Variable pricing for equity transactions has advantages over fixed pricing in certain situations. Variable pricing allows the issuer to determine when they need capital and provides immediate commitment, which is ideal when funds will be expended quickly over 6-18 months on milestones. Fixed pricing is better when there is no immediate need for funds and time is needed for investor due diligence. Announcing a large funding commitment can increase a company's stock price by an average of 69% as it resolves future funding concerns. Fixed pricing can trap issuers if the stock price drops significantly before closing.

1. Variable vs. Fixed Pricing for Equity Transactions Advantages and Disadvantages October 3, 2008

2. $2.7B AUM in primary funds 200+ transactions funded in 29 countries No effective upper limit Harvard Honors Thesis Topic Efficient Pricing in a Specialist Exchange System 30 Years Ago Sterling Atlantic & Affiliates

3. Invested funds result in increased EBITDA and stock price Funds expended over development period 6-18 months Milestones can be accomplished and announced, stock price likely to appreciate Issuer determines when needs capital Immediate commitment is important Ideal Variable Price Situation

4. All capital expended at closing Use is to restructure fixed price debt Future prospects not favorable No immediate need for commitment or capital, time for investor due diligence No Fixed Rate Trap Ideal Fixed Price Situation

5. Fundamental Warren Buffett Cash Flow Focused Slow Decisions- due diligence oriented Trader George Soros Trend, Liquidity, and Arbitrage Focus Rapid Decisions Hybrid Fundamental-Long Bias Structure Focus Rapid Decisions Investor Types

6. Assumptions: Stock sold once quarterly Variable Price Discount: 10% Fixed Price Discount: 15% Average Variable Price Per Share: 15.75 Fixed Price Per Share: 8.50 Difference: 7.25 % of Fixed Price 85.3% Stock Price Up Scenario

7. Assumptions: Stock sold once quarterly Variable Price Discount: 10% Fixed Price Discount: 15% Average Variable Price Per Share: 9.00 Fixed Price Per Share: 8.50 Difference: 0.50 % of Fixed Price 5.9% Stock Price Flat Scenario

8. Assumptions: Stock sold once quarterly Variable Price Discount: 10% Fixed Price Discount: 15% Average Variable Price Per Share: 6.25 Fixed Price Per Share: 8.50 Difference: (2.25) % of Fixed Price (26.5)% Stock Price Down Scenario

9. Assumptions: Stock sold once quarterly, not at low points Variable Price Discount: 10% Fixed Price Discount: 15% Average Variable Price Per Share: 12.50 Fixed Price Per Share: 8.50 Difference: 4.00 % of Fixed Price 47.0% Volatility Scenario

10. Fixed Price transaction Jan 08 Goldman Sachs Investor Jeffries – Investment Banker 80% price drop when issuer told they were getting a fixed price Blue Chip participants offer no protection Company committed but (i) price variable prior to closing or (ii) substantial over-allotment Fixed Price Trap

11. Investors Chronicle found average share price increase of 69% after obtaining financing commitment Share Price Effect of Large Fund Commitment

12. “ Unlike open-ended convertible bonds, where the interests of equity shareholders and bondholders are not aligned (the lower the share price, the greater the dilution for shareholders on conversion), the GEM model clearly works in the favour of shareholders. First, news that an equity credit line agreement is in place can act as a kicker to the share price as the stock market acknowledges that future funding concerns have been resolved . To a certain extent this happened with electronic software designer Easyscreen, whose share price more than doubled in the three months after the agreement was signed. Second, there is an incentive for the firm to exercise the subscription option after a period of heavy trading in the shares (thus maximizing the number of shares that can be subscribed for under the agreement), and when the share price is as high as possible , to increase the amount of funds released.” Investors Chronicle, page 17, May 2002 Share Price Effect of Large Fund Commitment

13. Appreciate your time and interest!! Conclusion