VOLERO VOLERO BRANDS BRANDS F e b r u a r y 2 0 1 9 V 2 - - PowerPoint PPT Presentation

VOLERO BRANDS

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VOLERO BRANDS

F e b r u a r y 2 0 1 9

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DISCLAIMER.

IMPORTANT – YOU MUST READ THE FOLLOWING BEFORE CONTINUING: The information contained in this document has been prepared by Volero Brands Inc. (the “Company”) and contains confidential information pertaining to the business, operations and assets of the Company. The information contained in this document (a) is provided as at the date hereof and is subject to change without notice, (b) does not purport to contain all the information that may be necessary or desirable to fully and accurately evaluate an investment in the Company and (c) is not to be considered as a recommendation by the Company that any person make an investment in the Company. An investment in the securities described herein is speculative and involves a number of risks that should be considered by a prospective investor. This document is confidential and is being provided to you solely for your information and may not be reproduced, in whole or in part, in any form or forwarded or further distributed to any other person. Any forwarding, distribution or reproduction of this document in whole or in part is unauthorized. This presentation is not, and under no circumstances is to be construed as, a prospectus, or advertisement or a public offering of securities of the Company. Prospective investors should not assume that this document is complete and should conduct their own analysis and investigation of the Company and consult with their own financial, legal, tax and other business advisors before investing in the Company. By accepting and reviewing this document, you acknowledge and agree (i) to maintain the confidentiality of this document and the information contained herein, (ii) to protect such information in the same manner you protect your own confidential information, which shall be at least a reasonable standard of care and (iii) to not utilize any of the information contained herein except to assist with your evaluation of a potential investment in the

• Company. Nothing contained herein is, or should be relied on as, a promise or representation as to the future performance of the Company.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION AND FORWARD-LOOKING STATEMENTS: Certain statements in this presentation constitute forward-looking statements and forward looking information within the meaning of applicable Canadian securities legislation (collectively herein referred to as “forward-looking statements”), which can often be identified by words such as “will”, “may”, “estimate”, “expect”, “plan”, “project”, “intend”, “anticipate” and other words indicating that the statements are forward-looking. Such forward-looking statements are expectations only and are subject to known and unknown risks, uncertainties and other important factors, including, but not limited to, risk factors included in this presentation, that could cause the actual results, performance or achievements of the Company or industry results to differ materially from any future results, performance or achievements implied by such forward-looking statements. Such risks and uncertainties include, among others: (i) dependence on obtaining regulatory approvals; (ii) dependence on key personnel of the Company; (iii) regulatory or political change; (iv) changes to the perception of the medical-use and adult-use cannabis industry; (v) the effect of capital market conditions and other factors on capital availability; (vi) competition, including from more established or better financed competitors; (vii) the need to secure and maintain corporate alliances and partnerships, including with customers and suppliers; (viii) potential damage to or destruction of property, loss of life and environmental damage; and (ix) general economic, market and business conditions. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. In addition, even if the outcome and financial effects of the plans and events described herein are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. Although the Company has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. Forward-looking information contained in this presentation is based on the Company’s current estimates, expectations and projections, which are based on the information available as of the date of this document. Prospective investors should not place undue reliance on any forward-looking statement contained in this presentation. Forward-looking statements contained in this document are made of the date of this presentation and, except as required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or

• circumstances. Historical statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. In this regard, certain

financial information contained herein has been extracted from, or based upon, information available in the public domain and/or provided by the Company. In particular, historical results should not be taken as a representation that such trends will be replicated in the future. No statement in this document is intended to be nor may be construed as a profit forecast. THIRD PARTY INFORMATION: This presentation includes market and industry data which was obtained from various publicly available sources and other sources believed by the Company to be true. Although the Company believes it to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this presentation, or analyzed or verified the underlying reports relied upon or referred to by such sources, or ascertained the underlying assumptions relied upon by such sources. The Company does not make any representation as to the accuracy of such information.

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START THE ADVENTURE

Vo l e r o B r a n d s i s e n g a g e d i n t h e d e v e l o p m e n t

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a f a m i l y

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c a n n a b i s b r a n d s a n d g a m e - c h a n g i n g d e l i v e r y s y s t e m s i n C a n a d a a n d a b r o a d .

the LEADERSHIP

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V MANAGEMENT TEAM

Sean Trustham, CPA, CMA, PMP | CEO Al Watt | President & COO Adam T emple | Chief Communications Officer Colin Derby, CPA | Financial Controller

Sean has 15+ years of accounting and project management experience, and received his B. Comm (Finance and Real Estate) from UBC in 2005. Al is a business leader with 35+ years of professional experience, specializing in the development of several large Canadian entertainment & gaming facilities. Adam is an entrepreneur and investor with four successful cannabis ventures launched since 2014. His expertise lies in developing proprietary extraction processes and equipment. Previously employed at a BC-based, mid-sized accounting firm, Colin graduated from Douglas College with a BBA (Accounting) in 2013, and became a Chartered Professional Accountant in 2015. Volero’s leadership team consists of industry first-movers and enterprising visionaries that have successfully developed leading cannabis brands and innovative products. Volero’s diversified experience and proven track record ensures consumers receive great quality dependable products.

Jill Provencal | Product Development

Jill is the founder of Alberta botanicals brand Big Bliss

• Botanicals. She will be responsible for overseeing operations

at the St. Albert facility.

Darren Darcy | Global Marketing & Innovation

Darren has 27+ years marketing experience spanning a wide range of industries including CPG, agriculture, tourism, tech, and

• telecom. Previously, Darren has worked with companies including

Volkswagen, Rogers, and Windset Farms, among others.

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the STRATEGY

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V STRATEGY

Build a leading branded cannabis product manufacturing

• peration. Volero is building a state-of-the-art extraction and production facility

that will produce vaporizers, concentrates and topical solutions. Volero expects the facility to be completed in Q3/19 and it should be capable of generating revenue of more than $100 mm/year. Volero has plans for a second site in Langley, BC that is expected to be completed in 2020. The company has applied for both medical and recreational Health Canada licenses for the operation of these facilities. Dominate the branded product space. Volero is focused on developing high quality and high margin products including vapes, concentrates and topical

• solutions. High quality branded products command a 15%+ price premium to their

unbranded counterparts. Exploring edible products & infusions. The company is actively exploring the development of edibles and other infused products “powered by Flyte”. The first such product is JetPack, a discrete drink additive infused with cannabinoid extracts, available in both CBD and THC varieties. International Expansion. Volero is looking to expand its brand presence beyond Canada. The company recently signed a licensing agreement and brand partnership with Flower One in Nevada and it will continue to pursue additional licensing agreements in U.S. states where adult-use cannabis is legal.

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V STRATEGY

(1) Arcview Research (2) Arcview Research

As the owner of one of the most well known vaporizer pen brands in Canada, Volero is strongly positioned to capture one of the fastest growing segments in the cannabis market. The cannabis market is evolving, with massive growth in branded products. Cannabis concentrate sales in the U.S. are estimated to reach $8.4 billion in 2022, with vaporizer cartridges projected to represent 80% of these sales.(1) the top five edibles & concentrates brands in Colorado, Oregon, and Arizona share more than

40%

• f the market(2)

80%

Market share in US by 2022

Vaporizer cartridges are forecast to reach 80% share

• f the US $6.5

billion concentrate market by 2022 (2)

In the U.S. market:

Volero aims to take advantage

• f an existing capital light

business model. Volero’s high- margin cannabis products are extracted from wholesale flower produced by other LPs, eliminating the need for expensive cultivation facilities & harvesting infrastructure.

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V EXECUTION PLANS

JANUARY 2019 Q1 2019 Q2 2019 Q4 2019

Volero enters license agreement with Flower One

• St. Albert –

construction complete First sales in Nevada. First sales in Canada.

Q1 2020

Break ground on Langley facility.

Q4 2018

Sale of IP to Volero – Advised by BLG Engage CCI for licensing of Langley facility

Q1 2019

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the BRAND

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V BRAND PORTFOLIO

Flyte is a BC-based brand that is almost two years old, best known for its vaporizer pens.

The cannabis market is evolving, with massive growth in branded products. These brands are creating new categories, sub- categories, and methods of consumption. Volero’s existing branded product line is well positioned for growth in the vaporizer pen market.

LEAD WITH PRODUCT FOCUS ON EXECUTION

The Flyte pen1 is a state-of-the-art distillate vaporizer. Pens are sold in kits consisting of one cartridge, one battery, and one charger. JetPack1 is a drink additive infused with cannabinoid extracts. Available in THC and CBD varieties. Big Bliss Botanicals is a maker of non-ingestible health & beauty products that Volero has entered into an agreement to purchase. Hipbees is a range of industry-leading non-infused beeswax-based self-care products.

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V THE FLYTE VAPORIZOR PEN

The cartridge is made from stainless steel, glass and a ceramic coil. It holds up to 0.8 ml

• f liquid which provides up to

400 draws. The stainless steel lithium battery component allows for 50 to 100 draws and can be fully recharged in ~ 2 hours. The Flyte Pen is a discrete, state-

• f-the-art distillate vaporizer which

consists of two components, the cartridge and battery.

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V THE EVOLUTION OF FLYTE

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the OPPORTUNITY

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V MARKET OPPORTUNITY

Canada: The federal government is targeting October 17th, 2019 for the legalization of adult-use cannabis edibles and concentrates. With its successful range of existing brands, Volero is well positioned for growth in Canada’s anticipated vaporizer pen market. United States: Volero has an opportunity to be an early participant in the growing U.S. market – a market projected to reach more than $23 billion in consumer spending by 2020. Continued roll out of state programs will bring nationwide spending to $23.4 billion in 2020, a 22% CAGR over that five year period.(1)

(1) Arcview Market Research (2) Grand View Research, 2025 global legal marijuana market size estimate (3) Mackie Research Capital

TOTAL GLOBAL CANNABIS MARKET IS ~US$145 BILLION(2)

Canadian Medical Canadian Recreational

~$2.6 Billion(3) ~$7.9 Billion(3)

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V US OPPORTUNITY

CANNABIS CONCENTRATE

sales in the U.S. are estimated to reach $8.4 billion in 2022, almost equaling $8.5 billion in forecasted flower sales(3)

Total Vape Sales: $6.5 Billion

Vape cartridge products are forecast to reach an 80% share of concentrate sales in 2022

Nevada: The value of the Nevada cannabis market is forecast to be approximately US$825 million in 2021(3). Volero has entered into a license agreement with Flower One which will be the largest grower in Nevada (6x larger than its nearest competitor).

(1) Arcview Market Research (2) Business Insider (3) MRCC

58%

• f concentrate

spending came from prefilled vaporizers(1)

27%

• f all cannabis

sales were concentrates(1) In 2018: In 2018:

(2)

adult- use adult-use

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• ST. ALBERT, AB
• ST. ALBERT, AB

⇀ 12,000 ft² facility with 10,500 ft² of production space ⇀ CapEx ~$2.0MM ⇀ Initial production capacity - > 2 million vape pens and cartridges ⇀ Target completion date - Q3 2019 ⇀ 17,500 ft² facility with 12,500 ft²

• f production space

⇀ CapEx of ~$2.5MM

⇀ Initial production capacity - > 2 million vape pens and cartridges

⇀ Target completion date - Q2 2020

FACILITIES

LANGLEY, BC LANGLEY, BC

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the OFFERING

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V FINANCIAL FORECAST & CAP T ABLE

(1) Excluding the Agent’s Option

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V TERM SHEET

Issuer: Volero Brands Inc. (“Volero” or the “Company”). Offering: Best-efforts, private placement offering (the “Offering”) of up to $5,000,000 in common shares of the Company (the “Common Shares”). Pricing: $0.50 per Common Share. Agent’s Option: The Company will grant the Agent an option (the “Agent’s Option”) exercisable in whole or in part at any time up to and including the Closing Date (as defined below) to increase the size of the Offering by up to 15% of the number of Common Shares offered pursuant to the Offering by giving written notice of the exercise of the Agent’s Option, or a part thereof, to the Company at any time up to 48 hours prior to Closing. Use of Proceeds: Proceeds of the Offering will be used for construction of the Company’s facility in Alberta, working capital and general corporate purposes. Offering Jurisdictions: The Offering will take place by way of a private placement to “accredited investors” (as defined in National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”)) in the provinces of Canada, and otherwise in those jurisdictions where the Offering can lawfully be made including the U.S. under applicable private placement exemptions. Canadian subscribers must be “accredited investors” or otherwise qualified under NI 45-106. Compensation: The Agent will receive a commission (the “Commission”) equal to: (i) 6.0% of the proceeds received by the Company from the sale of the Common Shares to subscribers, other than President’s List Subscribers (as defined below), in cash; (ii) 3.0% of the proceeds received by the Company from the sale of the Common Shares to subscribers on the “president’s list” who purchase a minimum of 50,000 Common Shares (“President’s List Subscribers”), in cash; (iii) such number of Common Share purchase warrants equal to 6.0% of the number of Common Shares sold to subscribers, other than President’s List Subscribers, each exercisable for one Common Share at the Purchase Price for a term of 24 months after the Closing Date (“Compensation Warrants”); and (iv) such number of Compensation Warrants equal to 3.0% of the number of Common Shares sold to President’s List Subscribers. Up to 5,000,000 Common Shares may be sold to President’s List Subscribers pursuant to the Offering. Hold Period: The Company is not a reporting issuer in any province or territory in Canada and its securities are not listed on any stock exchange in Canada and there is currently no public market for its securities to be resold. Accordingly, the Common Shares sold under the Offering (and the underlying Common Shares, Warrants and Warrant Shares) will be subject to an indefinite statutory hold period expiring on the date which is four months and a day after the later of (i) the Closing Date; and (ii) the date that the Company becomes a reporting issuer in any province or territory of Canada. Eligibility: The offered securities will not be qualified investments under the Income Tax Act (Canada) for registered accounts. Lead Agent: Mackie Research Capital Corporation (the “Agent”). Closing Date: February 28, 2019, or such other date or dates as may be agreed to by the Company and the Agent. The Subscriber acknowledges that multiple closings may occur with multiple Subscribers.

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V RIGHTS OF ACTION

This presentation which may constitute an offering memorandum under applicable securities laws. The purchaser may have, depending on the jurisdiction in which the trade was made, remedies for rescission or damages if this presentation (including any amendment thereto) contains a misrepresentation. A purchaser of the securities of the Company has a statutory right of action in the following offering jurisdictions: Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Saskatchewan, Yukon, Northwest Territories and Nunavut. Such rights must be exercised by the subscriber within the time limits prescribed by the applicable securities legislation. Subscribers should refer to the applicable provisions of the securities legislation of their respective provinces and territories for the complete text of these rights or consult with a legal advisor. The rights of action described below are in addition to and without derogation from any other right or remedy available at law to the purchaser and are intended to correspond to the rights against an issuer of securities provided in the relevant securities legislation and are subject to the defences contained therein. As required by applicable securities laws, a purchaser’s statutory rights of action in Ontario, Saskatchewan, Nova Scotia and New Brunswick are summarized below. The following summaries are subject to the express provisions of the securities laws of such provinces of Canada and the regulations, rules, policies and blanket orders thereunder. ONTARIO Ontario Securities Commission Rule 45-501 provides that when an offering memorandum is delivered to an investor to whom securities are distributed in reliance upon certain of the prospectus exemptions in the Securities Act (Ontario) or National Instrument 45-106 – Prospectus Exemptions (“NI 45-106”), respectively, the right of action referred to in Section 130.1 of the Securities Act (Ontario) (“Section 130.1”) is applicable unless the prospective purchaser is:

• a Canadian financial institution, meaning either:
• an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act;
• a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is

authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction in Canada;

• a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada);
• the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or
• a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by the directors of the

subsidiary. Section 130.1 provides purchasers who purchase securities offered by an offering memorandum with a statutory right of action against the issuer of securities and any selling securityholder for rescission or damages in the event that the offering memorandum or any amendment to it contains a “misrepresentation”, without regard to whether the purchaser relied on the “misrepresentation”. “Misrepresentation” means an untrue statement

• f a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading in light of the circumstances in which it was made.

In the event that this presentation, together with any amendment, is delivered to a prospective purchaser of securities in connection with a trade made in reliance on certain of the prospectus exemptions in the Securities Act (Ontario) or NI 45-106, and this presentation contains a misrepresentation which was a misrepresentation at the time of purchase of the securities, the purchaser will have a statutory right of action against the Company for damages or, while still the owner of the securities, for rescission, in which case, if the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages, provided that:

• no action shall be commenced more than, in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or in the case of any other action, the earlier of

(i) 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action;

• the defendant will not be liable if it proves that the purchaser purchased the securities with knowledge of the misrepresentation;
• the defendant will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon;
• in no case will the amount recoverable exceed the price at which the securities were offered to the purchaser; and
• the statutory right of action for rescission or damages is in addition to and does not derogate from any other rights or remedies the purchaser may have at law.

This summary is subject to the express provisions of the Securities Act (Ontario) and the regulations and rules made under it, and you should refer to the complete text of those provisions.

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V RIGHTS OF ACTION

SASKATCHEWAN Section 138 of The Securities Act, 1988 (Saskatchewan), as amended (the “Saskatchewan Act”) provides that where an offering memorandum or any amendment to it is sent or delivered to a purchaser and it contains a misrepresentation (as defined in the Saskatchewan Act), a purchaser who purchases a security covered by the offering memorandum or any amendment to it is deemed to have relied upon that misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for rescission against the issuer or a selling security holder on whose behalf the distribution is made or has a right of action for damages against:

• the issuer or a selling security holder on whose behalf the distribution is made;
• every promoter and director of the issuer or the selling security holder, as the case may be, at the time the offering memorandum or any amendment to it was sent or delivered;
• every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them;
• every person who or company that, in addition to the persons or companies mentioned in (a) to (c) above, signed the offering memorandum or the amendment to the offering memorandum; and
• every person who or company that sells securities on behalf of the issuer or selling security holder under the offering memorandum or amendment to the offering memorandum.

Such rights of rescission and damages are subject to certain limitations including the following:

• if the purchaser elects to exercise its right of rescission against the issuer or selling security holder, it shall have no right of action for damages against that party;
• in an action for damages, a defendant will not be liable for all or any portion of the damages that he, she or it proves do not represent the depreciation in value of the securities resulting from the

misrepresentation relied on;

• no person or company, other than the issuer or a selling security holder, will be liable for any part of the offering memorandum or any amendment to it not purporting to be made on the authority of an expert

and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation or believed that there had been a misrepresentation;

• in no case shall the amount recoverable exceed the price at which the securities were offered; and
• no person or company is liable in an action for rescission or damages if that person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation.

In addition, no person or company, other than the issuer or selling security holder, will be liable if the person or company proves that:

• the offering memorandum or any amendment to it was sent or delivered without the person’s or company’s knowledge or consent and that, on becoming aware of it being sent or delivered, that person or

company gave reasonable general notice that it was so sent or delivered; or

• with respect to any part of the offering memorandum or any amendment to it purporting to be made on the authority of an expert, or purporting to be a copy of, or an extract from, a report, an opinion or a

statement of an expert, that person or company had no reasonable grounds to believe and did not believe that there had been a misrepresentation, the part of the offering memorandum or any amendment to it did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert. Not all defences upon which we or others may rely are described herein. Please refer to the full text of the Saskatchewan Act for a complete listing. Similar rights of action for damages and rescission are provided in section 138.1 of the Saskatchewan Act in respect of a misrepresentation in advertising and sales literature disseminated in connection with an offering of securities. Section 138.2 of the Saskatchewan Act also provides that where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the security purchased and the verbal statement is made either before or contemporaneously with the purchase of the security, the purchaser is deemed to have relied on the misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for damages against the individual who made the verbal statement. Section 141(1) of the Saskatchewan Act provides a purchaser with the right to void the purchase agreement and to recover all money and other consideration paid by the purchaser for the securities if the securities are sold in contravention of the Saskatchewan Act, the regulations to the Saskatchewan Act or a decision of the Financial and Consumer Affairs Authority of Saskatchewan. Section 141(2) of the Saskatchewan Act also provides a right of action for rescission or damages to a purchaser of securities to whom an offering memorandum or any amendment to it was not sent or delivered prior to or at the same time as the purchaser enters into an agreement to purchase the securities, as required by Section 80.1 of the Saskatchewan Act. The rights of action for damages or rescission under the Saskatchewan Act are in addition to and do not derogate from any other right which a purchaser may have at law.

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V RIGHTS OF ACTION

Section 147 of the Saskatchewan Act provides that no action shall be commenced to enforce any of the foregoing rights more than:

• in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or
• in the case of any other action, other than an action for rescission, the earlier of:
• ne year after the plaintiff first had knowledge of the facts giving rise to the cause of action; or
• six years after the date of the transaction that gave rise to the cause of action.

The Saskatchewan Act also provides a purchaser who has received an amended offering memorandum delivered in accordance with subsection 80.1(3) of the Saskatchewan Act has a right to withdraw from the agreement to purchase the securities by delivering a notice to the person who or company that is selling the securities, indicating the purchaser’s intention not to be bound by the purchase agreement, provided such notice is delivered by the purchaser within two business days of receiving the amended offering memorandum. NEW BRUNSWICK Section 150(1) of Securities Act (New Brunswick) provides that where any information relating to the offering provided to the purchaser of the securities contains a misrepresentation, a purchaser who purchases the securities shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase, and

• the purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made; or
• where the purchaser purchased the securities from a person referred to in paragraph (a), the purchaser may elect to exercise a right of rescission against the person, in which case the purchaser shall have

no right of action for damages against the person. This right of action is not available if the purchaser purchased the securities with knowledge of the misrepresentation, and a defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on. An issuer shall not be liable where it is not receiving any proceeds from the distribution of the securities being distributed and the misrepresentation was not based on information provided by the issuer unless the misrepresentation:

• was based on information that was previously publicly disclosed by the issuer;
• was a misrepresentation at the time of its previous public disclosure; and
• was not subsequently publicly corrected or superseded by the issuer before the completion of the distribution of the securities being distributed.

In no case shall the amount recoverable under these rights of action exceed the price at which the securities were offered. These rights are in addition to and without derogation from any other right the purchaser may have at law.

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V RIGHTS OF ACTION

NOVA SCOTIA Where an offering memorandum or any amendment thereto or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) contains a misrepresentation, a purchaser to whom the offering memorandum has been delivered and who purchases a security referred to therein shall be deemed to have relied upon such misrepresentation if it was a misrepresentation at the time of purchase and the purchaser has the right of action for damages against the issuer or other seller and, subject to certain additional defences, against directors of the seller and persons who have signed the offering memorandum, but may elect to exercise a right of rescission against the seller, in which case he shall have no right of action for damages against the seller, directors of the seller or persons who have signed the offering memorandum, provided that, among

• ther limitations:
• in an action for rescission or damages, the defendant will not be liable if it proves that the purchaser purchased the security with knowledge of the misrepresentation;
• in an action for damages, the defendant is not liable for all or any portion of the damages that it proves do not represent the depreciation in value of the security as a result of the misrepresentation relied

upon; and

• in no case shall the amount recoverable under the right of action described herein exceed the price at which the security was offered.

In addition no person or company other than the issuer is liable if the person or company proves that:

• the offering memorandum or the amendment to the offering memorandum was sent or delivered to the purchaser without the person’s or company’s knowledge or consent and that, on becoming aware of its

delivery, the person or company gave reasonable general notice that it was delivered without the person’s or company’s knowledge or consent;

• after delivery of the offering memorandum or the amendment to the offering memorandum and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the
• ffering memorandum, or amendment to the offering memorandum, the person or company withdrew the person’s or company’s consent to the offering memorandum, or amendment to the offering

memorandum, and gave reasonable general notice of the withdrawal and the reason for it; or

• with respect to any part of the offering memorandum or amendment to the offering memorandum purporting: (i) to be made on the authority of an expert; or (ii) to be a copy of, or an extract from, a report, an
• pinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that (A) there had been a misrepresentation or (B) the relevant part of the offering

memorandum or amendment to the offering memorandum (1) did not fairly represent the report, opinion or statement of the expert or (2) was not a fair copy of, or an extract from, the report, opinion or statement of the expert. Furthermore, no person or company other than the issuer is liable with respect to any part of the offering memorandum or amendment to the offering memorandum not purporting: (a) to be made on the authority of an expert; or (b) to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation or believed that there had been a misrepresentation. If a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into, the offering memorandum or amendment to the offering memorandum, the misrepresentation is deemed to be contained in the offering memorandum or amendment to the offering memorandum. Pursuant to section 146 of the Securities Act (Nova Scotia), no action shall be commenced to enforce the right of action conferred by section 138 thereof unless an action is commenced to enforce that right not later than 120 days after the date on which payment was made for the security or after the date on which the initial payment for the security was made where payments subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently with, the initial payment. The right of action for rescission or damages described herein is conferred by section 138 of the Securities Act (Nova Scotia) and is in addition to and without derogation from any right the purchaser may have at law. For the purposes of the Securities Act (Nova Scotia) “misrepresentation” means:

• an untrue statement of material fact; or
• an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

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THANK YOU

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Pat McCarthy 416-860-7635 pmccarthy@mackieresearch.com Sean Riley 416-860-7751 sriley@mackieresearch.com