40 Orbit G arant 2012 annual rep O rt N OTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended June 30 2012 and 2011 in thousands of Canadian dollars except for earnings per share and option data 1 DESCRIPTION OF b USINESS Orbit Garant Drilling Inc the Company amalgamated under the Canada Business Company Act mainly operates a surface and underground diamond drilling business The Company has operations in Canada United States Central and South America and West Africa The Companys head offce located at 3200 boul JeanJacques Cossette ValdOr Quebec Canada The Company holds interests i n several entities including the percentage of voting rights in its princip al subsidiaries as follows of voting rights Services de forage Orbit Garant Inc 100 91169300 Quebec inc 100 Orbit Garant Ontario Inc 100 Drift Exploration Drilling Inc 100 Drift de Mexico SA de CV 100 Forage Orbit Inc dissolved September 6 2012 100 91295642 Quebec inc dissolved December 30 2011 100 Lantech Drilling Services Inc since December 16 2011 100 2 b USINESS ACQUISITIONS Acquisition of Lantech Drilling Services Inc On December 16 2011 the Company acquired all issued and outstanding shares of Lantech Drilling Services Inc which provides an expertise in iron ore drilling and geotechnical services strengthened the team wi th highly skilled management personnel drillers and feld technicians in Eastern Canada and also provides a strategic entry point to drilling market in West Africa The purchas e price for the transaction was for a total net consideration of 6614 payable for a cash consideration of 3506 calculated using the gross cash consideration of 8380 less bank overdraft and long termdebt of an amount of 4874 and 989 through the issuance of 217082 common shares of the company and a contingent consideration of 2119 Furthermore the Company paid a cash consideration of 3109 as compensation of the net working capital of the company on the acquisition date The account payable as compensation of the net working capital does not bear interest and was paid fve days after the deliverance of the fnancial statements of Lantec h Drilling Services Inc An amount of 1050 has been accounted for as intangible assets and 4056 as goodwill The amount of goodwill will not be deductible for income tax purposes The purchase price of Lantech Drilling Services Inc is subject to an adjustment of an amount up to 2400 calculated on the achievement of specifed earnings levels over the years ending December 15 2012 2013 and 2014 This contingent consideration has been evaluated at fair value at the acquisition date Acquisition of 1085820 Ontario Limited Advantage Control Technologies On November 8 2010 the Company acquired all issued and outstanding shares of 1085820 Ontario Limited which specialized in technologies and equipment for the development of new technologies for mineral drilling in Canada This addition of thes e advanced technologies is expected to increase signifcantly the productivity improve heal th and safety and optimize labour effciency The purchase price for the transaction was for a total net consideration of 3585 payable for a cash consideration of 2935 and 650 through the issuance of 132743 common shares of the company and a contingent consideration of 2014 Furthermore the Company paid a cash consideration of 521 as compensation of the net working capital of the company on the acquisition date The account payable as compensation of the net working capital does not bear interest and was paid ten days after the deliverance of the fnancial s tatements of 1085820 Ontario Limited An amount of 4322 has been accounted for as intangible assets and 1846 as goodwill The amount of goodwill will not be deductible for income tax purposes Further to this transaction the Company has also acquired some equipment related to this business for an amount of 375 payable in cash The purchase price of 1085820 Ontario Limited is subject to an adjustment of an amount up to 2400 calculated on the achievement of specifed earnings levels over the years ended November 8 2012 2013 and 2014 initially November 8 2011 2012 and 2013 This contingent consideration has been evaluated at fair value at the acquisition date During the year the management modi fed the applicable dates for the calculation of the specifc earnings levels from November 8 2011 2012 and 2013 to November 8 2012 2013 and 2014