Financial Instruments

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

NOTE 8 - Financial Instruments

Credit Risk

The Company is exposed to credit risk on the accounts receivable from its customers. In order to reduce its credit risk, the Company has adopted credit policies which include the analysis of the financial position of its customers and the regular review of their credit balances. The Company incurred bad debt expense of $0 during the period ended June 30, 2016 (2015 $0).

Currency Risk

The Company is exposed to currency risk on its sales and purchases denominated in Canadian Dollars. The Company actively manages these risks by adjusting its pricing to reflect currency fluctuations and purchasing foreign currency at advantageous rates.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. The Company relies on cash flows generated from operations, as well as injections of capital through the issuance of the Company's capital stock to settle its liabilities when they become due.

Concentration of Supplier Risk

The Company purchases all of its inventory from one supplier source in Asia. The Company carries significant strategic inventories of these materials to reduce the risk associated with this concentration of suppliers. Strategic inventories are managed based on demand. To date, the Company has been able to obtain adequate supplies of the materials used in the production of its products in a timely manner from existing sources. The loss of this key supplier or a delay in shipments could have an adverse effect on its business.

Concentration of Customer Risk

The following table includes the percentage of the Company's sales to significant customers for the six months ended June 30, 2016 and 2015, as well as the balance included in accounts receivable for each significant customer as at June 30, 2016 and 2015. A customer is considered to be significant if they account for greater than 10% of the Company's sales for the reporting period.

	2016				2015
	$		%		$		%
Customer A		2,541		42.7		36,845		30.6
Customer B		3,313		16.1		8,337		6.5
Customer C		994		1.1		21,134		34.4
		6,848		59.9		66,316		71.5

The loss of any of these key customers could have an adverse effect on the Company's business.