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AIRAM CAPITAL

INVESTMENT BANKING

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Funding

Airam Capital will promote and showcase your company to a number of different stock brokers, market makers, and trading desks through out North America. It's a great program to build liquidity in your stock, while building a long-term institutional following in your company. Airam Capital will also communicate with brokers that follow your company to keep them informed of your corporate activity, and to insure they have all the needed information to better inform their clients about your story.

Raising Capital as a Publicly-held Company

In an Initial Public Offering, the underwriters syndicate want their customers to purchase the IPO shares as cheaply as possible. When the trading starts, after the closing of the IPO, and the share price increases, the underwriters customers get the benefit, not the company going public. This means that the owners of the company received less than their company was worth, as evidenced by the price the public was willing to pay for the shares.

Example: XYZ is valued by the underwriters at 20 times earnings, for a total of $20 million. The IPO will be for 2 million shares at $5, totalling $10 million, for half of the company. Immediately following the IPO, the price increases to $6.25 per share, which reflects a market value of 25 times earnings. The owners of XYZ should have received an additional $2,500,000 for their shares.

In a reverse merger with a reporting listed public shell company, the shares of the newly merged company begin trading immediately following the announcement of the merger. The price per share is determined by public trading, not an underwriting syndicate.

Once public, the newly combined company can register shares with the Securities and Exchange Commission, followed by an offering of the shares to the public. The shares sold to the public would be priced at the same price as the shares traded on the public market. The company receives full value for its shares. Commissions are substantially less than the 10% commission and 5% expenses paid to underwriters in an IPO. A public offering registration takes about 90 days with current audits.

Public offerings can be a excellent strategy for a fast growing company. Take XYZ as a example, with its net income of $1,000,000, and market value of $25 million. If XYZ sold 50% of its stock it would bring in $12.5 million. The alternative strategy would be for XYZ to raise a lesser amount, say $3 million, which would be 12% of the company at 25 times earnings. Assume the $3 million in new capital was able to improve earnings from $1 million to 2 million. The overall market value of XYZ is now $50 million, and only 12% of the company has been sold off.

Equity Line of Credit - One of the Lowest Costs of Capital for a Private Equity Investment

A structured equity line is a commitment by the investor to purchase up to a predetermined dollar amount of shares of the public company's common stock over a certain period. It is very similar to a bank line of credit in that cash is available to the company on an "as needed" basis. The difference is the company repays the investor in stock. The company has the right but not an obligation to "draw down" on the equity line and sells shares to the investor when it is most favorable for the company. When the company draws down the line, the shares are sold to the investor at a discount.

Equity lines can be a highly effective and cost efficient capital raising tool.

Mechanics of an Equity Line of Credit

1. Investor and seller sign an agreement which commits Investor to purchase up to $X million of sellers share capital at the request of seller, over a period of up to 2 years. However, seller has no obligation to issue shares but Investor is committed for the full period.

2. At various times during the year seller may advise Investor that it wishes to exercise its option to "draw down" under the Equity Line, and sell shares. Seller may exercise an unlimited number of "draw downs".

3. The agreement governs the number of shares or dollar amount which can be drawn down, based on the liquidity of the shares themselves and the length of the drawdown period (5 to 20 days).

4. At the end of each draw down period, seller issues the new shares at a price representing the Bloomberg Volume-Weighted-Average Price over the drawdown period, less a discount.

5. There are no fees paid except for the initial legal fees and sellers fees for SEC filings.

Benefits of an Equity Credit Line

Flexibility

1. The Equity line of Credit does not require positive research, an investment case, or an active marketing effort by management and a sales force.
2. It can be executed in virtually all market conditions.

Speed

1. Once the line has registered, Seller can start raising new equity the day Seller asks us to do so.
2. Proceeds would be received within four weeks.

Control

1. Seller retains control over the timing and the price at which new equity is raised.
2. Seller can ask Investor to buy shares at any time, regardless of market conditions. In other words, Seller has a put option on the Investor.
3. Seller can set a minimum threshold.

Security

Seller is not committed to sell any shares. Investor remains committed for the full period

Market Timing

Once the Equity Line is in place, Seller is in a position to take advantage of periods of price strength by immediately executing a draw down, instead of risking that the favourable market window has shut by the time a secondary offering has been organized.

An Example Convertible Debt Deal

1. $2 million in the form of a two-year fixed price Convertible Secured Note, which is convertible into common shares at $2.33 a share
2. Represents a premium to market of approximately 10%
3. The note carries interest of 1.75 percent above prime with a floor of six percent per annum
4. The Company can elect to pre-pay the note in cash
5. The investor was granted a warrant to purchase 125,000 shares common stock for a period of five years from the date of the transaction.
6. The per share exercise price of the warrant is $2.68 for 75,000 shares subject to the warrant, $2.91 for 35,000 shares, and $3.38 for 15,000 shares.
7. Market share Price 60 days post closing $2.30

Other Funding Sources

Various types of equity instruments with price mechanisms tailored to meet the particular company's needs, include:

1. Common Stock
2. Convertible Preferred Stock
3. Stock Loan Programs
4. Sales of restricted and/or insider shares

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