Gailforce Ventures Inc./Ltd,

Financial Services

As financial advisors, our role at Gailforce Ventures is to source financing from institutional or private financial lenders and investors specializing in private equity and asset-based lending.

This is accomplished by identifying those financing sources whose investment criteria best matches the funding requirements and objectives of our client companies.  We consider all businesses in all industries.

Private Equity

Should your company wish to explore the possibility of accessing U.S. private equity financing, Gailforce Ventures would gather comprehensive details about your company's business strategy, financial history, management, growth opportunities, markets, competitive forces and capital requirements. We would then assess the financing need and determine if Gailforce Ventures' professional services are compatible with the investment opportunity. If so, we would ask the company to sign an engagement letter which sets out the terms that will guide us toward a successful completion of the financing process.

Gailforce Ventures would commence the process by preparing an exciting executive summary describing the business opportunities that are available to the company and prepare a confidential information memorandum which will contain a descriptive and concise overview of the business.

Then, through direct communication (telephone, fax and e-mail), we would further qualify the potential sources to identify those that are interested in the investment opportunity described in the executive summary of the business plan. At this point in time we would provide you with a list of firms which have expressed a preliminary interest in the investment opportunity. This affords you an opportunity to select which firms you would like to possibly become associated with and to prioritize the order in which the firms should be contacted.

Confidentiality agreements would be executed prior to identifying the company and providing them with a copy of the confidential information memorandum. The subsequent follow up and communications with these groups would ascertain which firms would be appropriate to arrange a meeting with. The purpose of the meeting would be to move the discussion forward first to a written expression of interest, and then a letter of intent. The effort would be concentrated and very focused over a relatively short timeframe. We believe this approach ensures the greatest probability of success in the shortest period of time.

Finally, Gailforce Ventures possesses relevant experience in the field of corporate acquisitions and divestitures, and have extensive business experience both in Canada, the United States and Europe which allows us to facilitate the successful consummation of the investment transaction.

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Asset-based Lending

Asset-based lending has experienced rapid growth during the past decade. What was once considered a minor part of financial services now challenges traditional banking in the most vibrant part of the United States economy. As Canadian corporations become increasingly familiar with asset-based financing, it is envisioned that asset-based lenders will challenge the Canadian chartered banks and enjoy the same success as they have achieved in the U.S.

The theory of asset-based lending, matching a company's assets to its borrowing needs has passed several tests:

An asset-based lender makes it possible for companies to finance their business with collateralized loans.  Unlike banks that rely heavily on balance sheet ratios and cash flow projections as loan criteria, asset-based lenders use a client's business assets as the primary basis for lending.  The result is usually far greater borrowing power than can be achieved from chartered banks and without the restrictive covenants or guarantees frequently required by the banks.

Asset-based financing can carry companies over difficult economic cycles, enabling them to strengthen their financial position, grow and achieve their ultimate goals.  The loans asset-based lenders make are constantly at work, because they function as a revolving credit line.  And unlike the chartered banks, the revolving line of credit from an asset-based lender is on a "committed" rather than on a "demand" basis.  As a company grows the amount of funds available increases with the increase of the collateral without any concerns about maintaining debt-to-equity ratios.  Another important aspect of the approach used by asset-based lenders is that prospective borrowers do not have to be profitable or have a minimum net worth.  A business with tangible assets and competent management can use its assets to create additional working funds to help carry out its business plans.  Manufacturers, wholesalers, distributors, importers, retailers and service-oriented businesses are all candidates for asset-based lending.

Guidelines for Asset-based Lenders

Amount: $5 million to $200 million (Canadian or U.S. dollars).

Availability: Up to 90% of eligible accounts receivable (Canadian, American or foreign).
Up to 85% of eligible inventory (raw materials and finished goods).

Purpose: Refinancing, restructuring, leveraged buyouts, cross border expansion, management buyouts, turnarounds and recapitalization, rapid growth situations

Loan type: Operating (revolving) lines of credit secured by accounts receivable and/or inventories

Term: Operating lines of credit are available on a "committed", rather than the conventional "demand" basis used by banks.

Flexibility: Flexible financial structures.  The integrity and ability of management as well as the quality of collateral weigh significantly in all transaction requests and take priority over ratio deficiencies and financial performance.

Pricing Transactions are priced based upon commensurate risk as well as collateral quality and normally fall within the Prime +.75% to 2.5% range.

Collateral: Asset-based loans are backed by many types of collateral:
* accounts receivable
* machinery and equipment
* inventories
* real estate and certain tangibles

In general, asset-based lenders are not burdened with the red tape, rigid rules and ratio dominated default clauses.  They are geared to processing new business that cuts through the bureaucracy found in most large chartered banks and to achieving long term relationships.

Gailforce Ventures would be pleased to review your financing requirements in order to determine if asset-based financing can help you with additional cash liquidity from receivables, inventory and other assets to finance new business opportunities and future growth.

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