ORBIT GAR ANT DRILLING INC NOTES TO THE CONSOLID A TED FINANCIAL ST A TEMENTS Continued Amounts as at March 31 2008 and for the nine and three months ended March 31 2008 and for the six and three months ended March 31 2007 are unaudited 4 SIGNIFIC ANT ACCOUNTING POLICIES The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles a nd reflect the following significant accounting policies P rinciples of consolidation The consolidated financial statements includes the accounts of the company and its whollyowned subsidiaries as follows Orbit Garant Drilling a General P artnership 91169300 Qu ebec Inc 75 since January 31 2007 and 100 since May 31 2007 Note 3 4378792 Canada Inc Drift Exploration Drilling Inc since April 16 2007 Note 3 Drift de Mexico SA De CV since April 16 2007 Note 3 Interim financial statements The interim results are not necessarily indicative of results for any future period In the opinion of management such informa tion has been prepared on the same basis as the audited annual financial statements and includes all adjustments consisting solely of n ormal recurring adjustments necessary for fair presentation of the financial position and results of operations for the periods pres ented Financial instr uments Financial assets and financial liabilities are initially recognized at fair value and their subsequent measurement is dependent on their classification as described below Their classification depends on the purpose for which the financial instruments were acquir ed or issued their characteristics and the companys designation of such instruments Settlement date accounting is used Classification Cash Held for trading A ccounts receivable L oans and receivables Investments in shares A vailableforsale Bank overdraft Other liabilities Bank loan Other liabilities A ccounts payable and accrued liabilities Other liabilities Client deposits Other liabilities Earnout payable Other liabilities A dvances from shareholders Other liabilities L ongterm debt Other liabilities Obligations under capital leases Other liabilities A dvances to a shareholder company Other liabilities Held for trading Held for trading financial assets are financial assets typically acquired for resale prior to maturity or that are designated a s held for trading They are measured at fair value at the balance sheet date F air value fluctuations including interest earned interest accrued gains and losses realized on disposal and unrealized gains and losses are included in other income Financial liabilities designated as held for trading are those nonderivative financial liabilities that the company elects to designate on initial recognition as instruments that it will measure at fair value through other interest expense These are accounted fo r in the same manner as held for trading assets The company has not designated any nonderivative financial liabilities as held for tra ding A vailableforsale A vailableforsale financial assets are those nonderivative financial assets that are designated as availableforsale or tha t are not classified as loans and receivables heldtomaturity or heldfortrading investments Except as mentioned below availablefor sale financial assets are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income until realized when the cumulative gain or loss is transferred to other income F12