The Company has designated its cash
as held-for-trading; loan receivable, as loans and receivables; and accounts payable, accrued liabilities, loan payable and amounts
due to related parties, as other financial liabilities.
The fair values of the Companys
cash, loan receivable, accounts payable, accrued liabilities, loan payable and amounts due to related parties approximate their
carrying values due to the short-term maturity of these instruments.
Credit risk is the risk of potential
loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Companys
financial asset that is exposed to credit risk is cash, which is minimized to the extent that it is placed with a major financial
institution. Concentration of credit risk exists with respect to the Companys cash as all amounts are held at a single major
American financial institution.
The Companys functional currency
is the US dollar. The Company translates transactions in foreign currencies into US currency using rates on the date of the transactions.
Translation risk is considered minimal as the Company does not incur any significant transactions in currencies other than US dollars.
The Company is not exposed to significant
interest rate risk due to the short-term maturity of its monetary current assets and liabilities.
Liquidity risk is the risk that the
Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity
risk by forecasting cash flows from operations and anticipated investing and financing activities. At September 30, 2012, the Company
had accounts payable of $25,906 (2011 - $30,984), which are due within 30 days or less. The Companys loan payable of $275,030
(2011 - $nil) and due to related parties of $263,274 (2011 - $152,457) have no specific terms of repayment.
As at September 30, 2012, accrued
liabilities consist of accounting fees of $3,000 (2011 - $5,500).