Copyright 2009 Thoughts From a CPC Founder Mark Lawrence P.Eng.,CFA New York - June 5, 2012 Copyright 2012 Invigorating Company Growth ™

Copyright 2009 What We Do NorthCrest Partners acts as a Quarterback or Champion to assist US Companies in accessing the Canadian Capital Markets and CPC Program. Our main services include: –1. Capital Pool Company (CPC) Creation and Operation –2. Mergers, Acquisitions and Restructuring –3. Consulting (Strategic and Operational) –4. Capital Sourcing (for private and public companies) We uniquely bring to our clients extensive investment banking, research and operational experience. Former Analyst Pru-Bache, Midland Walwyn (Merrill), LOM. Exempt Market Dealer – Registered with Ontario Securities Commission.

Copyright 2009 Experiences with CPCs CPCs administered by TSX Venture, more approachable than SEC. TSX administers this on behalf of the Ontario Securities Commission. Started up CPCs, stayed on as director, and worked as a Canadian Quarterback for US and International companies accessing the Canadian Capital Markets. Two Options with CPCs –Start one yourself with a minimum of two other directors and either look for company to merge with or have some ideas of target already. –Negotiate a merger with an existing CPC if you have or are the Target. –Difference is time to market, not so much additional dilution from third parties in an existing CPC.

Copyright 2009 Starting Your Own CPC vs Using Existing CPC Chance to get over 200 of your own investors into your CPC, and bring in larger private placement investors prior to announcing a transaction. Can create a CPC team with a defined area of interest. Existing CPC can bring directors with complementary experience, some cash, and wider investor base. Existing CPC directors can bind their company into deal without need for shareholder approval – de-risks transaction. Existing CPCs have a facility to loan some funds to Target.

Copyright 2009 Keys to Success Understand the process, including all of your directors. Secure a sponsoring firm for concurrent financing. Need to have cash on hand good for 12 to 18 months once CPC merges with Target. Convert Debt or push out long term. –Funding can be from investors worldwide. –Initial private placement can be free trading. –TSX Venture an excellent place of subsequent low cost financings. Target Company Criteria for a Good CPC - Institutional Grade Potential – Get Feedback Early On. - Coachable Management Team. - Pubco-grade Director team created. - Commercial Stage – more revenue the better. - Reason to be public. - Acquisition candidates possible with share currency. - Realistic valuation – Road to Liquidity, not cashing out – escrow?.

Copyright 2009 Transaction Pointers for CPC Advisors that know the market and process. –Not all security lawyers in Canada know CPC market. –Not all accountants know the CPC program. –Continue to work with local lawyer and accountant, with Canadian team. –US lawyer that knows the cross border issues to ensure tax and other securities issues dealt with. Identify early on capital structure of CPC, Target and Financing. –Valuation – Reasonable value for CPC plus Target Value (agreed to by CPC, Target and Broker), plus Concurrent Financing. No OTC model. –Remember for Target – road to liquidity, not a sale. Both CPC founders and CPC founders have time released escrow of shares. Present this structure to get buy in from Brokers. Solicit interest from existing CPCs and negotiate transaction. Finders fees are payable to those that find the CPC, or vice versa. Meet early with the TSX and advisor team.

Copyright 2009 Successful Transaction Audit requirements usually gating factor for timeline. (IFRS) Settle on cross border solutions early on. Set a budget for the transaction and get buy in and oversight. Educate your VC and institutional investors about the CPC. Filing Statement documents less onerous than a Prospectus. Start to develop aftermarket strategies for immediate deployment. –Target analysts and institutions, and a growing base of retail brokers. Subscribe to S&P Research process to Blue Sky in 38 states.

Copyright 2009 Sample CPC Transactions. Soltoro Intermap Element Financial

Copyright 2009 Recent Projects Include; A US LLC, became sub of Canadian public company through new Delaware sub. –Considered moving domicile of CPC to US but stayed in Canada. Used Inversion Rules of IRS tax to avoid tax of share swap for US founders. –Canadian Parent reports tax return to IRS. Used Restricted Voting Shares to keep over 50% of company’s common shares non-US to avoid immediate SEC registration. Canadian Auditor with existing local firm still doing field work. Share Option plan for Canadian company designed to work for US recipients. US and Canadian residents on Board of Directors. Raised funding into Target before transaction completed. Roadshow for Investors in Canada and the US.

Copyright 2009 Discussion Mark Lawrence