1.4 Financial Instruments. All financial instruments are initially recognized at fair value on the consolidated statement of financial position. The Company has classified each financial instrument into one of the following categories. (i) fair value through the statement of comprehensive income (loss), (ii) loans and receivables, and (iii) other financial liabilities. Measurement in subsequent periods depends on the classification of the financial instrument as described below. Fair value through profit or loss - financial instruments under this classification include cash and cash equivalents and derivative assets and liabilities. Amortized cost - financial instruments under this classification include accounts receivable, investments, accounts payable and accrued liabilities and long-term debt. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial assets and liabilities are offset, and the net amount is reported on the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. 1.5 Acquisitions, Asset Purchases and Disposals. Transactions undertaken involving the purchase of assets, that do not qualify as a business combination are treated as asset purchases, irrespective of whether the specific transactions involved the purchase of the asset directly or the purchase of an incorporated entity. Accordingly, no goodwill is recognised and the initial recognition exemption in IAS 12 Income Taxes is generally met. The purchase consideration is allocated to the assets and liabilities purchased based on their relative fair values. Proceeds on disposal are applied to the carrying amount of the specific intangible asset or development and production assets disposed of, and any surplus is recorded as a gain on disposal in the income statement. 1.6 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and bank balances. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition. 1.7 Current and deferred income tax lncome tax expense comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. 1.8 Share Capital Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction. Any discount on the issue of ordinary shares is deducted from the share premium account. 1.9 Intercompany Balances. Intercompany receivables and loans, which are considered quasi equity in nature, are treated as non-current assets in the Company statement of financial position.