5. Financial Instruments

Interest, Credit and Concentration Risk

Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company is not exposed to significant interest rate risk on the current portion of its long-term debt as the interest rates are fixed.

Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at December 31, 2024, the Company's credit risk is primarily attributable to cash and trade receivables. As at December 31, 2024, the Company's cash was held with a Canadian chartered bank and a United States of America bank.

With regards to credit risk with customers, the customers' credit evaluation is reviewed by management and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond the amounts provided for by the allowance for doubtful accounts is inherent in accounts receivable. As at December 31, 2024 and 2023, the allowance for doubtful accounts was $nil (C$nil).

As at December 31, 2024, the Company is exposed to concentration risk as it had no customers (2023-three customers) representing greater than 5% of total trade receivables and no customers (December 31, 2023-three customers) represented nil% (December 31, 2023 - 97%) of trade receivables. The Company had certain customers whose revenue individually represented 10% or more of the Company's total revenue.  These customers accounted for 96% (73%, 13% and 10%) (2023-94%; 39% 31%, 14% and 10%) of total revenue.

Liquidity Risk

Liquidity risk is the risk that the Company will be unable to meet its obligations as they fall due. The Company takes steps to ensure it has sufficient working capital and available sources of financing to meet future cash requirements for capital programs and operations. Management is considering all its options to refinance its obligations and repay creditors. Refer also to going concern, note 2 and subsequent events, note 21.

The Company actively monitors its liquidity to ensure that its cash flows and working capital are adequate to support its financial obligations and the Company's capital programs. To continue operations, the Company will need to raise capital, repay all of its outstanding obligations and complete the refinancing of its real property and organic waste processing and composting facility. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown. Refer also to going concern, note 2 and subsequent events note 21.

Currency Risk

Although the Company's functional currency is the C$, the Company realizes a portion of its expenses in United States Dollars ("$"). Consequently, certain assets and liabilities are exposed to foreign currency fluctuations. As at December 31, 2024, $2,323,951 (2023-$3,343,815) of the Company's net monetary liabilities were denominated in $. The Company has not entered into any hedging transactions to reduce the exposure to currency risk.