Ealixir, Inc. 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE REGARDING MARKET RISK We have limited exposure to financial market risks, including changes in interest rates. At September 30, 2003, we had cash and cash equivalents of $1,545,638. Cash and cash equivalents consisted of demand deposits and money market accounts. Because of the cash equivalency of the money market accounts and the liquidity thereof, there is no material exposure to changes in interest rates for these accounts. The Company also has short-term notes payable in the amount of $21,925, at September 30, 2003. These notes are due and payable within one year. Because of the short-term nature of the notes and the fixed rate on the notes, there is no material exposure to changes in interest rates for these accounts. The Company does not have any derivative or hedge instruments at September 30, 2003. Semotus has a permanent engineering operation in Vancouver, B.C., Canada and therefore has an exposure to the Canadian and U.S. dollar exchange rate. The Company, in the ordinary course of its business, transfers funds to the Canadian company and records the translation at the current exchange rate. The Company records translation gains and losses in Comprehensive Loss. At September 30, 2003, the cumulative translation loss was $78,039. Given the relative stability of the Canadian and U.S. dollar exchange rate, the Company has not deemed it necessary to hedge this exposure. The Company does actively monitor the situation and as of September 30, 2003 there has been a small but trending decline in the U.S. dollar against the Canadian dollar. Should the trend continue, the Company may seek to limit or hedge the exposure.