MANAGEMENT’S DISCUSSION AND ANALYSIS foreign exchange gain of $235,000 that was recognized in the Consolidated Statement of Net Income and  Comprehensive Income and has been classified on the Statement of Financial Position as an other current  asset. Management considers the credit risk associated with accounts receivable to be generally low as substantially  all counterparties are well established and financed oil and gas companies. AKITA has detailed credit-granting  procedures and in certain situations may require customers to make advance payment prior to provision of  services or take other measures to mitigate credit risk. Provisions have been estimated by management and  included in the accounts to recognize potential bad debts. Off Balance Sheet Transactions Related Party Transactions AKITA has not entered into any arrangements that involve off balance sheet transactions. AKITA is affiliated with the ATCO Group of companies and with Spruce Meadows, an equestrian show jumping  facility, through its majority shareholder. All related party transactions in 2012 and 2013 were made in the  normal course of business with regular payment terms and have been recorded at the paid amounts. Operating  purchases totalled $390,000 and included sponsorship and advertising ($325,000) and other miscellaneous  purchases ($65,000). During 2013, the Company renewed its multi-year sponsorship and advertising contracts  with Spruce Meadows. At December 31, 2013, the remaining commitment was $975,000. Costs incurred  related to this contract during 2013 were $325,000 (2012 - $325,000). Costs and related services are  consistent with parties dealing at arm’s length. In addition to operating purchases, the Company purchased  well site trailers for its rig operations totalling $328,000. The Company incurred legal fees of $83,000 (December 31, 2012 - $62,000) during the year for services  related to various legal matters with a law firm of which a director of the Company was a partner at December  31, 2013. At December 31, 2013, $1,000 (December 31, 2012 - $8,000) of this amount was included in  accounts payable. The Company is related to its joint ventures. The accompanying table summarizes transactions and annual  balances with the joint ventures. These transactions were made in the normal course of business with regular  payment terms and have been recorded at the paid amounts. $Thousands 2013 2012 Revenue 78 80 Operating and maintenance costs 7,298 5,801 Selling and administrative costs 758 723 Year-end accounts receivable 2,948 1,960 20 AKITA DRILLING LTD.  ANNUAL REPORT