8. Financial assets and liabilities:

(a) Fair value:

The fair values of the Company’s cash, accounts receivable, accounts payable and accrued liabilities and management bonuses payable approximate their carrying amounts.

The fair value of the other investments is market value which represents the closing bid price noted on the stock exchange. The fair value of the long-term debt approximates its carrying value as the interest rate does not differ significantly from the current market rates available to the Company for similar debt.

The significant financial risks to which the Company is exposed are credit risk, interest rate risk, market risk, currency risk and liquidity risk.

(b) Credit risk exposure:

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company is exposed to credit risk in the event of non-performance by counterparties in connection with its accounts receivable. The Company does not obtain collateral or other security to support the accounts receivable subject to credit risk but mitigates this risk by dealing only with what management believes to be financially sound counterparties and, accordingly, does not anticipate significant loss for non-performance.

(c) Interest rate risk:

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 interest rates. Changes in the bank’s prime lending rate can cause fluctuations in interest payments and cash flows. The Company does not use derivative financial instruments to alter the effects of this risk.

(d) Market risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company’s investments in publicly traded securities expose the Company to market risk as such investments are subject to price changes in the open market. The Company does not use derivative financial instruments to alter the effects of this risk.

(e) Currency risk:

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company enters into foreign currency purchase and sale transactions and has assets and liabilities that are denominated in foreign currencies and thus is exposed to the financial risk of earnings fluctuations arising from changes in foreign exchange rates and the degree of volatility of these rates. The Company does not currently use derivative instruments to reduce its exposure to foreign currency risk.

(f) Liquidity risk:

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company is exposed to liquidity risk arising primarily from the bank demand loan. The Company’s ability to meet obligations depends on the receipt of funds from its operating subsidiaries and other related sources, whether in the form of revenue or advances.