Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We have limited exposure to financial market risks, including changes in interest rates. At March 31, 2004, we had cash and cash equivalents of $1,717,052. Cash and cash equivalents consisted of demand deposits and money market accounts.
Because of the cash equivalency of the money market accounts and the liquidity
thereof, there is no material exposure to interest rates for these accounts.
We have no notes payable at March 31, 2004.
We have a permanent engineering operation in Vancouver, B.C., Canada and therefore we have an exposure to the Canadian and U.S. dollar exchange rate. In the ordinary course of business, we transfer funds to the Canadian company and record the translation at the current exchange rate. We record translation gains and losses in comprehensive income (loss). At March 31, 2004, the cumulative translation loss was $74,328. Given the relative stability of the Canadian and U.S. dollar exchange rate, we have not deemed it necessary to hedge this exposure. We actively monitor the situation and as of March 31, 2004 there has been a small but trending decline in the U.S. dollar against the Canadian dollar.
Should the trend continue, we would seek to limit or hedge the exposure.
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