Atok-Big Wedge Co., Inc. and its subsidiaries (the Group) have exposure to the following risks from its use of financial instruments:

                             • Credit Risk
                             • Liquidity Risk
                             • Market Risk

The main purpose of the Group’s dealings in financial instruments is to fund its operations and capital expenditures. 
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. All risks faced by the Group are incorporated in the annual operating budget. Mitigating strategies and procedures are also devised to address the risks that inevitably occur so as not to affect the Group’s operations and detriment forecasted results. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board of Directors reviews and institutes policies for managing each of the risks and these are summarized below.

Credit Risk

Credit risk represents the risk of loss the Group would incur if credit customers and counterparties fail to perform their contractual obligations. The Group’s credit risk arises principally from the Group’s cash in banks and cash equivalents, receivables, and refundable deposits.

The Group’s exposure to credit risk arises from the default of counterparties, with maximum exposure equal to the carrying values of the financial assets.

Cash in banks and cash equivalents are considered high grade as these pertain to deposits in reputable banks.

High Grade – accounts with a high degree of certainty in collection, where counterparties have consistently displayed prompt settlement practices, and have little to no instances of defaults or discrepancies in payment; also includes transactions with related parties (i.e., affiliates).

Standard Grade – active accounts with minimal to regular instances of payment default due to ordinary or common collection issues, but where the likelihood of collection is still moderate to high as the counterparties are generally responsive to credit actions initiated by the Group.

Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by forecasting projected cash flows and maintaining a balance between continuity of funding and flexibility in operations. Treasury controls and procedures are in place to ensure that sufficient cash is maintained to cover daily operational and working capital requirements. Management closely monitors the Group’s future and contingent obligations and sets up required cash reserves as necessary in accordance with internal requirements.

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and other market prices will adversely affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group is subject to minimal transaction and translation exposures resulting from currency exchange fluctuations. The Group regularly monitors outstanding financial assets and liabilities in foreign currencies and maintains them at a level responsive to the changes in current exchange rates.

Fair Values

The Group’s financial instruments comprising of cash and cash equivalents, receivables, refundable deposits, accounts payable and accrued expenses, and other current liabilities are short-term in nature. Their fair values approximate their carrying values as at December 31, 2013 and 2012.

Capital Management

The primary objective of the Group’s capital management is to ensure its ability to continue as a going concern and that it maintains healthy capital ratios in order to support its business.

The Group monitors capital on the basis of the debt-to-equity ratio, which is calculated as total debt divided by total equity. Total debt comprises of accounts payable and accrued expenses, other current liabilities and payable to related parties. Total equity comprises all components of equity.