H A M PT O N F IN A N C IA L C O RPO RA T IO N June 2018 Ticker: - - PowerPoint PPT Presentation

H A M PT O N F IN A N C IA L C O RPO RA T IO N

June 2018

CVE: HFC 29MM $0.41 $11.6MM Ticker: Shareso/s: Price: Mcap:

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DISCLAIMER

This presentation provides a summary description of Hampton Financial Corporation (“HFC”) and its business, but does not purport to be complete. Prospective investors are encouraged to obtain independent legal advice concerning any investment in securities of HFC and should not base their decision on whether to invest in HFC upon material provided herein. There are no representations or warranties made herein by HFC or any financial advisors and agents of HFC (the “Agents”). There are certain risks inherent in an investment in the securities of HFC which prospective investors should carefully consider before investing. This presentation is not, and under no circumstances is it to be construed as, an advertisement or a public offering of securities of HFC. No securities regulatory authority or similar authority has reviewed or in any way passed upon the presentation or the merits of these securities and any representation to the contrary is anoffence. This presentation hasbeen prepared for discussion purposes only and is confidential. No representation, warranty ,or undertaking, express or implied, is made and no responsibility or liability is accepted by HFC or any of its Agents as to the accuracyorcompleteness of the information contained herein. Neither this presentation or any of its contents may be disclosed or used without the prior written consent of HFC. This is not an Offering Memorandum.

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Hampton Financial Corporation owns and operates a full service IIROC regulated wealth management firm with a 20 year history. Our systems, processes, and credit arrangements provide the

• ptimal platform for tax efficient yieldgeneration.

4 2007

GROWTH

Continued to grow AUA and # of advisors and associates 1996

COMPANY FOUNDATION

Started as a small family office with $150 million AUA and 4employees

Hampton Securities Timeline

2008

GLOBAL FINANCIALCRISIS

While many of our competitors closed their doors, we kept moving forward

5 2016

PUBLICLISTING

Raised additional $3 millionand began trading on the TSX Venture Exchange (CVE:HFC) TODAY

ACQUSITIONS AND CAPITALRAISING

With approx. $900 million in AUM/A and 50+ advisors and associates, we are evaluating potential acquisitions and preparing to expand our capital base for

• ur proprietary investmentstrategy

2014

PRIVATE PLACEMENTFINANCING

Raised $4 million in equity capital to prepare for next phase of growth and role out proprietary investment

• perations

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Management & Directors

PETER M.DEEB

CHAIRMAN &CEO

As founder and Chairman of Hampton Securities, Mr. Deeb has spent the last 20 years growing and operating Hampton Securities into a leading investment dealer. He has built a career developing proprietary investment strategies for individual and institutional clients. He brings with him a wealth of international markets experience and operational skills derived from years spent as an entrepreneur in a number of industries, including energy, shipping, real-estate, and finance.

ROBERTSHERMAN

VICECHAIRMAN

• Mr. Sherman is a Senior Vice-President and investment advisor of Hampton Securities with over 25 years in the investment
• industry. Prior to entering the investment industry, Mr. Sherman was employed in the treasury and finance departments for

a group of Canadian mining companies

JOHN H.SUNUNU

DIRECTOR

Governor Sununu is a graduate of the Massachusetts Institute of Technology and has a Ph.D. in mechanical engineering. He served three terms as Governor of New Hampshire before being commissioned Chief of Staff to President George H.W. Bush, serving in the White House until March 1, 1992.

• DR. STEVEN SMALL

DIRECTOR

• Dr. Small has decades of experience as an entrepreneur, investor and founder/co-founder of several public and private

companies across many sectors. Dr. Small was an initial investor and co-founder of Element Financial Corp and Newcourt Credit Group.

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Management & Directors

RICHARD CARL,CFA

DIRECTOR

• Mr. Carl has a wide breadth of expertise and experience in a number of industries including capital markets, financial

services, oil and gas, mining, asset management and real estate. His previous roles included the President of Credit Suisse First Boston Canada and Senior Vice President and Director of Equity Sales and Trading for BMO Nesbitt Burns.

WILLIAMTHOMSON

DIRECTOR

• Mr. Thomson is the Managing Partner of Mercana Growth Partners, a merchant banking business focused on providing

strategic advice, operational experience and financial acumen to develop and execute business plans and attract capital to enable entrepreneurial businesses to succeed. Mr. Thomson has 35 years’ experience in completing business turnarounds and sourcing private equity for emerging growth companies and management consulting.

JOEPAVAO

PRESIDENT & CHIEF OPERATING OFFICER

• Mr. Pavao has served in executive positions in the financial community for more than 25 years. Most recently he served as

President of Solium Financial (SUM/TSX), and as Chief Strategy Officer at JitneyTrade Inc. Prior to this he has served in senior executive capacities at TD Greenline, CT Securities, ETrade and Sunlife Securities.

JASON MACKEY

CHIEF FINANCIAL OFFICER

• Mr. Mackey began his career at the public accounting firm, KPMG. He was a senior manager in the firm’s Investment Dealer

Practice, performing assurance and advisory services. In 2000, Mr. Mackey left KPMG to aid in the start-up and registration

• f MGI Securities Inc., a full service investment dealer as its Chief Financial Officer. In 2003, he became the Chief Financial

Officer of Jovian Capital Corporation, a publicly traded investment holding company, where he was made responsible for the accounting and reporting process of the Jovian Group of Companies.

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Cash FlowGeneration

Our proprietary investment strategy focuses on our substantial spread between cost of funds and market yields togenerate predictable cash flow * Create earnings stability and fund a return of capital to our shareholders

Economies of Scale

Industry upheaval has created a highly fragmented marketplace with deeply discounted valuations resulting in attractive acquisition and advisor recruitment opportunities * Drive margin expansion and improve profitability

Strategic Overview

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Investment Highlights

Safety

5 Year term Convertible at$0.60/share with additional warrantat $0.60 for 5years Low volatility, income generating investments. Redeemable at investor’s discretion after 3years 9% coupon paidsemi annually toshareholders

Coupon Maturity & Upside

Hampton is offering up to $20 million of convertible debentures to expand its proprietary investment strategy:

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Flow of Funds

Pubco invests $20MM via subordinated note receivable from Dealer $20MM invested in proprietary portfolio to generate tax free yield 9% coupon paid to investors quarterly. Principal repaid at maturity 9% coupon paid semi annually to Pubco from Dealer Investors Hampton Financial (Pubco)

100%

Hampton Securities (IIROC Dealer) $20MM inConvertible Debentures issued byPubco

1 2 3 4 5

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PROPRIETARY INVESTING

Our proprietary investment strategy aims to leverage low-cost borrowing rates and provide stable cash flows in an uncertain economic environment; HFC will invest in dividend-paying securities with low volatility and risk of default

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CASH FLOW Predictable cash flows from preferred shares with proven trackrecords LEVERAGE Conservative use of leverage coupled with low borrowing costs to maximize interest spread PLATFORM Capitalize on HamptonSecurities’ systems, staff, and licensing

Key SuccessFactors

HAMPTON FINANCI AL 40

PREFERRED INCOME STRATEGY

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Our top40 picksfromFinancialServices,Telecomm, CharteredBanks,Energy, Split Share Corporations, andInsurance BPO.N BAM.T BAM.X LCS.A BAM.Z BCE.O BCE.T AIM.A BCE.A BCE.Z BMO.L BNS.N BNS.Q CPX.A BPO.R CPX.C BCE.C ENB.A LFE.B CPX.E FTN.A MFC.H GMP.B FFH.C DF.A BMO.K BCE.Q DFN.A BNS.O RY.Z MFC.O FFN.A BCE.R BCE.F BCE.K BRF.A DGS.A PIC.A SLF .I RY.Q

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Preferred Shares

The Sensible Choice for Income

BETA

Much less volatile than the market ortheir common share counterparts

YIELD

Averaging 8%, these instruments have priority

• ver common share dividends

DIVERSITY

A portfolio of over 40 securities balanced across an array of sectors

STABILITY

The current low interest rate environment means minimal rate-reset risk or risk of default

02 03 04 01

RISK/RETURN

We select preferred shares with the highest Sharpe ratios, a measure of excess return per unit of risk. The moderate yields of these instruments combined with their relatively low betas gives them very attractive risk/return profiles for conservativeinvestors.

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Our PlatformAdvantage

Type II Introducer status with IIROC allows for margin at the call loan rate (currently 1%) on firm inventories Up to 4:1 leverage available on portfolio securities Dividend income generated from the portfolio is tax free to Hampton Securities Limited

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CDN Prime NBCN Call-loanRate

3.45% 1.25%

1 Year CDN Gov’t

2.26% 1.00%

1

. Year LIBOR

Cost of Funds

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Interest Spread

TARGET YIELD

8%

Less 3% Blended Cost of Funds

NET INTERESTSPREAD

5%

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Base Case Projection

Assumptions

No growth in AUM 1% borrowing rate from NBCN Net Proceeds of $10 million Gross Yield of 8% Annual reinvestment of netearnings

(in $ millions) Assets Under Management/Admin 900 900 900 900 900 Starting Portfolio 40 49 60 73 89 ProjectedIncome Fees and CommissionIncome 9.0 9.0 9.0 9.0 9.0 Net InterestSpread 2.80 3.43 4.20 5.12 6.24 Other Income 0.5 0.5 0.5 0.5 0.5 Total Revenue 12.3 13.0 13.7 14.6 15.8 ProjectedCosts Variable Compensation 4.5 4.5 4.5 4.5 4.5 Overhead Expenses: Variable 0.7 0.7 0.7 0.7 0.7 Fixed 3.2 3.2 3.2 3.2 3.2 Total Expenses 8.4 8.4 8.4 8.4 8.4 EBITDA 3.9 4.5 5.3 6.2 7.3 Tax Expense 0.00 0.00 0.00 0.00 0.00 Net Income 3.9 4.5 5.3 6.2 7.3 *Acquisition AmortizationCost 0.00 0.00 0.00 0.00 0.00 9% Coupon 0.9 0.9 0.9 0.9 0.9 Net Free Cash for Reinvestment 3.0 3.6 4.4 5.3 6.4

*Model assumes no growth in AUM

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Bear Case Projection

Assumptions

No growth in AUM 1.25% borrowing rate from NBCN Net Proceeds of $5 million Gross Yield of 7% Annual reinvestment of netearnings

(in $ millions) Assets Under Management/Admin 900 900 900 900 900 Starting Portfolio 20 25 32 39 48 ProjectedIncome Fees and CommissionIncome 9.0 9.0 9.0 9.0 9.0 Net InterestSpread 1.15 1.46 1.83 2.26 2.76 Other Income 0.5 0.5 0.5 0.5 0.5 Total Revenue 10.7 11.0 11.4 11.8 12.3 ProjectedCosts Variable Compensation 4.5 4.5 4.5 4.5 4.5 Overhead Expenses: Variable 0.7 0.7 0.7 0.7 0.7 Fixed 3.2 3.2 3.2 3.2 3.2 Total Expenses 8.4 8.4 8.4 8.4 8.4 EBITDA 2.3 2.6 2.9 3.3 3.9 Tax Expense 0.00 0.00 0.00 0.00 0.00 Net Income 2.3 2.6 2.9 3.3 3.9 *Acquisition AmortizationCost 0.00 0.00 0.00 0.00 0.00 9% Coupon 0.5 0.5 0.5 0.5 0.5 Net Free Cash for Reinvestment 1.8 2.1 2.5 2.9 3.4

*Model assumes no growth in AUM

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Reduced Bear Case Projection

Assumptions

No growth in AUM 1.5% borrowing rate from NBCN Net Proceeds of $2 million Gross Yield of 6% Annual reinvestment of netearnings

(in $ millions) Assets Under Management/Admin 900 900 900 900 900 Starting Portfolio 8 12 16 21 27 ProjectedIncome Fees and CommissionIncome 9.0 9.0 9.0 9.0 9.0 Net InterestSpread 0.36 0.53 0.73 0.96 1.21 Other Income 0.5 0.5 0.5 0.5 0.5 Total Revenue 9.9 10.1 10.3 10.5 10.7 ProjectedCosts Variable Compensation 4.5 4.5 4.5 4.5 4.5 Overhead Expenses: Variable 0.7 0.7 0.7 0.7 0.7 Fixed 3.2 3.2 3.2 3.2 3.2 Total Expenses 8.4 8.4 8.4 8.4 8.4 EBITDA 1.5 1.6 1.8 2.0 2.3 Tax Expense 0.00 0.00 0.00 0.00 0.00 Net Income 1.5 1.6 1.8 2.0 2.3 *Acquisition AmortizationCost 0.00 0.00 0.00 0.00 0.00 9% Coupon 0.2 0.2 0.2 0.2 0.2 Net Free Cash for Reinvestment 1.3 1.5 1.7 1.9 2.1

*Model assumes no growth in AUM

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Address

Hampton Financial Corporation 141 Adelaide St. West.Suite 1800 Toronto, ON. M5H 3L5

Phone & Email

Direct Line: (416) 862-8651 pdeeb@hamptonsecurities.com

SocialMedia

LinkedIn/Hampton Securities

ContactUs

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THANK YOU

We appreciate the opportunity to be your partner! Please don’t hesitate to contact us with any comments, concerns,

• r questions. We look forward to taking the first step in
• ur journey together.