21. FINANCIAL INSTRUMENTS AND RISKS
|12 Months Ended|
Dec. 31, 2020
|21. FINANCIAL INSTRUMENTS AND RISKS||
21.FINANCIAL INSTRUMENTS AND RISKS
Assets and liabilities measured at fair value on a recurring basis were presented on the Companys consolidated statements of financial position as at December 31, 2020 and 2019 as are follows:
The table below presents the continuity schedule of the Companys Level 3 investments:
The fair values of other financial instruments, which include accounts receivable, accounts payable and accrued liabilities, loans receivable, loans payable, approximate their carrying values due to the relatively short-term maturity of these instruments.
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet it's contractual obligations. Financial instruments that are subject to such risk include cash, accounts receivable and loans receivable. Accounts receivable balances are receivable from financial stable companies with good credit history. No credit loss allowance is required as the accounts receivable balances outstanding as at December 31, 2020 are considered collectible. The Company limits its exposure to credit loss by placing its cash with reputable financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. The Company is exposed to significant credit risk on its loans receivable. The carrying amount of financial assets represents the maximum credit exposure. The Company mitigates credit risk on loans receivable by monitoring the financial performance of borrowers.
c)Foreign Exchange Risk
The Company has cash and loans receivable denominated in United States dollars and, as a consequence, the financial results of the Companys operations as reported in Canadian dollars are subject to changes in the value of the Canadian dollar relative to the US dollar. Therefore, exchange rate movements in the United States dollar can have a significant impact on the Companys operating results due to the translation of monetary assets.
At December 31, 2020, a 4% (2019 4%) strengthening (weakening) of the Canadian dollar against the US dollar would have increased (decreased) the Companys net loss by approximately $482,000 (2019 - $2,064,000).
d)Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest earned on cash is at nominal interest rates, and therefore the Company does not consider interest rate risk for cash to be significant.
As at December 31, 2020, the interest rate on loans receivable, credit facilities, and convertible debentures are fixed based on the contracts in place. As such, the Company is exposed to interest rate risk to the extent as stated on these financial assets and liabilities.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities.
As at December 31, 2020, the Company had a cash balance of $1,146,569 (December 31, 2019 - $1,378,687) available to apply against short-term business requirements and current liabilities of $70,794,116 (December 31, 2019 -$55,542,045). All of the liabilities presented as accounts payable and accrued liabilities are due within 120 days of December 31, 2020.
The entire disclosure for financial instruments.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef