Índice de liquidez

As a start up company operations are financed through equity, therefore, the Corporation’s capital consists of shareholders’ equity. The Corporation’s objectives when managing capital are to sustain the Corporation’s ability to continue as a going concern, so that it can maximize returns for shareholders and benefits for other stakeholders, and to provide resources in order to enable growth.

The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and planned requirements. Cash flows from plasma technology sales and services will continue to be used to invest in the Corporation’s capital expenditure program and in order to maintain or adjust the capital structure the Corporation may also issue new shares, take on long-term debt or adjust its capital expenditure program based on the evaluation of strategic alternatives. Capital management objectives and strategies remain substantially unchanged from the prior year and there are no external capital requirements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Financial Instrument Risk Exposure and Management

The Corporation is exposed to various risks associated with its financial instruments. These risks are categorized as credit risk, foreign currency risk, interest rate risk and liquidity risk. The Corporation’s financial assets and liabilities include cash and cash equivalents, accounts receivable and accounts payable. The Corporation did not hold or issue any derivative financial instruments during the quarter.

Fair value

Financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable and accounts payable. Due to the short term nature of the Corporation’s financial assets and liabilities the fair values approximate carrying values.

Credit risk

Accounts receivable subject the Corporation to credit risk. The risk is as a result of extending credit to customers for goods or services. The Corporation’s credit risk with respect to accounts receivable is minimal as these amounts are from the government for GST, a major U.S. power company and the remaining outstanding

amounts have been subsequently received by the Corporation. As such, no provision has been made for amounts outstanding over 90 days as the Corporation believes they will be collected. The Corporation also minimizes its credit risk by requiring up to 50% deposits on torch sales, design and testing services.

The aging of accounts receivable is as follows:

June 30, 2008 December 31, 2007 Within 30 days 518,713 249,141 31 to 60 days 261,676 344,142 61 to 90 days - 10,508 Over 90 days 262,525 114,850 Accounts Receivable $ 1,042,914 $ 718,641 The Corporation’s cash is held at a charted Canadian financial institution which is reviewed by Management on a regular basis for its financial strength.

Market risk

Changes in interest rates and foreign currency exchange rates can expose the Corporation to fluctuations in its loss and in the fair value of its financial assets and liabilities.

Foreign exchange risk

The Corporation’s operations in the U.S. have revenue, expenses, assets and liabilities denominated in U.S. dollars. As a result, the Corporation’s consolidated balance sheet, statement of loss and statement of cash flow are impacted by changes in exchange rates between Canadian and U.S. currencies. The U.S. dollar based earnings are also converted into Canadian dollars for purposes of consolidated financial reporting. This conversion does not result in foreign exchange gains or losses but does result in lower or higher net earnings from U.S. operations than would have occurred had the exchange rate not changed. If the Canadian dollar strengthens against the U.S. dollar, the Canadian dollar equivalent of net earnings from U.S. operations will be negatively impacted. The Corporation does not currently hedge any of its exposure related to the translation of U.S. based earnings into Canadian dollars. The Corporation may enter into derivative forward exchange rate contracts to manage this risk, but has not done so to date. As at June 30, 2008, the fluctuation in the Corporation’s other comprehensive loss for the six months ended June 30, 2008 would have been approximately $242,000 for each $0.01 variation in the USD/Canadian exchange rate on translation of Alter NRG’s U.S. subsidiary

upon consolidation.

NOTES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The majority of Alter NRG’s U.S. operations are transacted in U.S. dollars and Alter NRG’s Canadian operations are primarily transacted in Canadian dollars. However, the Corporation occasionally purchases goods and supplies in U.S. dollars. These transactions and foreign exchange exposure would not typically have a material impact on the Canadian operation’s financial results.

Interest rate risk

The Corporation is exposed to interest rate risk or fluctuating cash flows arising from changes in interest rates on its term deposits. Its term deposits are daily revolving short term investments at a variable interest rate averaging 3.5% for the three month period ended June 30, 2008 (June 30, 2007 – 2.9%) and 3.9% for the six month period ended June 30, 2008 (June 30, 2007 - 3.0%). The Corporation has deposited its cash equivalents with a Canadian financial institution in a low risk, interest bearing account. As at June 30, 2008, the fluctuation in the Corporation’s loss for the three and six months ended June 30, 2008 would have been $62,739 and $115,913, respectively, for each 0.5% variation in the interest rate on Alter NRG’s term deposits.

Liquidity risk

The Corporation is exposed to liquidity risk or the risk of not meeting its financial obligations as they come due. At June 30, 2008, the Corporation’s exposure was limited due to having cash balances, invested in short term highly liquid term deposits, significantly in excess of total current liabilities and a $500,000 USD credit facility available for its U.S. subsidiary.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CORPORATE INFORMATION