Annual report pursuant to Section 13 and 15(d)

Management of Financial Risks

Management of Financial Risks
12 Months Ended
Aug. 31, 2020
Disclosure Text Block Supplement [Abstract]  

The risks to which the Company’s financial instruments are exposed to are:

(a) Credit risk

Credit risk is the risk of unexpected loss if a customer or third party to a financial instrument fails to meet contractual obligations. The Company is exposed to credit risk through its cash held at financial institutions, trade receivables from customers and notes receivable.

The Company has cash balances at various financial institutions. The Company has not experienced any loss on these accounts, although balances in the accounts may exceed the insurable limits. The Company considers credit risk from cash to be minimal.

Credit extension, monitoring and collection are performed for each of the Company’s business segments. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness, as determined by a review of the customer’s credit information.

Accounts receivable, collections and payments from customers are monitored and the Company maintains an allowance for estimated credit losses based upon historical experience with customers, current market and industry conditions and specific customer collection issues.

At August 31, 2020 and 2019, the Company had $12,830 and $144,013 in trade and other receivables, respectively and $89,159 and $845,743 in notes receivable, respectively. The Company considers it maximum exposure to credit risk to be its trade and other receivables and notes receivable. The Company expects to collect these amounts in full and has not provided an expected credit loss allowance against these amounts.

(b) Interest rate risk

Interest rate risk is the risk that changes in interest rates will affect the fair value or future cash flows of the Company’s financial instruments. The Company is exposed to interest rate risk as a result of holding fixed rate obligations of varying maturities as well as through certain floating rate instruments. The Company considers its exposure to interest rate risk to be minimal. 

(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities as they become due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses. 

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments. The Company has included both the interest and principal cash flows in the analysis as it believes this best represents the Company’s liquidity risk.

At August 31, 2020

          Contractual cash flows  
    Carrying           1 year           More than  
(in ’000s of dollars)   amount     Total     or less     2 - 5 years     5 years  
Accounts payable   $ 2,407     $ 2,407     $ 2,407     $ -     $ -  
Accrued liabilities     1,770       1,770       1,770       -       -  
Convertible debenture     8,834       11,694       10,061       1,633       -  
Debt     684       740       740       -       -  
Finance lease liabilities     247       274       193       81       -  
Operating lease liabilities     209       255       61       194       -  
Federal relief loans     580       931       76       196       659  
    $ 14,731     $ 18,071     $ 15,308     $ 2,104     $ 659