Financial Instruments

12 Months Ended

Dec. 31, 2019

Financial Instruments, Owned, at Fair Value [Abstract]

Financial Instruments

The Company's financial instruments consist of cash, receivables, performance bond, accounts payable and accrued liabilities, loan payable, interest payable, and long-term debt.

The Company characterizes inputs used in determining fair value using a hierarchy that prioritizes inputs depending on the degree to which they are observable. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

• Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2: inputs, other than quoted prices, that are observable, either directly or indirectly. Level 2 valuations are based on inputs, including quoted forward prices for commodities, market interest rates, and volatility factors, which can be observed or corroborated in the marketplace.

• Level 3: inputs are less observable, unavoidable or where the observable data does not support the majority of the instruments' fair value.

Fair value

As at December 31, 2019, there were no changes in the levels in comparison to December 31, 2018. The fair values of financial instruments are summarized as follows:

	December 31, 2019				December 31, 2018
	Carrying amount		Fair value		Carrying amount		Fair value
	$’000		$’000		$’000		$’000
Financial Assets
Amortized cost
Cash (Level 1)		685		685		660		660
Available for sale
Other financial assets (Level 1)		334		334		11		11
Loans and receivables
Receivables and other receivable ¹		3,224		3,224		3,055		3,055
Financial Liabilities
Amortized cost
Bank indebtedness		14,989		14,989		12,381		12,381
Accounts payable and accrued liabilities		12,709		12,709		6,927		6,927
Loan payable and current portion of long-term debt		334		334		10,102		10,102
Long-term debt		13,026		12,020		674		674
¹ Amounts exclude value added tax (“VAT”) recoverable of $880 and $3,843 as at December 31, 2019 and 2018 respectively.

Cash and other financial assets are measured based on Level 1 inputs of the fair value hierarchy on a recurring basis.

The carrying value of receivables, other receivable, accounts payable and accrued liabilities, bank indebtedness, loan payable, interest payable, and long-term debt approximate their fair value because of the short-term nature of these instruments and because long-term debt approximates a market rate of interest. The Company assessed that there were no indicators of impairment for these financial instruments.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high quality financial institutions and limits the amount of credit exposure with any one institution. Receivables consist of trade receivables and VAT recoverable and are not considered subject to significant risk, because the amounts are due from a government and a customer who is considered credit worthy.

Concentration risk

The Company has concentrations of credit risk with respect to its trade receivables, the majority of which are concentrated internationally amongst a small number of customers. As at December 31, 2019, the Company had two customers whose trade receivables of $150 (2018 – $225) accounted for greater than 10% of the total trade receivables. The Company controls credit risk through monitoring procedures, and by performing credit evaluations of its customers, but generally does not require collateral to secure accounts receivable.

The Company has concentrations in the volume of sales it made to customers. For the year ended December 31, 2019, the Company made sales of $21,938 (2018 - $47,441) to two customers which accounted for greater than 10% of total revenue.

The Company currently maintains a substantial portion of its day-to-day operating cash balances at financial institutions. At December 31, 2019, the Company had total cash balances of $685 (2018 - $660) at financial institutions, where $Nil (December 31, 2018- $Nil) is in excess of federally insured limits.