You are on page 1of 20

FOUNTAIN ASSET

CORPORATE OVERVIEW

Fall 2016

DISCLAIMER

These materials include certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Other than statement of historical fact,
all statements in this material, including, without limitation, statements regarding fair
values of marketable securities, investments, bridge loans, convertible debentures,
estimated asset retirement obligations, and future plans and objectives of the Company,
are forwardlooking statements that involve various known and unknown risks,
uncertainties and other factors. There can be no assurance that such statements will
prove accurate. Actual results and future events could differ materially from those
anticipated in such statements. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date of these materials.
Important factors that could cause actual results to differ materially from the Companys
expectations include, without limitation, the level of bridge loans completed, the nature
and credit quality of the collateral security, the sufficiency of cost estimates for
remaining reclamation obligations as well as those factors discussed in the Companys
documents filed from time to time with the TSX Venture Exchange, Canadian securities
regulators and other regulatory authorities. All subsequent written and oral forwardlooking statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by this notice.
2

FOUNTAIN ASSET OVERVIEW


WHAT MAKES FOUNTAIN A COMPELLING
INVESTMENT?

1) We provide the average investor the opportunity to access prepublic deals that are typically only available to institutional
investors.
2) We give private companies the growth capital and advisory services
necessary to prepare them to access publicly raised capital.
3) Management and Board Members of Fountain are aligned with our
Shareholders to continue to create Shareholder value - we have our
own skin in the game.

FOUNTAIN INVESTMENT HIGHLIGHTS


Stable
Financial
Position
Rising Portfolio
Value

The Company uses limited leverage and has enough fixed income
cashflow to cover all operating expenses.
As a result, Fountain is positioned well to benefit in down markets.
The portfolio investment strategy is achieving positive results in
relation to typical index benchmarks.
The deal pipeline continues to demonstrate similar investment
opportunities.

Unique
Origination
Sources

Management, the Board and key investors provides the Company


with unique, non-competitive deal flow channels.
Disciplined underwriting standards causes Fountain to be very
selective of the transactions that are funded.

Skin in the
Game

Management and the Board are aligned with Fountain


shareholders to continue to create shareholder value.
The Company has acquired capital loss carry-forwards of $26
million to shield future profits for the benefit of shareholders.

Hands On
Approach

Fountain takes a hands on approach in all investments made,


leveraging management's expertise to optimize the operations
and capital structure of all out investee companies.

Extensive
Experience and
Relationships

Fountain has over 100+ years of combined experience in


investments, capital markets, finance and operations.
Long term relationships with North Americas investment,
brokerage, legal and accounting sectors that benefits the
Company.

FOUNTAINS RECENT ACTIVITY AS IT


CONTINUES TO BUILD
The company has been consistently funding transactions to build a
portfolio of opportunistic, value creative private and publicly traded
positions.

public
high margin product
line
growing revenues
pre-public,
cashflowing

2016

2015

strong balance
sheet
public, cash
flowing
Syndicated follow
up $11.5mm
investment in2014
2015

public, profitable

disrupting sugar
Fountain management
hands on in restructuring
accretive acquisition
strategy

public, profitable

INVESTMENT THESIS

FOUNTAIN INVESTS IN SMALL TO MIDDLE MARKET COMPANIES


WITH PROVEN PRODUCTS, MARKET PENETRATION AND
STRONG MANAGEMENT TEAMS THAT ARE TOO SMALL FOR
PRIVATE EQUITY FUNDS THAT GENERALLY DO NOT INVEST
LESS THAN $15 TO $25 MILLION PER DEAL.
Our target investment profile includes:

Later stage companies with a six month to two year horizon from being
public
Committed, experienced, and reputable management teams
Companies with growing revenues with significant upside growth to be
facilitated by our capital and advisory support

PROFITING FROM PRIVATE TO PUBLIC


VALUE STEP-UP

Market Capitalization $ mm

Fountains management team is uniquely positioned to support small to middle


market companies in pursuing their IPO plans. In particular, the management team
comprises people who have directly represented and/or work closely with local and
foreign investment banks.
Private to Public Value
Arbitrage

75

50

Public Listing Preparation


25

Pre Listing Investment

6 18 Months Pre IPO

IPO

6 12 Months Post IPO

FOUNTAIN VALUE PROPOSITION

Prior to closing any investment, Fountain works closely with the


investment bankers in order to obtain direct feedback as to the
viability and best approach for an IPO.

Consol Asset Group

MARKET OPPORTUNITY
In recent years, there has been a void in the North America marketplace for small
companies to procure adequate and timely financing to fund the growth of their
businesses.
Further, much of the Canadian based small cap activity has been focused
throughout the last 10 years on resource based investments that has created an
underweight position in non-resource based companies in the Canadian capital
markets environment.
Additionally, pension funds and similar institutional investors are looking at
investing a minimum of $15 million which does not fit the criteria for most small
cap companies. Further, the institutional investors are looking for target
companies that have minimum market capitalization $100+ million putting it out
of the reach for many companies seeking financing .

Fountain is uniquely positioned to leverage the current


market void that does not address the capital
requirements of small and mid cap companies in North
America
8

THE COMPETITIVE LANDSCAPE


Deal Size
$25mm

Micro Cap

Middle Cap

Deal Size
$1mm

Fountain has the opportunity to develop its


niche brand in the small and middle market
9

KEY CHARACTERISTICS OF A TRANSACTION

10

DISCIPLINED EXECUTION

Deal Origination and Selection

Active pipeline of investment opportunities generated by proactive sourcing and an established


network
Selection process driven by extensive criteria in areas of quality of earnings, asset validation,
business assessment, market acceptance , management pedigree and ability to execute

Risk Management - Preservation of Capital Over Profits and Fees

Ability to analyze before entering transactions the downside risk and viability to exit, refinance or
asset disposition
Disciplined due diligence and active monitoring designed for small and middle market companies
Viability of concept and knowledge of asset classes and capital market operations

Implementation and Exits

Validate exit scenarios before funding easy to get into a deal, challenge is to get out
Proven exit strategies and predictability of downside recovery valuation

11

SAMPLE PUBLIC PORTFOLIO INVESTMENT


INTERTAIN GROUP LIMITED

A pre-IPO transaction for Fountain in late 2013.


The global online gambling sector is flourishing today and a handful of Canadian firms have seized the
opportunity ahead of much-anticipated worldwide legalization and have reaped the rewards of getting
in early. Intertain Group is one of them. Intertain Group offers online games through its subsidiary
CryptoLogic Operations Limited, under two brand names; InterCasino and InterPoker. The company
boasts 9,000 daily users on one of its sites alone, 3 million registered users and state that over US$25
billion has been wagered across their sites to date.
This Fountain invested in Intertain pre-IPO in 2013 experiencing a 3x return only one year after. Fountain
monitored the position throughout and exited parts of our position throughout 2015 and 2016. This is an
example of Fountain realizing the private to public arbitrage strategy.

F
A
B
U
Y

Fountain sold
throughout 2015 &
2016

12

SAMPLE PRIVATE PORTFOLIO INVESTMENT


ADVANTAGEWON REPAIR INC

A private transaction for Fountain in late 2013, and funded until today.

Advantagewon finances auto repair loans, and uses the RSLA (Repair Storage Lien Act) to get automatic
first security on the vehicle. 40%+ return on the average loan.
RSLA lien allows Advantagewon to REPO the car within ~60 days of a missed payment. No exceptions.
Approval for a loan is done within seconds online. All you need to input is your VIN and mileage, and 50%
of the value of the vehicle is automatically approved for a loan.
Dealers are easily sold on offering the Advantagewon financing to their customers, as it allows them to
keep the business they otherwise have to turn away, with no skin off their back.
Fountain has invested over $3mm into Advantagewon, and recently secured an institutional facility to
fund Advantagewons hockey stick growth.
Fountain is a significant debt provider and equity holder in Advantagewon.

ed
und
o
p
om
%C
0
0
ar 5
3 ye th Rate
Grow

13

SUCCESFULL EXITS
Selection of our Successful Exits
The Intertain Group Ltd.
VIQ Solutions
Poydras Gaming Finance Corp.
3TL Technologies Corp.
Royal Nickel Corp.
Kids Futures Inc.
Victhom Human Bionics Inc.
Adoption Technologies Corp.
Iseemedia Inc.
ESI Entertainment Systems Inc.
Homeland Energy Group Ltd.
IOU Financial Inc.
W3 Solutions Inc.

14

FOUNTAIN STOCK
COMPELLING STOCK PRICE TODAY
Book Value

Current Stock Price

Q2 Book Value
As of Q2, Fountains audited Book Value was $0.21 per share.
Tax Shelter 26mm
In addition there is a $26mm capital tax loss benefit, which
Total Book Value
increases the book value to $0.30 per share.
AT THE CURRENT MARKET PRICE OF $0.21, OUR STOCK IS
Book Value/Share
TRADING AT A DISCOUNT TO OUR BOOK VALUE.

Additional Value

Stock Price Discount to Book Value

0.21
$ 13,338,728
$

2,600,000

$ 15,938,728
$

0.30
29%

The above stated 30c Book Value does not include additional value we expect to unlock on some of our
holdings which include:
1) Financing Company: we own a convertible option for 50% of a car repair financing company called
Advantagwon Inc., which has a growing national portfolio and profitable operations.
2) Slot Machine Company: We own significant equity stake in TSXV listed Poydras Gaming Finance Corp., a
slot machine company tracking to hit $10mm EBITDA for 2016 and just completed a $30mm refinancing.
3) Oil Company: Slated to go public in Q4 2016, and Fountain holds a high yielding securitized convertible
debt in this Texas based company.

15

MANAGEMENT TEAM AND


BOARD OF DIRECTORS
Fountain is integrated an experienced and disciplined team of investment and finance
professionals to lead the growth the company. Our combined 100+ years of experience
and networks generate proprietary transaction opportunities and unique market
intelligence.
Jason G. Ewart. Chief Executive Officer & Director. Mr. Ewart has been the Chief Executive Officer of the
Company since June 2004, as well as Director and Chief Operating Officer since July 2003. Mr. Ewart was a
market analyst with A&E Capital Funding Inc. and Bradstone Equity Partners Inc. between 1998 and 2002 and
Vice-President of Quest Investment Corporation between 2002 and 2003. He has experience with bridge
financing, financial analysis, quantitative modeling, equities trading and mergers and acquisitions. Mr. Ewart
holds an economics degree from McGill University.
Steven Haasz. Chief Financial Officer: Mr. Haasz has over 15 years of experience working in the financial
sector across North America. Mr. Haasz is the founder of Consol Asset Group, a boutique investment bank
specializing in mergers and acquisitions, secured lending, business restructurings, and corporate finance
transactions. Mr. Haasz has held similar roles in managing companies representing aggregated annual sales of
over $200 million and 2,500+ employees and has worked throughout North America in secured lending.
Previously, Mr. Haasz worked at KPMG Audit and KPMG Business Transformation Services.
Eric Prisman. Senior Analyst: Erics primary responsibilities are modelling investment targets, structuring
deals, and assisting in the financial & operational advisory for Fountains portfolio companies. Prior to working at
Fountain, Eric worked in the risk consulting practice at PwC where he consulted for Schedule I banks on how to
manage credit risk within the constraints of updated regulatory requirements. Eric also worked in the valuations
group where they value fixed income and derivative securities for a variety of clients in the mining, industrial,
and financial industries. Previously, Eric worked on the equity derivatives desk at National Bank Financial and in 16
the credit risk group at TD Bank. Eric has a Master of Mathematical Finance from the University of Toronto.

MANAGEMENT TEAM AND


BOARD OF DIRECTORS
Cesare Fazari. Independent Director. Based in Toronto, Mr. Fazari is a co-founder of Northwood
Developments Inc., a diversified commercial construction company that has been working in the
greater Toronto area since 1991. Their client base includes Oxford Properties and Shoppers Drug
Mart.
Paul Kelly. Independent Director. Based in Toronto, Mr. Kelly has experience within the North
American steel industry. He was the former President and Chief Executive Officer and a director of
Slater Steel Inc., from May 1998 to May 2004. Slater steel was a multidivisional specialty steel
company formerly listed on the TSX. Mr. Kelly was President, Chief Operating Officer and a director,
from June 2004 to September 2007, of Harris Steel Group Inc., a multidivisional fabricator,
manufacturer and steel trading group formerly listed on the TSX. He has experience in dealing with
public markets as well as an extensive background in M&A and financial structuring. Mr. Kelly is also
the Chief Executive Officer, Chief Financial Officer and director of Corporate Catalyst Acquisition Inc.
a TSX Venture Exchange listed capital pool company. Mr. Kelly obtained a B.A. degree in Economics
from the University of Toronto.
Alec Regis. Independent Director. Mr. Regis is presently the asset manager at StoneCap Realty
Partners Inc. StoneCap Realty Partners manages, on behalf of its institutional clients, multifamily
real estate holdings, retail investments and purpose-built student-housing properties located in
major Canadian markets, including the Greater Toronto Area, Edmonton and Montreal.
Morris Prychidny. Independent Director. Mr. Prychidny is a Chartered Accountant with more than
35 years of experience in the mining and real-estate industries. Mr. Prychidny brings strong portfolio
management and financing expertise through his roles in a number of publicly-listed investment
and mining companies. He is currently a director of Nighthawk Gold Corp., a Canadian-based
exploration company focused on acquiring and developing gold mineral properties in the NWT,
Canada. He is also a director and Secretary-Treasurer of Orion Capital Incorporated, a Toronto17
based asset management company with a focus on investing in the junior mining and real estate

SUMMARY
Experienced Management team with long term relationships
within North Americas investment, brokerage, legal and
accounting sectors thus creating multiple channels of deal flow.
Fountain takes a hands on approach in all investments made,
leveraging management's expertise to optimize the operations
and capital structure of all their investee companies.
Capital tax-loss benefits of $26 million (acquired) to shield
future profits for the benefit of shareholders.
Investors have an opportunity to participate in private late
stage, high growth companies at attractive valuations prior to
an IPO.
.

18

CORPORATE INFORMATION
Authorized Capital Stock
Unlimited Subordinate Voting Share (1 vote per share)
Unlimited Multiple Voting Shares (4 votes per share)
Issued and Outstanding
Subordinate voting shares 53.02 mm
Multiple voting shares

1.03 mm

Total shares54.05 mm
Auditors
Collins Barrow
Register & Transfer Agent
Equity Financial Trust
Exchange & Symbol
FA on the TSX Venture Exchange
Corporate Address
25 Adelaide St. East, Suite 1300, Toronto M5C 3A1
Corporate Website
www.fountainassetcorp.com

19

FOR MORE INFORMATION, PLEASE


CONTACT
Jason Ewart; CEO Fountain Asset Corp.
jewart@fountainassetcorp.com
416-580-0721
Eric Prisman; Senior Analyst Fountain Asset
Corp.
eprisman@fountainassetcorp.com
647-818-7749

20