R esults of Operations Nine months ending March 31, 2008 compared to Nine months ending March 31, 2007 (1) Contract R evenue During the nine months ending March 31, 2008 (the ‘‘Fiscal 2008 Interim P eriod’’), the Company had contract revenue of $57,502,957, representing an increase of 127% when compared to the nine months ending March 31, 2007 (‘‘Fiscal 2007 Interim P eriod’’). Approximately $21,095,479 of this increase relates primarily to the acquisition of Orbit (including Soudure R oyale) and, to a lesser extent, to the acquisition of Drift (including the assets of Phyl-Don). Underground drilling sales revenue increased from $19,947,569 during the Fiscal 2007 Interim P eriod to $31,187,804 during the Fiscal 2008 Interim P eriod, a gain of 56%. This was primarily due to the combination of Orbit’s underground division with the Company’s underground division. Domestic Surface drilling contract revenue increased from $3,213,568 during the Fiscal 2007 Interim P eriod to $16,481,275 during the Fiscal 2008 Interim P eriod. Before F ebruary 1, 2007 the Company did not have a surface drilling division and so the increase is directly as a result of the acquisition of Orbit. Similarly, revenue related to international surface work performed by Orbit and Drift was added to the consolidated revenue of the Company during 2007, resulting in revenue of $6,074,952 from $1,254,130 during the Fiscal 2007 Interim P eriod. R evenue attributable to the sale of drills to unrelated third parties by Soudure R oyale was $3,758,926 during the Fiscal 2008 Interim P eriod compared to $919,900 during fiscal 2007 Interim P eriod. Soudure R oyale was acquired as part of the Orbit transaction and so all of this revenue is incremental to the Company when compared to the same period in the prior fiscal year. Cost of Contract R evenue and Gross Profit T otal gross profit during the Fiscal 2008 Interim P eriod was $20,079,924 compared to $7,142,880 in the Fiscal 2007 Interim P eriod. The domestic surface division, international surface division (including Drift) and Soudure R oyale accounted for $5,936,834, $3,048,455 and $1,380,754 of gross profit, respectively, during the Fiscal 2008 Interim P eriod, as compared to $1,107,055, $830,415 and $327,603, respectively, during the Fiscal 2007 Interim P eriod. These divisions were acquired during 2007 as part of the Orbit transaction, accounting for the majority of the increase. The balance of the gross profit increase is attributable to the underground division which increased its gross profit during the Fiscal 2008 Interim P eriod compared to the same period in the previous fiscal year by $4,836,074. The increase in gross profit is a result of: (i) a lower-margin underground contract being replaced with several higher-margin contracts; (ii) contractual price increases in the underground segment taking effect; and (iii) the inclusion of Orbit’s underground drilling division in Company’s financial results. The Company experienced increases in certain costs during the Fiscal 2007 Interim P eriod, specifically labour and consumables, which partially offset the gains in price attributable to contractual increases and new contracts. However, with the combination of the businesses on January 31, 2007, the Company was able to enter into a new supply agreement with its primary supplier of consumables, Boart L ongyear Limited, which is expected to result in significant savings. General and Administrative Expenses General and administrative expenses (‘‘G&A ’’) was $3,543,319 during the Fiscal 2008 Interim P eriod, an increase of $2,057,521 compared to the same period in the previous fiscal year. The increase is a consequence of the overhead of Orbit and Drift being included in the Fiscal 2008 Interim P eriod financial results. As a percent of sales, G&A was 6.2% during Fiscal 2008 Interim P eriod and 5.9% during the Fiscal 2007 Interim P eriod. The G&A as a percent of sales has been declining as the Company integrates the Orbit and Drift acquisitions and eliminates excess overhead. Note: (1) F or the purpose of comparison, the comparative figures for the nine months ending March 31, 2007 have been calculated by add ing the six months ended March 31, 2007 of Orbit Garant and the three months ended September 30, 2006 of Garant. 45