NOTES  TO CONSOLIDATED FINANCIAL STATEMENTS The following are the contractual maturities of the Company’s financial liabilities and obligations. Market risk is comprised of interest rate risk, foreign currency risk, and other price risk. The Company’s exposure to market risk is as follows: Foreign currency risk arises from the fluctuations in foreign exchange rates and the degree of volatility of these rates relative to the Canadian dollar. The following table summarizes the impact of a 1% change in the foreign exchange rates of the Canadian dollar against the US dollar (USD) on the financial assets and liabilities of the Company. The carrying amount of accounts receivable and accounts payable and accrued liabilities in USD represents the Company’s exposure at December 31, 2012. The Company has minimal interest rate risk because its long-term debt is a fixed rate of 3.71%. The Company considers its capital to be its equity. The Company’s objective in managing capital is to ensure a sufficient liquidity position to finance its manufacturing operations, research and development activities, administration and marketing expenses, working capital and overall capital expenditures, including those associated with patents and trademarks. The Company makes every effort to manage its liquidity to minimize dilution to its shareholders when possible. CEAPRO Annual Report 2012 53 22. CAPITAL DISCLOSURES FOREIGN EXCHANGE RISK (USD) CARRYING AMOUNT GLYPH<H11502> 1% +1% (USD) EARNINGS & EQUITY EARNINGS & EQUITY Financial assets Accounts receivable 254,623 2,546 (2,546) Financial liabilities Accounts payable and accrued liabilities 27,436 (274) 274 Total increase (decrease) 2,272 (2,272) 0 - 1 Year 1 - 3 Years 4 - 7 Years 8 - 12 Years Total $ $ $ $ $ Accounts payable and accrued liabilities 578,216 – – – 578,216 Long-term debt, including interest 200,793 600,246 216,756 – 1,017,795 Royalties interest payable 25,037 – – – 25,037 Royalty financial liability 129,238 118,354 – – 247,592 Repayable CAAP funding – 177,590 177,590 118,393 473,573 Total 933,284 896,190 394,346 118,393 2,342,213 C) MARKET RISK (1) FOREIGN CURRENCY RISK (2) INTEREST RATE RISK