19. Capital Management

The Company defines capital that it manages as the aggregate of its shareholders’ equity and interest bearing debt. The Company’s objectives when managing capital are to ensure that the Company will continue as a going concern, so that it can provide products and services to its customers and returns to its shareholders.

As at December 31, 2008, total managed capital was $161,036 (December 31, 2007 – $128,516), comprised of shareholders’ equity of $102,205 (December 31, 2007 – $122,598) and interest-bearing debt of $58,831 (December 31, 2007 – $5,918). Included in interest bearing debt is the debt component of the convertible notes of $7,392 (December 31, 2007 – $5,897), where the associated accreted interest expense is a non-cash charge.

The Company manages its capital structure in a manner to ensure that sufficient room is maintained under the Company’s revolving debt arrangement such that the Company can make its required interest payments. For the year ended December 31, 2008, the Company had sufficient availability under its revolving debt arrangement to make its required interest payments.

Global economic conditions have deteriorated rapidly over the last several months, and the severity, duration and impact of these developments are not yet fully understood. Many of the Company’s customers are experiencing financial constraints and have reduced or deferred their purchases. Such customers may continue to curtail or delay their purchases, which would reduce the Company’s revenues and impact its liquidity. If these circumstances persist or deteriorate further, the Company’s ability to raise capital in the debt or equity markets could be limited. In response to the current environment, the Company has adopted a plan to reduce its operating costs and realize on certain assets to improve its liquidity and believes it will be in compliance with its bank covenants (Note 8) and other obligations throughout 2009.