.$847,219 which is equivalent to C$1,154,590 at the June 30, 2020 exchange rate. The U.S. dollar financial assets generally result from holding U.S. dollar cash to settle
anticipated near-term accounts payable and accrued liabilities denominated in U.S. dollars. The U.S. dollar financial liabilities generally result from purchases of supplies and services from suppliers from outside of Canada.
Each change of 1% in the U.S. dollar in relation to the Canadian dollar results in a gain or loss, with a corresponding effect
on cash flows, of $8,472 based on the June 30, 2020 net U.S. dollar assets (liabilities) position. During the year ended June 30, 2020, the Company recorded foreign exchange gain of $45,912 (June 30, 2019 loss of $33,888).
As at June 30, 2020, the Company has a net excess of Euros denominated accounts payable and accrued liabilities in excess
of Euros denominated cash and cash equivalents of 49,345 which is equivalent to U.S.$55,417 at the June 30, 2020 exchange rate. The Euros financial assets generally result from holding Euros cash to settle anticipated near-term accounts
payable and accrued liabilities denominated in Euros. The Euros financial liabilities generally result from purchases of supplies and services from suppliers from outside of Canada.
Each change of 1% in the Euros in relation to the Canadian dollar results in a gain or loss, with a corresponding effect on
cash flows, of $554 based on the June 30, 2020 net Euros assets (liabilities) position. During the year ended June 30, 2020, the Company recorded a foreign exchange gain of $36,275 (June 30, 2019 gain of $Nil).
Interest Rate Risk:
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. As at
June 30, 2020, holdings of cash and cash equivalents of $4,307,407 (June 30, 2019$2,340,795) are subject to floating interest rates. In addition, the Company held fixed rate guaranteed investment certificates, cashable within ninety days
of purchase, with a book value of $Nil (June 30, 2019 $7,268,373). The balance of the Companys cash holdings of $1,498,402 (June 30, 2019$228,045 ) are non-interest bearing.
As at June 30, 2020, the Company held short-term investments in the form of fixed rate guaranteed investment certificates,
with terms of 6 to 12 months, with a face value of $Nil (June 30, 2019$3,820,585) and variable rate guaranteed investment certificates, with one-year terms, with face value of $42,193 (June 30,
2019$43,937).
F-31