Exhibit 4.12

Appendix — U.S. GAAP reconciliation

Reconciliation to accounting principles generally accepted in the United States

The un-audited consolidated financial statements of the Company for the nine month periods ended September 30, 2007 and 2006, and the audited consolidated financial statements for the years ended December 31, 2006 have been prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”) which, in most respects, conforms to generally accepted accounting principles in the United States (“U.S. GAAP”). The reconciliations and other information presented in this note are solely in relation to the consolidated financial statements. The significant differences between Canadian GAAP and U.S. GAAP as they relate to the Company are presented throughout this note. Additionally, where there is no significant conflict with Canadian GAAP requirements some of the additional U.S. GAAP disclosure requirements have been incorporated throughout the Canadian GAAP financial statements.

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Consolidated Balance Sheets

	As at
	September 30, 2007						December 31, 2006						September 30, 2006
	$ (Un-audited)						$						$ (Un-audited)
	Canadian GAAP			US GAAP			Canadian GAAP			US GAAP			Canadian GAAP			US GAAP
Assets
Current assets:
Cash and cash equivalents (8)		11,928,674			10,200,333			31,681,435			31,681,435			30,597,797			30,597,797
Cash restricted		26,672,843			26,672,843			29,301,940			29,301,940			35,652,911			35,652,911
Trade receivables		54,530,040			54,530,040			67,542,902			67,542,902			33,353,429			33,353,429
Commodity derivative contracts		—			—			1,759,575			1,759,575			1,703,100			1,703,100
Other assets (8)		2,931,626			134,098			2,954,946			2,954,946			95,265			95,265
Inventories		125,269,818			125,269,818			67,593,558			67,593,558			103,125,128			103,125,128
Prepaid expenses (8)		3,964,060			3,946,099			880,640			880,640			1,509,444			1,509,444
Deposit on business acquisition		—			—			—			—			30,639,000			30,639,000
Total current assets		225,297,061			220,753,231			201,714,996			201,714,996			236,676,074			236,676,074
Cash restricted		1,229,726			1,229,726			3,217,284			3,217,284			3,158,378			3,158,378
Deferred financing costs (7)		—			1,500,949			1,716,757			1,716,757			1,831,073			1,831,073
Investment in LNG Project (8)		—			5,429,862			—			—			—			—
Plant and equipment (1), (8)		237,671,816			225,432,318			242,642,077			231,175,281			236,989,837			225,352,161
Oil and gas properties		71,205,570			71,205,570			54,524,347			54,524,347			44,781,951			44,781,951
Future income tax benefit		2,251,626			2,251,626			1,424,014			1,424,014			1,203,600			1,203,600
Total assets		537,655,799			527,803,282			505,239,475			493,772,679			524,640,913			513,003,237
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities (7),(8)		132,626,075			132,408,209			76,095,369			76,095,369			75,855,550			75,855,553
Commodity derivative contracts		562,725			562,714			—			—			—			—
Working capital facility — crude feedstock		27,948,185			27,948,185			36,873,508			36,873,508			66,425,433			66,425,433
Deferred hedge gain (2)		—			—			1,385			—			959,687			—
Deferred liquefaction project liability		—			—			6,553,080			6,553,080			5,092,097			5,092,097
Current portion of secured loan (7)		144,187,210			144,245,543			13,500,000			13,500,000			—			—
Current portion of indirect participation interest — PNGDV		580,775			580,775			730,534			730,534			1,961,867			1,961,867
Total current liabilities		305,904,970			305,745,426			133,753,876			133,752,491			150,294,634			149,334,950
Accrued financing costs		—			—			1,087,500			1,087,500			1,450,000			1,450,000
Secured loan (7)		58,000,000			58,000,000			184,166,433			184,166,433			186,053,775			186,053,775
Deferred gain on contributions to LNG project (8)		8,910,293			—			—			—			—			—
Indirect participation interest (5)		96,086,369			115,926,369			96,861,259			116,861,259			96,861,259			116,861,259
Indirect participation interest — PNGDV		1,343,719			1,343,719			1,190,633			1,190,633			—			—
Total liabilities		468,830,754			481,015,514			417,059,701			437,058,316			434,659,668			453,699,984
Non-controlling interest (6)		5,692,678			5,354,150			5,759,206			5,416,831			5,726,684			5,374,388
Shareholders’ equity:
Share capital		235,327,634			235,327,634			233,889,366			233,889,366			232,678,088			232,678,088
Contributed surplus		9,148,271			9,148,271			4,377,426			4,377,426			4,196,247			4,196,247
Warrants		2,119,034			2,119,034			2,137,852			2,137,852			2,137,852			2,137,852
Induced Conversions of Convertible Debt (4)		—			6,899,211			—			6,899,211			—			6,899,211
Accumulated Other Comprehensive Income		2,374,528			2,374,528			1,492,869			1,494,258			1,343,294			2,313,448
Conversion options (5)		19,840,000			—			20,000,000			—			20,000,000			—
Accumulated deficit		(205,677,100	)		(214,435,060	)		(179,476,945	)		(197,500,581	)		(176,100,920	)		(194,295,981	)
Total shareholders’ equity		63,132,367			41,433,618			82,420,568			51,297,532			84,254,561			53,928,865
Total liabilities and shareholders’ equity		537,655,799			527,803,282			505,239,475			493,772,679			524,640,913			513,003,237

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Consolidated statements of operations

The following table presents the consolidated statements of operations under U.S. GAAP compared to Canadian GAAP:

	Nine month period ended						Year ended						Nine month period ended
	September 30, 2007						December 31, 2006						September 30, 2006
	$ (Un-audited)						$						$ (Un-audited)
	Canadian GAAP			U.S. GAAP			Canadian GAAP			U.S. GAAP			Canadian GAAP			U.S. GAAP
Revenue
Sales and operating revenues (1)		453,603,730			453,603,730			511,087,934			511,189,438			340,758,419			340,758,419
Interest income		1,734,361			—			3,223,995			—			2,375,543			—
Other income		2,202,510			—			3,747,603			—			2,149,562			—
		457,540,601			453,603,730			518,059,532			511,189,438			345,283,524			340,758,419
Expenses
Cost of sales and operating expenses (excluding depreciation shown below) (1)		423,976,643			423,976,643			499,494,540			499,584,532			339,958,342			339,980,788
Administrative and general expenses (1), (2), (8)		23,348,650			23,339,627			20,728,618			20,762,574			16,129,026			16,129,026
Depreciation and amortization (1)		10,037,606			9,679,389			12,352,672			11,591,513			8,799,170			8,208,891
Exploration costs, excluding exploration impairment		12,071,133			12,071,133			6,176,866			6,176,866			6,226,731			6,226,731
Exploration impairment		525,741			525,741			1,647,185			1,647,185			1,528,495			1,528,495
Legal and professional fees (1), (8)		3,742,659			3,307,433			3,937,517			3,937,517			2,803,935			2,803,935
Short term borrowing costs		8,773,023			8,773,023			8,478,540			8,478,540			6,625,549			6,625,549
Long term borrowing costs (1)		7,621,055			7,621,055			11,856,872			11,856,872			7,247,211			7,247,211
Loss on amendment of indirect participation interest — PNGDV		—			—			1,851,421			1,851,421			1,851,421			1,851,421
Gain on LNG shareholder agreement		(6,553,080	)		(6,553,080	)		—			—			—			—
Loss on proportionate consolidation of LNG Project (8)		2,432,652			—			—			—			—			—
Gain on equity accounted investment (8)		—			(6,043,353	)		—			—			—			—
Foreign exchange loss/(gain) (2), (8)		(2,239,613	)		(2,238,875	)		(4,744,810	)		(4,744,810	)		(4,493,566	)		(4,493,566	)
Non-controlling interest (6)		(66,513	)		(62,679	)		(263,959	)		(265,865	)		(306,943	)		(308,307	)
Interest income (8)		—			(1,726,138	)		—			(3,223,995	)		—			(2,375,543	)
Other income		—			(2,202,510	)		—			(3,747,603	)		—			(2,149,562	)
		483,669,956			470,467,409			561,515,462			553,904,747			386,369,370			381,275,069
Loss before income taxes		(26,129,355	)		(16,863,679	)		(43,455,930	)		(42,715,309	)		(41,085,846	)		(40,516,650	)
Income tax expense (3)		(70,800	)		(70,800	)		(2,342,873	)		(2,342,873	)		(1,336,932	)		(1,336,932	)
Net loss		(26,200,155	)		(16,934,479	)		(45,798,803	)		(45,058,182	)		(42,422,778	)		(41,853,582	)

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Reconciliation of Canadian GAAP net income/(loss) to U.S. GAAP net income/(loss)

	Nine Month						Nine Month
	period ended			Year ended			period ended
	September 30,			December 31,			September 30,
	2007			2006			2006
	$ (Un-audited)			$			$ (Un-audited)
Net loss as shown in the Canadian GAAP financial statements		(26,200,155	)		(45,798,803	)		(42,422,778	)
Description of items having the effect of increasing reported income
Decrease in depreciation and amortization due to difference in date of commencement of operations of refinery (1)		358,217			761,159			590,279
Decrease in non-controlling interest expense (6)		(3,833	)		1,907			1,365
Increase in reporting income due to reversal of proportionate consolidation of LNG Project and equity accounting the investment (8)		8,911,292			—			—
Increase in sales from ineffective portion of hedges (2)		—			101,504			—
Description of items having the effect of decreasing reported income
Increase in cost of sales from ineffective portion of hedges (2)		—			(89,992	)		(22,448	)
Increase in administrative and general expenses from ineffective portion of hedges (2)		—			(33,956	)		—
Net loss according to US GAAP		(16,934,479	)		(45,058,182	)		(41,853,582	)

Statement of comprehensive income/(loss), net of tax

	Nine months						Nine months
	period ended			Year ended			period ended
	September 30,			December 31,			December 31,
	2007			2006			2005
	$ (Un-audited)			$			$ (Un-audited)
Net loss in accordance with U.S. GAAP, net of tax		(16,934,479	)		(45,058,182	)		(41,853,582	)
Foreign currency translation reserve, net of tax		880,270			1,015,426			865,851
Deferred hedge gain, net of tax		(1,389	)		(993,153	)		(24,388	)
Total other comprehensive income, net of tax		878,881			22,273			841,463
Comprehensive loss, net of tax		(16,055,598	)		(45,035,909	)		(41,012,119	)

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Consolidated Statements of Shareholders’ Equity

	Nine month Period ended						Year ended						Nine month Period ended
	September 30, 2007						December 31, 2006						September 30, 2006
	$ (Un-audited)						$						$ (Un-audited)
	Canadian GAAP			US GAAP			Canadian GAAP			US GAAP			Canadian GAAP			US GAAP
Share capital
At beginning of period		233,889,366			233,889,366			223,934,500			223,934,500			223,934,500			223,934,500
Issue of capital stock		1,438,268			1,438,268			9,954,866			9,954,866			8,743,588			8,743,588
At end of period		235,327,634			235,327,634			233,889,366			233,889,366			232,678,088			232,678,088
Contributed surplus
At beginning of period		4,377,426			4,377,426			2,933,586			2,933,586			2,933,586			2,933,586
Stock compensation		4,770,845			4,770,845			1,443,840			1,443,840			1,262,661			1,262,661
At end of period		9,148,271			9,148,271			4,377,426			4,377,426			4,196,247			4,196,247
Warrants
At beginning of period		2,137,852			2,137,852			2,137,852			2,137,852			2,137,852			2,137,852
Movement for period		(18,818	)		(18,818	)		—			—			—			—
At end of period		2,119,034			2,119,034			2,137,852			2,137,852			2,137,852			2,137,852
Accumulated Other Comprehensive Income
At beginning of period		1,492,869			1,494,258			477,443			1,471,985			477,443			1,471,985
Deferred hedge gain recognised on transition		1,385			—			—			—			—			—
Deferred hedge (loss)/gain movement for period, net of tax		(1,385	)		(1,389	)		—			(993,153	)		—			(24,388	)
Foreign currency translation adjustment movement for period, net of tax		881,659			881,659			1,015,426			1,015,426			865,851			865,851
At end of period		2,374,528			2,374,528			1,492,869			1,494,258			1,343,294			2,313,448
Induced Conversions of Convertible Debt
At beginning of period (4)		—			6,899,211			—			6,899,211			—			6,899,211
Movement for the period		—			—			—			—			—			—
		—			6,899,211			—			6,899,211			—			6,899,211
Conversion options
At beginning of period		20,000,000			—			20,000,000			—			20,000,000			.
Movement for period		(160,000	)		—			—			—			—			—
At end of period		19,840,000			—			20,000,000			—			20,000,000			—
Accumulated deficit
At beginning of period		(179,476,945	)		(197,500,581	)		(133,678,142	)		(152,442,399	)		(133,678,142	)		(152,442,399	)
Net loss for period		(26,200,155	)		(16,934,479	)		(45,798,803	)		(45,058,182	)		(42,422,778	)		(41,853,582	)
Deduct:
Preference Share Dividends
At end of period		(205,677,100	)		(214,435,060	)		(179,476,945	)		(197,500,581	)		(176,100,920	)		(194,295,981	)
Shareholders’ equity at end of period		63,132,367			41,433,618			82,420,568			51,297,532			84,254,561			53,928,865

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Consolidated Statement of Cash Flows

	Nine month period						Nine month period
	ended			Year ended			ended
	September 30, 2007			December 31, 2006			September 30, 2006
	$ (Un-audited)			$			$ (Un-audited)
Cash flows provided by (used in):
Operating activities — Canadian GAAP (as per consolidated cash flows)		(19,781,769	)		2,187,462			(15,926,643	)
Reconciling items:
Exploration costs expensed including exploration impairment		(12,596,874	)		(7,824,051	)		(7,755,226	)
Being LNG project equity accounted under US GAAP as opposed to proportionate consolidation under Canadian GAAP		6,912,669			—			—
Operating activities — U.S. GAAP		(25,465,974	)		(5,636,589	)		(23,681,869	)
Investing activities — Canadian GAAP (as per consolidated cash flows)		1,172,609			(97,071,319	)		(97,193,271	)
Reconciling items:
Exploration costs expensed including exploration impairment		12,596,874			7,824,051			7,755,226
Being cash investment in LNG Project		(1,976,975	)		—			—
Being reversal of PNG LNG cash call proportionately consolidated in cash flow statement		(6,664,035	)		—			—
Investing activities — U.S. GAAP		5,128,473			(89,247,268	)		(89,438,045	)
Financing activities — Canadian and U.S. GAAP		(1,143,601	)		66,963,485			84,115,904
(Decrease)/increase in cash and cash equivalents		(21,481,102	)		(27,920,372	)		(29,004,010	)
Cash and cash equivalents, beginning of period		31,681,435			59,601,807			59,601,807
Cash and cash equivalents, end of period (U.S. GAAP)		10,200,333			31,681,435			30,597,797

Under Canadian GAAP, InterOil share in the LNG Joint venture project is proportionately consolidated and InterOil’s share of the JV cash flows will be taken up in InterOil consolidated cash flow statement. The cash flows would be classified between operating, investing and financing as per the nature of the transaction. Under U.S. GAAP, When an investment in an entity is accounted for by use of the equity method, an investor restricts its reporting in the cash flow statement to the cash flows between itself and the investee, for example, to dividends and advances. The above cash and cash equivalents is different to the Canadian cash and cash equivalents balance due to the proportionate take up of the cash balance under Canadian GAAP, but equity accounting of the LNG investment in U.S. GAAP (refer (8) below).

Per share amounts

Basic per share amounts are computed by dividing net income available to shareholders by the weighted average number of shares outstanding for the reporting period. Diluted per share amounts reflects the potential dilution that could occur if options or contracts to issue shares were exercised or converted into shares.

For the calculation of diluted per share amounts, the basic weighted average number of shares is increased by the dilutive effect of stock options determined using the treasury method. No potential shares in options or warrants on issue were dilutive for the nine month period ended September 30, 2007, year ended December 31, 2006 and nine month period ended September 30, 2006.

Reconciliation to accounting principles generally accepted in the United States (cont’d)

	Nine month						Nine month
	period ended			Year ended			period ended
Weighted average number of shares on which earnings per	September 30,			December 31,			September 30,
share calculations are based in accordance with U.S. GAAP	2007			2006			2006
Basic		29,908,847			29,602,360			29,523,026
Effect of dilutive options		—			—			—
Diluted		29,908,847			29,602,360			29,523,026
Net income/(loss) per share in accordance with U.S. GAAP	(Restated)			(Restated)			(Restated)
Basic		(0.57	)		(1.52	)		(1.42	)
Diluted		(0.57	)		(1.52	)		(1.42	)

(1)	Operations
	The Company determined that refinery operations commenced under U.S. GAAP at December 1, 2004, which is the date management assessed that construction of the refinery was substantially complete and ready for its intended use. The Company ceased capitalization of certain costs to the refinery project at this date and recognized one month’s results from sales, related costs of sales and operating expenses and administrative and general expenses in the statement of operations for the year ended December 31, 2004.
	As disclosed in note 3(q) in the consolidated financial statements, operations commenced on January 1, 2005 under Canadian GAAP. Therefore, the Company continued to capitalize December 2004’s results to the refinery project. Due to the difference in the cost basis of the refinery, the depreciation expense recorded under U.S. GAAP differs from that recorded under Canadian GAAP.
	The useful life for the refinery under U.S. GAAP is the same as that disclosed under Canadian GAAP.
(2)	Derivative instruments and hedging
	The Company accounts for derivatives and hedging activities in accordance with FASB Statement No. 133, “Accounting for Derivative Instruments and Certain Hedging Activities”, as amended (“SFAS No. 133”), which requires that all derivative instruments be recorded on the balance sheet at their respective fair values.
	The Canadian Institute of Chartered Accountants issued Accounting Guideline 13 “Hedging Relationships” (“AcG-13”), which became effective January 1, 2004. This guideline was issued to align certain accounting principles under Canadian GAAP with SFAS No. 133, including hedge documentation and assessing hedge effectiveness. The Company adopted the hedge accounting provisions in AcG-13 and SFAS No. 133 in respect of the commodity forward contracts it transacted beginning in July 2004. Under Canadian GAAP, the Company included hedges which are unsettled at period end in current liabilities based on a marked to market calculation. Under SFAS No. 133 the marked to market amount for the unsettled hedges is included in other comprehensive income to the extent that they are effective. The ineffective portion is expensed.
	Effective January 1, 2007, CICA 3865 – Hedges came into effect as explained under Note 3(c). This revision brings Canadian accounting treatment of hedges in line with the U.S. GAAP treatment and the Company has followed the transition provisions as per guidance under the new standard to reclassify the marked to market amount for the unsettled hedges from current liabilities to other comprehensive income. Details of hedge accounting are disclosed in note 8 of the unaudited consolidated financial statements of the Company for the nine month period ended September 30, 2007.
(3)	Income tax effect of adjustments
	The income tax effect of U.S. GAAP adjustments was a reduction to the future tax asset of $277,175 (years ended December 31, 2006 — $259,957) for the nine month period ended September 30, 2007. A corresponding decrease in the valuation allowance was recorded. No income tax expense was recorded in the periods disclosed due to the tax holiday period in Papua New Guinea through five years after the refinery commences operations.

Reconciliation to accounting principles generally accepted in the United States (cont’d)

(4)	Debt conversion expense
	100% of the outstanding convertible debentures were converted before December 31, 2004. The Company issued an additional 180,000 shares to induce conversion before the end of the year. Under Canadian GAAP, the fair value of these shares was recorded as an increase in share capital of $6,976,800 with offsetting adjustments to retained earnings of $6,899,211 and a conversion expense of $77,589.
	FASB Statement No. 84, “Induced Conversions of Convertible Debt” requires an expense to be recorded when convertible debt is converted under an inducement. The Company recognized the entire fair value of the inducement shares of $6,976,800 as a conversion expense under U.S. GAAP.
(5)	Indirect participation interest
	As disclosed in note 2 in the unaudited consolidated financial statements, the Company entered into an indirect participation interest agreement in exchange for proceeds of $125,000,000. Under Canadian GAAP, this amount was apportioned between non financial liabilities and equity. Under U.S. GAAP, Company has not bifurcated the amount as the Company has opted to utilize the scope exception under SFAS 133 Para 10(f) for ‘derivatives that serve as impediments to sales accounting’.
(6)	Non controlling interest
	The non-controlling interest movements are the result of the U.S. GAAP adjustments relating to the midstream operations described in points 1 to 3 above.
(7)	Deferred Financing costs
	Deferred financial costs are offset against the respective liabilities under Canadian GAAP; however, the same is disclosed as a separate item on the face of the balance sheet under US GAAP in accordance with guidance under APB 21.
(8)	Investment in LNG Project/Deferred gain on contributions to LNG Project:
	As disclosed in Note 13 of the unaudited consolidated financial statements for the nine month period ended September 30, 2007, a Shareholders Agreement was signed on July 30, 2007 which converted PNG LNG Inc. and its subsidiaries into a joint venture project from being a subsidiary of InterOil. Under Canadian GAAP, joint ventures are proportionately consolidated into the Company’s consolidated financials based on the shareholding in the joint venture.
	Applying the guidance under APB 18, a Corporate joint venture has to be equity accounted under U.S. GAAP. InterOil has also followed the guidance under SAB Topic 5H wherein a gain on contributions to the joint venture is recognised as a result of a change in economic interest of the entity. For Canadian GAAP this gain is deferred and recognised over the life of the contributed assets..
	InterOil will account for the joint venture using equity accounted method. In addition to the gain or loss recognised as part of the operations, InterOil will also recognise any difference between the Investment carried in its balance sheet and the underlying equity in net assets of the joint venture in the statement of operations to account for this difference and the investment balance will increase/decrease in line with this difference.
	The adjustments to reflect the reversal of proportionately consolidated balances and take-up of equity accounted balances have been summarised below. Given below is the Midstream – liquefaction consolidated balance sheet and statement of operations under Canadian GAAP and U.S. GAAP. The statement of operations incorporates results for the nine month period ended September 30, 2007. PNG LNG Inc. was a subsidiary of InterOil till the date of the Shareholder’s Agreement and has been proportionately consolidated subsequent to that date.

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Midstream - liquefaction				GAAP
Consolidated Balance Sheet	Canadian GAAP			Adjustments			US GAAP
Cash and cash equivalents		1,728,341			(1,728,341	)		—
Cash restricted		—			—			—
Other assets		2,797,528			(2,797,528	)		—
Prepaid expenses		17,961			(17,961	)		—
Current assets		4,543,830			(4,543,830	)		—
Investment in PNG LNG Inc.		—			5,429,862			5,429,862
Plant and equipment		1,130,919			(1,130,919	)		—
Total assets		5,674,749			(244,887	)		5,429,862
Accounts payable and accrued liabilities		268,949			(245,886	)		23,063
Intercompany payables		2,060,598			—			2,060,598
Current liabilities		2,329,547			(245,886	)		2,083,661
Deferred gain on contributions to LNG project	8,910,293				(8,910,293	)		—
Total liabilities		8,910,293			(8,910,293	)		—
Share capital		1			—			1
Accumulated deficit		(5,565,092	)		8,911,293			3,346,201
Shareholders’ Equity		(5,565,091	)		8,911,293			3,346,202
Total liabilities and Shareholders’ equity		5,674,749			(244,886	)		5,429,863

Midstream - liquefaction				GAAP
Consolidated Statement of Operation	Canadian GAAP			Adjustments			US GAAP
Interest income		15,336			(8,223	)		7,113
Total revenues		15,336			(8,223	)		7,113
Office and Administrative expenses		1,502,726			(9,023	)		1,493,703
Professional fees		952,950			(435,226	)		517,724
Exchange (Gain) loss		(2,097	)		738			(1,359	)
Loss on proportionate consolidation of PNG LNG Inc		2,432,652			(2,432,652	)		—
Gain on equity accounted investment		—			(6,043,353	)		(6,043,353	)
Total expenses		4,886,231			(8,919,516	)		(4,033,285	)
Net gain/(loss)		(4,870,895	)		8,911,293			4,040,398

Recent Accounting Pronouncements

Fair value measurements

In September 2006, the FASB issued FAS 157 which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. The standard is effective for fiscal years beginning after November 15, 2007 and all interim periods within those fiscal years. The Company does not expect that the application of FAS 157 will have a material impact on the financial statements.

Reconciliation to accounting principles generally accepted in the United States (cont’d)

Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued FAS 159 which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company does not expect that the application of FAS 159 will have a material impact on the financial statements.

Business combinations

In December 2007, the FASB issued FAS 141 (revised 2007) to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

Non-controlling interests in consolidated financial statements

The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement changes the way the consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. Previously, net income attributable to the noncontrolling interest generally was reported as an expense or other deduction in arriving at consolidated net income. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.