NOTICE OF MEETING AND MANAGEMENT INFORMATION CIRCULAR RELATING TO THE ANNUAL AND SPECIAL MEETING OF THE SHAREHOLDERS FORTUNE BAY CORP.

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1 NEITHER THE TSX VENTURE EXCHANGE INC. NOR ANY SECURITIES REGULATORY AUTHORITY HAS IN ANY WAY PASSED UPON THE MERITS OF THE TRANSACTION IN THIS MANAGEMENT INFORMATION CIRCULAR AND ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE. NOTICE OF MEETING AND MANAGEMENT INFORMATION CIRCULAR RELATING TO THE ANNUAL AND SPECIAL MEETING OF THE SHAREHOLDERS OF FORTUNE BAY CORP. TO BE HELD ON JUNE 15, 2016 These materials are important and require your immediate attention. The shareholders of Fortune Bay Corp. are required to make important decisions. If you have questions as to how to deal with these documents or the matters to which they refer, please contact your financial, legal or other professional advisor. THE TRANSACTION AND THE RELATED SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH, RECOMMENDED BY, OR APPROVED OR DISAPPROVED BY THE TORONTO STOCK EXCHANGE, THE TSX VENTURE EXCHANGE, THE SECURITIES AUTHORITY OF ANY CANADIAN PROVINCE OR TERRITORY, U.S. STATE OR THE SEC, NOR HAVE ANY OF THEM PASSED UPON THE FAIRNESS OR MERITS OF THE TRANSACTION OR THE ACCURACY OR ADEQUACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. MAY 13, 2016

2 FORTUNE BAY CORP. Dear Shareholder: You are cordially invited to attend an annual and special meeting (the "Meeting") of the shareholders (the "Fortune Shareholders") of Fortune Bay Corp. ("Fortune") to be held at the office of Computershare Investor Services Inc. ("Computershare"), 1969 Upper Water Street, Suite 2008 in the City of Halifax on June 15, 2016 at 2:00 p.m. (Atlantic Time). At the Meeting, you will be asked to consider and vote upon a proposed transaction, pursuant to which Fortune will (i) spin-out its resources properties by way of a court-approved plan of arrangement in Ontario (the "Arrangement"); and (ii) acquire 100% of the issued and outstanding ordinary shares (the "Kneat Shares") of Kneat Solutions Limited ("Kneat") by way of a concurrent scheme of arrangement in Ireland (the "Merger" and together with the Arrangement, the "Transaction"). In addition, at the Meeting, Fortune Shareholders will be asked to consider those matters further described in the accompanying Notice of Annual and Special Meeting of the Fortune Shareholders (the "Notice of Meeting"). Pursuant to the Arrangement, Fortune Shareholders will receive one (1) new common share of Fortune (each a "New Fortune Share") and one and one half (1.5) of a common share (a "SpinCo Share") of Canada Limited, a newly formed exploration company ("SpinCo"), in exchange for each three (3) common shares of Fortune (the "Fortune Shares") held by them. Pursuant to the Merger, Fortune will acquire 100% of the issued and outstanding Kneat Shares in consideration for issuance to the holders of the Kneat Shares (the "Kneat Shareholders") that number of New Fortune Shares representing 68.7% of the issued and outstanding New Fortune Shares. Upon closing of the Transaction, Fortune Shareholders will hold 100% of the issued and outstanding SpinCo Shares and 31.3% of the issued and outstanding New Fortune Shares, with the former Kneat Shareholders holding the remaining 68.7% of the issued and outstanding New Fortune Shares. In addition to acquiring all the issued and outstanding Kneat Shares, Fortune will retain net CAD $8.2 million. SpinCo will hold Fortune's interests in the Goldfields project in Saskatchewan and the Ixhuatán project and Huizopa net smelter royalty in Mexico. In summary, the Transaction will result, through a series of steps, in: Fortune Shareholders receiving one (1) New Fortune Share and one and one half (1.5) of a SpinCo Share in exchange for each three (3) Fortune Shares held by them; Kneat Shareholders receiving that number of New Fortune Shares representing 68.7% of the issued and outstanding New Fortune Shares in exchange for the acquisition by Fortune of all the issued and outstanding Kneat Shares; the change of Fortune's name to "kneat.com, inc."; delisting of the Fortune Shares from the Toronto Stock Exchange and listing of the New Fortune Shares on the TSX Venture Exchange (the "TSXV"); and the change of SpinCo's name to "Fortune Bay Corp." Thus, upon completion of the Transaction, SpinCo will own and operate the existing business of Fortune, and Fortune will own and operate the existing business of Kneat. The Transaction will result in Fortune diversifying its business into a fast growing software development company with a best in class solution for the life sciences industry, through the acquisition of Kneat. Fortune Shareholders will also maintain an interest in Fortune's existing business and assets by receiving SpinCo Shares of a newly i

3 formed company that will hold Fortune's existing resource assets. Detailed information regarding the Transaction is contained in the attached Notice of Meeting and Management Information Circular. In order to become effective, among other things, the special resolution approving the Arrangement (the "Arrangement Resolution") must be passed by (i) a majority of no less than two-thirds of the votes cast on the Arrangement Resolution by the Fortune Shareholders present in person or by proxy at the Meeting, and (ii) a majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI Take-Over Bids and Special Transactions ("MI "). In addition, in order to become effective, the ordinary resolution approving the issuance of the New Fortune Shares to the Kneat Shareholders in connection with the Merger (the "Fortune Merger Resolution") must be passed by a simple majority of the votes cast on the Fortune Merger Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI Completion of the Transaction, is also subject to receipt of certain required regulatory approvals, including the approval of the TSXV, the approval of the Arrangement by the Ontario Superior Court of Justice (Commercial List) (the "Court"), the approval of the Merger by the High Court of Ireland, and other customary closing conditions, all of which are described in more detail in the attached Management Information Circular. All of the directors and senior officers of Fortune have entered into agreements to vote in favour of the Arrangement, provided that the transaction agreement dated February 9, 2016 entered into among Fortune, Kneat and SpinCo has not been terminated in accordance with its terms. After taking into consideration, among other things, the terms of the Transaction, the unanimous recommendation of a special committee of the board of directors of Fortune (the "Fortune Board") established to review the Arrangement, discussions with Fortune's advisors, and the requirement for Court and Fortune Shareholder approval, the Fortune Board has unanimously concluded that the Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders, and has approved the Arrangement pursuant to the Plan of Arrangement and the Merger pursuant to the Merger scheme, and authorized submission of the Arrangement Resolution and the Fortune Merger Resolution for approval to the Fortune Shareholders and submission of the Arrangement to the Court for approval. Accordingly, the Fortune Board unanimously recommends that the Fortune Shareholders vote FOR the Arrangement. See the section in the accompanying Management Information Circular entitled "The Transaction The Arrangement Reasons for the Arrangement" for a summary of the principal reasons for the unanimous recommendation of the Fortune Board. The accompanying Notice of Meeting and Management Information Circular contain a detailed description of the Transaction and include certain other information to assist you in considering the matters to be voted upon. You are urged to carefully consider all of the information in the accompanying Management Information Circular, including the documents incorporated by reference therein. If you require assistance, you should consult your financial, legal, or other professional advisor. Voting Your vote is important regardless of the number of Fortune Shares that you own. If you are a registered Fortune Shareholder and are unable to be present in person at the Meeting, we encourage you to vote by completing the enclosed form(s) of proxy. You should specify your choice by marking the box on the enclosed form(s) of proxy and by dating, signing and returning your proxy in the enclosed return envelope addressed to Computershare, 100 University Avenue, 8 th Floor, Toronto, Ontario, M5J 2Y1, or by Internet voting at or by telephone voting at VOTE (8683) Toll Free (in Canada), at least 48 hours (excluding Saturdays, Sundays and holidays) before the time of the Meeting. Please do this as soon as possible. Voting by proxy will not prevent you from voting in person if you attend the Meeting and revoke your proxy, but will ensure that your vote will be counted if you are unable to attend. ii

4 If you are not registered as the holder of your Fortune Shares but hold your Fortune Shares through a broker or other intermediary, you should follow the instructions provided by your broker or other intermediary to vote your Fortune Shares. See the section in the accompanying Management Information Circular entitled "General Proxy Information Non-Registered Holders" for further information on how to vote your Fortune Shares. Letter of Transmittal If you are a registered Fortune Shareholder we also encourage you to complete and return the enclosed letter of transmittal together with the certificate(s) representing your Fortune Shares and any other required documents and instruments, to the depositary, Computershare (the "Depositary"), in the enclosed return envelope in accordance with the instructions set out in the letter of transmittal, so that if the Arrangement is approved, the New Fortune Shares and SpinCo Shares issuable in exchange for your Fortune Shares can be sent to you as soon as possible after the Arrangement becomes effective. The letter of transmittal contains other procedural information related to the Arrangement and should be reviewed carefully. If you hold your Fortune Shares through a broker or other intermediary, please contact that broker or other intermediary for instructions and assistance in receiving the New Fortune Shares and SpinCo Shares issuable in exchange for your Fortune Shares. While certain matters, such as the timing of the receipt of required regulatory approvals, are beyond the control of Fortune, if the Arrangement Resolution and the Merger Resolution are passed by the requisite majority at the Meeting, and the other conditions to closing are satisfied, it is anticipated that the Transaction will be completed and become effective on or about June 23, On behalf of Fortune, we would like to thank you for your continued support as we proceed with this important transaction. Yours very truly, "Wade K. Dawe" Wade K. Dawe, Chairman and Chief Executive Officer iii

5 FORTUNE BAY CORP. NOTICE OF ANNUAL AND SPECIAL MEETING NOTICE IS HEREBY GIVEN that an annual and special meeting (the "Meeting") of the shareholders (the "Fortune Shareholders") of Fortune Bay Corp. ("Fortune" or the "Company") will be held at the office of Computershare Investor Services Inc. ("Computershare"), 1969 Upper Water Street, Suite 2008, in the City of Halifax, Nova Scotia on June 15, 2016 at 2:00 p.m. (Atlantic Time) for the following purposes: 1. to receive and consider the consolidated financial statements of the Company for the fiscal year ended December 31, 2015, together with the report of the auditors thereon; 2. to appoint as auditors of the Company for the forthcoming year, PricewaterhouseCoopers LLP, Chartered Accountants, at a remuneration to be fixed by the directors; 3. to consider, pursuant to an interim order of the Ontario Superior Court of Justice (Commercial List) dated May 12, 2016 (the "Arrangement Interim Order") and, if thought advisable, to pass, with or without amendment, a special resolution (the "Arrangement Resolution") approving an arrangement (the "Arrangement") under section 192 of the Canada Business Corporations Act (the "CBCA"), the full text of which is set forth in Appendix A to the accompanying management information circular (the "Circular"); 4. to consider, and if thought advisable, to pass, with or without amendment, an ordinary resolution (the "Fortune Merger Resolution"), the full text of which is set out in the section entitled "The Transaction The Merger Approval of Fortune Merger Resolution" in this Circular, approving the issuance (the "Merger" and together with the Arrangement, the "Transaction") of new common shares of Fortune (the "New Fortune Shares") to the holders of ordinary shares of Kneat Solutions Limited ("Kneat"), in connection with a court-approved scheme of arrangement of Kneat under Chapter 1 of Part 9 of the Irish Companies Act 2014, in accordance with the transaction agreement (the "Transaction Agreement") dated February 9, 2016, entered into among Fortune, Canada Limited, a newly formed exploration company ("SpinCo"), and Kneat, all as more particularly set forth in the Circular; 5. to elect directors to hold office until the next annual meeting of the Fortune Shareholders, which, if the Transaction becomes effective, shall consist of nominees of both Fortune and Kneat, as contemplated in the Transaction Agreement, and if the Transaction does not become effective, to elect directors to hold office until the next annual meeting of the Fortune Shareholders, which shall consist of nominees that are existing directors of the Company; 6. to consider, and, if thought advisable, to pass, with or without amendment, an ordinary resolution approving an amended stock option plan for Fortune for use following completion of the Transaction, the full text of which is set forth in the Circular; 7. to consider, and, if thought advisable, to pass, with or without amendment, an ordinary resolution approving a new rolling stock option plan for SpinCo for use following completion of the Transaction, the full text of which is set forth in the Circular; 8. to consider and, if thought advisable, to pass, with or without amendment, an ordinary resolution approving a deferred share unit plan of Fortune and the reservation of 2,000,000 common shares of Fortune (the "Fortune Shares") for issuance thereunder, all as more particularly set forth and described in the Circular; 9. to consider and, if thought advisable, to pass, with or without amendment, an ordinary resolution approving the issuance of an aggregate of 1,322,500 Fortune Shares to certain senior officers, directors and a nonexecutive employee of Fortune in connection with the Transaction, all as more particularly set forth and described in the Circular; and i

6 10. to transact such further or other business as may properly come before the Meeting or any adjournment or postponement thereof. The Circular contains, among other things, the full text of the Arrangement Resolution and the Fortune Merger Resolution and provides additional information relating to the subject matters of the Meeting, including the Transaction, and is deemed to form part of this Notice of Meeting. Fortune Shareholders are entitled to vote at the Meeting either in person or by proxy. Registered Fortune Shareholders who are unable to attend the Meeting in person are encouraged to read, complete, sign, date and return the enclosed form(s) of proxy in accordance with the instructions set out in the proxy and in the Circular. In order to be valid for use at the Meeting, proxies must be received by Computershare, at its offices at 100 University Avenue, 8 th Floor, Toronto, Ontario, M5J 2Y1, or by Internet voting at or by telephone voting at VOTE (8683) Toll Free (in Canada), at least 48 hours (excluding Saturdays, Sundays and holidays) before the time of the Meeting. Please advise Fortune of any change in your mailing address. If you are not a registered Fortune Shareholder, please refer to the section in the Circular entitled "General Proxy Information Non-Registered Holders" for information on how to vote your Fortune Shares. Take notice that, pursuant to the Arrangement Interim Order, each registered Fortune Shareholder has been granted the right to dissent in respect of the Arrangement Resolution and, if the Arrangement becomes effective, to be paid the fair value of the common shares of Fortune in respect of which such registered Fortune Shareholder dissents by the Company, in accordance with the dissent procedures contained in the Arrangement Interim Order. To exercise such right, (a) a written notice of dissent with respect to the Arrangement Resolution from the registered Fortune Shareholder must be received by the Company at its address for such purpose, 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7, by not later than 4:00 p.m. (Halifax time) on June 14, 2016, or one business day prior to any adjournment of the Meeting, and (b) the registered Fortune Shareholder must have otherwise complied with the dissent procedures in the Arrangement Interim Order. The right to dissent is described in the section in the Circular entitled "Dissent Rights" and the text of the Arrangement Interim Order is set forth in Appendix A to the Circular. Failure to strictly comply with the requirements set forth in the Arrangement Interim Order may result in the loss of any right of dissent. DATED at the City of Halifax, in the Province of Nova Scotia 13 th day of May, BY ORDER OF THE BOARD OF DIRECTORS "Wade K. Dawe" Wade K. Dawe Chairman and Chief Executive Officer ii

7 TABLE OF CONTENTS INFORMATION CONTAINED IN THIS INFORMATION CIRCULAR... 1 Information Contained in this Circular regarding Kneat... 1 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISKS... 1 NOTE TO UNITED STATES SECURITYHOLDERS... 3 CURRENCY AND EXCHANGE RATES... 4 GLOSSARY OF TERMS... 5 SUMMARY GENERAL PROXY INFORMATION Solicitation of Proxies Appointment and Revocation of Proxies Non-Registered Holders Voting of Proxies Voting Shares and Principal Holders Thereof INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON THE TRANSACTION The Arrangement Transaction Mechanics Principal Steps of the Arrangement Treatment of Fortune Options and Fortune Warrants Background to the Transaction Recommendation of the Special Committee Recommendation of the Fortune Board Reasons for the Transaction Fortune Irrevocable Undertakings Approval of Arrangement Resolution Court Approval of the Arrangement Regulatory Approvals of the Transaction Completion of the Arrangement The Transaction Agreement Procedure for Exchange of Fortune Shares Expenses of the Transaction Interests of Certain Persons in the Transaction Regulatory Law Matters and Securities Law Matters Certain Canadian Federal Income Tax Considerations Eligibility For Investment Dissent Rights The Merger Effect of the Merger Approval of the Fortune Merger Resolution Risks Associated with the Transaction OTHER MATTERS TO BE CONSIDERED AT THE MEETING Audited Financial Statements Appointment of Auditors Election of Directors Approval of Fortune Amended Stock Option Plan Approval of SpinCo Stock Option Plan Approval of the Compensation Shares Approval of the DSUP INFORMATION CONCERNING FORTUNE INFORMATION CONCERNING KNEAT INFORMATION CONCERNING SPINCO INFORMATION CONCERNING NEW FORTUNE INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS... 68

8 INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS INTERESTS OF EXPERTS OTHER MATERIAL FACTS ADDITIONAL INFORMATION APPROVAL OF DIRECTORS... 1 CERTIFICATE OF FORTUNE BAY CORP... 1 CERTIFICATE OF KNEAT SOLUTIONS LIMITED... 1 APPENDIX A ARRANGEMENT RESOLUTION... A-1 APPENDIX B PLAN OF ARRANGEMENT... B-1 APPENDIX C INTERIM ORDER AND NOTICE OF APPLICATION... B-1 APPENDIX D SECTION 190 OF THE CBCA... D-1 APPENDIX E INFORMATION CONCERNING FORTUNE AND ANNUAL MEETING MATTERS... E-1 APPENDIX F INFORMATION CONCERNING KNEAT... F-1 APPENDIX G INFORMATION CONCERNING NEW FORTUNE... G-1 APPENDIX H INFORMATION CONCERNING SPINCO... H-1

9 INFORMATION CONTAINED IN THIS INFORMATION CIRCULAR The information contained in this Circular, unless otherwise indicated, is given as of April 30, No person has been authorized to give any information or to make any representation in connection with the matters being considered herein other than those contained in this Circular and, if given or made, such information or representation should not be considered or relied upon as having been authorized. This Circular does not constitute an offer to sell, or a solicitation of an offer to acquire, any securities, or the solicitation of a proxy, by any person in any jurisdiction in which such an offer or solicitation is not authorized or permitted or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or proxy solicitation. Neither the delivery of this Circular nor any distribution of securities referred to herein should, under any circumstances, create any implication that there has been no change in the information set forth herein since the date of this Circular. Information contained in this Circular should not be construed as legal, tax or financial advice and Fortune Shareholders are urged to consult their own professional advisors in connection with the matters considered in this Circular. THE TRANSACTION AND THE RELATED SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH, RECOMMENDED BY, OR APPROVED OR DISAPPROVED BY THE TORONTO STOCK EXCHANGE, THE TSX VENTURE EXCHANGE, THE SECURITIES AUTHORITY OF ANY CANADIAN PROVINCE OR TERRITORY, U.S. STATE OR THE SEC, NOR HAVE ANY OF THEM PASSED UPON THE FAIRNESS OR MERITS OF THE TRANSACTION OR THE ACCURACY OR ADEQUACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Information Contained in this Circular regarding Kneat The information concerning Kneat, its affiliates and the Kneat Shareholders contained in this Circular has been provided by Kneat for inclusion in this Circular. In the Transaction Agreement, Kneat provided a covenant to Fortune that it would ensure that the information provided by it for the preparation of this Circular would not contain any untrue statement of a material fact or omit to state a material fact required to be stated in the Circular in order to make any information so furnished or any information concerning Kneat, its affiliates and the Kneat Shareholders not misleading in light of the circumstances in which it is disclosed. Although Fortune has no knowledge that would indicate that any statements contained herein relating to Kneat, its affiliates and the Kneat Shareholders taken from or based upon such information provided by Kneat are untrue or incomplete, neither Fortune nor any of its officers or directors assumes any responsibility for the accuracy or completeness of the information relating to Kneat, its affiliates and the Kneat Shareholders or for any failure by Kneat to disclose facts or events that may have occurred or may affect the significance or accuracy of any such information but which are unknown to Fortune. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISKS This Circular contains "forward-looking information" within the meaning of the applicable Canadian Securities Laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended (forward-looking statements and forward-looking information being collectively herein after referred to as "forward-looking statements") that are based on expectations, estimates and projections as at the date of this Circular. These forward-looking statements include but are not limited to statements and information concerning: the Transaction; covenants of Fortune and Kneat; the timing for the implementation of the Transaction and the potential benefits of the Transaction; the likelihood of the Transaction being completed; principal steps of the Transaction; statements relating to the business and future activities of, and developments related to, Fortune, SpinCo and Kneat after the date of this Circular and before the Merger Effective Time and to and of New Fortune and SpinCo after the Merger Effective Time; Fortune Shareholder approval and Court approval of the Arrangement; Fortune Shareholders approval of the Merger; Kneat Shareholder approval and the Irish Court approval of the Merger Scheme; the TSXV approval of the Transaction and the listing of the New Fortune Shares and the SpinCo Shares; the market position and future financial or operating performance of New Fortune or SpinCo; and the liquidity of New Fortune Shares and SpinCo Shares following the Merger Effective Time. 1

10 Statements concerning proven and probable mineral reserves and mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered as and if a property is developed, and in the case of mineral resources or proven and probable mineral reserves, such statements reflect the conclusion based on certain assumptions that the mineral deposit can be economically exploited. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often but not always using phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements and are intended to identify forward-looking statements, which include statements relating to, among other things, the ability of New Fortune or SpinCo to continue to successfully compete in the market. These forward-looking statements are based on the beliefs of the management of Fortune or Kneat, as the case may be, as well as on assumptions which such management believes to be reasonable, based on information currently available at the time such statements were made. However, there can be no assurance that forward-looking statements will prove to be accurate. Such assumptions and factors include, among other things, the satisfaction of the terms and conditions of the Transaction, including the approval of the Arrangement and the Merger by Fortune Shareholders and the approval of the Arrangement and its fairness by the Court; the approval of the Merger Scheme by Kneat Shareholders and the approval of the Merger Scheme by the Irish Court, the receipt of the required regulatory and third party approvals and consents, and the timing of the receipt thereof; general business and economic conditions; that the anticipated benefits of the Transaction will be achieved; market competition; and tax benefits and tax rates. By their nature, forward-looking statements are based on assumptions and involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of New Fortune or SpinCo to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements are subject to a variety of risks, uncertainties and other factors, which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: the Transaction Agreement may be terminated in certain circumstances; general business, economic, competitive, political, regulatory and social uncertainties; mineral and gold and silver price volatility; risks related to competition; risks related to factors beyond the control of Fortune, SpinCo or Kneat; risks and uncertainties associated with exploration, development and mining operations; title risks; environmental risks and risks relating to environmental permitting and licenses; risks related to directors and executive officers of Fortune possibly having interests in the Transaction that are different from other Fortune Shareholders; risks relating to the possibility that more than 5% of Fortune Shareholders may exercise their Dissent Rights; dependence on key management, employees, consultants, and skilled personnel; the global economic climate; the execution of strategic growth plans; risks inherent to operating in Mexico through foreign subsidiaries; risks relating to the lack of hedging policies; dilution; market reaction to the Transaction; insurance risks; and litigation. This list is not exhaustive of the factors that may affect any of the forward-looking statements of Fortune, SpinCo or Kneat. Forward-looking statements are statements about the future and are inherently uncertain. Actual results could differ materially from those projected in the forward-looking statements as a result of the matters set out or incorporated by reference in this Circular generally and certain economic and business factors, some of which may be beyond the control of Fortune, SpinCo and Kneat. Some of the important risks and uncertainties that could affect forward-looking statements are described in the section entitled "Risk Factors" of Fortune's annual MD&A, which is available on SEDAR at and is attached as Schedule 1 to "Appendix E Information Concerning Fortune and Annual Meeting Matters", and in the sections entitled "Risk Factors" in each of "Appendix F Information Concerning Kneat", and "Appendix H Information Concerning SpinCo" to this Circular. Fortune, SpinCo and Kneat do not intend, and do not assume, any obligation to update any forward-looking statements, other than as required by applicable Law. For all of these reasons, Fortune Shareholders should not place undue reliance on forward-looking statements. 2

11 NOTE TO UNITED STATES SECURITYHOLDERS THE TRANSACTION AND THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE TRANSACTION HAVE NOT BEEN REGISTERED WITH, RECOMMENDED BY, OR APPROVED OR DISAPPROVED BY THE SEC OR THE SECURITIES AUTHORITY IN ANY STATE OF THE UNITED STATES, NOR HAS THE SEC OR THE SECURITIES AUTHORITY OF ANY STATE OF THE UNITED STATES PASSED UPON THE FAIRNESS OR MERITS OF THE TRANSACTION OR UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR AND ANY DOCUMENTS INCORPORATED BY REFERENCE HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The New Fortune Shares and SpinCo Shares to be issued pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act or any applicable Securities Laws of any state of the United States, and are being issued in reliance on the Section 3(a)(10) Exemption on the basis of the approval of the Court, which will consider, among other things, the fairness of the Arrangement to Fortune Shareholders as further described in this Circular under the heading "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters United States Securities Law Matters", and in reliance on similar exemptions from registration or qualification under any applicable Securities Laws of any state of the United States. The solicitation of proxies made pursuant to this Circular is not subject to the requirements of Section 14(a) of the U.S. Exchange Act by virtue of an exemption applicable to proxy solicitations by "foreign private issuers" (as defined in Rule 3b-4 under the U.S. Exchange Act). Accordingly, this Circular has been prepared in accordance with disclosure requirements applicable in Canada. Fortune Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to registration statements under the U.S. Securities Act and to proxy statements under the U.S. Exchange Act. Information concerning the properties and operations of Fortune and SpinCo has been prepared in accordance with the requirements of Canadian Securities Laws, which differ from the requirements of United States Securities Laws. Unless otherwise indicated, all mineral reserve and mineral resource estimates included in this Circular have been prepared in accordance with NI and the Canadian Institute of Mining, Metallurgy and Petroleum definitions and classification system. NI is a rule developed by the Canadian Securities Administrators, which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. In particular, and without limiting the generality of the foregoing, the requirements of NI for identification of "reserves" are not the same as those of the SEC under the SEC's Industry Guide 7, and reserves reported in compliance with NI may not qualify as "reserves" under SEC Industry Guide 7 standards. Under SEC Industry Guide 7 standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Further, the term "resource" does not equate to the term "reserve". The SEC's Guide 7 standards normally do not permit the inclusion of information concerning "measured mineral resources", "indicated mineral resources" or "inferred mineral resources" or other descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves" by Guide 7 standards in documents filed with the SEC. United States investors should also understand that "inferred mineral resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an "inferred mineral resource" will ever be upgraded to a higher category. Under Canadian rules, estimates of "inferred mineral resources" may not form the basis of feasibility or pre-feasibility studies except in rare cases. Disclosure of "contained tonnes" in a mineral resource estimate is permitted disclosure under NI , provided that the grade or quality and the quantity of each category is stated; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by Guide 7 standards as in place tonnage and grade without reference to unit measures. Investors are cautioned not to assume that all or any part of "measured mineral resources", "indicated mineral resources" or "inferred mineral resources" will ever be converted into Industry Guide 7 compliant "reserves". Accordingly, information contained in this Circular containing descriptions of mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal Securities Laws and the rules and regulations thereunder. 3

12 Financial statements included or incorporated by reference in this Circular have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, and are subject to Canadian generally accepted auditing standards or International standards on auditing, as described in the related auditors' report included in the financial statements, which differ from United States generally accepted accounting principles, auditing and auditor independence standards, respectively, in certain material respects, and thus they may not be comparable to financial statements of U.S. companies. The enforcement by Fortune Shareholders of civil liabilities under U.S. Securities Laws may be affected adversely by the fact that Fortune is incorporated outside the United States, that some or all of its officers and directors and the experts named herein are residents of a foreign country and that some or all of the assets of Fortune and the aforementioned persons are located outside the United States. As a result, it may be difficult or impossible for Fortune Shareholders to effect service of process within the United States upon Fortune, its officers or directors or the experts named herein, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the federal Securities Laws of the United States or "blue sky" laws of any state within the United States. In addition, Fortune Shareholders should not assume that the courts of Canada would allow them to (a) sue Fortune, its officers or directors, or the experts named herein in the courts of Canada, (b) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal Securities Laws of the United States or "blue sky" laws of any state within the United States, or (c) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal Securities Laws of the United States or "blue sky" laws of any state within the United States. CURRENCY AND EXCHANGE RATES Unless otherwise indicated herein, references to"$" are to Canadian dollars, references to "US$" are to United States dollars and references to " " are to the European Euro. The following table sets out, for each period indicated, the high and low exchange rates for one United States dollar expressed in Canadian dollars, the average of such exchange rates on the last day of each month during that period, and the exchange rate at the end of the period, in each case, based on the Bank of Canada noon spot rate of exchange. Month ended April 30, 2016 Year ended December High $ $ $ $ Low $ $ $ $ Average Rate for Period $ $ $ $ Rate at End of Period $ $ $ $ The following table sets out, for each period indicated, the high and low exchange rates for one European euro expressed in Canadian dollars, the average of such exchange rates on the last day of each month during that period, and the exchange rate at the end of the period, in each case, based on the Bank of Canada noon spot rate of exchange. Month ended April 30, 2016 Year ended December High $ $ $ $ Low $ $ $ $ Average Rate for Period $ $ $ $ Rate at End of Period $ $ $ $

13 On May 12, 2016, the day before the date of this Circular, the exchange rate for one United States dollar expressed in Canadian dollars was $1.2858, and for one European Euro expressed in Canadian dollar was $ based on the Bank of Canada noon spot rate of exchange. GLOSSARY OF TERMS In this Circular and accompanying Notice of Meeting, unless otherwise defined herein or unless there is something in the subject matter inconsistent therewith, the following terms have the respective meanings set out below, words importing the singular number include the plural and vice versa and words importing any gender include all genders. "Acquired Fortune Shares" "affiliate" "Arm's Length Transaction" "Arrangement" "Arrangement Effective Date" means that number of New Fortune Shares as will represent, upon their issuance in connection with the Arrangement, 68.7% of the issued and outstanding New Fortune Shares, subject to adjustment pursuant to the Transaction Agreement. means a company that is affiliated with another company as follows: (a) a company is an "affiliate" of another company if: (i) one of them is the subsidiary of the other; or (ii) each of them is controlled by the same Person. (b) a company is "controlled" by a Person if: (i) voting securities of the company are held, other than by way of security only, by or for the benefit of that Person; and (ii) the voting securities, if voted, entitle the Person to elect a majority of the directors of the company. (c) a Person beneficially owns securities that are beneficially owned by: (i) a company controlled by that Person; or (ii) an affiliate of that Person or an affiliate of any company controlled by that Person. means a transaction which is not a Related Party Transaction. means the arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with the Transaction Agreement or the Plan of Arrangement or made at the direction of the Court in the Arrangement Final Order. means the date upon which all of the conditions to the completion of the Arrangement as set out in Sections 6.1, 6.2 and 6.3 of the Transaction Agreement have been satisfied or waived in accordance with the Transaction Agreement and all documents agreed to be delivered thereunder have been delivered. "Arrangement Effective Time" means 12:01 a.m. (Toronto time) on the Arrangement Effective Date. "Arrangement Final Order" means the final order of the Court pursuant to Section 192 of the CBCA, approving the Arrangement as such order may be amended by the Court at any time prior to the Arrangement Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal. 5

14 "Arrangement Interim Order" means the interim order of the Court granted May 12, 2016 made in connection with the Arrangement and providing for, among other things, the calling and holding of the Meeting, as the same may be amended, supplemented or varied by the Court. "Arrangement Resolution" "associate" means the special resolution of the Fortune Shareholders approving the Arrangement, to be considered at the Meeting, substantially in the form set out in Appendix A to this Circular. when used to indicate a relationship with a Person, means: (a) an issuer of which the Person beneficially owns or controls, directly or indirectly, voting securities entitling him to more than 10% of the voting rights attached to outstanding securities of the issuer; (b) (c) (d) any partner of the Person; any trust or estate in which a Person has a substantial beneficial interest or in respect of which an individual or company serves as trustee or in a similar capacity; in the case of a Person that is an individual: (i) (ii) that Person's spouse or child; or any relative of that Person or of his spouse who has the same residence as that individual; but (e) where the TSXV determines that two Persons shall, or shall not, be deemed to be associates with respect to a Member firm, Member corporation or holding company of a Member corporation, then such determination shall be determinative of their relationships in the application of Rule D with respect to that Member firm, Member corporation or holding company. "Business Day" "CBCA" "Circular" "Compensation Shares" "Compensation Shares means any day other than a Saturday, a Sunday or a statutory or civic holiday in Toronto, Ontario or the Republic of Ireland. means the Canada Business Corporations Act and the regulations made thereunder, as promulgated or amended from time to time, and includes any successor thereto. means collectively, the Notice of Meeting and this Management Information Circular, including all appendices, sent to Fortune Shareholders in connection with the Meeting. means an aggregate of 1,322,500 Fortune Shares that Fortune expects to issue to certain senior officers, directors and a non-executive employee of Fortune in connection with the Transaction immediately prior to the completion of the Transaction. means the ordinary resolution of the disinterested Fortune Shareholders to 6

15 Resolution" "Computershare" or "Transfer Agent" "Control Person" "Court" "Depositary" "Dissent Procedures" "Dissent Rights" "Dissent Shares" approve the issuance of the Compensation Shares. means Computershare Investor Services Inc. means any Person that holds or is one of a combination of Persons that holds a sufficient number of any of the securities of an issuer so as to affect materially the control of that issuer, or that holds more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holder of those securities does not materially affect the control of the issuer. means the Ontario Superior Court of Justice (Commercial List). Computershare. has the meaning ascribed thereto in the section entitled "Dissent Rights". means the rights of Fortune Shareholders to dissent in respect of the Arrangement described in the Plan of Arrangement. means the Fortune Shares held by a Dissenting Shareholder and in respect of which the Dissenting Shareholder has validly exercised Dissent Rights. "Dissenting Shareholder" means a registered Fortune Shareholder who has duly exercised Dissent Rights. "DRS Statements" means statements prepared by the Depositary pursuant to the Depositary's electronic direct registration system. "DSU" means a deferred share unit. "DSUP" means the DSU plan of Fortune. "DSUP Resolution" means the ordinary resolution of the disinterested Fortune Shareholders to approve the implementation of the DSUP and the reservation of 2,000,000 Fortune Shares for issuance thereunder. "EI Loan" means the loan between New Fortune and Enterprise Ireland in the amount of 532,000 plus the arrears of dividends to be calculated on the Merger Effective Date. Interest will be 3% per annum calculated on the 532,000 principal balance only. The loan will be fully repayable on the three year anniversary of the Merger Effective Date. "EIIS Proposal" the proposal made by Fortune to each of the EIIS Shareholders pursuant to which Fortune agrees, subject to the Merger Scheme becoming effective, to make an additional payment to each such EIIS Shareholder calculated on the basis of the relief from income tax that would be foregone by such EIIS Shareholder as a result of the Merger Scheme becoming effective. "EIIS Shareholders" Kneat Shareholders who are holders of EIIS Shares; 7

16 "EIIS Shares" Kneat Ordinary Shares issued as eligible shares pursuant to an employment and investment incentive scheme under Part 16 of the Taxes Consolidation Act "EU Securities Laws" means EU Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and EU Directive 2003/6/EC on insider dealing and market manipulation, including all laws transposing such directives into the laws of EU member states. "Fair Market Value" when applied to Fortune Shares, means the volume weighted average price of the Fortune Shares over the five trading days on the TSX ending the day prior to such determination; and, when applied to the SpinCo Shares, means the value determined as of the Arrangement Effective Time by the directors of SpinCo, acting reasonably, and a certificate setting out such value shall forthwith thereafter be provided by SpinCo to Fortune. "Fortune" or "Company" means Fortune Bay Corp., a corporation existing under the laws of Canada. "Fortune Amended Stock Option Plan" means the amended stock option plan of Fortune in the form set forth in Schedule 2 to "Appendix G Information Concerning New Fortune", to be considered by the Fortune Shareholders at the Meeting, which, if approved, will govern, among other things, options to purchase New Fortune Shares after completion of the Transaction. "Fortune Amended Stock Option Plan Resolution" means the ordinary resolution of the Fortune Shareholders to approve the Fortune Amended Stock Option Plan. "Fortune Board" means the board of directors of Fortune as the same is constituted from time to time. "Fortune Board Resolution" means the ordinary resolution of the Fortune Shareholders to authorize and approve the election of directors to the Fortune Board, which, if the Transaction becomes effective, shall consist of nominees of both Fortune and Kneat, as contemplated in the Transaction Agreement, and if the Transaction does not become effective, shall consist of nominees that are existing directors of the Company. "Fortune Irrevocable Undertakings" means the irrevocable undertakings of each of the Key Fortune Shareholders to vote in favour of the Arrangement at the Meeting. "Fortune Merger Resolution" means the ordinary resolution of the Fortune Shareholders approving the issuance of New Fortune Shares to the Kneat Shareholders, in connection with the Merger, in accordance with the Transaction Agreement, to be considered at the Meeting, substantially in the form set out in the section entitled "Transaction The Merger Approval of Fortune Merger Resolution" in this Circular. 8

17 "Fortune Mineral Properties" means all mining claims (whether patented or unpatented), concessions, leases, licences, surface rights or other rights to explore for, exploit, develop, mine or produce minerals which any of Fortune or any of its subsidiaries owns, has an interest in, or has a right or option to acquire or use, together with all joint venture, earn-in and other contracts and royalties or other similar rights and all exploration information, data reports and studies including all geological, geophysical and geochemical information and data (including all drill, sample and assay results and all maps) and all technical reports, feasibility studies and other similar reports and studies concerning the Fortune Mineral Properties in Fortune's possession or control relating to such Fortune Mineral Properties. "Fortune Nominee" means Wade K. Dawe. "Fortune Optionholders" means the holders of Fortune Options. "Fortune Options" means the outstanding options to purchase Fortune Shares granted under or otherwise subject to the Fortune Stock Option Plan. "Fortune Securities" means the Fortune Shares, the Fortune Warrants and the Fortune Options. "Fortune Securityholders" means the Fortune Shareholders, the Fortune Warrantholders and the Fortune Optionholders. "Fortune Shareholder" means a Person who is a registered holder of Fortune Shares as shown on the share register of Fortune Shares immediately prior to the Arrangement Effective Time. "Fortune Shares" means the common shares of Fortune, as currently constituted prior to the Arrangement Effective Time. "Fortune Stock Option Plan" means the Stock Option Plan of Fortune approved by Fortune Shareholders dated March 5, 2014 and amended on June 23, "Fortune Warrantholders" means the holders of Fortune Warrants. "Fortune Warrants" means the outstanding warrants to purchase Fortune Shares. "Governmental Entity" means any applicable: (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign; (b) subdivision, agent, commission, board or authority of any of the foregoing; (c) quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; or (d) the TSX. 9

18 "IFRS" means International Financial Reporting Standards as developed and adopted by the International Accounting Standards Board from time to time. "Insider" if used in relation to an issuer, means: (a) a director or senior officer of the issuer; (b) a director or senior officer of the company that is an insider or subsidiary of the issuer; (c) a Person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the issuer; or (d) the issuer itself if it holds any of its own securities. "Intermediary" has the meaning ascribed thereto in "General Proxy Information Non- Registered Holders". "Irish Act" means the Irish Companies Act "Irish Court" means the High Court of Ireland. "Irish Securities Laws" means the Irish Prospectus (Directive 2003/71/EC) Regulations 2005, the Irish Central Bank of Ireland Prospectus Rules 2014 and the Irish Market Abuse (Directive 2003/6/EC) Regulations "Key Fortune Shareholders" means Wade K. Dawe, Darren Nantes, Dr. Michael Gross, Sarah Oliver, Derrick Gill and David Peat. "Key Kneat Shareholders" means Edmund Ryan, Brian Ahearne, Kevin Fitzgerald, McGrath's Pharmacy Limited, Paul Breen, James Osborne, Ian Ainsworth and Eric McGrath. "Key Regulatory Approvals" has the meaning ascribed thereto in the Transaction Agreement. "Key Third Party Consents" has the meaning ascribed thereto in the Transaction Agreement. "Kneat" means Kneat Solutions Limited. "Kneat A Convertible Shareholders" means the holders of Kneat A Convertible Shares. "Kneat A Convertible Shares" means the 8% A cumulative redeemable convertible preference shares of 1.00 each in the capital of Kneat. "Kneat A Ordinary Shareholders" means the holders of Kneat A Ordinary Shares. 10

19 "Kneat A Ordinary Shares" means the A ordinary shares of 1.00 each in the capital of Kneat. "Kneat A Preference Shares" means the 8% A Cumulative Redeemable Preference Shares of 1.00 each in the capital of Kneat. "Kneat Articles" means the Memorandum and Articles of Association of Kneat. "Kneat Board" means the board of directors of Kneat as the same is constituted from time to time. "Kneat Cancellation Shares" means any Kneat Shares in issue before the Merger Cancellation Record Time, but excluding, in any case, the Transfer Shares. "Kneat Convertible Shareholders" means the holders of Kneat Convertible Shares. "Kneat Convertible Shares" means the 8% cumulative redeemable convertible preference shares of 1.00 each in the capital of Kneat. "Kneat IP" has the meaning ascribed thereto in the Transaction Agreement. "Kneat Irrevocable Undertakings" means the irrevocable undertakings of each of the Key Kneat Shareholders to vote in favour of the Merger at the Kneat Meeting. "Kneat Nominees" means Paul Breen, James Osborne, Ian Ainsworth, Kevin Fitzgerald and Edmund Ryan. "Kneat Ordinary Shareholders" means the holders of Kneat Ordinary Shares. "Kneat Ordinary Shares" means the ordinary shares of 1.00 each in the capital of Kneat. "Kneat Products" has the meaning ascribed thereto in the Transaction Agreement. "Kneat Transfer Shares" means any Kneat Shares issued at or after the Merger Cancellation Record Time and/or at or before the Merger Scheme Record Time. "Kneat Shareholders" means the Kneat A Convertible Shareholders, Kneat A Ordinary Shareholders, Kneat Convertible Shareholders and Kneat Ordinary Shareholders. "Kneat Shares" means the Kneat A Convertible Shares, Kneat A Ordinary Shares, Kneat Convertible Shares and Kneat Ordinary Shares. "Law" or "Laws" means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees or other requirements, whether 11

20 domestic or foreign, and the terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity, and the term "applicable" with respect to such Laws and in a context that refers to one or more Parties, means such Laws as are applicable to such party or its business, undertaking, assets, property or securities and emanate from a Person having jurisdiction over the Party or Parties or its or their business, undertaking, assets, property or securities. "Letter of Transmittal" means the Letter of Transmittal sent by Fortune to Registered Fortune Shareholders for use in connection with the Plan of Arrangement. "Liens" means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims, other third Person interest or encumbrance of any kind, whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing. "Material Adverse Effect" means, in respect of any Party, any change, effect, event, circumstance, fact or occurrence that individually or in the aggregate with other such changes, effects, events, circumstances, facts or occurrences, is or would reasonably be expected to be, material and adverse to the business, condition (financial or otherwise), properties, assets (tangible or intangible), liabilities (including any contingent liabilities), operations or results of operations of that Person and its subsidiaries, taken as a whole, except any change, effect, event, circumstance, fact or occurrence resulting from or relating to: (i) the announcement of the execution of the Transaction Agreement or the transactions contemplated thereby; (ii) general political, economic or financial conditions, including in Ireland, Canada or the United States; (iii) the state of securities or commodity markets in general (provided that it does not have a materially disproportionate effect on that Person relative to comparable companies); (iv) the commencement or continuation of any war, armed hostilities or acts of terrorism; (v) any decrease in the trading price or any decline in the trading volume of that Person's securities (it being understood that the causes underlying such change in trading price or trading volume (other than those in items (i) to (iv) above and (vi) to (viii) below) may be taken into account in determining whether a Material Adverse Effect has occurred); (vi) any actions taken (or omitted to be taken) by a Party upon the written request of any other Party; (vii) any changes in applicable Laws or IFRS, including authoritative interpretations thereof; or (viii) earthquakes, hurricanes, other natural disasters or acts of god. "Material Contracts" has the meaning ascribed thereto in the Transaction Agreement. "material fact" has the meaning ascribed to it in the Securities Act. "MD&A" means the management discussion and analysis. "Meeting" means the annual and special meeting of Fortune Shareholders, including any adjournment or postponement thereof, to be called and held in accordance with 12

21 the Arrangement Interim Order to consider, among other things, the Arrangement Resolution. "Meeting Materials" means this Circular, the form of proxy and the Letter of Transmittal. "Member" means a Person who has executed the Members' Agreement (as such term is defined in TSXV Policy 1.1 Interpretation), as amended from time to time, and is accepted as and becomes a member of the TSXV under the Exchange Requirements. "Merger" means the proposed acquisition of the Kneat Shares by Fortune by means of the Merger Scheme pursuant to the Transaction Agreement. "Merger A Convertible Share Class Scheme Meeting" means the meeting of Kneat A Convertible Shareholders convened by order of the Irish Court to consider and vote on the approval of the Merger Scheme. "Merger A Ordinary Share Class Scheme Meeting" means the meeting of Kneat A Ordinary Shareholders convened by order of the Irish Court to consider and vote on the approval of the Merger Scheme. "Merger Effective Date" means the date upon which the Merger becomes effective, as set out in the Merger Scheme. "Merger Effective Time" means the time on the Merger Effective Date that the Merger becomes effective, as set out in the Merger Scheme. "Merger Final Order" means the final order of the Irish Court approving the Merger Scheme pursuant to Section 453 of the Irish Act, on application by Kneat, in a form acceptable to Kneat and Fortune, acting reasonably, as such order may be amended by the Irish Court at any time prior to the Merger Effective Time or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal. "Merger Cancellation Record Time" means 11:59 p.m. (Irish time) on the day before the Irish Court hearing to sanction the Merger Scheme. "Merger Convertible Share Class Scheme Meeting" means the meeting of Kneat Convertible Shareholders convened by order of the Irish Court to consider and vote on the approval of the Merger Scheme. "Merger EGM" means the extraordinary general meeting of Kneat Ordinary Shareholders and Kneat A Ordinary Shareholders (and any adjournment thereof) to be convened in connection with the Merger Scheme. "Merger EGM Resolutions" means the resolutions to be proposed at the Merger EGM for the purposes of approving and implementing the Merger Scheme, the Merger Capital Reduction (as defined in the Transaction Agreement), changes to the Kneat Articles and such other matters as Kneat reasonably determines to be necessary for the purposes of implementing the Merger or, subject to the consent of 13

22 Fortune (such consent not to be unreasonably withheld, conditioned or delayed), desirable for the purposes of implementing the Merger Scheme or the Merger. "Merger Interim Order" means the order of the Irish Court made in connection with the Merger Scheme in a form acceptable to Kneat and Fortune, acting reasonably, providing for, among other things, directions as to the appropriate scheme meetings that must be held in connection with the Merger Scheme and the calling and holding of the Merger Scheme Meetings, as the same may be amended, supplemented or varied by the Irish Court. "Merger Meetings" means the Merger EGM and the Merger Scheme Meetings. "Merger Ordinary Share Class Scheme Meeting" means the meeting of Kneat Ordinary Shareholders convened by order of the Irish Court to consider and vote on the approval of the Merger Scheme. "Merger Resolutions" means the Merger Scheme Meeting Resolutions and the Merger EGM Resolutions. "Merger Scheme" or "Scheme of Arrangement" means the proposed scheme of arrangement under Chapter 1 of Part 9 of the Irish Act and the related reduction of capital under Sections 84 to 86 of the Irish Act to effect the Merger pursuant to the Transaction Agreement, on the terms and for the issue of the Acquired Fortune Shares and on such other terms and in such form not being inconsistent therewith as the Parties mutually agree in writing, including any revision thereof as may be so agreed between the Parties. "Merger Scheme Meetings" means the Merger A Convertible Share Class Scheme Meeting, the Merger A Ordinary Share Class Scheme Meeting, the Merger Convertible Share Class Scheme Meeting and the Merger Ordinary Share Class Scheme Meeting. "Merger Scheme Meeting Resolution" means, with respect to each Merger Scheme Meeting, the resolution to be considered and voted on at that Merger Scheme Meeting proposing that the Merger Scheme, with or without amendment, except for a technical or procedural amendment which is required for the proper implementation of the Merger Scheme and does not have a substantive consequence on the implementation of the Merger Scheme), be agreed to. "MI " means Multilateral Instrument Protection of Minority Shareholders in Special Transactions. "Name Change" means the change of Fortune's name from "Fortune Bay Corp." to "kneat.com, inc." or such other name as may be approved by Kneat in its sole discretion. "NEO" or "Named Executive Officer" means a named executive officer, which includes: (f) the chief executive officer (the "CEO"); 14

23 (g) (h) (i) the chief financial officer (the "CFO"); each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000 for that financial year; and each individual who would be an NEO under paragraph (c) but for the fact that the individual was neither an executive officer, nor acting in a similar capacity, at the end of that financial year. "New Fortune" or "Resulting Issuer" "New Fortune Board" means Fortune after the completion of the Transaction. the board of directors of the New Fortune. "New Fortune Shares" means the common shares in the authorized share structure of Fortune to be created and issued under the Arrangement. "NI " means National Instrument Standards of Disclosure for Mineral Projects. "NI " means National Instrument Resale of Securities. "NI " means National Instrument Prospectus Exemptions. "NI " means National Instrument Continuous Disclosure Obligations. "Non Arm's Length Party" means in relation to a company, a promoter, officer, director, other Insider or Control Person of that Company (including an issuer) and any associates or affiliates of any of such Persons. In relation to an individual, means any associate of the individual or any company of which the individual is a promoter, officer, director, Insider or Control Person. "Non-Registered Holder" has the meaning ascribed thereto in "General Proxy Information Non- Registered Holders". "Outside Date" means June 30, 2016, or such later date as may be agreed to in writing by the Parties. "Parties" means Kneat, Fortune and SpinCo and "Party" means any one of them. "Permit" has the meaning ascribed thereto in the Transaction Agreement. "Person" includes an individual, partnership, association, body corporate, trust, trustee, executor, administrator, legal representative, government (including any 15

24 Governmental Entity) or any other entity, whether or not having legal status. "Plan of Arrangement" means the plan of arrangement in the form and content set out in Appendix B to this Circular, and any amendments or variations thereto made in accordance with the Transaction Agreement or the Plan of Arrangement. "Record Date" means May 11, "Registered Fortune Shareholder" "Registered Plan" "Regulation S" means a registered holder of Fortune Shares. has the meaning ascribed thereto in the section entitled "Certain Canadian Federal Income Tax Considerations". means Regulation S promulgated by the SEC pursuant to the U.S. Securities Act. "Related Party Transaction" has the meaning ascribed to that term in Policy 5.9 of the TSXV, and includes a related party transaction that is determined by the TSXV, to be a Related Party Transaction. The TSXV may deem a transaction to be a Related Party Transaction where the transaction involves Non Arm's Length Parties, or other circumstances exist which may compromise the independence of the issuer with respect to the transaction. "Representative" has the meaning ascribed thereto in the Transaction Agreement. "Retained Assets" means the following assets of Fortune: (i) CAD$8,450,000 in cash; and (ii) all minute books of Fortune and copies of all books, ledgers, files, lists, reports, operating records, correspondence, and other data and information, including all data and information stored on computer-related or other electronic media, relating to Taxes of Fortune or which may reasonably be required by Fortune after the Arrangement Effective Time in connection with Returns, for audit purposes or in connection with required public disclosure pursuant to applicable Securities Laws or stock exchange rules. "Returns" means all reports, forms, elections, designations, information statements and returns (whether in tangible, electronic or other form) including any amendments, schedules, attachments, supplements, appendices and exhibits thereto relating to, or required to be filed or prepared in connection with any Taxes. "SEC" means the United States Securities and Exchange Commission. "Section 3 (a) (10) Exemption" means the exemption from the registration requirements of the U.S. Securities Act provided under Section 3(a)(10) thereof. "Securities Act" means the Securities Act (Ontario) and the rules, regulations and published policies made thereunder, as now in effect and as they may be promulgated or 16

25 amended from time to time. "Securities Authorities" means the securities commissions or other securities regulatory authorities in each of the provinces of Canada and the SEC, collectively. "Securities Laws" means the Securities Act, the U.S. Securities Act, the U.S. Exchange Act, Irish Securities Laws and EU Securities Laws together with all other applicable provincial or other securities laws, rules and regulations and published policies thereunder, as applicable, as now in effect and as they may be promulgated or amended from time to time. "SEDAR" means the System for Electronic Disclosure Analysis and Retrieval. "Special Committee" means the special committee of the Fortune Board formed to consider the Transaction. "SpinCo" means Canada Limited, a company existing under the CBCA. "SpinCo Assets" means all of the assets of Fortune (including, for greater certainty, the assets listed in Schedule G to the Transaction Agreement) other than the Retained Assets. "SpinCo Board" means the board of directors of SpinCo as the same is constituted from time to time. "SpinCo Disposition" means the distribution by Fortune of SpinCo Shares to Fortune Shareholders pursuant to the Arrangement. "SpinCo Liabilities" means all liabilities or obligations of any type whatsoever (whether contingent or absolute, and including all future obligations) of Fortune and its subsidiaries that, following the Arrangement Effective Time, Fortune or any of its subsidiaries pays or discharges, or is legally or otherwise obliged to pay or discharge, but which relates to or was incurred or accrued the period prior to the Arrangement Effective Time with respect to the SpinCo Assets and/or subsidiaries of Fortune, including, without limitation, (i) any employee obligations, (ii) any environmental liabilities, and (iii) all liabilities or obligations of any type whatsoever of Fortune in connection with any tax which is payable to any Governmental Entity, including any tax in connection with either (a) the SpinCo Reorganization (as defined in the Transaction Agreement) or (b) in respect of the SpinCo Disposition (but only to the extent that such Tax is payable after Fortune has claimed the maximum amount of all credits, deductions, and other amounts available to it (including any loss carryforwards) for the taxation year of Fortune that includes the SpinCo Reorganization and the SpinCo Disposition. "SpinCo Stock Option Plan" means the rolling stock option plan of SpinCo. 17

26 "SpinCo Stock Option Plan Resolution" means the ordinary resolution of the Fortune Shareholders to approve the SpinCo Stock Option Plan. "SpinCo Shares" means the common shares in the authorized share capital of SpinCo. "SpinCo Warrants" means the outstanding warrants to purchase SpinCo Shares. "subsidiary" means, with respect to any specified Person, any other Person of which such specified Person will, at the time, directly or indirectly through one or more subsidiaries, (a) own at least 50% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally, (b) hold at least 50% of the partnership, limited liability company, joint venture or similar interests or (c) be a general partner, managing member or joint venturer. "Tax Act" means the Income Tax Act (Canada), as amended from time to time. "Tier 1 Surplus Escrow" means the escrow provisions for surplus securities for Tier 1 issuers, as set out in TSXV Policy 5.4. "Transaction" means the Arrangement and the Merger. "Transaction Agreement" "TSX" means the transaction agreement dated February 9, 2016 among Kneat, Fortune and SpinCo, as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof. means the Toronto Stock Exchange. "TSXV" means the TSX Venture Exchange. "U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as the same has been and hereinafter from time to time may be amended. "U.S. Person" has the meaning ascribed to such term under Rule 902(k) of Regulation S of the U.S. Securities Act. "U.S. Securities Act" means the United States Securities Act of 1933, as the same has been and hereinafter from time to time may be amended. "United States" or "U.S." means the United States of America, its territories and possessions, any State of the United States and the District of Columbia. 18

27 SUMMARY The following is a summary of information relating to Fortune, Kneat, SpinCo and Resulting Issuer (assuming completion of the Transaction) and should be read together with the more detailed information and financial data and statements contained elsewhere in this Circular or incorporated by reference in the Circular. This summary is qualified in its entirety by the more detailed information appearing elsewhere in this Circular, including the Appendices which are incorporated into and form part of this Circular. Terms with initial capital letters in this summary are defined in the Glossary of Terms immediately preceding this summary. The Meeting The Meeting will be held at the office of Computershare, 1969 Upper Water Street, Suite 2008, in the City of Halifax, Nova Scotia on June 15, 2016 at 2:00 p.m. (Atlantic Time). Record Date Only Fortune Shareholders of record as at 5:00 p.m. (Atlantic time) on May 11, 2016 will be entitled to receive notice of the Meeting, or any adjournment or postponement thereof. Only Fortune Shareholders of record as at 5:00 p.m. (Atlantic time) on May 11, 2016 will be entitled to vote at the Meeting. Purpose of the Meeting The Meeting is an annual and special meeting of Fortune Shareholders. At the Meeting, Fortune Shareholders will be asked to consider and, if deemed advisable, to pass, the Arrangement Resolution approving the Arrangement. The full text of the Arrangement Resolution is set out in Appendix A to this Circular. In order to implement the Arrangement, the Arrangement Resolution must be approved, with or without amendment, by: (i) (ii) not less than two-thirds of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting and voting as a single class; and a majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI See "The Transaction The Arrangement Approval of Arrangement Resolution" and "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters MI ". Additionally, at the Meeting, Fortune Shareholders will be asked to consider and, if deemed advisable, to pass, with or without amendment, the Fortune Merger Resolution, the Fortune Board Resolution, the Fortune Amended Stock Option Plan Resolution, the SpinCo Stock Option Plan Resolution, the Compensation Shares Resolution, the DSUP Resolution, and to appoint as auditors of the Company for the forthcoming year, PricewaterhouseCoopers LLP, Chartered Accountants, at a remuneration to be fixed by the Fortune Board. In order to become effective, the ordinary resolution approving the Merger must be passed by a simple majority of the votes cast on the Fortune Merger Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI The ordinary resolutions approving the Fortune Board, the Fortune Amended Stock Option Plan, the SpinCo Stock Option Plan and the appointment as auditors of the Company for the forthcoming year, PricewaterhouseCoopers LLP, Chartered Accountants, at a remuneration to be fixed by the Fortune Board, must be passed by a simple majority of the votes cast on these resolutions by the Fortune Shareholders. The ordinary resolutions approving the issuance of the Compensation Shares must be passed by a simple majority of the votes cast on the Compensation Shares Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by the senior officers and the directors who will be issued the Compensation Shares. The ordinary resolutions approving the DSUP must be passed by a simple majority of the votes cast on the DSUP Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by the directors and senior officers of Fortune. 19

28 See "The Transaction The Merger", "Other Matters to be Considered at the Meeting" Appointment of Auditors, Election of Directors, Approval of the Fortune Amended Stock Option Plan, Approval of the SpinCo Stock Option Plan", Approval of the Compensation Shares and Approval of the DSUP." Fortune Fortune is engaged in the exploration and potential development of the Goldfields project, located in northern Saskatchewan and consists of two gold deposits: the Box deposit and the Athona deposit. Fortune also holds the Ixhuatán project located in the northern Chiapas State in Mexico. See "Appendix E Information Concerning Fortune and Annual Meeting Matters". Kneat Kneat, headquartered in Limerick, Ireland, is in the business of developing and marketing the Kneat Gx platform software that meets the stringent pharmaceutical industry regulatory requirements for all forms of validation, equipment changeover management, risk lifecycle management, change control and much more. It has been designed to allow the customer to configure and manage many regulated data and document processes in a paperless environment. See "Appendix F Information Concerning Kneat". The Transaction The Transaction will result, through a series of steps, in: Fortune Shareholders receiving one (1) New Fortune Share and one and one half (1.5) of a SpinCo Share in exchange for each three (3) Fortune Shares held by them to be effected through the Arrangement by way of a court-approved Plan of Arrangement; Kneat Shareholders receiving that number of New Fortune Shares representing 68.7% of the issued and outstanding New Fortune Shares in exchange for the acquisition by Fortune of all the issued and outstanding Kneat Shares; the change of Fortune's name to "kneat.com, inc."; delisting of the Fortune Shares from the TSX and listing of the New Fortune Shares on the TSXV; and the change of SpinCo's name to "Fortune Bay Corp." Thus, upon completion of the Transaction, SpinCo will own and operate the existing business of Fortune, and Fortune will own and operate the existing business of Kneat. See "The Transaction The Arrangement Principal Steps of the Arrangement", "Information Concerning Kneat", "Information Concerning New Fortune" and "Information Concerning SpinCo" and Appendix E, Appendix F, Appendix G and Appendix H to this Circular. A copy of the Plan of Arrangement is attached as Appendix B and forms an integral part of this Circular. Fortune Shareholders are encouraged to read the Transaction Agreement as it is the principal agreement that governs the Transaction. The Transaction Agreement may be found under Fortune's company profile on SEDAR at For a summary of the principal provisions of the Transaction Agreement, see "The Transaction The Arrangement The Transaction Agreement". Treatment of Fortune Options and Fortune Warrants There are currently 2,000,000 Fortune Options outstanding. Upon completion of the Transaction, the Fortune Options will be consolidated on a one-for-three basis (1:3) resulting in a total of 666,667 Fortune Options at an average exercise price of $

29 There are currently 803,572 Fortune Warrants outstanding. Upon completion of the Transaction, the Fortune Warrants will be consolidated on a one-for-three basis (1:3) resulting in a total of 267,857 Fortune Warrants at an exercise price of $0.90. In addition, consistent with the terms of the Arrangement, holders of the Fortune Warrants will receive one and one-half (1.5) SpinCo Warrants for every one (1) Fortune Warrant held, exercisable at $0.60 per SpinCo Warrant. Treatment of Kneat Options As at April 30, 2016, 30,558 Kneat Options were outstanding. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat Options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an estimated exercise price of $0.90 will be granted by Fortune to former holders of the Kneat Options and other individuals as determined by the New Fortune Board. See "Appendix F Information Concerning Kneat Description of the Securities" and "Appendix G Information Concerning New Fortune Options to Purchase Securities". Background to the Transaction The provisions of the Transaction Agreement are the result of arm's length negotiations conducted between representatives of Fortune and Kneat and their respective advisors. See "The Transaction The Arrangement Background to the Arrangement" for a summary of the meetings, negotiations, discussions and actions between Fortune and Kneat that preceded the execution and public announcement of the Transaction Agreement. Recommendation of the Special Committee and the Fortune Board After careful consideration of a number of factors, as described under the heading "The Transaction The Arrangement Reasons for the Transaction", the Special Committee has unanimously recommended that the Fortune Board approve the Arrangement and recommend that Fortune Shareholders vote for the Arrangement, and the Fortune Board has unanimously determined that the Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders. Accordingly, the Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Arrangement Resolution. The Transaction Agreement The Arrangement and the Merger will be effected pursuant to the Transaction Agreement. The Transaction Agreement contains covenants and warranties of and from each of Fortune, Kneat and SpinCo, as applicable, and various conditions precedent, both mutual and with respect to Fortune and Kneat. The Transaction Agreement may be terminated before the Arrangement Effective Time in certain circumstances. This Circular contains a summary of certain provisions of the Transaction Agreement and is qualified in its entirety by the full text of the Transaction Agreement, a copy of which is available under Fortune's company profile on SEDAR at See "The Transaction The Arrangement The Transaction Agreement". Reasons for the Transaction The following is a summary of the principal reasons for the unanimous recommendation of the Fortune Board that Fortune Shareholders vote FOR the Arrangement Resolution: Continued Participation by Fortune Shareholders in the Fortune Mineral Properties Through SpinCo. Fortune Shareholders, through their ownership of SpinCo Shares, will continue to participate in the opportunities associated with the Fortune Mineral Properties being transferred to SpinCo. Such former Fortune Shareholders will hold 100% of the issued and outstanding SpinCo Shares upon completion of the Transaction, and SpinCo will have the same staff and management team to pursue the exploration business formerly run by Fortune. Participation by Fortune Shareholders in Kneat's Business Through Fortune. Fortune Shareholders, through their ownership of New Fortune Shares, will have the ability to participate in the opportunities associated with Kneat's business of developing and marketing the Kneat Gx platform software being transferred to Fortune. Such former Fortune Shareholders will hold 31.3% of the issued and outstanding New Fortune Shares upon completion of the Transaction. 21

30 Process. Following negotiations with Kneat and careful consideration of the alternatives, the Fortune Board considers the Transaction to be the best available means to maximize shareholder value. Recommendation of Special Committee. The Special Committee, comprised of independent directors on the Fortune Board, has concluded, after receiving advice from its advisors, that the Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders and has unanimously recommended that the Fortune Board approve the Arrangement. Low Completion Risk. There are no material competition or other regulatory issues which are expected to arise in connection with the Transaction that would prevent its completion, and all required regulatory clearances and approvals are expected to be obtained. The Transaction is subject to conditions that are in line with similar transactions of this nature. Required Fortune Shareholder and Court Approval. The Arrangement Resolution must be approved by (i) not less than two-thirds of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting and voting as a single class, and (ii) a majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI The Arrangement must also be sanctioned by the Court, which will consider, among other things, the fairness of the Arrangement to Fortune Shareholders. The Fortune Merger Resolution must be approved by a simple majority of the votes cast on the Fortune Merger Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI Dissent Rights. Registered Fortune Shareholders who oppose the Arrangement may, on strict compliance with certain conditions, exercise their Dissent Rights and receive the fair value of their Fortune Shares in accordance with the Arrangement. Fortune Irrevocable Undertaking. Fortune Key Shareholders, being Fortune's directors and officers, who, as of the Record Date, in the aggregate hold approximately 15.5% of the issued and outstanding Fortune Shares have entered into the Fortune Irrevocable Undertakings pursuant to which they agree to vote in favour of the Arrangement. See "Cautionary Note Regarding Forward-Looking Statements and Risks" and "The Transaction The Arrangement - Reasons for the Transaction". Fortune Irrevocable Undertakings On February 9, 2016, Kneat entered into a Fortune Irrevocable Undertaking with each of the directors and officers of Fortune. The Fortune Irrevocable Undertakings set forth, among other things, the agreement of each director and officer of Fortune to vote in favour of the Arrangement. As of the Record Date, approximately 15.5% of the issued and outstanding Fortune Shares were subject to the Fortune Irrevocable Undertaking. See "The Transaction The Arrangement - Fortune Irrevocable Undertaking ". Fortune and SpinCo after the Transaction Kneat is currently owned by the Kneat Shareholders and is engaged in the development and marketing of the Kneat Gx platform software that meets the stringent pharmaceutical industry regulatory requirements for all forms of validation, equipment changeover management, risk lifecycle management, change control and much more. Upon completion of the Transaction, Fortune will own and operate the existing business of Kneat and Fortune Shareholders will own 31.3% of New Fortune, with the remaining 68.7% owned by the Kneat Shareholders. New Fortune will continue to be a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland following completion of the Transaction. See "Information Concerning Kneat" and "Information Concerning New Fortune" and Appendix F and Appendix G to this Circular. 22

31 SpinCo is a newly incorporated company that has been formed to acquire and hold the SpinCo Assets. The head office of SpinCo is located at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7. SpinCo's registered office is located at 77 King Street West, Suite 3000, TD Centre North Tower, Toronto, ON M5K 1G8. Upon completion of the Transaction, Fortune Shareholders will own 100% of SpinCo and SpinCo will hold the SpinCo Assets, including the Fortune Mineral Properties. SpinCo expects that it will be a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland following completion of the Transaction. Application has been made for the listing of the SpinCo Shares on the TSXV. The TSXV has conditionally accepted the Transaction subject to SpinCo fulfilling all of the requirements of the TSXV on or before August 10, There can be no assurances as to if, or when, the SpinCo Shares will be listed or traded on the TSXV, or any other stock exchange. See "Information Concerning SpinCo" and Appendix H to this Circular. Court Approval The Arrangement requires Court approval under the CBCA. In addition to this approval, the Court will be asked for a declaration following a Court hearing that the Arrangement is fair to the Fortune Shareholders, which will, in part, serve as the basis for the Section 3(a)(10) Exemption. Before the mailing of this Circular, Fortune obtained the Arrangement Interim Order providing for the calling and holding of the Meeting, the Dissent Rights and certain other procedural matters. If the Arrangement Resolution is passed at the Meeting as provided for in the Arrangement Interim Order, Fortune intends to make an application to the Court for the Arrangement Final Order at 10:00 a.m. (Toronto time), or as soon thereafter as counsel may be heard, on June 17, 2016 at the Courthouse, 330 University,, Avenue, 8th Floor, Toronto, Ontario, or at any other date and time as the Court may direct. The Arrangement Final Order is required for the Arrangement to become effective, and before the hearing of the Arrangement Final Order, the Court will be informed that the Arrangement Final Order will also constitute the basis for the Section 3(a)(10) Exemption under the U.S. Securities Act with respect to the New Fortune Shares and SpinCo Shares to be issued pursuant to the Arrangement. Fortune has been advised by its legal counsel, Fogler, Rubinoff LLP, that the Court has broad discretion under the CBCA when making orders with respect to the Arrangement and that the Court will consider, among other things, the fairness and reasonableness of the Arrangement, both from a substantive and a procedural point of view. The Court may approve the Arrangement, either as proposed or as amended, on the terms presented or substantially on those terms. Depending upon the nature of any required amendments and in accordance with the Transaction Agreement, Fortune may determine not to proceed with the Arrangement. Any Fortune Shareholder who wishes to appear or be represented and to present evidence or arguments at that hearing must file and serve a response to petition no later than 4:00 p.m. (Toronto time) on June 15, 2016 along with any other documents required, all as set out in the Arrangement Interim Order and Notice of Application for Arrangement Final Order, the texts of which are set out in Appendix C to this Circular, and satisfy any other requirements of the Court. Such persons should consult with their legal advisor with respect to the legal rights available to them in relation to the Arrangement and as to the necessary requirements to assert any such rights. See "The Transaction The Arrangement Court Approval of the Arrangement". In addition, the Merger Scheme requires approval under the Irish Act. Subject to the terms of the Transaction Agreement, and if the Merger Resolutions are approved by the Kneat Shareholders at the Merger Meetings in the manner required by the Merger Interim Order, Kneat intends to make an application to the Irish Court for the Merger Final Order. The application for the Merger Final Order approving the Scheme of Merger is currently scheduled for June 21, Procedure for Exchange of Fortune Shares under the Arrangement At the time of sending this Circular to each Fortune Shareholder, Fortune is also sending to each Registered Fortune Shareholder the Letter of Transmittal. The Letter of Transmittal is for use by Registered Fortune Shareholders only and is not to be used by Non-Registered Holders. Non-Registered Holders should contact their broker or other Intermediary for instructions and assistance in receiving the consideration in respect of their Fortune Shares. The Letter of Transmittal contains instructions with respect to the deposit of certificates representing Fortune Shares with the Depositary in order to receive the certificates or DRS Statements representing New Fortune Shares and SpinCo Shares to which Registered Fortune Shareholders are entitled under the Arrangement. 23

32 No fractional New Fortune Shares or fractional SpinCo Shares will be issued. Where the aggregate number of New Fortune Shares or SpinCo Shares to be issued under the Arrangement would result in a fraction of a New Fortune Share or SpinCo Share being issuable to a Fortune Shareholder, the number of New Fortune Shares or SpinCo Shares to be received by such Fortune Shareholder will be rounded down to the nearest whole New Fortune Share or SpinCo Share, as the case may be, and such Fortune Shareholder will not be entitled to compensation in respect of such fractional New Fortune Share or SpinCo Share, as the case may be. See "The Transaction The Arrangement Procedure for Exchange of Fortune Shares". Dissent Rights The Plan of Arrangement provides that the Fortune Shares of Registered Fortune Shareholders who validly exercise Dissent Rights and who are ultimately entitled to be paid the fair value, in cash, for those Fortune Shares, will be acquired by Fortune as at the Arrangement Effective Time, in consideration for the payment by Fortune of the fair value thereof, in cash. Kneat is not obligated to complete the Arrangement if Registered Fortune Shareholders holding more than 5% of the issued and outstanding Fortune Shares exercise the Dissent Rights in respect of the Arrangement. Registered Fortune Shareholders who wish to dissent should take note that strict compliance with the Dissent Procedures is required. Any Dissenting Shareholder who ultimately is not entitled to be paid the fair value, in cash, of his, her or its Fortune Securities will be deemed to have participated in the Arrangement on the same basis as non-dissenting Shareholders, and (i) each three (3) Fortune Shares held by such Dissenting Shareholder, if any, will be deemed to be transferred to and acquired by Fortune in exchange for one (1) New Fortune Share and one and one-half (1.5) of a SpinCo Share. In no case, however, will Fortune or SpinCo or any other person be required to recognize such persons as holders of Fortune Securities after the Arrangement Effective Time, and the names of such persons will be deleted from the central securities registers of Fortune at the Arrangement Effective Time. See "Dissent Rights". Income Tax Considerations Canadian Federal Income Tax Matters Please refer to the summary of Canadian federal income tax considerations contained in this Circular set forth under "Certain Canadian Federal Income Tax Considerations". All Fortune Shareholders should consult their own tax advisors for advice with respect to their own particular circumstances. Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters Fortune is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. The Fortune Shares are listed and posted for trading on the TSX. It is a condition precedent to the obligations of Fortune and Kneat to complete the Transaction that the TSX or the TSXV, as the case may be, has conditionally approved the listing of the New Fortune Shares to be issued pursuant to the Transaction, subject only to the satisfaction by Fortune of customary listing conditions of the TSXV. Upon completion of the Transaction, SpinCo expects that it will be a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. Application has been made for the listing of the SpinCo Shares on the TSXV. Any listing will be subject to meeting the initial listing requirements of the TSXV. There can be no assurance as to if, or when, the SpinCo Shares will be listed or traded on the TSXV or any other stock exchange. It is not a condition of the Arrangement that the TSXV has conditionally approved the listing of the SpinCo Shares. As the SpinCo Shares are not listed on a stock exchange, unless and until such a listing is obtained, holders of SpinCo Shares may not have a market for their shares. The distribution of the New Fortune Shares and SpinCo Shares pursuant to the Transaction will constitute a distribution of securities which is exempt from the prospectus requirements of Canadian Securities Laws. The New Fortune Shares and SpinCo Shares received pursuant to the Transaction will not bear any legend under Canadian Securities Laws and may be resold through registered dealers in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, provided that (i) Fortune or SpinCo, as applicable, is and has been a reporting issuer in a jurisdiction in Canada for the four months immediately preceding the trade, (ii) the trade is not a "control distribution" as defined in NI , (iii) no 24

33 unusual effort is made to prepare the market or to create a demand for the New Fortune Shares or SpinCo Shares, (iv) no extraordinary commission or consideration is paid to a person in respect of such sale, and (v) if the selling securityholder is an insider or officer of Fortune or SpinCo, as applicable, the selling securityholder has no reasonable grounds to believe that Fortune or SpinCo, as applicable, is in default of applicable Canadian Securities Laws. Each Fortune Shareholder is urged to consult his, her or its professional advisors to determine the conditions and restrictions applicable under Canadian Securities Laws to trades in New Fortune Shares and SpinCo Shares that the Fortune Shareholder is entitled to receive under the Arrangement. See "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters". United States Securities Law Matters The New Fortune Shares and SpinCo Shares to be issued by Fortune to Fortune Shareholders pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act or any applicable Securities Laws of any state of the United States, and will be issued in reliance upon the Section 3(a)(10) Exemption and similar exemptions from registration or qualification under any applicable Securities Laws of any state of the United States. The Section 3(a)(10) Exemption provides an exemption from the registration requirements of the U.S. Securities Act for securities issued in exchange for one or more outstanding securities or interests where the terms and conditions of the issuance and exchange of such securities have been approved by a court authorized to grant such approval after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all persons to whom the securities will be issued have the right to appear and have received adequate notice thereof. The U.S. Securities Act imposes restrictions on the resale of New Fortune Shares and SpinCo Shares received pursuant to the Arrangement by persons who will be "affiliates" of Fortune and SpinCo after the Arrangement Effective Time or who have been affiliates of Fortune or Kneat within 90 days before the Arrangement Effective Time. See "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters United States Securities Law Matters". Interests of Insiders, Promoters or Control Persons of the Company Except as otherwise stated herein and as disclosed below, none of the Insiders, promoters or Control Persons of Fortune or any of their respective associates and affiliates (before and after giving effect to the Transaction) have any interest in the Transaction. Wade K. Dawe, the Chairman and CEO of Fortune, holds less than 1% of Kneat Shares. Not a Non-Arm's Length Qualifying Transaction The Transaction constitutes an Arm's Length Transaction. Use of Funds Available on Completion of the Transaction As at April 30, 2016, Fortune had estimated working capital of $9,200,000 and Kneat had estimated negative working capital of $150,000. It is estimated that upon completion of the Transaction, New Fortune will have $7,400,000 in working capital. The following table sets out the estimated available funds after giving effect to the Transaction and the proposed principal uses for those funds: Expenditure Amount (as at April 30, 2016) Increase in salaries and wages, recruitment costs and commissions due to hiring of key employees including sales staff, CFO, account managers and program developers over the twelve month period following the Transaction $3,000,000 Expansion of office space and infrastructure improvements $370,000 25

34 Marketing and distribution (non-labour) $200,000 Research and development (non-labour) $345,000 Estimated amount payable under the EIIS Proposal $670,000 General and Administrative $400,000 Unallocated Working Capital $2,415,000 See "Appendix G Information Concerning the Resulting Issuer Available Funds and Principal Purposes". Select Pro Forma Consolidated Financial Information The following table sets out certain pro forma financial information for the Resulting Issuer assuming completion of the Transaction. The following information should be read in conjunction with the unaudited pro forma consolidated financial statements set forth in this Circular. Please see "Appendix G Information Concerning New Fortune". Selected Financial Information Fortune (as at Dec 31, 2015) Kneat (as Dec 31, 2015) Pro Forma Adjustment Resulting Issuer Pro Forma Consolidation Current Assets 7,990,662 1,694, ,338 10,144,639 Total Assets 22,728,299 4,244,958 (14,278,299) 12,694,958 Current Liabilities 589, ,136 (189,959) 1,247,136 Total Liabilities 589,959 2,004,910 (189,958) 2,404,911 Shareholders' Equity (Deficiency) New Fortune Shares Issued and Outstanding 22,138,340 2,240,048 (14,088,340) 10,290,048 27,828,496-11,735,140 39,563,636 Company's Listing on the TSXV Fortune is a reporting issuer under the Securities Laws of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. The Fortune Shares are listed and posted for trading on the TSX under the symbol "FOR". Upon completion of the Transaction it is expected that the Fortune Shares will be delisted from the TSX, and the New Fortune Shares and the SpinCo Shares will be listed on the TSXV. No public market currently exists for the Kneat Shares and the SpinCo Shares. Market Price of Fortune Shares The outstanding Fortune Shares are listed on the TSX under the trading symbol "FOR". On February 10, 2016, Fortune issued a press release announcing the Transaction. On February 9, 2016, the last trading day before it was announced that Fortune and Kneat had entered into the Transaction Agreement, the closing price of the Fortune Shares on the TSX was $0.27. Conditional Listing Approval The TSXV has conditionally accepted the Transaction, and listing of the New Fortune Shares and SpinCo Shares on the TSXV, subject to Fortune fulfilling all of the requirements of the TSXV on or before August 10, Conflicts of Interest Some of the individuals proposed for appointment as directors or officers of the Resulting Issuer and of SpinCo upon the completion of the Transaction or who may be considered promoters of the Resulting Issuer and/or of SpinCo are also directors, officers and/or promoters of other reporting and non-reporting issuers. Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible acquisitions or in generally 26

35 acting on behalf of the Resulting Issuer or of SpinCo, as the case may be, notwithstanding that they will be bound by the provisions of the CBCA to act at all times in good faith in the interest of the Resulting Issuer or of SpinCo, as the case may be, and to disclose such conflicts to the Resulting Issuer or to SpinCo, as the case may be, if and when they arise. To the best of its knowledge, Fortune is not aware of the existence of any conflicts of interest between Fortune and any of its directors and officers as of the date of this Circular. To the best of its knowledge, Kneat is not aware of the existence of any conflicts of interest between Kneat and any of its directors and officers as of the date of this Circular. To the best of its knowledge, SpinCo is not aware of the existence of any conflicts of interest between SpinCo and any of its directors and officers as of the date of this Circular. The Fortune Shareholders must appreciate that they will be required to rely on the judgment and good faith of its directors and officers, as well as on the judgment and good faith of the directors and officers of Kneat and SpinCo, in resolving any conflicts of interest that may arise. Interests of Experts Except as disclosed below, to the knowledge of Fortune and Kneat, no person or company whose profession or business gives authority to a statement made by the person or company and who is named as having prepared or certified a part of this Circular or as having prepared or certified a report or valuation described or included in this Circular holds any beneficial interest, direct or indirect, in any securities or property of Fortune, Kneat, the Resulting Issuer or an associate or affiliate of the foregoing. A partner at the Irish member firm of the PricewaterhouseCoopers network of firms holds less than 1% of Kneat Shares. Risk Factors Fortune Shareholders should carefully consider the risk factors relating to the Transaction. Some of these risks include, but are not limited to: the Transaction Agreement may be terminated in certain circumstances, including the occurrence of a Material Adverse Effect relating to Fortune; there can be no certainty that all conditions precedent to the Transaction will be satisfied; Fortune will incur costs even if the Transaction is not completed; directors and executive officers of Fortune may have interests in the Transaction that are different from those of the other Fortune Shareholders; the market price for Fortune Shares may decline if the Transaction is not completed; the issue of New Fortune Shares under the Transaction may cause the market price of New Fortune Shares to decline; and there is currently no market for the SpinCo Shares. For more information see "Transaction The Arrangement Risks associated with the Transaction". Additional risks and uncertainties, including those currently unknown or considered immaterial by Fortune, may also adversely affect the Fortune Shares and SpinCo Shares or the business of Fortune or SpinCo following the Transaction. In addition to the risk factors relating to the Transaction set out in this Circular, Fortune Shareholders should also carefully consider the risk factors associated with the business of Fortune set forth in the section entitled "Risk Factors" of Fortune's MD&A, which is available on SEDAR at and the risk factors set forth in the section entitled "Risk Factors" in "Appendix H Information Concerning SpinCo" to this Circular, as such risk factors will be associated with the business of SpinCo following completion of the Arrangement. Fortune Shareholders should also carefully consider the risk factors associated with the business of Kneat set forth in the section entitled "Risk Factors" in "Appendix F Information Concerning Kneat" to this Circular as such risk factors will be associated with the business of Fortune following completion of the Transaction. GENERAL PROXY INFORMATION Solicitation of Proxies This Circular is furnished in connection with the solicitation of proxies by the management of Fortune for use at the Meeting, to be held on June 15, 2016, at the time and place and for the purposes set forth in the accompanying Notice of Meeting. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the directors, officers and regular employees of Fortune at nominal cost. All costs of solicitation by management will be borne by Fortune. 27

36 Appointment and Revocation of Proxies The individuals named in the accompanying form of proxy have been selected by the Fortune Board and have agreed to represent, as proxyholder, Fortune Shareholders appointing them. A FORTUNE SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO MUST BE A FORTUNE SHAREHOLDER AS MORE SPECIFICALLY SET OUT BELOW) TO REPRESENT HIM, HER OR IT AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by Computershare, at its offices at 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, or by Internet voting at or by telephone voting at VOTE (8683) Toll Free (in Canada), not less than 48 hours (Saturdays, Sundays, and holidays excepted) before the scheduled time of the Meeting or any adjournment thereof. The time limit for the deposit of proxies may be waived or extended by the Chairman of the Meeting at his or her discretion without notice. A person must not be appointed a proxyholder unless the person is a Fortune Shareholder, unless: (a) the Fortune Shareholder is a corporation; (b) there is only one Fortune Shareholder at the time of the Meeting; or (c) the remaining Fortune Shareholders present in person or represented by proxy at the Meeting for which the proxyholder is appointed, by resolution on which the proxyholder is not entitled to vote, permit the proxyholder to attend and vote at the Meeting. A Registered Fortune Shareholder who has given a proxy may revoke it by an instrument in writing executed by the Registered Fortune Shareholder or by his or her attorney authorized in writing or, where the Registered Fortune Shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivered to Fortune's head office, at any time up to and including the last Business Day preceding the day of the Meeting, or if adjourned, any reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting or, if adjourned, any reconvening thereof or in any other manner provided by Law. A revocation of a proxy does not affect any matter on which a vote has been taken before the revocation. Non-Registered Holders Only Registered Fortune Shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Most Fortune Shareholders are "non-registered" shareholders because the Fortune Shares they own are not registered in their own names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased their Fortune Shares. A person is not a Registered Fortune Shareholder (a "Non-Registered Holder") in respect of Fortune Shares which are held either (i) in the name of an intermediary (an "Intermediary") that the Non-Registered Holder deals with in respect of the shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans), or (ii) in the name of a clearing agency (such as CDS Clearing and Depository Services Inc.), or its nominee, of which the Intermediary is a participant. In accordance with the requirements of National Instrument Communication with Beneficial Owners of Securities of a Reporting Issuer of the Canadian Securities Administrators, Fortune has distributed copies of the Meeting Materials to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders. Intermediaries are required to forward the Meeting Materials to Non-Registered Holders other than Non-Registered Holders that have waived the right to receive them. Intermediaries will frequently use service companies to forward the Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either: (a) be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Fortune Shares beneficially owned by the Non- Registered Holder and is to be completed, but not signed, by the Non-Registered Holder and deposited with Computershare, or 28

37 (b) more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions which the Intermediary must follow. In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the Fortune Shares which they beneficially own. Should a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non-Registered Holder should strike out the names of the management proxyholders named in the form and insert the Non-Registered Holder's name in the blank space provided. Non- Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered. Voting of Proxies FORTUNE SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES IN FAVOUR OF PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY WILL, WHERE A CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED UPON HAS BEEN SPECIFIED IN THE FORM OF PROXY, BE VOTED IN ACCORDANCE WITH THE SPECIFICATION MADE. SUCH FORTUNE SHARES WILL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED BY THE SHAREHOLDER. Therefore, unless you give contrary instructions, the persons designated will vote your Fortune Shares at the Meeting as follows: FOR the Arrangement Resolution. FOR the Fortune Merger Resolution. FOR the Fortune Board Resolution. FOR the Fortune Amended Stock Option Plan Resolution. FOR the SpinCo Stock Option Plan Resolution. FOR the Compensation Shares Resolution. FOR the DSUP Resolution. FOR the ordinary resolution to appoint the auditors of Fortune. The enclosed form(s) of proxy when properly completed and delivered and not revoked, confers discretionary authority upon the person appointed proxy thereunder to vote with respect to any amendment to or variation of a matter identified in the Notice of Meeting, and with respect to any other matter which may properly come before the Meeting. If an amendment to or variation of a matter identified in the Notice of Meeting is properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated in the enclosed form(s) of proxy to vote in accordance with their best judgment on such matter or business. At the time of the printing of this Circular, the management of Fortune knows of no such amendment, variation or other matter which may be presented to the Meeting. Voting Shares and Principal Holders Thereof The authorized share structure of Fortune consists of an unlimited number of Fortune Shares. Only Registered Fortune Shareholders are entitled to receive notice of or to attend and vote at any meetings of Fortune Shareholders. As at the Record Date, there were 35,494,045 Fortune Shares issued and outstanding. Each Fortune Share will entitle the holder thereof to one (1) vote on each of the Arrangement Resolution, the Fortune Merger Resolution, the Fortune Board Resolution, the Fortune Amended Stock Option Plan Resolution, the SpinCo Stock Option Plan Resolution, the Compensation Shares Resolution, the DSUP Resolution and the resolution appointing the auditors of Fortune. A quorum for the transaction of business at the Meeting is two Fortune Shareholders present and entitled to vote. 29

38 Fortune Shareholders of record as at 5:00 p.m. (Atlantic time) on the Record Date who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and subject to the provisions described above will be entitled to vote or to have their Fortune Shares voted at the Meeting. To the knowledge of the directors and executive officers of Fortune, and based on Fortune's review of electronic filings on SEDAR and insider reports filed on the System for Electronic Disclosure by Insiders, as of the Record Date, no person or company beneficially owns, directly or indirectly, or exercises control or direction over, Fortune Shares carrying more than 10% of the voting rights attached to all Fortune Shares, except for Wade K. Dawe, Chairman and CEO of Fortune, who holds, directly and indirectly through BC Ltd., Brigus Capital Inc., Kelligrew Inc. and Wade K. Dawe Inc. and exercises control or direction over 4,779,003 Fortune Shares, representing approximately 13.5% of the issued and outstanding Fortune Shares as of the Record Date. Kneat has confirmed to Fortune that neither Kneat nor any of its affiliates held any Fortune Shares (or securities convertible into Fortune Shares) as at either the Record Date or the date of this Circular. INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON No director or executive officer of the Company, nor any person who has held such a position since incorporation, nor any nominee for election as a director of the Company, nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting other than the Transaction (see "The Transaction The Arrangement Interests of Certain Persons in the Transaction" for details), the election of directors (see "Other Matters to be Considered at the Meeting Election of Directors"), the approval of the Fortune Amended Stock Option Plan (insofar as such directors and/or officers hold Fortune Options) (see "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan", "Appendix E Information Concerning Fortune and Annual Meeting Matters Executive Compensation", and "Appendix G Information Concerning New Fortune Stock Option Plan and Executive Compensation" for particulars on the Fortune Options held by directors and executive officers, the approval of the SpinCo Stock Option Plan (insofar as such directors and/or executive officers may be granted SpinCo Options under the SpinCo Stock Option Plan, provided the SpinCo Stock Option Plan has been approved by the Fortune Shareholders at the Meeting (see "Other Matters to be Considered at the Meeting Approval of the SpinCo Stock Option Plan", "Appendix H Information Concerning SpinCo Options to Purchase Securities" and Executive Compensation"); the approval of the Compensation Shares (see "Other Matters to be Considered at the Meeting Approval of the Compensation Options"); and the approval of the DSUP (insofar as such directors and/or executive officers may be granted DSUs under the DSUP, provided the DSUP has been approved by the disinterested Fortune Shareholders at the Meeting (see "Other Matters to be Considered at the Meeting Approval of the DSUP"). THE TRANSACTION The Arrangement At the Meeting, Fortune Shareholders will be asked to consider and, if thought advisable, to pass, the Arrangement Resolution to approve the Arrangement under the CBCA pursuant to the terms of the Arrangement Interim Order, the Transaction Agreement and the Plan of Arrangement. The Arrangement, the Plan of Arrangement and the terms of the Transaction Agreement are summarized below. This summary does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement, which has been filed by Fortune under its profile on SEDAR at on February 11, 2016, and the Plan of Arrangement, which is attached as Appendix B to this Circular. In order to implement the Arrangement, the Arrangement Resolution must be approved by (i) not less than twothirds of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting and voting as a single class, and (ii) a majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI See "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters MI ". Each Fortune Share will entitle the holder thereof to one vote on the Arrangement Resolution. 30

39 A copy of the Arrangement Resolution is set out in Appendix A to this Circular. Information concerning the business and affairs of Fortune is provided in this Circular in "Appendix E - Information Concerning Fortune and Annual Meeting Matters". The audited financial statements of Fortune for the years ended December 31, 2013, 2014 and 2015 available on SEDAR at and incorporated into this Circular by reference. Information concerning New Fortune is provided in this Circular in "Appendix G - Information Concerning New Fortune". Unaudited pro-forma financial information is provided in this Circular in Schedule 1 to Appendix G. Kneat has entered into a Fortune Irrevocable Undertaking with each of Fortune's directors and officers pursuant to which each such director and officer have agreed to vote their Fortune Shares in favour of the Arrangement. Unless otherwise directed, management will vote FOR the Arrangement Resolution. If you do not specify how you want your Fortune Shares voted, the persons named as proxyholders will cast the votes represented by your proxy at the Meeting FOR the Arrangement Resolution. If the Arrangement Resolution is approved at the Meeting, the Arrangement Final Order approving the Arrangement is issued by the Court and the applicable conditions to the completion of the Arrangement are satisfied or waived, the Arrangement will take effect at the Arrangement Effective Time (which will be at 12:01 a.m. (Toronto time) or such other time as the Parties agree in writing) on the Arrangement Effective Date (which is expected to be on or about June 23, 2016). Transaction Mechanics The Transaction is to be carried out pursuant to the Transaction Agreement and the Plan of Arrangement. The Transaction will result, through a series of transactions, in: Fortune Shareholders receiving one (1) New Fortune Share and one and one-half (1.5) of a SpinCo Share for each three (3) Fortune Shares held; and Kneat Shareholders receiving that number of New Fortune Shares representing 68.7% of the issued and outstanding New Fortune Shares in exchange for the transfer to Fortune of all of the issued and outstanding Kneat Shares (see "The Merger Effect of the Scheme of Merger" below); the Name Change; delisting of the Fortune Shares from the TSX and listing of the New Fortune Shares on the TSXV; and change of SpinCo's name to "Fortune Bay Corp." Upon completion of the Transaction, SpinCo will own and operate the existing business of Fortune and Fortune will own and operate the existing business of Kneat. Fortune Shareholders will hold 100% of the issued and outstanding SpinCo Shares and 31.3% of the issued and outstanding New Fortune Shares, with the Kneat Shareholders holding the remaining 68.7% of the issued and outstanding New Fortune Shares. At the Meeting, the Fortune Shareholders will be asked to approve the Fortune Merger Resolution. See "The Transaction The Merger Approval of the Fortune Merger Resolution". Principal Steps of the Arrangement Below is a brief description of the principal steps of the Arrangement set out in the order they will occur. Cancellation of Dissent Fortune Shares 31

40 Each Dissent Share held by a Dissenting Shareholder will be surrendered and transferred to Fortune and cancelled in exchange for a cash payment from Fortune of an amount agreed upon with Fortune or equal to the fair value thereof determined in accordance with Section 5 of the Plan of Arrangement. Redesignation of Fortune Shares and Creation of New Fortune Shares The identifying name of Fortune Shares will be changed from "Common" shares to "Class A Common" shares, the voting rights of the Fortune Shares will increase from one (1) vote to two (2) votes per Fortune Share, and the special rights and restrictions set out in Appendix A to the Plan of Arrangement will attach to the Fortune Shares. An unlimited number of New Fortune Shares, being shares without par value the identifying name of which will be "Common" shares, will be created as a class, and Fortune's articles will be amended as set out in Appendix A to the Plan of Arrangement. Exchange of Fortune Shares Each Fortune Shareholder will transfer to Fortune, free and clear of any Lien, all of its Fortune Shares in exchange for the issuance or transfer by Fortune of one (1) New Fortune Share and one and one half (1.5) of a SpinCo Share for each three (3) Fortune Shares so transferred. The stated capital of the New Fortune Shares will be an amount equal to the paid-up capital of the Fortune Shares, less the Fair Market Value of the SpinCo Shares distributed on such exchange. All Fortune Shares transferred to Fortune will be cancelled. Cancellation of "Class A Common Shares" The Articles of Fortune will be amended by cancelling the class of shares designated as "Class A Common Shares", so that upon completion of the amendments of the Articles of Fortune, the authorized share capital of Fortune will be as set out in Appendix B attached to the Plan of Arrangement. Name Change Fortune's name will be changed to "kneat.com, inc.", or such other name as may be acceptable to Kneat. SpinCo's name will change to "Fortune Bay Corp." Treatment of Fortune Options and Fortune Warrants There are currently 2,000,000 Fortune Options outstanding. Upon completion of the Transaction, the Fortune Options will be consolidated on a one-for-three basis (1:3) resulting in a total 666,667 options at an average exercise price of $0.90. There are currently 803,572 Fortune Warrants outstanding. Upon completion of the Transaction, the Fortune Warrants will be consolidated on a one-for-three basis (1:3) resulting in a total 267,857 Fortune Warrants at an exercise price of $0.90. In addition, consistent with the terms of the Arrangement, holders of the Fortune Warrants will receive one and one-half (1.5) SpinCo Warrants for every one (1) Fortune Warrant held, exercisable at $0.60 per SpinCo Warrant. Background to the Transaction The provisions of the Transaction Agreement are the result of arm's length negotiations conducted between representatives of Fortune and Kneat and their respective advisors. The following is a summary of the meetings, negotiations, discussions and actions between the Parties that preceded the execution and public announcement of the Transaction Agreement. Management of Fortune has traditionally maintained an open door policy as to expressions of interest in the possibility of a transaction with Fortune. From time to time over the past couple of years, Fortune has executed confidentiality agreements with various counterparties regarding potential strategic transactions involving Fortune. On November 18, 2015, after negotiation, Fortune and Kneat executed a term sheet respecting the potential transaction. 32

41 During the period from November 18, 2015 to February 8, 2016, Fortune, Kneat and their respective legal advisors negotiated the terms of the potential transaction between Fortune and Kneat. Due diligence continued during this period. On November 6, 2015, the Fortune Board formed the Special Committee to consider the potential transaction. The Special Committee consisted of Derrick Gill, Michael Gross, David Peat and Darren Nantes. During the period from November 6, 2015 to February 8, 2016, senior management of Fortune, in consultation with certain members of the Fortune Board and legal counsel, extensively reviewed, considered and deliberated on the proposed terms of a potential transaction between Fortune and Kneat. This involved, among other things, the hiring by the Special Committee of a third party to conduct due diligence related to the Kneat technology, of which a report on findings was discussed and issued to the Special Committee. During that period, the Special Committee met on several occasions to receive updates from legal advisors and management with respect to the conduct of negotiations, status and findings from due diligence work and to provide feedback to legal advisors with respect to the terms of the Transaction. On February 6, 2016, the Special Committee and the Fortune Board held a joint meeting at which representatives of Fortune's legal advisors were present at the request of the Special Committee and the Fortune Board to consider the fairness of the Transaction. At the meeting, Fortune's legal advisors provided an overview of the terms of the proposed transaction and a summary of the most recent changes to the Transaction Agreement. The members of Special Committee then met separately and, after discussion among the members of the Special Committee, the Special Committee unanimously resolved, subject to finalizing the terms of the Transaction Agreement, to recommend to the Fortune Board that the Fortune Board recommend to Fortune Shareholders that they vote in favour of approving the Arrangement and the Arrangement Resolution. The Fortune Board met immediately after the meeting of the Special Committee to consider the Transaction. At this meeting, the Special Committee tabled its recommendation. On February 8, 2016, Fortune management and Kneat management agreed in principle to the terms of the Arrangement. The Fortune Board, having extensively reviewed, considered and deliberated on all aspects of the Transaction and the Transaction Agreement, having received the unanimous recommendation of the Special Committee, the advice of Fortune's legal counsel and senior management, and having reviewed a significant amount of information and considered a number of factors, unanimously determined that the Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders and that the Fortune Shareholders should have the opportunity to vote to approve the Arrangement. The determination of the Fortune Board is based on various factors described more fully under the heading "The Transaction The Arrangement Reasons for the Transaction". Accordingly, the Fortune Board unanimously approved the Arrangement and unanimously resolved to recommend that Fortune Shareholders vote in favour of the Arrangement Resolution. The Transaction Agreement and the Fortune Irrevocable Undertakings were executed on February 9, Prior to the opening of the financial markets on February 10, 2016, Fortune and Kneat issued a joint press release announcing the Transaction. Recommendation of the Special Committee The Fortune Board established the Special Committee to, among other things, review and consider the Arrangement. The Special Committee, having taken into account the matters it considered relevant, including the factors set out below under the heading "The Transaction The Arrangement Reasons for the Transaction", determined that the Plan of Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders. Accordingly, the Special Committee unanimously recommended that the Fortune Board approve the Arrangement and recommend that the Fortune Shareholders vote FOR the Arrangement Resolution. 33

42 Recommendation of the Fortune Board After careful consideration of a number of factors, as described under the heading "The Transaction The Arrangement Reasons for the Transaction", and having discussed the Arrangement with Fortune's advisors and based upon the unanimous recommendation of the Special Committee, the Fortune Board has unanimously determined that the Plan of Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders. Accordingly, the Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Arrangement Resolution. Each member of the Fortune Board intends to vote all of his Fortune Shares in favour of the Arrangement Resolution. Reasons for the Transaction The Fortune Board has reviewed and considered a significant amount of information and considered a number of factors relating to the Transaction with the benefit of advice from the Special Committee, Fortune's senior management and its advisors. The following is a summary of the principal reasons for the unanimous recommendation of the Fortune Board that Fortune Shareholders vote FOR the Arrangement Resolution: Continued Participation by Fortune Shareholders in the Fortune Mineral Properties Through SpinCo. Fortune Shareholders, through their ownership of SpinCo Shares, will continue to participate in the opportunities associated with the Fortune Mineral Properties being transferred to SpinCo. Such former Fortune Shareholders will hold 100% of the issued and outstanding SpinCo Shares upon completion of the Transaction, and SpinCo will have the same staff and management team to pursue the exploration business formerly run by Fortune. Participation by Fortune Shareholders in Kneat's Business Through Fortune. Fortune Shareholders, through their ownership of New Fortune Shares, will have the ability to participate in the opportunities associated with Kneat's business of developing and marketing the Kneat Gx platform software being transferred to Fortune. Such former Fortune Shareholders will hold 31.3% of the issued and outstanding New Fortune Shares upon completion of the Transaction. Process. Following negotiations with Kneat and careful consideration of the alternatives, the Fortune Board considers the Transaction to be the best available means to maximize shareholder value. Recommendation of Special Committee. The Special Committee, comprised of independent directors on the Fortune Board, has concluded, after receiving advice from its advisors, that the Arrangement is in the best interests of Fortune and is fair to the Fortune Shareholders and has unanimously recommended that the Fortune Board approve the Arrangement. Low Completion Risk. There are no material competition or other regulatory issues which are expected to arise in connection with the Transaction that would prevent its completion, and all required regulatory clearances and approvals are expected to be obtained. The Transaction is subject to conditions that are in line with similar transactions of this nature. Required Fortune Shareholder and Court Approval. The Arrangement Resolution must be approved by (i) not less than two-thirds of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting and voting as a single class, and (ii) a majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI The Arrangement must also be sanctioned by the Court, which will consider, among other things, the fairness of the Arrangement to Fortune Shareholders. The Fortune Merger Resolution must be approved by a simple majority of the votes cast on the Fortune Merger Resolution by the Fortune Shareholders, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI

43 Dissent Rights. Registered Fortune Shareholders who oppose the Arrangement may, on strict compliance with certain conditions, exercise their Dissent Rights and receive the fair value of their Fortune Shares in accordance with the Arrangement. Fortune Irrevocable Undertakings. Fortune's directors and officers, who, as of the Record Date, in the aggregate hold approximately 15.5% of the issued and outstanding Fortune Shares have entered into the Fortune Irrevocable Undertakings pursuant to which they agree to vote in favour of the Arrangement. See "Cautionary Note Regarding Forward-Looking Statements and Risks". In view of the wide variety of factors and information considered in connection with its evaluation of the Transaction, the Fortune Board and the Special Committee did not find it practicable to, and therefore did not, quantify or otherwise attempt to assign any relative weight to each specific factor or item of information considered in reaching its conclusions and recommendations. In addition, individual members of the Fortune Board and the Special Committee may have given different weights to different factors or items of information. Fortune Irrevocable Undertakings On February 9, 2016, Kneat entered into a Fortune Irrevocable Undertaking with each of the directors and officers of Fortune. The Fortune Irrevocable Undertaking set forth, among other things, the agreement of Key Fortune Shareholders to vote their Fortune Shares in favour of the Arrangement. As of the Record Date, approximately 15.5% of the issued and outstanding Fortune Shares held by Fortune's directors and officers were subject to the Fortune Irrevocable Undertaking. Pursuant to the Fortune Irrevocable Undertaking, each director and officer of Fortune has agreed to vote or cause to be voted his or her Fortune Shares to the extent he or she is so entitled, in favour of the Arrangement and against any matter that could reasonably be expected to delay, prevent, interfere with, discourage or frustrate the successful completion of the Arrangement. The Fortune Irrevocable Undertakings will automatically terminate on (i) the termination of the Transaction Agreement in accordance with its terms, (ii) if the Merger lapses or is withdrawn with, to the extent required, the approval of the Irish Court, or (iii) the Merger Effective Date. The foregoing will not require any director or officer of Fortune, including in his or her capacity as a director or officer of Fortune, to take any action in contravention of, or omit to take any action pursuant to, or otherwise take or refrain from taking any actions which are inconsistent with, instructions or directions of the Fortune Board undertaken in the exercise of their fiduciary duties. Approval of Arrangement Resolution At the Meeting, the Fortune Shareholders will be asked to approve the Arrangement Resolution, the full text of which is set out in Appendix A to this Circular. In order for the Arrangement to become effective, as provided in the Arrangement Interim Order and by the CBCA, the Arrangement Resolution must be approved by: (i) (ii) not less than two-thirds of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting and voting as a single class; and at least a simple majority of the votes cast by the Fortune Shareholders present in person or represented by proxy at the Meeting, with the 4,779,003 votes attaching to the Fortune Shares held by Wade K. Dawe, Fortune's Chairman and CEO, and the 660,902 votes attaching to the Fortune Shares held by Michael Gross, a director of Fortune, being excluded from such vote in accordance with the requirements of MI See "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters MI ". 35

44 Each Fortune Share will entitle the holder thereof to one (1) vote on the Arrangement Resolution. Should the Fortune Shareholders fail to approve the Arrangement Resolution by the requisite majorities, the Transaction will not be completed. The Fortune Board has approved the terms of the Transaction Agreement and the Plan of Arrangement and unanimously recommends that the Fortune Shareholders vote FOR the Arrangement Resolution. See "The Transaction The Arrangement Recommendation of the Fortune Board". Court Approval of the Arrangement An arrangement under the CBCA requires approval of the Court. Arrangement Interim Order On May 12, 2016, Fortune obtained the Arrangement Interim Order providing for the calling and holding of the Meeting, the Dissent Rights and certain other procedural matters. The text of the Arrangement Interim Order is set out in Appendix C to this Circular. Arrangement Final Order Subject to the terms of the Transaction Agreement, and if the Arrangement Resolution is approved by Fortune Shareholders at the Meeting in the manner required by the Arrangement Interim Order, Fortune intends to make an application to the Court for the Arrangement Final Order. The application for the Arrangement Final Order approving the Arrangement is currently scheduled for June 17, 2016 at 10:00 a.m. (Toronto time), or as soon thereafter as counsel may be heard, at the Courthouse, 330 University Avenue, 8 th Floor, Toronto, Ontario, or at any other date and time as the Court may direct. Any Fortune Shareholder or any other interested party who wishes to appear or be represented and to present evidence or arguments at that hearing must file and serve a response to petition no later than 4:00 p.m. (Toronto time) on June 15, 2016 along with any other documents required, all as set out in the Arrangement Interim Order and Notice of Application, the texts of which are set out in Appendix C to this Circular, and satisfy any other requirements of the Court. Such persons should consult with their legal advisors as to the necessary requirements. If the hearing is adjourned then, subject to further order of the Court, only those persons having previously filed and served a response to petition will be given notice of the adjournment. Fortune has been advised by its legal counsel, Fogler, Rubinoff LLP, that the Court has broad discretion under the CBCA when making orders with respect to the Arrangement and that the Court will consider, among other things, the fairness and reasonableness of the Arrangement, both from a substantive and a procedural point of view. The Court may approve the Arrangement, either as proposed or as amended, on the terms presented or substantially on those terms. Depending upon the nature of any required amendments and subject to the terms of the Transaction Agreement, Fortune may determine not to proceed with the Arrangement. The New Fortune Shares and SpinCo Shares to be issued pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act or the Securities Laws of any state of the United States and will be issued in reliance upon the Section 3(a)(10) Exemption and similar exemptions from registration or qualification under any applicable Securities Laws of any state of the United States. Section 3(a)(10) of the U.S. Securities Act exempts from registration a security that is issued in exchange for outstanding securities, claims or property interests, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or by a governmental authority expressly authorized by law to grant such approval. The Court will be advised at the hearing of the application for the Arrangement Final Order that if the terms and conditions of the Arrangement, and the fairness thereof, are approved by the Court, the Arrangement Final Order will be relied upon to constitute the basis for the Section 3(a)(10) Exemption under the U.S. Securities Act with respect to the New Fortune Shares and SpinCo Shares to be issued pursuant to the Arrangement. Accordingly, the Arrangement Final Order of the Court will, if granted, constitute a basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the issuance of the New Fortune Shares and SpinCo Shares by Fortune in connection with the Arrangement. See "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters United States Securities Law Matters". 36

45 For further information regarding the Court hearing and your rights in connection with the Court hearing, see the form of Notice of Application attached at Appendix C to this Circular. The Notice of Application constitutes notice of the Court hearing of the application for the Arrangement Final Order and is your only notice of the Court hearing. Regulatory Approvals of the Transaction The Fortune Shares are listed and posted for trading on the TSX. Upon completion of the Transaction, it is expected that the Fortune Shares will be delisted from the TSX and the New Fortune Shares will be listed on the TSXV. Completion of the Transaction is subject to a number of conditions including that the TSXV has conditionally approved the listing of the New Fortune Shares to be issued pursuant to the Transaction, subject only to the satisfaction by Fortune of customary listing conditions of the TSXV. In addition, application has been made for the listing of the SpinCo Shares on the TSXV, however, it is not a condition of the Transaction that the TSXV has conditionally approved the listing of the SpinCo Shares. Completion of the Arrangement The Arrangement will become effective at the Arrangement Effective Time on the Arrangement Effective Date. The Arrangement Effective Date is expected to be on or about June 23, It is possible that completion may be delayed beyond this date if the conditions to completion of the Arrangement cannot be met on a timely basis, but in no event will completion of the Arrangement occur later than June 30, 2016 or such later date as may be agreed to in writing by Fortune and Kneat. The Transaction Agreement The following is a summary description of certain material provisions of the Transaction Agreement, is not comprehensive and is qualified in its entirety by reference to the full text of the Transaction Agreement, which is available under Fortune's profile at Capitalized terms used but not otherwise defined herein have the meanings set out in the Transaction Agreement and the Plan of Arrangement attached as Appendix B to this Circular. Warranties and Covenants of Fortune The Transaction Agreement contains customary warranties for transactions of this nature on the part of Fortune in respect of matters pertaining to, among other things: approval and recommendation of the Arrangement pursuant to the Plan of Arrangement by the Fortune Board and approval of the Merger pursuant to the Merger Scheme; the due incorporation, existence, capacity, authority, registration and licensing to conduct the business of Fortune; the corporate power, authority and capacity of Fortune to enter into the Transaction Agreement and perform its obligations thereunder; the execution, delivery and enforceability of the Transaction Agreement, and the same not resulting in a violation, or breach of or default under Fortune's or any of its subsidiaries' constating documents, Permits, Material Contracts or Laws; required consents; the capitalization of Fortune; the ownership of Fortune's subsidiaries; Fortune's reporting issuer status and the absence of a cease trade order against the securities of Fortune; Fortune having made all required filings under applicable securities laws and such filings not containing any untrue statement of a material fact or omitting to state a material fact; the financial statements of Fortune; Fortune's financial reporting; the accuracy of the financial books, records, and accounts of Fortune and its subsidiaries; the completion and accuracy of the corporate minute books of Fortune; the absence of undisclosed liabilities; the absence of material changes; the absence of claims or proceedings against Fortune and its subsidiaries; the due payment of Taxes and proper filing of Returns and other matters related to Taxes; the existence of, and good standing of the Material Contracts of Fortune; possession and material compliance with all material Permits required by applicable Laws, necessary to conduct Fortune's business as now being conducted; no part of the property or assets of Fortune being condemned or expropriated by any Government Entity; the absence of right of first refusal or option to purchase or any other right of participation in any material properties or assets owned by Fortune, expect as disclosed in the financial statements of Fortune; compliance with Environmental Laws (as defined in the Transaction Agreement); compliance with applicable Laws; employment and labour matters; the existence of related party transactions; the absence of registration rights; the absence of rights of first refusal, options to purchase, or rights of participation in properties or assets of Fortune; the absence of any judgment or order restricting the business of Fortune; the fees and commissions of brokers, investment bankers and financial advisors in connection with the contemplated transactions; the existence and maintenance of insurance policies of Fortune; the applicability of U.S. securities laws to Fortune; and absence of certain business practices. 37

46 The warranties made by Fortune to Kneat in the Transaction Agreement were made solely for the purposes of the Transaction Agreement and may be subject to important qualifications and limitations agreed to by the Parties in connection with negotiating and entering into the Transaction Agreement. In addition, these warranties were made as of specified dates, may be subject to a contractual standard of materiality (including a Material Adverse Effect) that is different from what may be viewed as material to Fortune Shareholders or may have been used for the purpose of allocating risk between the Parties rather than for the purpose of establishing facts. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Transaction Agreement. For the foregoing reasons, you should not rely on the representations and warranties contained in the Transaction Agreement as statements of factual information at the time they were made or otherwise. The Transaction Agreement, includes, among other things, covenants of Fortune customary for transactions of this nature, which are intended to ensure that Fortune and each if its subsidiaries carry on business until the earlier of the Merger Effective Time and the time that the Transaction Agreement is terminated in accordance with its terms in the ordinary course of business consistent with past practice, except as required or permitted by the Transaction Agreement or as disclosed in the Fortune disclosure letter including the transfer of the SpinCo Assets to SpinCo and the assumption of the SpinCo Liabilities by SpinCo. These covenants include, among other things, prohibitions on: taking any action other than in the ordinary course of business or as otherwise required or permitted pursuant to the Transaction Agreement; amending constating documents; capital alterations; issuing securities; changing accounting policies; acquiring and disposing of assets or properties; incurring or repaying indebtedness; modifying employment arrangements and benefits; settling actions, claims or proceedings; declaring dividends or other distributions; entering into or amending Material Contracts and entering into or amending contracts outside of the ordinary course of business; taking certain actions respecting Taxes; taking any action or failing to take any action that would result, under any securities Laws or any rules of the TSX, in the material loss, expiration or surrender of any right of Fortune; taking any action or failing to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent materially delay or materially impeded the ability of Fortune to consummate the Arrangement and the Merger; maintenance of current insurance policies; covenant to notify Kneat of any circumstance or development that is or could be reasonably expected to constitute a Material Adverse Effect; covenant to be in compliance with the rules and policies of the TSX and to list the New Fortune Shares for trading on the TSX or the TSXV. Fortune has also covenanted and agreed with Kneat that it will, and will cause each of its subsidiaries, to perform all obligations required or desirable to be performed by Fortune or any of the its subsidiaries under the Transaction Agreement, cooperate with Kneat in connection therewith and do or cause to be done all such acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by the Transaction Agreement, including: subject to obtaining confirmation that insurance coverage is maintained as contemplated in the Transaction Agreement, using commercially reasonable efforts to cause to be delivered to Kneat on the Arrangement Effective Date resignations, effective on the Arrangement Effective Date or at such other time and in the manner requested by Kneat, of all of the directors, officers and employees of Fortune designated in writing by Kneat, with five (5) Kneat Nominees and one (1) Fortune Nominee to be appointed to the Fortune Board immediately after such resignation; applying for and using commercially reasonable efforts to obtain all required approvals from Governmental Entities, including the Key Regulatory Approvals, relating to Fortune; using commercially reasonable efforts to obtain as soon as practicable following execution of the Transaction Agreement all third party consents, approvals and notices required under any of the Material Contracts, including all Key Third Party Consents (as defined in the Transaction Agreement), as applicable; taking all commercially reasonable efforts to ensure that, on or prior to the Arrangement Effective Date, the SpinCo Assets have been duly transferred to SpinCo and SpinCo has assumed all of the SpinCo Liabilities in a manner satisfactory to Kneat; defending all lawsuits or other legal, regulatory or other proceedings against Fortune challenging or affecting the Transaction Agreement or the consummation of the transactions contemplated thereby; and allowing representatives of Kneat (including legal and financial advisors) to attend the Meeting. Notwithstanding the foregoing, Fortune may at any time prior to the Arrangement Effective Time dispose of any of the SpinCo Assets or SpinCo Liabilities to a Person other than SpinCo if: such disposition of the SpinCo Assets or SpinCo Liabilities is not a Related Party Transaction; the purchaser or assignee of such SpinCo Assets or SpinCo Liabilities, as the case may be, is at Arm's Length to Fortune and to SpinCo; the SpinCo Assets or SpinCo Liabilities are sold, transferred or assigned for consideration equal to not less than the Fair Market Value of such SpinCo 38

47 Assets or SpinCo Liabilities; prior to such disposition, any such SpinCo Assets or SpinCo Liabilities have first been sold, conveyed, transferred, assigned or set over, as applicable, to SpinCo; Fortune is not party to any agreement or other instrument in connection with a disposition of the SpinCo Assets or SpinCo Liabilities to any Person other than SpinCo; Fortune is indemnified by SpinCo, in form satisfactory to Kneat, acting reasonably, from any liability in connection with such disposition; and Kneat and its Representatives are given a reasonable opportunity to review and comment on any documents to effect such disposition, prior to such documents being executed, and Fortune must give reasonable and good faith consideration to all additions, deletions or changes suggested thereto by Kneat and its Representatives. Warranties and Covenants of Kneat The Transaction Agreement contains customary warranties for transactions of this nature on the part of Kneat in respect of matters pertaining to, among other things: the corporate power, authority, and capacity of Kneat to enter into the Transaction Agreement and perform its obligations thereunder; the due incorporation, existence, capacity, authority, registration, permitting and licensing to conduct business of Kneat and its sole subsidiary; the absence of material changes; the authorization, execution, and delivery of the Transaction Agreement by Kneat, and the same not resulting in a violation or breach of or a default under any Kneat or its sole subsidiary's constating documents, Permits, Material Contracts or Laws, triggering any change in control provisions, rights of first offer or refusal or any similar provisions, giving rise to any termination or acceleration of indebtedness or resulting in the imposition of any Lien upon any of the property or assets of Kneat or its sole subsidiary; required consents; the capitalization of Kneat; the ownership by Kneat of its sole subsidiary; Kneat's reporting issuer status; the financial statements of Kneat; the accuracy of the financial books, records, and accounts of Kneat and its sole subsidiary; the completion and accuracy of the corporate minute books of Kneat; the absence of undisclosed liabilities; the due payment of Taxes and proper filing of Returns and other matters related to Taxes; the absence of claims and proceedings against Kneat and its sole subsidiary; the existence of, and good standing of the Material Contracts of Kneat and its sole subsidiary; Kneat and its sole subsidiary having all material Permits required by applicable Laws and being in material compliance with such material Permits; the absence of expropriation proceedings with respect to the property or assets of Kneat or its sole subsidiary; the absence of rights of first refusal, options to purchase or any right of participation by any Person in any of the material properties or assets of Kneat or its sole subsidiary; compliance with Environmental Laws; matters relating to the Kneat IP; status of Kneat Products; compliance with applicable Laws; employment and labour matters; the existence of related party transactions; the absence of registration rights; the absence of restrictions on business activities; the fees and commissions of brokers, investment bankers and financial advisors in connection with the contemplated transactions; the absence of a cease trade order against the securities of Kneat; the applicability of U.S. securities laws to Kneat; and absence of certain business practices. The warranties made by Kneat to Fortune in the Transaction Agreement were made solely for the purposes of the Transaction Agreement and may be subject to important qualifications and limitations agreed to by the Parties in connection with negotiating and entering into the Transaction Agreement. In addition, these warranties were made as of specified dates, may be subject to a contractual standard of materiality that is different from what may be viewed as material to Fortune Shareholders or may have been used for the purpose of allocating risk between the Parties rather than for the purpose of establishing facts. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Transaction Agreement. For the foregoing reasons, you should not rely on the warranties contained in the Transaction Agreement as statements of factual information at the time they were made or otherwise. The Transaction Agreement, includes, among other things, covenants of Kneat customary for transactions of this nature, which are intended to ensure that Kneat and its sole subsidiary (i) carry on business until the earlier of the Merger Effective Time and the time that the Transaction Agreement is terminated in accordance with its terms in the ordinary course of business consistent with past practice and (ii) use commercially reasonable efforts to maintain and preserve their business organization, assets, employees, goodwill and business relationships. These covenants include, among other things, prohibitions on: taking any action except in the ordinary course of business of Kneat and its sole subsidiary; amending constating documents; capital alterations; issuing or acquiring securities; changing accounting policies; acquiring and disposing of properties or assets including intellectual property; incurring or repaying indebtedness; modifying employment arrangements and benefits; settling actions, claims or proceedings; declaring dividends or other distributions; entering into any agreement or arrangement that limits or otherwise restricts in any material respect Kneat or any successor thereto, or that would, after the Merger Effective Time, limit 39

48 or restrict in any material respect Kneat from competing in any manner; waiving, releasing or assigning any material rights, claims of benefits of Kneat; entering into or amending Material Contracts and entering into or amending contracts outside of the ordinary course of business; taking certain actions respecting Taxes; defending all claims or other Legal Proceedings against Kneat or its sole subsidiary challenging or affecting the Kneat IP; entering into a new line of business or abandoning or discontinuing existing lines of business; and disposing of, transferring or allowing to lapse any material rights in any of the Kneat IP, other than in the ordinary course of business consistent with past practice, or disclosing any material trade secrets to a third party. Kneat has also covenanted and agreed with Fortune that it will, and will cause its sole subsidiary, to perform all obligations required to be performed by Kneat or its sole subsidiary under the Transaction Agreement, cooperate with Fortune in connection therewith and use commercially reasonable efforts to do or cause to be done all such acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by the Transaction Agreement, including: applying for and using commercially reasonable efforts to obtain all Key Regulatory Approvals relating to Kneat or its sole subsidiary; providing Fortune and its representatives reasonable access to the books, contracts, records, management personnel and properties of Kneat and its subsidiaries; using commercially reasonable efforts to obtain as soon as practicable following execution of the Transaction Agreement all third party consents, approvals and notices required under any of the Material Contracts, including all Key Third Party Consents; and using commercially reasonable efforts to defend all lawsuits or other legal, regulatory or other proceedings against Kneat or any of its subsidiaries challenging or affecting the Transaction Agreement or the consummation of the transactions contemplated thereby. SpinCo Reorganization Pursuant to the Transaction Agreement, immediately prior to the Arrangement Effective Time: (i) Fortune will transfer all of its assets, including the SpinCo Assets, other than the Retained Assets, to SpinCo, in accordance with an agreement of purchase and sale, and SpinCo will assume the SpinCo Liabilities pursuant to an assumption agreement on an "as is, where is" basis, in exchange for SpinCo Shares. Following the completion of the SpinCo Reorganization, the total number of outstanding SpinCo Shares will equal one half of the total number of outstanding Fortune Shares immediately prior to Arrangement Effective Time. Arrangement Conditions Precedent The obligations of Fortune and Kneat to complete the transactions contemplated by the Transaction Agreement, including the Arrangement, are subject to the fulfillment, on or before the Arrangement Effective Time, of each of the following conditions, each of which may be waived only with the mutual consent of Fortune and Kneat: (a) (b) (c) (d) (e) approval of the Arrangement Resolution by Fortune Shareholders at the Meeting in accordance with the Arrangement Interim Order; receipt of the Arrangement Interim Order and the Arrangement Final Order on terms consistent with the Transaction Agreement; absence of any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation and the absence of any action taken under Law or by any Governmental Entity or other regulatory authority that would prevent the consummation of the Arrangement; the distribution of the securities pursuant to the Arrangement being exempt from the prospectus and registration requirements of applicable Securities Laws and the absence of resale restrictions under applicable Securities Laws (other than as applicable to control persons or pursuant to Section 2.6 of NI ); the New Fortune Shares and the SpinCo Shares issuable pursuant to the Arrangement being exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof and the absence of any resale restrictions under the U.S. Securities Act, subject to restrictions applicable to affiliates (as defined in Rule 405 of the U.S. Securities Act) of Fortune following the Arrangement Effective Date; 40

49 (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) conditional approval by the TSX or the TSXV for the listing of the New Fortune Shares issuable pursuant to the Arrangement, subject to the payment of fees and the filing of customary required documents; receipt of the Key Regulatory Approvals; receipt of the Key Third Party Consents; the SpinCo Reorganization having been completed; approval of the Fortune Merger Resolutions the Merger Meetings in accordance with the Merger Interim Order; receipt of the Merger Interim Order and the Merger Final Order; all warranties of Kneat set forth in the Transaction Agreement being true and correct in all respects as at the Arrangement Effective Date and the Merger Effective Date as though made on and as at the Arrangement Effective Date and the Merger Effective Date, respectively; absence of any Material Adverse Effect in respect of Kneat; absence of any outstanding indebtedness of Kneat (excluding the EI Loan) other than general trade payables incurred in the normal course of business, including costs related to the transactions provided for in the Transaction Agreement; and the Transaction Agreement not having been terminated in accordance with its terms. Merger Conditions Precedent The Merger Scheme shall be subject to the fulfillment, on or before the Merger Effective Time, of each of the following conditions precedent, each of which may be waived only with the mutual consent of Fortune and Kneat: (a) (b) (c) (d) (e) (f) (g) the Arrangement shall have become effective; approval of the Merger Resolutions at the Merger Meetings in accordance with the Merger Interim Order; receipt of the Merger Interim Order and the Merger Final Order on terms consistent with the Transaction Agreement; absence of any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation, and there shall not have been any action taken under any Law or by any Governmental Entity or other regulatory authority, that makes it illegal or otherwise directly or indirectly restrains, enjoins, prevents or prohibits the consummation of the Merger Scheme; the distribution of the securities pursuant to the Merger Scheme being exempt from the prospectus and registration requirements of applicable Securities Laws and the absence of the resale restrictions under applicable Securities Laws (other than as applicable to control Persons or pursuant to Section 2.6 of National Instrument ); the Acquired Fortune Shares to be issued pursuant to the Merger Scheme being exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof and the absence of resale restrictions under the U.S. Securities Act, subject to restrictions applicable to affiliates (as defined in Rule 405 of the U.S. Securities Act) of Fortune following the Merger Effective Date; conditional approval of the TSX or the TSXV, subject to the payment of fees and the filing of customary required documents, the New Fortune Shares issuable pursuant to the Merger Scheme; 41

50 (h) (i) (j) (k) (l) (m) (n) all warranties of Fortune set forth in the Transaction Agreement being true and correct in all respects as of the Arrangement Effective Date and the Merger Effective Date as though made on and as of Arrangement Effective Date and the Merger Effective Date respectively; absence of any Material Adverse Effect in respect of Fortune; holders of no more than 5% of the total of the issued and outstanding Fortune Shares having exercised Dissent Rights (and not withdrawn such exercise); at the Arrangement Effective Time and the Merger Effective Time, Fortune having $8,450,000 in cash and cash equivalents; absence of liabilities other than general trade payables of a maximum of $10,000 and liabilities transaction costs in respect of legal and accounting advice of $240,000; receipt of written confirmation from the Irish Revenue Commissioners, to the satisfaction of Kneat, that the provisions of section 584 of the Taxes Consolidation Act 1997 (as applied by section 586 or 587 the Taxes Consolidation Act 1997) apply to the Scheme of Arrangement, provided that if Kneat does not receive this confirmation, Kneat acknowledges and agrees that it shall in good faith cooperate with Fortune to find an alternative manner in which to effect the transactions contemplated herein; and the Transaction Agreement not having been terminated in accordance with its terms. SpinCo Indemnity From the Merger Effective Time, SpinCo has agreed to indemnify and hold harmless Fortune and Kneat from all losses, claims, actions, liabilities, Liens, damages, bonds, dues, assessments, fines, interest, penalties, Taxes, fees, costs (including costs of investigation, defense and enforcement of the Transaction Agreement), consequential damages, expenses or amounts paid in settlement (in each case, including attorneys' and experts' fees and expenses), threatened or actual suffered or incurred by Fortune or Kneat as a result of, in connection with, arising out of or relating to, directly or indirectly, the SpinCo Assets or SpinCo Liabilities. Termination The Transaction Agreement may be terminated and the Arrangement and the Merger may be abandoned at any time prior to the Merger Effective Time (notwithstanding any approval of the Transaction Agreement or the Arrangement Resolution by the Fortune Shareholders, the Arrangement by the Court, the Merger Resolutions in accordance with the Merger Interim Order or the Merger Scheme by the Irish Court ): (a) (b) by mutual written agreement of Fortune and Kneat; by either Fortune or Kneat, if: (i) (ii) (iii) the Merger Effective Date does not occur on or before the Outside Date, provided that a Party may not terminate the Transaction Agreement if the failure of the Merger Effective Date to so occur has been caused by, or is a result of, the failure of such Party to fulfill any of its obligations or the breach by such Party of any of its warranties under the Transaction Agreement; after the date of the Transaction Agreement, an applicable Law is enacted or there is an injunction or court order that makes consummation of the Arrangement or the Merger illegal or otherwise prohibits or enjoins Fortune or Kneat from consummating the Arrangement or the Merger and such applicable Law, injunction or court order is final and non-appealable; the Arrangement Resolution was not approved at the Meeting in accordance with the Arrangement Interim Order; or 42

51 (iv) the Merger Resolutions were not approved at the Merger Meeting in accordance with the Merger Interim Order; (c) by Kneat, if: (i) (ii) (iii) (iv) (v) any of the Merger conditions precedent has not been satisfied or waived by the Outside Date or it is clear that such condition is incapable of being satisfied by the Outside Date provided that Kneat is not then in breach of the Transaction Agreement so as to cause any of the Merger conditions precedent not to be satisfied; subject to compliance with the notice and cure provisions of the Transaction Agreement, Fortune breaches any of its warranties which breach would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on Fortune, or Fortune breaches any of its covenants or other obligations in the Transaction Agreement, in each case in any material respect (provided that Kneat is not then in breach of the Transaction Agreement so as to have caused any of the Merger conditions precedent not to be satisfied); the Meeting does not occur on or before May 31, 2016 or such later date to which the Meeting may have been postponed or adjourned, provided that the failure to hold Meeting is not caused by or a result of the failure by Kneat to fulfill any obligation under the Transaction Agreement; after the date of the Transaction Agreement, there is a change, effect, event, circumstance or fact that constitutes a Material Adverse Effect in respect of Fortune and its subsidiaries, taken as a whole; or Kneat has not received on or before May 31, 2016 written confirmation from the Irish Revenue Commissioners, to the satisfaction of Kneat, that the provisions of section 584 of the Taxes Consolidation Act 1997 (as applied by section 586 or 587 the Taxes Consolidation Act 1997) apply to the Scheme of Arrangement, provided that if Kneat does not receive this confirmation, Kneat acknowledges and agrees that it shall in good faith cooperate with Fortune to find an alternative manner in which to effect the transactions contemplated in the Transaction Agreement. (d) by Fortune, if: (i) (ii) (iii) any of the Merger conditions precedent is not satisfied or waived by the Outside Date or it is clear that such condition is incapable of being satisfied by the Outside Date (provided that Fortune is not then in breach of the Transaction Agreement so as to have caused any of the Merger precedent not to be satisfied); subject to compliance with the notice and cure provisions of the Transaction Agreement, Kneat breaches any of its representations or warranties which breach would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect on Kneat, or Kneat breaches any of its covenants or other obligations in the Transaction Agreement, in any material respect (provided that Fortune is not then in breach of the Transaction Agreement so as to have caused any of the Merger conditions precedent not to be satisfied); or after the date of the Transaction Agreement, there is a change, effect, event, circumstance or fact that constitutes a Material Adverse Effect in respect of Kneat and its sole subsidiary, taken as a whole. Insurance and Indemnification Pursuant to the Transaction Agreement, Fortune is entitled to purchase run off directors' and officers' liability insurance for a period of up to six (6) years from the Merger Effective Date with the prior written consent of Kneat, not to be unreasonably withheld. Fortune will also ensure that the articles and/or by-laws of Fortune and its subsidiaries (or their respective successors) will contain the provisions with respect to indemnification set forth in 43

52 Fortune's or the applicable subsidiary's current articles and/or by-laws, which provisions will not, except to the extent required by applicable Laws, be amended, repealed or otherwise modified for a period of six (6) years from the Arrangement Effective Date in any manner that would adversely affect any rights of indemnification of individuals who, immediately prior to the Merger Effective Date, were directors or officers of Fortune or any of its subsidiaries. Further, Fortune has agreed that it will directly honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of Fortune and its subsidiaries, to the extent they are disclosed in the Fortune disclosure letter, and has acknowledged that such rights will survive the completion of the Transaction and will continue in full force and effect for a period of not less than six (6) years from the Merger Effective Date. Procedure for Exchange of Fortune Shares At the time of sending this Circular to each Fortune Shareholder, Fortune is also sending to each Registered Fortune Shareholder the Letter of Transmittal. The Letter of Transmittal is for use by Registered Fortune Shareholders only and is not to be used by Non-Registered Holders. Non-Registered Holders should contact their broker or other Intermediary for instructions and assistance in receiving the consideration in respect of their Fortune Shares. Registered Fortune Shareholders are requested to tender to the Depositary any share certificate(s) representing their Fortune Shares, along with a duly completed Letter of Transmittal. Following receipt of the Arrangement Final Order and before the Arrangement Effective Date, Fortune will deposit, or cause to be deposited, with the Depositary a treasury direction directing the Depositary to deliver certificates or DRS Statements representing New Fortune Shares and SpinCo Shares issuable to Fortune Shareholders. As soon as practicable following the later of the Arrangement Effective Date and the date of deposit by a Registered Fortune Shareholder with the Depositary of a duly completed Letter of Transmittal, together with the share certificate(s) representing the Registered Fortune Shareholder's Fortune Shares, the Depositary will forward to the Registered Fortune Shareholder, certificates or DRS Statements representing the New Fortune Shares and SpinCo Shares to which the Registered Fortune Shareholder is entitled under the Arrangement, net of any applicable withholding taxes, to be either (i) delivered to the address or addresses as the Registered Fortune Shareholder directed in their Letter of Transmittal, (ii) made available for pick-up at the offices of the Depositary, in accordance with the instructions of the Registered Fortune Shareholder in the Letter of Transmittal, or (iii) if the Letter of Transmittal neither specifies an address nor contains instructions for pick-up, forwarded to the Registered Fortune Shareholder at the address of the holder as shown on the central securities register of Fortune. A Registered Fortune Shareholder that did not submit an effective Letter of Transmittal before the Arrangement Effective Date may take delivery of the certificates or DRS Statements representing the New Fortune Shares and SpinCo Shares to which the Registered Fortune Shareholder is entitled pursuant to the Arrangement, by delivering the share certificate(s) representing Fortune Shares formerly held by them to the Depositary at the office indicated in the Letter of Transmittal at any time before the sixth anniversary of the Arrangement Effective Date. Such share certificate(s) must be accompanied by a duly completed Letter of Transmittal, together with such other documents as the Depositary may require. The certificates or DRS Statements representing the New Fortune Shares and SpinCo Shares to which the Registered Fortune Shareholder is entitled pursuant to the Arrangement, net of any applicable withholding taxes, will be either (i) delivered to the address or addresses as the Registered Fortune Shareholder directed in their Letter of Transmittal, made available for pick-up at the offices of the Depositary in accordance with the instructions of the Registered Fortune Shareholder in the Letter of Transmittal, or (iii) if the Letter of Transmittal neither specifies an address nor contains instructions for pick-up, forwarded to the Registered Fortune Shareholder at the address of such holder as shown on the central securities register of Fortune. Except as otherwise provided in the instructions set out in the Letter of Transmittal, the signature on the Letter of Transmittal must be guaranteed by an Eligible Institution (as defined in the Letter of Transmittal). If a Letter of Transmittal is executed by a person other than the registered holder of the share certificate(s) deposited therewith or if the consideration issuable is to be delivered to a person other than the registered holder, the share certificate(s) must be endorsed or be accompanied by an appropriate power of attorney duly and properly completed by the registered holder, signed exactly as the name of the registered holder appears on such share certificate(s), with the signature on the share certificate(s) or power of attorney guaranteed by an Eligible Institution. 44

53 No fractional New Fortune Shares or fractional SpinCo Shares will be issued. Where the aggregate number of New Fortune Shares or SpinCo Shares to be issued under the Arrangement would result in a fraction of a New Fortune Share or SpinCo Share being issuable to a Fortune Shareholder, the number of New Fortune Shares or SpinCo Shares to be received by such Fortune Shareholder will be rounded down to the nearest whole New Fortune Share or SpinCo Share, as the case may be, and such Fortune Shareholder will not be entitled to compensation in respect of such fractional New Fortune Share or SpinCo Share, as the case may be. Lost Certificates If any certificate which, immediately before the Arrangement Effective Time, represented one or more outstanding Fortune Shares has been lost, stolen or destroyed, upon the making of an affidavit or statutory declaration of that fact by the Registered Fortune Shareholder claiming such certificate to be lost, stolen or destroyed and who was listed immediately before the Arrangement Effective Time as the registered holder thereof on the central securities register of Fortune, the Depositary will deliver to such Registered Fortune Shareholder, the certificates or DRS Statements representing the New Fortune Shares and SpinCo Shares to which such Registered Fortune Shareholder is entitled to receive in exchange for such lost, stolen or destroyed certificate. When authorizing such delivery in exchange for such lost, stolen or destroyed certificate, the Registered Fortune Shareholder to whom the certificates or DRS Statements are to be issued must, as a condition precedent to the delivery thereof, give a bond satisfactory to Fortune, SpinCo and the Depositary, in such sum as Fortune, SpinCo or the Depositary may direct, or otherwise indemnify Fortune, SpinCo and the Depositary in a manner satisfactory to Fortune, SpinCo and the Depositary against any claim that may be made against Fortune, SpinCo and the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed. Expenses of the Transaction All expenses incurred in connection with the Transaction and the transactions contemplated thereby must be paid by the Party incurring such expenses. The expenses incurred or to be incurred by Fortune in connection with the Transaction are anticipated to be approximately $350,000. Interests of Certain Persons in the Transaction In considering the recommendation of the Fortune Board with respect to the Arrangement, Fortune Shareholders should be aware that certain members of Fortune's senior management and the Fortune Board have certain interests in connection with the Transaction that may present them with actual or potential conflicts of interest in connection with the Transaction. Directors and Officers As at the Record Date, the directors and officers of Fortune hold the following Fortune Shares, Fortune Options and Fortune Warrants: Name Fortune Shares Fortune Options Fortune Warrants # % (1) # % (1) # % (1) Wade K. Dawe (2) 4,779, , , Sarah Oliver 10, , Nil N/A Derrick Gill 17, ,000 5 Nil N/A Dr. Michael Gross (3) 660, , , Darren Nantes (4) 30, ,000 5 Nil N/A David Peat 14, ,000 5 Nil N/A TOTAL 5,512, ,300, , Notes: (1) Based on 35,494,045 Fortune Shares, 2,000,000 Fortune Options and 803,572 Fortune Warrants outstanding as the Record Date. 45

54 (2) Mr. Dawe holds: 2,500 Fortune Shares indirectly through BC Ltd., 1,638,500 Fortune Shares indirectly through Brigus Capital Inc., 1,485,000 Fortune Shares indirectly through Kelligrew Inc., and 25,000 Fortune Shares indirectly through Wade K. Dawe Inc., each of which is a company of which he is the controlling shareholder. (3) Dr. Michael Gross holds 241,521 Fortune Shares indirectly through mmp, a company of which he is a controlling shareholder. (4) Mr. Nantes holds 30,800 indirectly through Nantes Investments Inc., a company of which he is a controlling shareholder. All of the Fortune Shares, Fortune Options and Fortune Warrants held by Fortune's directors and officers will be treated in the same fashion under the Arrangement as Fortune Shares, Fortune Options and Fortune Warrants held by every other Fortune Securityholder. However, the 4,779,003 votes attached to Fortune Shares held by Mr. Dawe and 660,902 votes attached to Fortune Shares held by Dr. Gross will be excluded for purposes of determining whether minority approval has been obtained under MI See "The Transaction The Arrangement Approval of Arrangement Resolution", "The Transaction The Arrangement Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters MI " and "Transaction The Arrangement Interests of Certain persons in the Transaction Termination and Change of Control Benefits" below. Consistent with standard practice in similar transactions, in order to ensure that the directors and officers of Fortune do not lose or forfeit their protection under liability insurance policies maintained by Fortune, the Transaction Agreement provides for the maintenance of such protection for six (6) years. See "Transaction The Arrangement - Transaction Agreement Insurance and Indemnification" above. Termination and Change of Control Benefits Fortune previously entered into employment agreements with Wade K. Dawe, Chairman and CEO of the Company (the "Dawe Agreement"), and with Sarah Oliver, the CFO of Fortune (the "Oliver Agreement" and together with the Dawe Agreement, the "Employment Agreements"). Pursuant to the Dawe Agreement, in the event of a Change of Control (as defined below) event, Fortune shall pay Mr. Dawe a lump sum amount equal to three (3) times his base salary plus the prior year's bonus equivalent. In addition, benefits shall continue to be payable for 36 months from the date of departure. In the event of a Change in Control, all Fortune Options held by the him will vest immediately and Mr. Dawe shall be provided with a minimum of twelve months to exercise the Fortune Options. In the event of a Change of Control (as defined below) event, Fortune shall pay Ms. Oliver a lump sum amount equal to eighteen (18) months her base salary. In addition, benefits shall continue to be payable for 18 months from the date of departure. In the event of a Change in Control, all Fortune Options held by her will vest immediately and Ms. Oliver shall be provided with a minimum of twelve months to exercise the Fortune Options. "Change of Control" shall be deemed to have occurred when (i) any person becomes the beneficial owner, directly or indirectly, of Fortune Shares representing 50% or more of (a) the outstanding Fortune Shares or (b) the combined voting power of the then-outstanding Fortune Shares; or (ii) Fortune is a party to a merger or consolidation, or series of related transactions, which results in the voting shares of Fortune outstanding immediately prior thereto failing to continue to represent at least 50%, of the combined voting power of the voting shares of Fortune or such surviving or other entity outstanding immediately after such merger or consolidation; or (iii) the sale or disposition of all or substantially all of Fortune's assets; or (iv) the change of 50% or more of the directors of the Fortune Board during the course of any consecutive 12 month period; or (v) the dissolution or liquidation of Fortune; or (vi) any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing. Pursuant to the Employment Agreements, Mr. Dawe and Ms. Oliver are entitled to receive $540,000 and $195,000, respectively, immediately on the closing of a transaction resulting in a Change of Control. The Transaction will constitute a Change of Control, and Mr. Dawe and Ms. Oliver will be entitled to receive such amounts upon completion of the Transaction. In lieu of the lump sum payments due on a Change of Control to Mr. Dawe and Ms. Oliver, Fortune will issue 833,333 Fortune Shares (at a deemed value of $0.30 per Fortune Share) and pay $75,000 (which payment reflects the amount of estimated salary deferral since November 1, 2015 until the date of closing of the Transaction) to Mr. Dawe, and will issue 216,667 Fortune Shares (at a deemed value of $0.30 per Fortune Share) and pay $65,000 (which payment is calculated based on the estimated tax to be incurred by Ms. Oliver) to Ms. Oliver. 46

55 At the Meeting, Fortune Shareholders will be asked to approve the Compensation Shares, which include an aggregate of 1,050,000 Fortune Shares that Fortune proposes to issue to Mr. Dawe and Ms. Oliver in lieu of their respective Change of Control payments. See "Other Matters to be Considered at the Meeting Approval of the Compensation Shares". Regulatory Law Matters and Securities Law Matters Other than the Arrangement Final Order, the Merger Final Order and the approval of the TSXV, Fortune is not aware of any material approval, consent or other action by any Governmental Entity that would be required to be obtained in order to complete the Transaction. If any such approval or consent is determined to be required, such approval or consent will be sought, although any such additional requirements could delay the Arrangement Effective Date and the Merger Effective Date or prevent the completion of the Arrangement and the Merger. While there can be no assurance that any regulatory consents or approvals that are determined to be required will be obtained, Fortune and Kneat currently anticipate that any such consents and approvals that are determined to be required will have been obtained or otherwise resolved by the Arrangement Effective Date in the case of the Arrangement, and the Merger Effective Date, in the case of the Merger, which, subject to receipt of the approval of Fortune Shareholders at the Meeting, receipt of the Kneat Shareholders at the Merger Scheme Meetings, receipt of the Arrangement Final Order, receipt of the Merger Final Order and the satisfaction or waiver of all other conditions specified in the Transaction Agreement, is expected to be on or about June 23, Canadian Securities Law Matters Each Fortune Shareholder is urged to consult his, her or its professional advisors to determine the conditions and restrictions applicable under Canadian Securities Laws to trades in New Fortune Shares and SpinCo Shares that the Fortune Shareholder is entitled to receive under the Arrangement. Status under Canadian Securities Laws Fortune is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland. The Fortune Shares are listed and posted for trading on the TSX. In connection with the Transaction, it is expected that the Fortune Shares will be delisted from the TSX and the New Fortune Shares will be listed on the TSXV. It is a condition precedent to the obligations of Fortune and Kneat to complete the Transaction that the TSXV has conditionally approved the listing of the New Fortune Shares to be issued pursuant to the Arrangement, subject only to the satisfaction by Fortune of customary listing conditions of the TSXV. Upon completion of the Transaction, SpinCo expects that it will be a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland. Application has been made for the listing of the SpinCo Shares on the TSXV. Any listing will be subject to meeting the initial listing requirements of the TSXV. There can be no assurance as to if, or when, the SpinCo Shares will be listed or traded on the TSXV or any other stock exchange. It is not a condition of the Transaction that the TSXV has conditionally approved the listing of the SpinCo Shares. As the SpinCo Shares are not listed on a stock exchange, unless and until such a listing is obtained, holders of SpinCo Shares may not have a market for their shares. Distribution and Resale of New Fortune Shares and SpinCo Shares under Canadian Securities Laws The distribution of the New Fortune Shares and SpinCo Shares pursuant to the Arrangement and the Merger will constitute a distribution of securities which is exempt from the prospectus requirements of Canadian Securities Laws. The New Fortune Shares and SpinCo Shares received pursuant to the Arrangement and the Merger will not bear any legend under Canadian Securities Laws and may be resold through registered dealers in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland provided that (i) Fortune or SpinCo, as applicable, is and has been a reporting issuer in a jurisdiction in Canada for the four months immediately preceding the trade, (ii) the trade is not a "control distribution" as defined in NI , (iii) no unusual effort is made to prepare the market or to create a demand for the New Fortune Shares or SpinCo Shares, (iv) no extraordinary commission or consideration is paid to a person in respect of such sale, and (v) if the selling securityholder is an insider or officer of Fortune or SpinCo, as applicable, the selling securityholder has no reasonable grounds to believe that Fortune or SpinCo, as applicable, is in default of applicable Canadian Securities Laws. 47

56 MI MI governs transactions which raise the potential for conflicts of interest, including issuer bids, insider bids, related party transactions and business combinations. The Transaction does not constitute an issuer bid, an insider bid or a related party transaction for the purposes of MI The Transaction is a business combination under MI since, as described below, certain related parties of Fortune are entitled to receive a "collateral benefit" as a consequence of the Transaction. A "collateral benefit", as defined under MI , includes any benefit that a "related party" of Fortune (which includes the directors and senior officers of Fortune and its subsidiaries and any Fortune Shareholder who beneficially owns and/or exercises control or direction over, directly or indirectly, more than 10% of the outstanding Fortune Shares) is entitled to receive, directly or indirectly as a result of the Transaction, including a lump sum payment or an enhancement in benefits related to past or future services as an employee, director or consultant of Fortune as well as a payment for surrendering securities, regardless of whether it is provided or agreed to by Fortune, SpinCo or Kneat. MI excludes, however, from the meaning of "collateral benefit" certain benefits to a related party received solely in connection with the related party's services as an employee, director or consultant of an issuer or an affiliated entity of the issuer or a successor to the business of the issuer where, among other things, (a) the benefit is not conferred for the purpose, in whole or in part, of increasing the value of the consideration paid to the related party for securities relinquished under the transaction, (b) the conferring of the benefit is not, by its terms, conditional on the related party supporting the transaction in any manner, (c) full particulars of the benefit are disclosed in the disclosure document for the transaction, and (d)(i) at the time the transaction was agreed to, the related party and its associated entities beneficially own or exercise control or direction over less than 1% of the outstanding shares of the issuer or (ii) an independent committee, acting in good faith, determines that the value of the collateral benefit, net of any offsetting costs to the related party, is less than 5% of the value of the consideration the related party expects to receive in exchange for his or her equity securities under the terms of the Transaction. MI requires that, in addition to any other required securityholder approval, a business combination be subject to "minority approval". In relation to the Transaction and for purposes of the required Fortune Shareholder approval for the Arrangement and the Merger, the "minority" shareholders of Fortune are all Fortune Shareholders other than (i) Fortune, (ii) any interested party to the Transaction within the meaning of MI , (iii) any related party to such interested party within the meaning of MI (subject to the exceptions set out therein), and (iv) any person that is a joint actor with a person referred to in the foregoing clauses (ii) or (iii) for the purposes of MI In the context of the Transaction, an "interested party" is any party entitled to receive, directly or indirectly, as a consequence of the Transaction, a collateral benefit. For the purposes of MI , Ms. Oliver is considered to beneficially own less than 1% of the Fortune Shares and Fortune Options. Mr. Dawe is considered to beneficially own more than 1% of the Fortune Shares, Fortune Options and Fortune Warrants. Fortune has determined that the value of the change of control payment to be received by Ms. Oliver as a result of the Arrangement, as described under "The Transaction The Arrangement Interests of Certain Persons in the Arrangement Termination and Change of Control Benefits", net of any offsetting costs, is less than 5% of the amount of the consideration that Ms. Oliver expects to be beneficially entitled to receive under the terms of the Arrangement in exchange for the Fortune Shares and Fortune Options that she beneficially owns. In the case of Mr. Dawe, the Company has determined that the value of the change of control payment to be received by him as a result of the Transaction, as described under "The Transaction The Arrangement Interests of Certain Persons in the Transaction Termination and Change of Control Benefits", net of any offsetting costs, is more than 5% of the amount of the consideration that Mr. Dawe expects to be beneficially entitled to receive under the terms of the Arrangement in exchange for the Fortune Shares, Fortune Options and Fortune Warrants that he beneficially owns. Accordingly, the change of control payments that Mr. Dawe may receive as a result of the completion of the Transaction constitute a collateral benefit under MI Thus, the Fortune Shares beneficially owned, or over which control or direction is exercised by Mr. Dawe or any of his joint actors must be excluded for purposes of determining whether minority approval has been obtained. In addition, in connection with the Transaction, prior to closing, Fortune will issue 40,000 Fortune Shares (at a deemed price of $0.30 per Fortune Share) to each of Dave Peat, Darren Nantes, Michael Gross and Derrick Gill, the current directors of Fortune, who will not continue as directors of the Resulting Issuer, in consideration of the past services provided to Fortune. For the purpose of MI , each of Messrs. Peat, Nantes and Gill is considered to 48

57 beneficially own less than 1% of the Fortune Shares and Fortune Options. Dr. Gross is considered to beneficially own more than 1% of the Fortune Shares, Fortune Options and Fortune Warrants. Fortune has determined that the value of the Fortune Shares to be issued to Dr. Gross in connection with the Transaction, net of any offsetting costs, is more than 5% of the amount of the consideration that Dr. Gross expects to be beneficially entitled to receive under the terms of the Arrangement in exchange for the Fortune Shares, Fortune Options and Fortune Warrants that he beneficially owns. Accordingly, the Fortune Shares Dr. Gross will be issued in connection with the Transaction constitute a "collateral benefit" under MI Thus, the Fortune Shares beneficially owned, or over which control or direction is exercised by Dr. Gross or any of his joint actors must be excluded for purposes of determining whether minority approval has been obtained. United States Securities Law Matters The following discussion is a general overview of certain requirements of U.S. federal Securities Laws applicable to Fortune Shareholders in the United States in connection with the Arrangement. All Fortune Shareholders in the United States ("U.S. Fortune Shareholders") are urged to consult with their own legal advisors to ensure that the resale of any New Fortune Shares or SpinCo Shares issued to them under the Arrangement complies with applicable U.S. Securities Laws. Further information applicable to U.S. Fortune Shareholders is disclosed under the heading "Note to United States Securityholders" in this Circular. The following discussion does not address the Canadian Securities Laws that will apply to the issue of New Fortune Shares and SpinCo Shares issued into the United States or the resale of the New Fortune Shares and SpinCo Shares in Canada by U.S. Fortune Shareholders. U.S. Fortune Shareholders reselling their New Fortune Shares and SpinCo Shares in Canada must comply with Canadian Securities Laws, as discussed elsewhere in this Circular. Status under United States Securities Laws Fortune is not a reporting issuer with the SEC and the Fortune Shares currently are not quoted for trading in the United States. Exemption from the Registration Requirements of the U.S. Securities Act The New Fortune Shares and SpinCo Shares to be issued by Fortune to Fortune Shareholders pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act or any applicable Securities Laws of any state of the United States, and will be issued in reliance upon the Section 3(a)(10) Exemption and similar exemptions from registration or qualification under any applicable Securities Laws of any state of the United States. The Section 3(a)(10) Exemption exempts from registration the distribution of securities which are issued in exchange for outstanding securities or interests where the terms and conditions of such issue and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or governmental authority expressly authorized by law to grant such approval. The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered. The Court issued the Arrangement Interim Order on 12, 2016 and, subject to the approval of the Arrangement by the Fortune Shareholders, a hearing in respect of the Arrangement Final Order for the Arrangement is currently scheduled to take place on June 17, 2016 at 10:00 a.m. (Toronto time) in Toronto, Ontario. All Fortune Shareholders are entitled to appear and be heard at this hearing. Accordingly, pursuant to the Section 3(a)(10) Exemption, the Arrangement Final Order, if granted, will constitute a basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the New Fortune Shares and SpinCo Shares issued to Fortune Shareholders in connection with the Arrangement. Certain Canadian Federal Income Tax Considerations In the opinion of Fogler, Rubinoff LLP, Canadian counsel to Fortune, the following summary fairly describes the principal Canadian federal income tax considerations relating to the Arrangement generally applicable to Fortune Shareholders, who for the purposes of the Tax Act (i) hold their Fortune Shares and will hold their New Fortune Shares and SpinCo Shares, as capital property, (ii) deal at arm's length with Fortune, and (iii) are not affiliated with Fortune (a "Holder"). Fortune Shares, New Fortune Shares and SpinCo Shares will generally be considered to be capital property to a Holder, unless such securities are held in the course of carrying on a business of buying or selling securities or were acquired in a transaction considered to be an adventure in the nature of trade. 49

58 This summary is not applicable to a Holder who (i) is a "financial institution" for the purposes of the mark-to-market rules contained in the Tax Act, (ii) is a "specified financial institution" as defined in the Tax Act, (iii) is a Holder of an interest which is a "tax shelter investment" as defined in the Tax Act, (iv) has acquired Fortune Options on the issuance or grant of an employee stock option, (v) has acquired Fortune Shares upon the exercise of an employee stock option, (vi) is a taxpayer whose "functional currency" for the purposes of the Tax Act is the currency of a country other than Canada; or (vii) that has entered into, or will enter into, a "derivative forward agreement" or a "synthetic disposition agreement" as defined in the Tax Act with respect to Fortune Shares, SpinCo Shares or New Fortune Shares. Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation, resident in Canada, and is, or becomes, controlled by a non-resident corporation for the purposes of the "foreign affiliate dumping" rules in section of the Tax Act. Such Holders should consult their own tax advisors to determine the particular Canadian federal income tax consequences to them of the Arrangement. This summary is based upon the current provisions of the Tax Act, the regulations thereunder (the "Regulations"), and counsel's understanding of the current administrative practices and policies of the CRA. This summary also takes into account all specific proposals to amend the Tax Act and Regulations (the "Proposed Amendments") officially announced by the Minister of Finance (Canada) prior to the date hereof, and assumes that all Proposed Amendments will be enacted in the form proposed. If the Proposed Amendments are not enacted as presently proposed, the tax consequences may not be as described below in all cases. This summary does not take into account or anticipate any other changes in law or administrative or assessing practice, whether by legislative, governmental, or judicial action or decision, nor does it take into account provincial, territorial or foreign income tax considerations, which may differ from the Canadian federal income tax considerations discussed below. This summary is of a general nature only, and is not exhaustive of all possible Canadian federal income tax considerations. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any Holder. Accordingly, Holders should consult their own tax advisors for advice as to the income tax consequences to them of the Arrangement in their particular circumstances. Holders Resident in Canada The following portion of this summary is applicable to a Holder who, at all relevant times, is or is deemed to be resident in Canada for the purposes of the Tax Act (a "Resident Holder"). Certain Resident Holders who might not otherwise be considered to hold their Fortune Shares, New Fortune Shares or SpinCo Shares as capital property may be entitled to have them treated as capital property by making the election provided by subsection 39(4) of the Tax Act. Any Resident Holders contemplating making a subsection 39(4) election should first consult their tax advisor for advice as to whether the election is available or advisable in their particular circumstances. Exchange of Fortune Share for New Fortune Share and SpinCo Share Fortune has informed counsel that the aggregate fair market value of all SpinCo Shares when they are distributed is not expected to exceed the "paid-up capital", as defined in the Tax Act, for all Fortune Shares immediately before the distribution of SpinCo Shares in exchange for Fortune Shares. Accordingly, Fortune is not expected to be deemed to pay, nor is a Resident Holder expected to be deemed to receive, a dividend as a result of the distribution of SpinCo Shares in exchange for Fortune Shares under the Arrangement. If the fair market value of all SpinCo Shares at the time of their distribution were to exceed the paid-up capital of all Fortune Shares immediately before that time, Fortune would be deemed to have paid a dividend on the Fortune Shares equal to the amount of the excess and each Resident Holder would be deemed to have received a pro rata portion of the dividend, based on the proportion of Fortune Shares held. See "Taxation of Dividends" below for a general description of the taxation of dividends under the Tax Act. Assuming that the fair market value of all SpinCo Shares at the time of distribution does not exceed the paid-up capital of all Fortune Shares immediately before that time, a Resident Holder whose Fortune Shares are exchanged for New Fortune Shares and SpinCo Shares under the Arrangement will be considered to have disposed of the Fortune Shares for proceeds of disposition equal to the greater of: (i) the Resident Holder's adjusted cost base of the 50

59 Fortune Shares immediately before the exchange; and (ii) the fair market value, at the time of the exchange, of the SpinCo Shares received by the Resident Holder. Consequently, a Resident Holder will realize a capital gain to the extent that the fair market value of the SpinCo Shares received exceeds the adjusted cost base of the Resident Holder's Fortune Shares at the time of the distribution. If the fair market value of all SpinCo Shares at the time of distribution were to exceed the paid-up capital of all Fortune Shares immediately before the exchange, the proceeds of disposition of the Resident Holder's Fortune Shares would be reduced by the amount of the dividend referred to in the previous paragraph that the Resident Holder is deemed to have received. See "Taxation of Capital Gains and Losses" below for a general description of the treatment of capital gains and losses under the Tax Act. The cost to a Resident Holder of New Fortune Shares acquired on the exchange will be equal to the amount, if any, by which the adjusted cost base of the Resident Holder's Fortune Shares immediately before the exchange exceeds the fair market value, at the time of their distribution, of the SpinCo Shares received by the Resident Holder. The cost to a Resident Holder of the SpinCo Shares acquired on the exchange will be equal to the fair market value of the SpinCo Shares at the time of exchange. Dissenting Shareholders A Resident Holder of Fortune Shares who, as a result of exercising Dissent Rights, receives a cash payment from Fortune in consideration for such Resident Holder's Fortune Shares may be deemed to have realized a dividend to the extent that the proceeds of disposition exceed the paid-up capital of the Fortune Shares and a capital gain (or capital loss) to the extent that the proceeds of disposition less the deemed dividend exceed (or are less than) the adjusted cost base of such dissenting Resident Holder's Fortune Shares, immediately before payment of the fair market value of the Fortune Shares. In certain circumstances, all or a part of a deemed dividend received by a dissenting Resident Holder that is a corporation may be treated as proceeds of disposition rather than as a deemed dividend. See "Taxation of Capital Gains and Losses" below for a general description of the treatment of capital gains and losses under the Tax Act. A dissenting Resident Holder will be required to include in income any interest awarded by a court in connection with the Arrangement. Taxation of Dividends In the case of a Resident Holder who is an individual, dividends received or deemed to be received on New Fortune Shares or SpinCo Shares will be included in computing the individual's income and will be subject to gross-up and dividend tax credit rules applicable to taxable dividends received from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit applicable to any dividends designated by Fortune or SpinCo, as the case may be, as an "eligible dividend" in accordance with the Tax Act. In certain circumstances, subsection 55(2) of the Tax Act (as proposed to be amended by Proposed Amendments released on April 18, 2016) will treat a taxable dividend received by a Canadian Holder that is a corporation as proceeds of a disposition or a capital gain. In the case of a Resident Holder that is a corporation, dividends received or deemed to be received on New Fortune Shares or SpinCo Shares will be included in computing the corporation's income and will generally be deductible in computing its taxable income. A "private corporation" or a "subject corporation", as defined in the Tax Act, may be liable under Part IV of the Tax Act to pay a refundable tax of 38⅓% on dividends received or deemed to be received on Fortune Shares or SpinCo Shares to the extent that such dividends are deductible in computing the corporation's taxable income. Disposition of New Fortune or SpinCo Shares Generally, a Resident Holder that disposes or is deemed to dispose of New Fortune Shares or SpinCo Shares will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition exceed (or are less than) the aggregate of the Resident Holder's adjusted cost base of those shares immediately before the disposition and any reasonable costs of the disposition. See "Taxation of Capital Gains and Losses" below for a general description of the treatment of capital gains and losses under the Tax Act. Taxation of Capital Gains and Losses One-half of any capital gain (a "taxable capital gain") realized by a Resident Holder in a taxation year will be included in the Resident Holder's income for the year. One-half of any capital loss (an "allowable capital loss") realized by the Resident Holder in a year may be deducted against taxable capital gains realized in the year. Any excess of allowable capital losses over taxable capital gains in a taxation year may be carried back up to three 51

60 taxation years or forward indefinitely and deducted against net taxable capital gains in those other years, to the extent and in the circumstances specified in the Tax Act. The amount of any capital loss arising on the disposition or deemed disposition of any shares by a Resident Holder that is a corporation may be reduced by the amount of certain dividends received or deemed to have been received by it on such shares to the extent and under circumstances prescribed by the Tax Act. Similar rules may apply where the corporation is a member of a partnership or a beneficiary of a trust that owns such shares or where a trust or partnership of which the corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such shares. A Resident Holder that is throughout the relevant taxation year a "Canadian controlled private corporation", as defined in the Tax Act, may be liable to pay an additional refundable tax of 10 ⅔% on its "aggregate investment income" for the year, which will include taxable capital gains. Alternative Minimum Tax Capital gains realized by individuals and certain trusts may give rise to alternative minimum tax. Such Resident Holders should consult their own tax advisors with respect to the alternative minimum tax provisions of the Tax Act. Holders Not Resident in Canada The following portion of the this summary is applicable to a Holder who (i) at all relevant times, is not, and is not deemed to be, resident in Canada for purposes of the Tax Act, and (ii) does not and will not use or hold, and is not and will not be deemed to use or hold, Fortune Shares, New Fortune Shares or SpinCo Shares in connection with carrying on a business in Canada (a "Non-Resident Holder"). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere. Exchange of Fortune Share for New Fortune Share and SpinCo Share The discussion above, applicable to Resident Holders under the heading "Holders Resident in Canada Exchange of Fortune Share for New Fortune Share and SpinCo Share" also applies to a Non-Resident Holder. See "Taxation of Dividends" below for a general description of the taxation of dividends to a Non-Resident Holder under the Tax Act. The tax treatment of a capital gain or a capital loss realized by a Non-Resident Holder is described generally below under the heading "Taxation of Capital Gains and Losses". Dissenting Shareholders The discussion above applicable to Resident Holders, under the heading "Holders Resident in Canada Dissenting Shareholders", also applies to a dissenting Non-Resident Holder. The tax treatment of a capital gain or capital loss and a deemed dividend realized by a Non-Resident Holder as a consequence of exercising Dissent Rights are described generally below under the heading "Taxation of Capital Gains and Losses" and "Taxation of Dividends". Taxation of Capital Gains and Losses A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain arising on a disposition or deemed disposition of New Fortune Shares or SpinCo Shares, unless, at the time of disposition, such shares constitute "taxable Canadian property" of the Non-Resident Holder within the meaning of the Tax Act and the Non-Resident Holder is not entitled to relief under an applicable income tax convention. Generally, a share of a corporation will not constitute "taxable Canadian property" to a Non-Resident Holder at the time of disposition provided that the share is listed at that time on a designated stock exchange (which includes the TSX), unless at any time during the 60-month period immediately preceding the time of disposition the following two conditions have been met concurrently: (i) one or any combination of (a) the Non-Resident Holder, (b) persons with whom the Non-Resident Holder does not deal at arm's length, and (c) partnerships in which the Non-Resident Holder or a person described in (b) holds a membership interest directly or indirectly through one or more partnerships, has owned 25% or more of the shares of any class or series of the capital stock of the corporation; and (ii) more than 50% of the fair market value of the share was derived directly or indirectly from one of any combination of real or immovable property situated in Canada, "Canadian resource properties", "timber resource properties" (each as defined in the Tax Act), or an option in respect of, or interests in, or for civil law rights in, any 52

61 such properties, whether or not such property exists. Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, a share could be deemed to be taxable Canadian property to a Non-Resident Holder. A disposition or deemed disposition of shares by a Non-Resident Holder whose shares are taxable Canadian property and who is not entitled to an exemption under an applicable income tax convention, will give rise to a capital gain (or a capital loss) equal to the amount, if any, by which the proceeds of disposition, less the reasonable costs of disposition, exceed (or are less than) the adjusted cost of such shares to the Non-Resident Holder at the time of actual or deemed disposition. Generally, one-half of any capital gain realized will be required to be included in income as a taxable capital gain and will be taxed at applicable Canadian tax rates. One-half of any capital loss will be deductible, subject to certain limitations, against certain taxable capital gains in the year of disposition or the three preceding years or any subsequent year in accordance with the detailed provisions of the Tax Act. Non- Resident Holders to whom these rules may be relevant should consult their own tax advisers in this regard. Taxation of Dividends Dividends paid or credited or deemed under the Tax Act to be paid or credited to a Non-Resident Holder on New Fortune Shares or SpinCo Shares will be subject to Canadian withholding tax at a rate of 25%. This rate may be reduced in the case of a Non-Resident Holder that is entitled to the protection of an applicable income tax convention. Eligibility For Investment New Fortune Shares and SpinCo Shares will be qualified investments, based on the current provisions of the Tax Act and the Regulations thereunder, for a trust governed by a registered retirement savings plan (an "RRSP"), registered retirement income fund (an "RRIF"), deferred profit sharing plan, registered retirement education savings plan, registered disability savings plan or a tax-free savings account (a "TFSA") at any particular time, provided the New Fortune Shares and SpinCo Shares are listed on a designated stock exchange (which currently includes the TSXV) at that time. Notwithstanding that New Fortune Shares and SpinCo Shares may be qualified investments for a TFSA, RRSP or RRIF (a "Registered Plan"), if the New Fortune Shares or SpinCo Shares are a "prohibited investment" within the meaning of the Tax Act for a Registered Plan, the holder or annuitant of the Registered Plan, as the case may be, will be subject to penalty taxes as set out in the Tax Act. New Fortune Shares and SpinCo Shares will generally not be a "prohibited investment" for a Registered Plan if the holder or annuitant, as the case may be, (i) deals at arm's length with Fortune or SpinCo, as the case may be, for the purposes of the Tax Act, and (ii) does not have a "significant interest" (as defined in the Tax Act) in Fortune or SpinCo, as the case may be. In addition, New Fortune Shares and SpinCo Shares, as the case may be, will not be a prohibited investment if the New Fortune Shares or SpinCo Shares, as the case may be, are "excluded property" as defined in the Tax Act for trusts governed by a TFSA, RRSP or RRIF. Holders should consult their own tax advisors to ensure the New Fortune Shares and SpinCo Shares would not be a prohibited investment in their particular circumstances including with respect to whether such shares would be "excluded property" as defined in the Tax Act. Dissent Rights Fortune Shareholders who wish to dissent should take note that strict compliance with the dissent procedures set out in the CBCA, as modified by the Arrangement Interim Order, the proposed Arrangement Final Order and the Plan of Arrangement ("Dissent Procedures") is required. Each registered Fortune Shareholder is entitled to be paid the fair value, in cash, of the holder's Fortune Shares, provided that the holder validly dissents to the Arrangement and the Arrangement becomes effective. The Dissent Rights are those rights pertaining to the right to dissent from the Arrangement Resolution that are contained in Section 190 of the CBCA, as modified by the Arrangement Interim Order, the proposed Arrangement Final Order and the Plan of Arrangement. A registered Fortune Shareholder is not entitled to exercise Dissent Rights if the holder votes any Fortune Shares in favour of the Arrangement Resolution. 53

62 The Plan of Arrangement provides that the Fortune Shares of registered Fortune Shareholders who validly exercise Dissent Rights and who are ultimately entitled to be paid the fair value, in cash, for those Fortune Shares, will be acquired by Fortune as at the Arrangement Effective Time, in consideration for the payment by Fortune of the fair value thereof, in cash. Kneat is not obligated to complete the Arrangement if registered Fortune Shareholders holding more than 5% of the issued and outstanding Fortune Shares exercise the Dissent Rights in respect of the Arrangement. Any Dissenting Shareholder who ultimately is not entitled to be paid the fair value, in cash, of his, her or its Fortune Shares will be deemed to have participated in the Arrangement on the same basis as non-dissenting Shareholders, and (i) each three (3) Fortune Shares held by such Dissenting Shareholder, if any, will be deemed to be transferred to and acquired by Fortune in exchange for one (1) New Fortune Share and one and one half (1.5) of a SpinCo Share. In no case, however, will Fortune or SpinCo or any other person be required to recognize such persons as holders of Fortune Securities after the Arrangement Effective Time, and the names of such persons will be deleted from the central securities registers of Fortune at the Arrangement Effective Time. A brief summary of the Dissent Procedures is set out below. This summary does not purport to provide a comprehensive statement of the procedures to be followed by a Dissenting Shareholder who seeks payment of the fair value of the Fortune Shares held and is qualified in its entirety by reference to Section 190 of the CBCA, as modified by the Arrangement Interim Order, the proposed Arrangement Final Order and the Plan of Arrangement. A copy of the Arrangement Interim Order is reproduced in Appendix C to this Circular. Section 190 of the CBCA are reproduced in Appendix D to this Circular. The Dissent Procedures must be strictly adhered to and any failure by a registered Fortune Shareholder to do so may result in the loss of that holder's Dissent Rights. Accordingly, each registered Fortune Shareholder who wishes to exercise Dissent Rights should carefully consider and comply with the Dissent Procedures and consult the holder's legal advisors. A Registered Fortune Shareholder who intends to exercise the Dissent Rights must deliver a Dissent Notice to Fortune Bay Corp., 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7, to be received not later than 4:00 p.m. (Toronto Time) on June 14, 2016 or one (1) Business Day prior to any adjournment of the Meeting and must not vote any Dissent Shares in favour of the Arrangement. A Non-Registered Fortune Shareholder who wishes to exercise the Dissent Rights must arrange for the Registered Fortune Shareholder(s) holding its Fortune Shares to deliver the Dissent Notice. The Dissent Notice must set out the number of Dissent Shares the Dissenting Shareholder holds. A vote against the Arrangement Resolution does not constitute a Dissent Notice and a Registered Fortune Shareholder is not entitled to exercise Dissent Rights with respect to Fortune Shares if such holder votes (or instructs, or is deemed, by submission of any incomplete proxy, to have instructed his, her or its proxyholder, to vote) or in the case of a beneficial holder caused, or is deemed to have caused, the Registered Fortune Shareholder to vote, in favour of the Arrangement Resolution at the Meeting. If the Arrangement Resolution is passed at the Meeting, Fortune must send by registered mail to every Dissenting Shareholder, a notice (the "Notice of Intention"). A Notice of Intention is not required to be sent to any Dissenting Shareholder who voted in favour of the Arrangement Resolution or who has withdrawn their Dissent Notice. A Dissenting Shareholder then has 20 days after receipt of the Notice of Intention or, if the Dissenting Shareholder does not receive a Notice of Intention, within 20 days after learning that the Arrangement Resolution has been adopted, to send to Fortune a written notice (a "Demand Notice") containing the Dissenting Shareholder's name and address, and the number of Dissent Shares the Dissenting Shareholder holds and in respect of which it dissents and a demand for the payment of the fair value of such Dissenting Shares. A Dissenting Shareholder must within 30 days after sending the Demand Notice, send the certificates representing the Dissenting Shares to Fortune or its transfer agent or else the Dissenting Shareholder will lose its right to make a claim for the fair value of such Dissenting Shares. If a Dissent Right is being exercised by someone other than the beneficial owner of such Dissenting Shares, this Demand Notice must be signed by such beneficial owner. A Dissenting Shareholder delivering such a written statement may not withdraw its dissent and, at the Arrangement Effective Time, will be deemed to have transferred to Fortune all of its Dissent Shares (free of any lien, claims or encumbrances). Fortune will pay to each Dissenting Shareholder for the Dissent Shares the fair value, in cash. Either 54

63 Fortune or a Dissenting Shareholder may apply to Court if no agreement on the amount to be paid for the Dissent Shares has been reached, and the Court may: (a) (b) (c) determine the fair value that the Dissent Shares had immediately before the passing of the Arrangement Resolution, excluding any appreciation or depreciation in anticipation of the Arrangement unless such exclusion would be inequitable, or order that such fair value be established by arbitration or by reference to the Director or a referee of the Court; join in the application each other Dissenting Shareholder who has not reached an agreement with Fortune as to the amount to be paid for the Dissent Shares; or make consequential orders and give directions it considers appropriate. Dissenting Shareholders who are ultimately entitled to be paid fair value for their Dissent Shares will be entitled to be paid such fair value and will not be entitled to any other payment or consideration, including any payment or consideration that would be payable under the Plan of Arrangement had they not exercised their Dissent Rights. If a Dissenting Shareholder fails to strictly comply with the requirements of the Dissent Rights set out in Section 190 of the CBCA, as modified by the Arrangement Interim Order, the Arrangement Final Order and the Plan of Arrangement, it will lose its Dissent Rights, Fortune will return to the Dissenting Shareholder the certificate(s) representing the Dissent Shares that were delivered to Fortune, if any, and, if the Arrangement is completed, that Dissenting Shareholder shall be deemed to have participated in the Arrangement on the same terms as all other Fortune Shareholders who are not Dissenting Shareholders. Neither Fortune nor any other person shall be required to recognize a Dissenting Shareholder as a registered or beneficial owner of Fortune Shares at or after the Arrangement Effective Time, and at the Effective Time the names of such Dissenting Shareholders shall be deleted from the register of holders of Fortune Shares maintained by or on behalf of Fortune. Registered Fortune Shareholders wishing to exercise the Dissent Rights should consult their legal advisers with respect to the legal rights available to them in relation to the Arrangement and the Dissent Rights. Registered Fortune Shareholders should note that the exercise of Dissent Rights can be a complex, timeconsuming and expensive procedure. The Merger Effect of the Merger Pursuant to the terms of the Transaction Arrangement, Fortune will acquire 100% of the issued and outstanding Kneat Shares by way of the Merger Scheme in consideration for issuance of that number of New Fortune Shares that will represent, upon their issuance 68.7% of the issued and outstanding New Fortune Shares, subject to adjustments described below. Pursuant to the Merger Scheme, a copy of which is attached as Schedule H to the Transaction Agreement: (a) (b) (c) all outstanding Kneat Shares will be cancelled or transferred to Fortune; Kneat will issue New Kneat Shares to Fortune in place of the Kneat Cancellation Shares; and Fortune will issue Acquired Fortune Shares to each Merger Scheme Shareholder for each Merger Scheme Share (the "Kneat Exchange Ratio") held by him, her or it, provided that if the CDN$-Euro Exchange Rate is less than $0.67 or greater than $0.71 on the second last Business Day before the Merger Effective Date, the Kneat Exchange Ratio will be correspondingly adjusted as illustrated in Schedule I attached to the Transaction Agreement. Additionally, Fortune shall deliver or procure the delivery to each of the EIIS Shareholders, or as such EIIS Shareholder may direct, a cheque in the amount payable to that EIIS Shareholder pursuant to the terms of the EIIS 55

64 Proposal (without interest and less any applicable withholding taxes). The estimated maximum cost that may be incurred is 448,000. Kneat will put the Merger Scheme to the Kneat Shareholders for approval in accordance with the Irish Act and pursuant to the Merger Interim Order. It is expected that the Merger Meetings will take place on May 13, Fortune has entered into a Kneat Irrevocable Undertaking with each of Fortune's directors and officers pursuant to which each such director and officer have agreed to vote their Kneat Shares, in favour of the Merger Scheme. On May 18, 2016, Kneat will be seeking to obtain the Merger Interim Order providing for, among other things, directions as to the appropriate scheme meetings that must be held in connection with the Merger Scheme and the calling and holding of the Merger Scheme Meetings, as the same may be amended, supplemented or varied by the Irish Court. Subject to the terms of the Transaction Agreement, and if the Merger Resolutions are approved by the Kneat Shareholders at the Merger Meetings in the manner required by the Merger Interim Order, Kneat intends to make an application to the Irish Court for the Merger Final Order. The application for the Merger Final Order approving the Scheme of Merger is currently scheduled for June 21, Upon the Merger Resolutions having been approved and adopted by the Kneat Shareholders at the Merger Meetings, in accordance with the Merger Interim Order and Kneat obtaining the Merger Final Order, the Merger Scheme shall be effective at the Merger Effective Time on the Merger Effective Date, which is anticipated to be on June 23, As at May 13, 2016, 794,254 Kneat Shares, were issued and credited as fully paid. There are also 30,558 Kneat Options issued and outstanding. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat Options will be cancelled and an aggregate of up to 1,456,479 New Fortune Options (which will represent 3.7% of the New Fortune Shares to be issued and outstanding upon completion of the Transaction on a non-diluted basis and 3.5% on a fully-diluted basis) at an exercise price of $0.90 will be granted by Fortune to former holders of the Kneat Options and other individuals as determined by the New Fortune Board. See "Appendix F Information Concerning Kneat Description of Securities" and "Appendix G Information Concerning New Fortune Options to Purchase Securities". Upon closing of the Arrangement and the Merger, Fortune Shareholders will hold 31.3% of the issued and outstanding New Fortune Shares and the former Kneat Shareholders will hold the remaining 68.7% of the issued and outstanding New Fortune Shares. Approval of the Fortune Merger Resolution At the Meeting, Fortune Shareholders will be asked to consider and, if thought advisable, to pass, the Fortune Merger Resolution to approve the Merger pursuant to the terms of the Transaction Agreement. Approval of the Fortune Merger Resolution is required in connection with the Merger by the rules and regulations of the TSX. Fortune expects to issue approximately an aggregate of 27,732,287 New Fortune Shares in connection with the Transaction, which will represent 234.4% of the New Fortune Shares to be outstanding immediately prior to the issuance of any New Fortune Shares in connection with the Transaction, and based on the outstanding Fortune Shares as at the date of the Circular (see "Appendix "G" Information Concerning New Fortune Pro forma Capitalization"). Pursuant to the listing rules of the TSX, a listed company is generally required to obtain shareholder approval in connection with an acquisition transaction where the number of securities issued or issuable in payment of the purchase price for the acquisition exceeds 25% of the number of securities of the listed issuer, which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction. In addition, as a result of the issuance of approximately 27,178,121 New Fortune Shares, which will represent 68.7% of the to be issued New Fortune Shares post the Merger, the Transaction will materially affect the control of Fortune. Therefore, in order for the Transaction to be completed, Fortune Shareholders must approve the Fortune Merger Resolution. 56

65 Details regarding the Transaction mechanics, the background to the Transaction, the reasons for the Transaction, regulatory approvals, the Transaction Agreement, regulatory Law matters and the Securities Law matters, as applicable to the Merger, are described in detail under the heading "The Transaction The Arrangement" above. The risks associated with the Transaction are described in detail under the heading entitled "Risks Associated with the Transaction" below. Information concerning the business and affairs of Fortune is provided in this Circular in "Appendix E Information Concerning Fortune and Annual Meeting Matters". The audited financial statements of Fortune for the years ended December 31, 2013, 2014 and 2015 are available on SEDAR at and are incorporated herein by reference. Information concerning Kneat is provided in this Circular in "Appendix F Information Concerning Kneat". The audited financial statements of Kneat for the years ended December 31, 2013, 2014 and 2015 are provided in this Circular in Schedule 1 to Appendix F. Information concerning New Fortune is provided in this Circular in "Appendix G Information Concerning New Fortune". Unaudited pro-forma financial information is provided in this Circular in Schedule 1 to Appendix G. At the Meeting, the following Fortune Merger Resolution will be placed before the Fortune Shareholders: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 1. the issuance of such number of Fortune common shares (the "New Fortune Shares") as may be required to be issued pursuant to the terms of the merger (as merger may be, or may have been, modified or amended in accordance with its terms) (the "Merger") under the terms of the transaction agreement (the "Transaction Agreement") among Fortune, Kneat Solutions Limited ("Kneat") and Canada Limited dated February 9, 2016, and all as more particularly described and set forth in the management information circular (the "Circular") of Fortune dated May 13, 2016, is hereby authorized, approved and adopted; 2. the issuance of such number of New Fortune Shares as may be required to be issued pursuant to the exercise of the replacement share purchase options to be issued by Fortune to the former holders of the stock options of Kneat pursuant to the terms of the Merger, as more particularly described and set forth in the Circular, is hereby authorized, approved and adopted; 3. any one or more directors or officers of Fortune is hereby authorized, for and on behalf and in the name of Fortune, to execute and deliver, whether under corporate seal of Fortune or otherwise, all such agreements, forms waivers, notices, certificates, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Transaction Agreement and the completion of the Merger in accordance with the terms of the Transaction Agreement, including: (i) (ii) (iii) all actions required to be taken by or on behalf of Fortune, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; the signing of the certificates, consents and other documents or declarations required under the Transaction Agreement or otherwise to be entered into by Fortune; and such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing. In order to implement the Merger, the Fortune Merger Resolution must be approved by a simple majority of the votes attached to the Fortune Shares held by Fortune Shareholders present in person or represented by proxy at the Meeting, excluding for this purpose votes attached to Fortune Shares held by persons described in items (a) through 57

66 (d) of section 8.1(2) of MI See "Transaction The Arrangement - Regulatory Law Matters and Securities Law Matters Canadian Securities Law Matters MI ". Each Fortune Share will entitle the holder thereof to one vote on the Fortune Merger Resolution. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Fortune Merger Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the Fortune Merger Resolution. Risks Associated with the Transaction In evaluating the Transaction, Fortune Shareholders should carefully consider the following risk factors relating to the Transaction. The following risk factors are not a definitive list of all risk factors associated with the Transaction. Additional risks and uncertainties, including those currently unknown or considered immaterial by Fortune, may also adversely affect the New Fortune Shares, the SpinCo Shares and/or the businesses of Fortune and SpinCo following the Arrangement and the Merger. In addition to the risk factors relating to the Arrangement and the Merger set out below, Fortune Shareholders should also carefully consider the risk factors associated with the business of Fortune set forth in the section entitled "Risk Factors" of Fortune's MD&A, which is available on SEDAR at as such risk factors will be associated with the business of SpinCo following completion of the Transaction. Fortune Shareholders should also carefully consider the risk factors associated with the business of Kneat set forth in the section entitled "Risk Factors" in "Appendix F Information Concerning Kneat" to this Circular as such risk factors will be associated with the business of New Fortune following completion of the Transaction and the risk factors associated with the business of SpinCo set forth in the section entitled "Risk Factors" in "Appendix H Information Concerning SpinCo" to this Circular. If any of the risk factors materialize, the predictions based on them may need to be re-evaluated. The risks associated with the Transaction include, without limitation: The Transaction Agreement may be terminated in certain circumstances, including in the event of a Material Adverse Effect on Fortune. Each of Fortune and Kneat has the right to terminate the Transaction Agreement in certain circumstances. Accordingly, there is no certainty, nor can Fortune provide any assurance, that the Transaction Agreement will not be terminated by either Fortune or Kneat before the completion of the Transaction. For example, Kneat has the right, in certain circumstances, to terminate the Transaction Agreement if any change, effect, event, circumstance or fact occurs that constitutes a Material Adverse Effect in respect of Fortune and its subsidiaries. Although a Material Adverse Effect excludes certain events that are beyond the control of Fortune (such as general political, economic or financial conditions or the state of securities and commodities market which do not have a materially disproportionate effect on Fortune), there is no assurance that a Material Adverse Effect on Fortune will not occur before the Merger Effective Date, in which case Kneat could elect to terminate the Transaction Agreement and the Transaction would not proceed. There can be no certainty that all conditions precedent to the Arrangement and the Merger will be satisfied. The completion of the Arrangement and the Merger is subject to a number of conditions precedent, certain of which are outside the control of Fortune, including the receipt of the Arrangement Final Order and the Merger Final Order. There can be no certainty, nor can Fortune or Kneat provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. Fortune will incur costs in connection with the Transaction. Certain costs related to the Arrangement and the Merger, such as legal fees, must be paid by Fortune even if the Transaction is not completed. Fortune' s directors and executive officers may have interests in the Transaction that are different from those of the Fortune Shareholders. In considering the recommendation of the Fortune Board to vote in favour of the Arrangement Resolution and the Fortune Merger Resolution, Fortune Shareholders should be aware that certain members of the Fortune Board and management have agreements or arrangements that provide them with interests in the Transaction that differ from, or are in addition to, those of Fortune Shareholders generally. See "The Transaction The Arrangement Interests of Certain persons in the Transaction". 58

67 The market price for Fortune Shares may decline if the Transaction is not completed. If the Transaction is not completed, the market price of the Fortune Shares may decline to the extent that the current market price reflects a market assumption that the Transaction will be completed. If the Transaction is not completed and the Fortune Board decides to seek another merger or arrangement, there can be no assurance that it will be able to find a party willing to pay an equivalent or more attractive price than the total consideration to be paid pursuant to the Transaction. Fortune will also remain obligated to pay certain costs. The issue of New Fortune Shares under the Transaction and their subsequent sale may cause the market price of New Fortune Shares to decline. As of the Record Date, 35,494,045 Fortune Shares were outstanding, an aggregate of 2,000,000 Fortune Shares were subject to outstanding Fortune Options and an aggregate of 803,572 Fortune Shares were subject to outstanding Fortune Warrants. Up to 27,178,121 New Fortune Shares may be issued or issuable in connection with the Transaction. The issue of these New Fortune Shares and their sale and the sale of additional New Fortune Shares that may become eligible for sale in the public market from time to time could depress the market price for Fortune Shares. There is currently no market for the SpinCo Shares. There is currently no market through which the SpinCo Shares may be sold and Fortune Shareholders may not be able to resell the SpinCo Shares acquired under the Arrangement. This may affect the price of the SpinCo Shares in the secondary market, the transparency and availability of trading prices and the liquidity of the SpinCo Shares. Application has been made for the listing of the SpinCo Shares on the TSXV. Any listing will be subject to meeting the initial listing requirements of the TSXV. There can be no assurance as to if, or when, the SpinCo Shares will be listed or traded on the TSXV or any other stock exchange. It is not a condition of the Transaction that the TSXV has conditionally approved the listing of the SpinCo Shares. OTHER MATTERS TO BE CONSIDERED AT THE MEETING Audited Financial Statements The audited financial statements of Fortune for the fiscal year ended December 31, 2015 and the report of the auditors thereon will be submitted to the Meeting. Receipt at such Meeting of the auditors' reports and the financial statements of Fortune for the above noted fiscal period will not constitute approval or disapproval of any matters referred to therein. Appointment of Auditors Management recommends to appoint PricewaterhouseCoopers LLP, Chartered Accountants, as auditors of the Company to hold office until the close of the next annual meeting of the Fortune Shareholders, and to authorize the Fortune Board to fix the remuneration of the auditors. PricewaterhouseCoopers LLP, Chartered Accountants were first appointed as auditors of Fortune on May 2, 2014, replacing Deloitte LLP, Chartered Accountants, which had resigned as the auditors of Fortune effective April 29, At the Meeting, Fortune Shareholders will be asked to approve the appointment of PricewaterhouseCoopers LLP, Chartered Accountants, as the auditors of Fortune for the ensuing year. This resolution requires the approval of a simple majority of the votes cast at the Meeting, in person or by proxy, in order to be approved. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the appointment of PricewaterhouseCoopers LLP, Chartered Accountants as auditors of Fortune. Election of Directors Pursuant to the Transaction Agreement, following completion of the Transaction, the Fortune Board shall be comprised of six (6) persons, including one (1) Fortune Nominee and five (5) Kneat Nominees. The Fortune Board is expected to be comprised of the following six persons: Paul Breen, James Osborne, Ian Ainsworth, Kevin Fitzgerald, Edmund Ryan and Wade K. Dawe. 59

68 The constating documents of Fortune provide that the number of directors to be elected shall be a minimum of one (1) and a maximum of ten (10). If the Arrangement and Merger become effective and Fortune completes the Transaction, the Fortune Board has resolved that the number of directors be set at six (6) and five (5), if the Transaction does not become effective. Accordingly, it is proposed that the one (1) person named below, being the Fortune Nominee, be elected at the Meeting to serve until the next annual meeting of Fortune Shareholders or until his successors are duly elected or appointed: Wade K. Dawe Moreover, it is proposed that the five (5) persons named below, being the Kneat Nominees, be elected at the Meeting to serve from such time as the Arrangement and Merger become effective and Fortune completes the Transaction, until the next annual meeting of Fortune Shareholders or until their successors are duly elected or appointed: Paul Breen James Osborne Ian Ainsworth Kevin Fitzgerald Edmund Ryan Further, to cover the possibility that Fortune does not complete the Transaction and the Kneat Nominees do not become members of the Fortune Board, it is proposed that four (4) additional persons named below, being the current directors of Fortune, be elected as directors at the Meeting to serve until the next annual meeting of shareholders or until his successors are duly elected or appointed: Derrick Gill Dr. Michael Gross Darren Nantes David Peat The term of office of all present directors of Fortune expires at the Meeting. Management has been informed by each nominee that he is willing to stand for election or re-election, as applicable, and serve as a director. Each of the directors will be elected on an individual basis. The Fortune Board has unanimously adopted a majority voting policy in director elections that will apply at any meeting of Fortune Shareholders where an uncontested election of directors is held. Pursuant to this policy, if the number of proxy votes withheld for a particular director nominee is greater than the votes for such director, the director nominee will be required to submit his or her resignation to the Chairman of the Fortune Board promptly following the applicable Fortune Shareholders' meeting. Following receipt of the resignation, the Fortune Board will consider whether or not to accept the offer of resignation. In considering whether or not to accept the resignation, the Fortune Board will consider all factors deemed relevant by its members. The Fortune Board will be expected to accept the resignation except in situations where the considerations would warrant the applicable director to continue to serve on the Fortune Board. The Fortune Board will publicly disclose its final decision within 90 days following the Meeting. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Fortune Board at which the resignation is considered. At the Meeting, the following Fortune Board Resolution will be placed before the Fortune Shareholders: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 1. Derrick Gill, Dr. Michael Gross, Darren Nantes, David Peat and Wade K. Dawe be appointed as directors of Fortune, to hold office until the earlier of: (i) next annual meeting of Fortune or until their successors is duly elected or appointed, unless their office is earlier vacated; or (ii) completion of the Transaction; 60

69 2. subject to the Arrangement and the Merger becoming effective, following completion of the Transaction, Paul Breen, James Osborne, Ian Ainsworth, Kevin Fitzgerald, Edmund Ryan and Wade K. Dawe shall be appointed as directors of Fortune, to hold office until the next annual meeting of Fortune or until their successor is duly elected or appointed, unless their office is earlier vacated; 3. any director or officer of Fortune be and is hereby authorized and directed, for and on behalf of Fortune, to execute (whether under the corporate seal of Fortune or otherwise) and deliver, or cause to be executed and delivered, and to sign and/or file, or cause to be signed and/or filed, as the case may be, all applications, declarations, instruments and other documents, and to do or cause to be done all such other acts and things, as such director or officer may determine necessary or advisable to give effect to the foregoing resolutions including, without limitation, the execution, signing or filing of any such document or the doing of any such act or thing being conclusive evidence of such determination; and 4. capitalized terms not otherwise defined in these resolutions have the meaning assigned to them in the management information circular of Fortune dated May 13, 2016." Additional information with respect to each of the six (6) nominees for election as director should the Transaction become effective can be found in "Appendix G Information Concerning the New Fortune Directors, Officers and Promoters", which sets forth each proposed director's place of residence, holdings of common shares, present and principal occupation and prior occupations within the last five (5) years. Additional information with respect to each of the four (4) nominees for election as director contingent on the Transaction not being completed (other than the Fortune Nominee, who is nominated for election as director whether or not the Arrangement and the Merger become effective) can be found in this section under the heading "Nominees for Election to the Fortune Board", which sets forth such proposed director's place of residence, holdings of common shares, present and principal occupation and prior occupations within the last five (5) years. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Fortune Board Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the Fortune Board Resolution. Nominees for Election to the Fortune Board The following table sets out: (i) the name of each of the persons proposed to be nominated for election as a director contingent on the Transaction not becoming effective (other than the Fortune Nominee, who will be nominated for election as director whether the Transaction is completed or not); (ii) the principal occupations and offices presently held by him; (iii) the period during which he has served as a director of Fortune; and (iv) the number of Fortune Shares that he has advised are beneficially owned by him, directly or indirectly, or over which control or direction is exercised by him, as of April 30, Name and Municipality of Residence and Date First Become a Director Present Principal Occupation Fortune Shares Beneficially Owned, or Controlled or Directed, Directly or Indirectly (1) at the date of this Circular Percentage of Total Outstanding Fortune Shares at the date of this Circular Wade K. Dawe Halifax, Nova Scotia, Canada January 14, 2014 Derrick Gill (2)(3) St. John's, NL, Canada January 14, 2014 Dr. Michael Gross (2)(3)(5) Halifax, Nova Scotia, Chairman and Chief Executive Officer of the Company Co-founder and a director of Strategic Concepts and SCI Software Professor of Orthopaedic surgery at Dalhousie University 4,779,003 (6) 13.46% 17, % 660,902 (7) 1.86% 61

70 Name and Municipality of Residence and Date First Become a Director Present Principal Occupation Fortune Shares Beneficially Owned, or Controlled or Directed, Directly or Indirectly (1) at the date of this Circular Percentage of Total Outstanding Fortune Shares at the date of this Circular Canada January 14, 2014 David Peat (2)(4) Fernandina Beach, Florida, USA January 14, 2014 Financial Consultant 14, % Darren Nantes (2) Halifax, Nova Scotia, Canada June 23, 2015 Founder, Chairman and Chief Executive Officer of Nantes Capital Inc. and the Nantes Group of Companies 30,800 (8) 0.09% Notes: (1) The information as to Fortune Shares beneficially owned or over which control or direction is exercised, not being within the knowledge of Fortune, has been furnished by the respective parties. (2) Member of the Audit Committee. (3) Member of the Nominations and Compensation Committee. (4) Chairman of the Audit Committee. (5) Chairman of the Nominations and Compensation Committee. (6) Mr. Dawe holds: 2,500 Fortune Shares indirectly through BC Ltd., 1,638,500 Fortune Shares indirectly through Brigus Capital Inc., 1,485,000 Fortune Shares indirectly through Kelligrew Inc., and 25,000 Fortune Shares indirectly through Wade K. Dawe Inc., each of which is a company of which he is the controlling shareholder. (7) Dr. Michael Gross holds 241,521 Fortune Shares indirectly through mmp, a company of which he is a controlling shareholder. (8) Mr. Nantes holds 30,800 indirectly through Nantes Investments Inc., a company of which he is a controlling shareholder. As at the date hereof, the directors and executive officers of Fortune as a group owned beneficially, directly or indirectly, controlled or exercised direction over, 5,512,330 Fortune Shares representing approximately 15.5% of the outstanding Fortune Shares. The following are brief profiles of the directors of Fortune, including a brief description of each individual's principal occupation within the past five years. For a brief profile of Wade K. Dawe, the Chairman and CEO of Fortune, please see "Appendix G - Information Concerning the New Fortune Directors, Officers and Promoters". Mr. Derrick Gill Director Mr. Gill is co-founder and a director of Strategic Concepts and SCI Software, which provides strategic planning, financial modeling and business development consultation to major mining and oil and gas projects in Canada. Mr. Gill's 30-year career has included executive roles at Voisey's Bay Nickel, Diamond Fields Resources and Bristol Communications. Mr. Gill received his undergraduate degree in business administration from Memorial University. Dr. Michael Gross Director Dr. Gross has extensive capital markets experience, having served as either an executive or as a director with a number of venture stage companies. Dr. Gross was a founder and chairman of the board of NWest Energy Corp. prior to its successful initial public offering in Dr. Gross is currently the Chair and acting CEO of Biosign Technologies Inc., a public company trading on the TSXV. Biosign is a software supplier to the home care industry. A Professor of Orthopaedic surgery for over 20 years, he consults extensively in design and implantation techniques with the orthopaedic manufacturing industry. Dr. Gross is also the founder of companies specializing in proprietary medical devices. He received his degree in medicine from the University of Newcastle Upon Tyne in England. He obtained a Fellowship in Surgery in London and a Canadian Fellowship in Orthopaedic Surgery in Dr. Gross has completed the Rotman Directorship program and is a member of the Institute of Directors. 62

71 Mr. David W. Peat Director Mr. Peat has over 30 years of executive experience in financial leadership in support of mining corporations. Mr. Peat has held multiple executive positions, including as Vice President and Chief Financial Officer of Frontera Copper Corporation from 2006 through 2009; Vice President and Global Controller of Newmont Mining Corporation from 2002 through 2004; and Vice President of Finance and Chief Financial Officer of Homestake Mining from 1999 through Mr. Peat began his career at PriceWaterhouse in Toronto and he has been a member of the Chartered Professional Accountants of Ontario (formerly known as the Institute of Chartered Accountants of Ontario) since He is currently a director and chairman of the audit committees of Electrum Special Acquisition Corporation, Gabriel Resources Ltd. and AQM Copper Inc. and a director and chairman of the audit committee of the Sunshine Silver Mining and Refining Corporation, a privately held silver exploration and development company. He was previously a director of Brigus Gold Corp. and its predecessor company, Apollo Gold Corporation. Mr. Peat received his bachelor's degree in economics from the University of Western Ontario, and a bachelor's degree in commerce, with honours in business administration, from the University of Windsor, Ontario. Mr. Darren S. Nantes, FCA Director Mr. Nantes is the founder, Chairman and Chief Executive Officer of Nantes Capital Inc. and the Nantes Group of Companies. Mr. Nantes' career has included senior advisory and consulting roles in a National CA firm as well as the Chief Financial Officer role in a radio broadcasting / communications company in Atlantic Canada. In 2003, Mr. Nantes founded the Nantes Group of Companies. Since that time, he has owned and/or operated a number of industrial and commercial businesses with operations in Atlantic Canada. Mr. Nantes received his bachelor of commerce degree from St. Mary's University. He earned his Chartered Accountant designation in 1991 and was named a Fellow of the Nova Scotia Institute of Chartered Accountants (FCA) in He has served as director on numerous charitable, community and industry organizations including the Nova Scotia Securities Commission and the Construction Association of Nova Scotia. He currently serves on the board of the Halifax Chamber of Commerce and the Maritime NHL'ers for Kids Society, and is past National Chair of the Children's Wish Foundation of Canada. Mr. Nantes, is a member of the Young Presidents' Organization (YPO), an international organization for business leaders. Orders, Penalties and Bankruptcies To the knowledge of Fortune, no director to be nominated for election at the Meeting: (a) is at the date of this Circular, or has been, within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including Fortune) that: (i) (ii) was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer, (b) (c) is at the date of this Circular, or has been, within 10 years before the date hereof, a director or executive officer of any company (including Fortune) that, while such nominee was acting in that capacity, or within a year of such nominee ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or has, within 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such nominee. 63

72 For the purposes of the above section, the term "order" means: (i) (ii) (iii) a cease trade order; an order similar to a cease trade order; or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days. To the knowledge of Fortune, as of the date hereof, no director nominated for election at the Meeting has been subject to: (a) (b) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or any other penalties or sanctions imposed by a court or regulatory body. Approval of Fortune Amended Stock Option Plan The Fortune Stock Option Plan is designed to comply with the policies of the TSX. Subject to completion of the Transaction and in connection with anticipated listing of the New Fortune Shares on the TSXV, Fortune proposes to, and the Fortune Board has approved (provided that the Arrangement Resolution and the Fortune Merger Resolution are approved and subject to receiving Fortune Shareholder approval of the Fortune Amended Stock Option Resolution at the Meeting and the TSXV approval), to approve the Fortune Amended Stock Option Plan that complies with the policies of the TSXV. The Fortune Amended Stock Option Plan is a rolling stock option plan that sets the number of New Fortune Shares issuable under the Fortune Amended Option Plan at a maximum of 10% of the New Fortune Shares issued and outstanding at the time of any grant under the Fortune Amended Stock Option Plan. If the Fortune Amended Stock Option Plan is approved, following completion of the Transaction, a total of 3,956,364 New Fortune Shares will be available for Fortune Option grants under the Fortune Amended Stock Option Plan, of which 2,000,000 (which number will be 666,667 upon completion of the Transaction) Fortune Options have been granted and are outstanding (which represents approximately 5.6% of the Fortune Shares outstanding as at the date hereof). In addition, pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat Options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an exercise price of $0.90 will be granted by Fortune to former holders of the Kneat Options and other individuals as determined by the New Fortune Board. Thus, a total of 2,123,146 New Fortune Options will be issued and outstanding upon completion of the Transaction (which will represent 5.4% of the New Fortune Shares to be issued and outstanding upon completion of the Transaction on a non-diluted basis), and a total of 1,833,218 New Fortune Shares (which will represent 4.6% of the New Fortune Shares to be issued and outstanding upon completion of the Transaction on a non-diluted basis) will remain available for further option grants under the Fortune Amended Stock Option Plan as at as at the date hereof. A copy of the Fortune Amended Stock Option Plan is set out in Schedule 2 to "Appendix G Information Concerning New Fortune" attached to this Circular. Approval of the Fortune Amended Stock Option Plan is not a condition to the Arrangement and the Merger becoming effective. A summary of the Fortune Amended Stock Option Plan can be found in "Appendix G Information Concerning New Fortune Stock Option Plan". At the Meeting, Fortune Shareholders will be asked to consider, and, if thought advisable, approve an ordinary resolution in the following form: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 64

73 1. effective upon completion of the Transaction, the Amended Fortune Stock Option Plan of substantially as appended as Schedule 2 to "Appendix G Information Concerning New Fortune" of the management information circular of Fortune dated May 13, 2016 (the "Circular"), be and is hereby approved, confirmed and adopted as the stock option plan of Fortune with such modifications, if any, as may be required by any stock exchange upon which the shares of Fortune may be listed or may trade from time to time; 2. any officer or director of Fortune is hereby authorized to do all such acts and execute and file all instruments and documents necessary or desirable to carry out this resolution, including making appropriate filings with regulatory authorities including any applicable stock exchange; 3. any one director or officer of Fortune is authorized to amend the Fortune Amended Stock Option Plan should such amendments be required by applicable regulatory authorities including, but not limited to, the TSXV; and 4. capitalized terms not otherwise defined in these resolutions have the meaning assigned to them in the Circular." To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast by Fortune Shareholders at the Meeting. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Fortune Amended Stock Option Plan Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the Fortune Amended Stock Option Plan Resolution. Approval of SpinCo Stock Option Plan At the Meeting, provided that the Arrangement Resolution and the Fortune Merger Resolution are approved, Fortune Shareholders will be asked to consider and, if deemed advisable, approve the adoption by SpinCo of the SpinCo Stock Option Plan, which will authorize the SpinCo Board to issue stock options to directors, officers, employees and other eligible service providers (or corporations controlled by such persons) of SpinCo, subject to the rules and regulations of applicable regulatory authorities and any stock exchange upon which the SpinCo Shares may be listed or may trade from time to time. Approval of the SpinCo Stock Option Plan is not a condition to the Arrangement and the Merger becoming effective. If approved, the SpinCo Stock Option Plan will be implemented if and when SpinCo lists the SpinCo Shares on a stock exchange. The SpinCo Stock Option Plan is a rolling stock option plan that sets the number of SpinCo Shares issuable thereunder at a maximum of 10% of the SpinCo Shares issued and outstanding at the time of any grant. As of the date of this Circular, no stock options have been granted nor have any other rights or securities to purchase SpinCo Shares been issued. The SpinCo Board does not intend to grant any stock options until such time following the listing of the SpinCo Shares on a stock exchange such that a fair market value exercise price for options can be determined. A summary of the SpinCo Stock Option Plan can be found in "Appendix H Information Concerning SpinCo Options to Purchase Securities of SpinCo SpinCo Stock option Plan" of the Circular. A copy of the SpinCo Stock Option Plan is available for review up until the day preceding the Meeting at SpinCo's head office at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7, and will be available at the Meeting. At the Meeting, Fortune Shareholders will be asked to consider, and, if thought advisable, approve an ordinary resolution in the following form: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 1. effective upon completion of the Transaction, the SpinCo Stock Option Plan be and is hereby approved and adopted as the stock option plan of SpinCo with such modifications, if any, as may be required by any stock exchange upon which the shares of Fortune may be listed or may trade from time to time; 65

74 2. any officer or director of SpinCo is hereby authorized to do all such acts and execute and file all instruments and documents necessary or desirable to carry out this resolution, including making appropriate filings with regulatory authorities including any applicable stock exchange. 3. any one director or officer of SpinCo is authorized to amend the SpinCo Stock Option Plan should such amendments be required by applicable regulatory authorities including, but not limited to, the TSXV; and 4. capitalized terms not otherwise defined in these resolutions have the meaning assigned to them in the management information circular of Fortune dated May 13, 2016." To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast by Fortune Shareholders at the Meeting. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the SpinCo Stock Option Plan Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the SpinCo Stock Option Plan Resolution. Approval of the Compensation Shares Pursuant to the Employment Agreements, Mr. Dawe and Ms. Oliver are entitled to receive $540,000 and $195,000, respectively, immediately on the closing of a transaction resulting in a Change of Control. The Transaction will constitute a Change of Control, and Mr. Dawe and Ms. Oliver will be entitled to receive such amounts upon completion of the Transaction. In lieu of the lump sum payments due on a Change of Control to Mr. Dawe and Ms. Oliver, subject to receipt of a disinterested Fortune Shareholder's approval, and provided that the Arrangement Resolution and the Fortune Merger Resolution are approved, Fortune proposes to issue 833,333 Fortune Shares (at a deemed value of $0.30 per Fortune Share) to Mr. Dawe, and 216,667 Fortune Shares (at a deemed value of $0.30 per Fortune Share) to Ms. Oliver. For further details, see in this Circular, "The Transaction The Arrangement Interests of Certain Persons in the Transaction Termination and Change of Control Benefits". In addition, subject to receipt of a disinterested Fortune Shareholder's approval, and provided that the Arrangement Resolution and the Fortune Merger Resolution are approved, Fortune proposes to issue: (i) an aggregate of 160,000 Fortune Shares (at an estimated value of $0.30 per Fortune Share), to members of the Fortune Board in consideration for the services provided for serving on the Special Committee of Fortune in connection with the Transaction; and (ii) 112,500 Fortune Shares to a non-executive employee of Fortune, as a part of the severance payment. At the Meeting, Fortune Shareholders will be asked to consider, and, if thought advisable, approve an ordinary resolution in the following form: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 1. the issuance of an aggregate of 1,322,500 Compensation Shares to certain senior officers and directors of Fortune, as described in the management information circular of Fortune dated May 13, 2016 (the "Circular") be approved; 2. the board of directors of Fortune may revoke this resolution before it is acted upon, without further approval of the shareholders of Fortune; 3. any one officer or one director of the Company is hereby authorized and directed to do and perform all things, including, the execution of documents which may be necessary or desirable to give effect to the foregoing resolution, including making appropriate filings with regulatory authorities including the TSX Venture Exchange; and 4. capitalized terms not otherwise defined in these resolutions have the meaning assigned to them in the Circular". 66

75 To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast by Fortune Shareholders at the Meeting, excluding for this purpose votes attached to Fortune Shares held by the directors and senior officers of Fortune. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the Compensation Shares Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the Compensation Shares Resolution. Approval of the DSUP The DSUP, which has been approved by the TSX, was originally approved by the Fortune Shareholders on June 23, In connection with the anticipated listing of the New Fortune Shares on the TSXV, Fortune proposes to obtain a disinterested Fortune Shareholders' approval of the DSUP, in accordance with the requirements of the TSXV. A summary of the DSUP can be found in "Appendix E Information Concerning Fortune and Annual Meeting Matters Security Based Compensation Arrangements Deferred Share Unit Plan". At the Meeting, Fortune Shareholders will be asked to consider, and, if thought advisable, approve an ordinary resolution in the following form: "BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Fortune Bay Corp. ("Fortune") that: 1. the adoption of the deferred share unit plan of Fortune and the reservation of 2,000,000 common shares of Fortune for issuance thereunder, substantially as described in the management information circular of Fortune dated May 13, 2016 be approved; 2. the board of directors of Fortune may revoke this resolution before it is acted upon, without further approval of the shareholders of Fortune; and 3. any one officer or one director of the Company is hereby authorized and directed to do and perform all things, including, the execution of documents which may be necessary or desirable to give effect to the foregoing resolution, including making appropriate filings with regulatory authorities including the TSX Venture Exchange." To be adopted, this resolution is required to be passed by the affirmative vote of a majority of the votes cast by Fortune Shareholders at the Meeting, excluding for this purpose votes attached to Fortune Shares held by the directors and senior officers of Fortune. The Fortune Board unanimously recommends that Fortune Shareholders vote FOR the DSUP Resolution. Unless otherwise instructed, the persons named in the enclosed form of proxy intend to vote the Fortune Shares represented by such form of proxy FOR the DSUP Resolution. INFORMATION CONCERNING FORTUNE Information relating to Fortune and annual Meeting matters is contained in Appendix E to this Circular. INFORMATION CONCERNING KNEAT Upon completion of the Arrangement and the Merger, Fortune Shareholders (including former Fortune Optionholders and Fortune Warrantholders who receive New Fortune Shares) will remain shareholders of Fortune, and Fortune will own and operate the existing business of Kneat. Information relating to Kneat prior to the completion of the Arrangement and the Merger is contained in "Appendix F Information Concerning Kneat" to this Circular. 67

76 INFORMATION CONCERNING SPINCO Upon completion of the Arrangement and the Merger, Fortune Shareholders will become shareholders of SpinCo and SpinCo will own and operate the existing business of Fortune. Information relating to SpinCo after the Arrangement and the Merger is contained in "Appendix H Information Concerning SpinCo" to this Circular. INFORMATION CONCERNING NEW FORTUNE Upon completion of the Arrangement and the Merger, Fortune Shareholders (including former Fortune Optionholders and Fortune Warrantholders who receive New Fortune Shares) will remain shareholders of Fortune, and Fortune will own and operate the existing business of Kneat. Information relating to New Fortune after completion of the Arrangement and the Merger is contained in "Appendix G Information Concerning New Fortune" to this Circular. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS No directors or executive officers or any of their respective associates or affiliates is or at any time since the beginning of Fortune's most recently completed financial year, were indebted to Fortune or any of its subsidiaries as of the end of the most recently completed financial year or as at the date hereof, nor is or at any time since the beginning of Fortune's most recently completed financial year, has any of the aforementioned individuals been indebted to another entity which indebtedness has been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by Fortune or any of its subsidiaries. INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS Other than as set forth in the Circular, as of the date of this Circular, no informed person of Fortune or any associate or affiliate of any informed person, has had a material interest in any transaction since the commencement of Fortune's most recently completed financial year or has a material interest in any proposed transaction which has materially affected or would affect Fortune or any of its subsidiaries. INTERESTS OF EXPERTS The auditors of Fortune is PricewaterhouseCoopers LLP, Chartered Accountants, 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, B3J 3P6, Canada. PricewaterhouseCoopers LLP audited the financial statements of Fortune for the years ended December 31, 2015 and 2014, which are incorporated into the Circular by reference, and have confirmed that they are independent with respect to Fortune within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Nova Scotia. Except as disclosed below, no person or company whose profession or business gives authority to a statement made by the person or company and who is named as having prepared or certified a part of this Circular or as having prepared or certified a report or valuation described or included in this Circular holds any beneficial interest, direct or indirect, in any securities or property of Fortune, Kneat, the Resulting Issuer, SpinCo or an associate or affiliate of the foregoing. A partner at the Irish member firm of the PricewaterhouseCoopers network of firms, holds less than 1% of Kneat Shares. OTHER MATERIAL FACTS There are no other material facts about Fortune, Kneat, the Resulting Issuer or the Transaction that have not been disclosed in this Circular. 68

77 ADDITIONAL INFORMATION Additional information regarding Fortune is available on SEDAR at and on Fortune website at Financial information regarding Fortune is provided in the financial statements and MD&A of Fortune, mailed to those Fortune Shareholders who requested such information. Fortune files an Annual Information Form with the various provincial securities commissions and administrators across Canada and a copy of Fortune's AIF dated March 1, 2016, Fortune Financial Statements and MD&A for the financial year ended December 31, 2015, together with the auditor's report thereon and this Circular may be obtained from the Secretary of Fortune upon request. 69

78 APPROVAL OF DIRECTORS The contents and sending of this Circular, including the Notice of Meeting, have been approved and authorized by the Fortune Board. May 13, 2016 BY ORDER OF THE BOARD OF DIRECTORS "Wade K. Dawe" Wade K. Dawe Chairman and Chief Executive Officer 1

79 CERTIFICATE OF FORTUNE BAY CORP. The foregoing document constitutes full, true and plain disclosure of all material facts relating to the securities of Fortune Bay Corp. ("Fortune") assuming completion of the transaction, pursuant to which Fortune will spin-out its resources properties by way of a court-approved plan of arrangement in Ontario, and acquire 100% of the issued and outstanding ordinary shares of Kneat Solutions Limited by way of a concurrent scheme of arrangement in Ireland. (signed) "Wade K. Dawe" Chief Executive Officer (signed) "Sarah Oliver" Chief Financial Officer On behalf of the Board of Directors (signed) "Derrick Gill" Director (signed) "David Peat" Director 1

80 CERTIFICATE OF KNEAT SOLUTIONS LIMITED The foregoing document as it relates to Kneat Solutions Limited constitutes full, true and plain disclosure of all material facts relating to the securities of Kneat. (signed) "Edmond Ryan" Chief Executive Officer On behalf of the Board of Directors (signed) "Paul Breen" Director (signed) "James Osborne" Director 1

81 APPENDIX A ARRANGEMENT RESOLUTION BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT: 1. The arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations Act (the "CBCA") involving Fortune Bay Corp. ("Fortune"), all as more particularly described and set forth in the management information circular (the "Circular") of Fortune dated May 13, 2016 (as the Arrangement may be modified or amended), is hereby authorized, approved and adopted. 2. The plan of arrangement, as it may be or has been amended (the "Plan of Arrangement"), involving Fortune and implementing the Arrangement, the full text of which is set out in Appendix B to the Circular, is hereby authorized, approved and adopted. 3. The transaction agreement (the "Transaction Agreement") between Fortune, Kneat Solutions Limited and Canada Limited, dated February 9, 2016, and all the transactions contemplated therein, the actions of the directors of Fortune in approving the Arrangement and the actions of the directors and officers of Fortune in executing and delivering the Transaction Agreement and any amendments thereto are hereby confirmed, ratified, authorized and approved. 4. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the securityholders of Fortune or that the Arrangement has been approved by the Ontario Superior Court of Justice, the directors of Fortune are hereby authorized and empowered, without further notice to, or approval of, any securityholders of Fortune: (a) (b) to amend the Transaction Agreement or the Plan of Arrangement to the extent permitted by the Transaction Agreement or the Plan of Arrangement; or subject to the terms of the Transaction Agreement, not to proceed with the Arrangement; 5. Any one or more directors or officers of Fortune is hereby authorized, for and on behalf and in the name of Fortune, to execute and deliver, whether under corporate seal of Fortune or not, all such agreements, applications, forms, waivers, notices, certificates, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Transaction Agreement and the completion of the Plan of Arrangement in accordance with the terms of the Transaction Agreement, including: (a) (b) all actions required to be taken by or on behalf of Fortune, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and the signing of the certificates, consents and other documents or declarations required under the Transaction Agreement or otherwise to be entered into by Fortune; such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing. A-1

82 APPENDIX B PLAN OF ARRANGEMENT PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT 1. INTERPRETATION (a) Definitions: In this Plan of Arrangement, unless the context otherwise requires, the following words and terms shall have the meaning hereinafter set out: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) "Acquired Fortune Shares" means that number of New Fortune Shares as will represent, upon their issuance in connection with the Arrangement, 68.7% of the issued and outstanding New Fortune Shares, subject to adjustment pursuant to Section 3.1(a)(iii) of the Transaction Agreement. "affiliate" has the meaning given to such term in the Transaction Agreement; "Arrangement" means the arrangement under the provisions of Section 192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, as may be amended, varied or supplemented from time to time in accordance with Section 10.1 of the Transaction Agreement and the provisions hereof; "Arrangement Resolution" means the special resolution of Fortune Securityholders approving the Arrangement; "CBCA" means the Canada Business Corporations Act and the regulations made thereunder, as promulgated or amended from time to time, and includes any successor thereto; "Business Day" means any day, other than a Saturday, Sunday or a statutory or civic holiday in Toronto, Ontario or the Republic of Ireland; "Court" means the Ontario Superior Court of Justice (Commercial List), or other court as applicable; "Depositary" means any nationally recognized trust company, bank or financial institution engaged by Fortune for the purpose of, among other things, receiving Letters of Transmittal and distributing certificates representing New Fortune Shares and SpinCo Shares in connection with the Arrangement; "Dissenting Holder" means a registered Fortune Shareholder who has duly exercised a Dissent Right; "Dissent Rights" shall have the meaning set out in Section 5 hereof; "Dissent Shares" means the Fortune Shares held by a Dissenting Fortune Shareholder and in respect of which the Dissenting Fortune Shareholder has validly exercised Dissent Rights; "Effective Date" means the date upon which all of the conditions to completion of the Arrangement as set out in Sections 6.1, 6.2 and 6.3 of the Transaction Agreement have been satisfied or waived in accordance with the Transaction Agreement and all documents agreed to be delivered thereunder have been delivered; "Effective Time" means 12:01 a.m. (Toronto time) on the Effective Date; B-1

83 (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) (xxvi) "Fair Market Value", when applied to Fortune Shares, means the volume weighted average price of the Fortune Shares over the five trading days on the TSX ending the day prior to such determination; and, when applied to the SpinCo Shares, means the value determined as of the Effective Time by the directors of SpinCo, acting reasonably, and a certificate setting out such value shall forthwith thereafter be provided to Fortune; "Final Order" means the final order of the Court pursuant to Section 192 of the CBCA, after a hearing upon the fairness of the terms and conditions of the Arrangement, approving the Arrangement, as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal; "Fortune" means Fortune Bay Corp., a corporation existing under the laws of Canada; "Fortune Meeting" means the special meeting of Fortune Securityholders, including any adjournment or postponement thereof, to be held for the purpose of, among other things, obtaining approval by the Fortune Securityholders of the Arrangement Resolution; "Fortune Optionholders" means the holders of Fortune Options; "Fortune Options" means the outstanding options to purchase Fortune Shares granted under or otherwise subject to the Fortune Stock Option Plan; "Fortune Securities" means the Fortune Shares, the Fortune Warrants and the Fortune Options; "Fortune Securityholder" means the Fortune Shareholders, the Fortune Warrantholders and the Fortune Optionholders; "Fortune Shareholder" means a Person who is a registered holder of Fortune Shares as shown on the share register of Fortune Shares immediately prior to the Effective Time; "Fortune Shares" means the common shares of Fortune, as currently constituted prior to the Effective Time; "Fortune Stock Option Plan" means the Stock Option Plan of Fortune approved by Fortune's shareholders dated March 5, 2014, as amended; "Fortune Warrantholders" means the holders of Fortune Warrants; "Fortune Warrants" means the outstanding warrants to purchase Fortune Shares; (xxvii) "Interim Order" means the interim order of the Court providing for, among other things, the calling and holding of the Fortune Meeting, as such order may be amended, supplement or varied by the Court; (xxviii) "Letter of Transmittal" means the letter of transmittal(s) to be delivered by Fortune to the Fortune Shareholders providing for the delivery of the Fortune Shares to the Depositary; (xxix) (xxx) "Kneat" means Kneat Solutions Limited, an Irish corporation; "Lien" means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims, other third Person interest or encumbrance of any kind, whether contingent or absolute, and any agreement, option, right or privilege (whether by law, contract or otherwise) capable of becoming any of the foregoing; B-2

84 (xxxi) "New Fortune Shares" means common shares in the authorized share structure of Fortune to be created and issued under the Arrangement; (xxxii) "paid-up capital" has the meaning ascribed to such term for purposes of the Tax Act; (xxxiii) "Person" means an individual, general partnership, limited partnership, corporation, company, limited liability company, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative; (xxxiv) "SpinCo" means Canada Limited, a corporation existing under the laws of Canada; (xxxv) "SpinCo Shares" means the common shares of SpinCo; and (xxxvi) "Tax Act" means the Income Tax Act (Canada) and the regulations thereunder, as amended from time to time; and (xxxvii) "Transaction Agreement" means the Transaction Agreement dated February 9, 2016 to which this Plan of Arrangement is attached as Schedule A, as the same may be amended, varied or supplemented from time to time in accordance with the terms thereof. (b) (c) (d) (e) (f) Interpretation Not Affected by Headings. The headings contained in this Plan of Arrangement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Plan of Arrangement. The terms "this Plan of Arrangement", "hereof", "herein", "hereto", "hereunder" and similar expressions refer to this Plan of Arrangement and not to any particular article, section, subsection, paragraph, subparagraph, clause or sub-clause hereof and include any agreement or instrument supplementary or ancillary hereto. Date for any Action. If the date on which any action is required to be taken hereunder is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day. Number and Gender. In this Plan of Arrangement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders and neuter. Reference to Persons. A reference to a Person includes any successor to that Person. A reference to any statute includes all regulations made pursuant to such statute and the provisions of any statute or regulation which amends, supplements or supersedes any such statute or regulation. Currency. Unless otherwise stated in this Plan of Arrangement, all references herein to amounts of money are expressed in lawful money of Canada. 2. EFFECT OF THE ARRANGEMENT (a) (b) This Plan of Arrangement is made pursuant to and subject to the provisions of the Transaction Agreement. At the Effective Time, the Arrangement shall without any further authorization, act or formality on the part of the Court be binding upon Fortune, SpinCo and the Fortune Securityholders. 3. THE ARRANGEMENT (a) The Arrangement. At the Effective Time the following shall occur and shall be deemed to occur in the following sequence as set out below without any further authorization, act or formality, in each case effective as at five minute intervals starting at the Effective Time: B-3

85 (i) all Fortune Shares held by Dissenting Holders shall be deemed to have been transferred (free and clear of all Liens) to Fortune in exchange for a debt claim against Fortune for the amount determined under Section 5; and (A) (B) such Dissenting Holders shall cease to be the holders of such Fortune Shares and to have any rights as Fortune Shareholders other than the right to be paid the fair value for such Fortune Shares as set out in Section 5; and the name of each such Dissenting Holders shall be removed as a Fortune Shareholder from the registers of Fortune Shareholders maintained on or on behalf of Fortune; (ii) the Articles of Fortune will be amended by: (A) (B) (C) changing the designation of the existing "Common Shares" to "Class A Common Shares" and to increase the voting rights of the Fortune Shares from one vote to two votes per Fortune Share and to change the rights, privileges, restrictions and conditions attached thereto, whether issued or unissued, so that the rights, privileges, restrictions and conditions attached thereto shall be as set out in Appendix A attached hereto; creating a new class of shares designated as "Common Shares", in an unlimited number, having the rights, privileges, restrictions and conditions set out in Appendix A attached hereto; and otherwise to the extent necessary to facilitate the Arrangement, so that upon completion of the amendments of the Articles of Fortune set forth above, the authorized share capital of Fortune shall be as set out in Appendix A attached hereto; (iii) each Fortune Shareholder shall transfer to Fortune, free and clear of any Lien, all its Fortune Shares and: (A) (B) (C) in exchange for each three (3) Fortune Shares, other than Dissent Shares, Fortune shall issue as fully paid or transfer to the Fortune Shareholder, one (1) New Fortune Share and one and one-half (1.5) of a SpinCo Share; for each Dissent Share, the Dissenting Holder shall be entitled to receive from Fortune an amount agreed upon with Fortune or equal to the fair value thereof determined in accordance with the Dissent Rights; and the stated capital of the New Fortune Shares will be an amount equal to the paid-up capital of the Fortune Shares, less the Fair Market Value of the SpinCo Shares distributed on such exchange; (iv) with respect to each Fortune Share: (A) (B) (C) the Fortune Shareholder thereof shall cease to be the Fortune Shareholder of such Fortune Share and the name of the Fortune Shareholder shall be removed from the central securities register of Fortune with respect to such Fortune Share; such Fortune Share shall be cancelled; and other than with respect to Dissent Shares, the Fortune Shareholder shall be registered in the central securities register of Fortune as the holder of New Fortune Shares as set out in paragraph 3(a)(ii)(B); B-4

86 (v) the Articles of Fortune will be amended by: (A) (B) cancelling the class of shares designated as "Class A Common Shares", none of which will be issued and outstanding at such time according to the Plan of Arrangement; and otherwise to the extent necessary to facilitate the Arrangement, so that upon completion of the amendments of the Articles of Fortune set forth above, the authorized share capital of Fortune shall be as set out in Appendix B attached hereto; (vi) (vii) The name of Fortune is changed to Kneat Solutions Inc. or such other name as may be acceptable to Kneat; and The name of SpinCo is changed to Fortune Bay Corp. (b) No Fractional Shares. Notwithstanding any other provision of this Arrangement, no fractional SpinCo Shares or New Fortune Shares shall be transferred to the Fortune Shareholders or Offerees. Where the aggregate number of SpinCo Shares or New Fortune Shares to be issued under this Plan of Arrangement would result in a fraction of a SpinCo Share or New Fortune Share being issuable, the number of SpinCo Shares or New Fortune Shares to be received by such Fortune Shareholder or Offeree shall be rounded down to the nearest whole SpinCo Share or New Fortune Share, as the case may be, and such Fortune Shareholder or Offeree shall not be entitled to any compensation in respect of such fractional SpinCo Share or New Fortune Share. 4. DELIVERY OF SPINCO SHARES AND NEW FORTUNE SHARES (a) Entitlement to SpinCo Certificates and Fortune Certificates. (i) (ii) (iii) At or prior to the Effective Date, Fortune shall deposit with the Depositary, for the benefit of the Fortune Shareholders, certificate(s) representing the number of New Fortune Shares and SpinCo Shares to which they are entitled at the Effective Time after giving effect to the steps in Section 3(a)(i) (iv) above. Until such time as Fortune Shareholder deposits with the Depositary a duly completed Letter of Transmittal, documents, certificates and instruments contemplated by the Letter of Transmittal and such other documents and instruments as the Depository or Fortune reasonably requires, all certificates to New Fortune Shares or SpinCo Shares to which such Fortune Shareholder is entitled (and all dividends paid or distributions made in respect thereof) shall, subject to Section 4(a)(iii), in each case be delivered or paid to the Depositary to be held in trust for such Fortune Shareholder for delivery to the Fortune Shareholder, without interest and net of all applicable withholding and other taxes, if any, upon delivery of the Letter of Transmittal, documents, certificates and instruments contemplated by the Letter of Transmittal and such other documents and instruments as the Depository or Fortune reasonably requires. Upon surrender to the Depositary for cancellation of a certificate which immediately prior to the Effective Time represented one or more Fortune Shares which were exchanged for New Fortune Shares and SpinCo Shares in accordance with Section 3 hereof, if applicable, a completed Letter of Transmittal and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate or the deliverer of such Letter of Transmittal, as applicable, shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such Fortune Shareholder following the Effective Time, certificates representing the New Fortune Shares and the SpinCo Shares to which such Fortune Shareholder is entitled to receive in accordance with Section 3 hereof. B-5

87 (iv) After the Effective Time and until surrender for cancellation as contemplated by Section 4(a)(iii) hereof, each certificate which immediately prior to the Effective Time represented one or more Fortune Shares (other than certificates representing Dissent Shares) shall be deemed at all times to represent only the right to receive in exchange therefor certificates representing the New Fortune Shares and the SpinCo Shares to which the holder of such certificate is entitled to receive in accordance with Section 4(a)(iii) hereof. (b) (c) (d) (e) Lost Certificates. In the event that any certificate which immediately prior to the Effective Time represented one or more Fortune Shares which were exchanged for New Fortune Shares and SpinCo Shares in accordance with Section 3 hereof shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming such certificate to be lost, stolen or destroyed, the Depositary shall deliver in exchange for such lost, stolen or destroyed certificate, certificates representing the Fortune Shares and the SpinCo Shares which such Fortune Shareholder is entitled to receive in accordance with Section 3 hereof. When authorizing such delivery of certificates representing the Fortune Shares and the SpinCo Shares which such Fortune Shareholder is entitled to receive in exchange for such lost, stolen or destroyed certificate, the Fortune Shareholder to whom certificates representing such Fortune Shares and SpinCo Shares are to be delivered shall, as a condition precedent to the delivery of such Fortune Shares and SpinCo Shares give a bond satisfactory to Fortune, SpinCo and the Depositary in such amount as Fortune, SpinCo and the Depositary may direct, or otherwise indemnify Fortune, SpinCo and the Depositary in a manner satisfactory to Fortune, SpinCo and the Depositary, against any claim that may be made against Fortune, SpinCo or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed and shall otherwise take such actions as may be required by the by-laws of Fortune. Termination of Rights. Any certificate formerly representing Fortune Shares that is not deposited, with all other documents as provided in this Section 4 on or before the sixth anniversary of the Effective Date, shall cease to represent any claim or interest of any kind or nature against Fortune, SpinCo or the Depositary. Dividends or other Distributions. No dividends or distributions declared or made after the Effective Date with respect to New Fortune Shares with a record date after the Effective Date will be payable or paid to the holder of any unsurrendered certificate or certificates which, immediately prior to the Effective Date, represented outstanding Fortune Shares unless and until the holder of such certificate shall have complied with the provisions of this Section 4. Subject to Applicable Law and to Section 4 hereof, at the time of such compliance, there shall, in addition to the delivery of a certificate representing the Fortune Shares and the SpinCo Shares to which such holder is thereby entitled, be delivered to such holder, without interest, the amount of the dividend or other distribution with a record date after the Effective Time theretofore paid with respect to such Fortune Shares and SpinCo Shares. Withholding Rights. Fortune, SpinCo and the Depositary shall be entitled to deduct and withhold from all dividends, distributions, other payments or other consideration otherwise payable to any Person such amounts as Fortune, SpinCo or the Depositary is required or permitted to deduct and withhold with respect to such payment under the Tax Act, the United States Revenue Code of 1986 or any provision of any applicable federal, provincial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the Person in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. 5. DISSENT RIGHTS (a) Each registered Fortune Shareholder may exercise rights of dissent ("Dissent Rights") with respect to the Fortune Shares held by it pursuant to and in the manner set forth in the Interim Order. Dissenting Holders who: (i) are ultimately entitled to be paid by Fortune the fair value for their Dissent Shares shall be deemed to have transferred such Dissent Shares (free of any Liens) to Fortune for cancellation in accordance with Section 3(a)(i); or B-6

88 (ii) are ultimately not entitled, for any reason, to be paid by Fortune fair value for their Dissent Shares in respect of which they dissent, shall be deemed to have participated in the Arrangement in respect of those Fortune Shares on the same basis as a non-dissenting Fortune Shareholder and shall be entitled to receive only the New Fortune Shares and SpinCo Shares that such nondissenting Fortune Shareholders are entitled to receive, on the basis set forth in Section 3(a)(iii)(A). (b) (c) In no event shall Fortune or SpinCo or any other Person be required to recognize a Dissenting Holder as a registered or beneficial owner of Fortune Shares at or after the Effective Time, and at the Effective Time the names of such Dissenting Holders shall be deleted from the central securities register of Fortune as at the Effective Time. For greater certainty, in addition to any other restrictions in the Interim Order, no Person shall be entitled to exercise Dissent Rights with respect to Fortune Shares in respect of which such Person voted in favour of the Arrangement. 6. AMENDMENT (a) (b) (c) (d) (e) Fortune reserves the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that any amendment, modification or supplement must be contained in a written document which is filed with the Court and, if made following the Fortune Meeting, then: (i) approved by the Court, and (ii) if the Court directs, approved by the Fortune Shareholders, Fortune Warrantholders and Fortune Optionholders voting as a single class and in any event communicated to them, and in either case in the manner required by the Court. Any amendment, modification or supplement to this Plan of Arrangement may be made at any time prior to or at the Fortune Meeting, with or without any other prior notice or communication and, if so proposed and accepted by the Persons voting at the Fortune Meeting (other than as may be required under the Interim Order) shall become part of this Plan of Arrangement for all purposes. Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Fortune Meeting will be effective only if it is consented to by Fortune and, if required by the Court, by the Fortune Shareholders, Fortune Warrantholders and Fortune Optionholders, voting as a single class. Any amendment, modification or supplement to this Plan of Arrangement may be made by Fortune without approval of the Fortune Shareholders, Fortune Warrantholders and the Fortune Optionholders provided that it concerns a matter which, in the reasonable opinion of Fortune is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the Fortune Shareholders, Fortune Warrantholders and the Fortune Optionholders. Notwithstanding the foregoing provisions of this Section 6, no amendment, modification or supplement of this Plan of Arrangement may be made prior to the Effective Time except in accordance with the terms of the Transaction Agreement. B-7

89 Appendix A to Schedule A Share conditions attaching to Fortune Shares and New Fortune Shares at the time of the amendment contemplated in Section 3(a)(ii) of the Plan of Arrangement 1. The rights, privileges, restrictions and conditions attaching to the Class A Common Shares shall be as follows: a) The holders of Class A Common Shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Corporation except meetings of the holders of another class of shares. Each Class A Common Share shall entitle the holder thereof to two votes in respect of each Class A Common Share held. b) The holders of Class A Common Shares shall be entitled to receive such dividends as may be declared thereon by the board of directors of the Corporation from time to time. c) In the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of Class A Common Shares shall be entitled, along with the holders of all other common shares of the Corporation, to receive pro rata all of the assets remaining for distribution. 2. The rights, privileges, restrictions and conditions attaching to the Common Shares shall be as follows: a) The holders of Common Shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Corporation except meetings of the holders of another class of shares. Each Common Share shall entitle the holder thereof to one vote in respect of each Common Share held. b) The holders of Common Shares shall be entitled to receive such dividends as may be declared thereon by the board of directors of the Corporation from time to time. c) In the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of Common Shares shall be entitled, along with the holders of all other common shares of the Corporation, to receive pro rata all of the assets remaining for distribution. B-8

90 Appendix B to Schedule A Share conditions attaching to New Fortune Shares at the time of the amendment contemplated in Section 3(a)(v) of the Plan of Arrangement 1. The rights, privileges, restrictions and conditions attaching to the Common Shares shall be as follows: a) The holders of Common Shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Corporation except meetings of the holders of another class of shares. Each Common Share shall entitle the holder thereof to one vote in respect of each Common Share held. b) The holders of Common Shares shall be entitled to receive such dividends as may be declared thereon by the board of directors of the Corporation from time to time. c) In the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of Common Shares shall be entitled, along with the holders of all other common shares of the Corporation, to receive pro rata all of the assets remaining for distribution. B-9

91 APPENDIX C INTERIM ORDER AND NOTICE OF APPLICATION C-1

92 Court File No. CV OOCL ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST THE HONOURABLE ~"IAOPi" ) THURSDAY, THE 12" JUSTICE I'~Es B ~Q ~ DAY OF MAY, 2016 IN THE MATTER OF an Application under section 192 of the Ca~aa~l~c Business Corpor~tio~ts Act, R.S.C. 1985, c. C-44, as amended; AND IN THE MATTER OF Rule 14.05(2) of the Rules of Civil Procedure AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING FORTUNE BAY CORP., ITS SHAREHOLDERS AND CANADA LIMITED INTERIM ORDER THIS MOTION made by the Applicant, Fortune Bay Corp. ("Fortune"), for an interim order for advice and directions pursuant to section 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, (the "CBCA") was heard this day at 330 University Avenue, Toronto, Ontario. ON READING the Notice of Motion, the Notice of Application issued on May 6, 2016 and the Affidavit of Sarah Oliver sworn May 9, 2016, (the "Oliver Affidavit"), including the Plan of Arrangement, which is attached as Appendix "B" to the draft management information circular of Fortune (the "Information Circular"), which is attached as Exhibit "B" to the Oliver Affidavit, and on hearing the submissions of counsel for Fortune, and on being advised that the Director appointed under the CBCA (the "Director") does not consider it necessary to appear.

93 -2- lle~nitions 1. THIS COURT ORDERS that all definitions used in this Interim Order shall have the meaiung ascribed thereto in the Information Circular or otherwise as specifically defined herein. The Meeting 2. THIS COURT ORDERS that Fortune is permitted to call, hold and conduct an annual and special meeting (the "Meeting") of the holders of voting common shares (the "Fortune Shareholders") in the capital of Fortune to be held at the office of Computershare Investor Services Inc., 1969 Upper Water Street, Suite 2008, Halifax, Nova Scotia on June 15, 2016 at 2:00 p.m. (Atlantic time) in order for the Fortune Shareholders to, among other things, consider and, if determined advisable, pass a special resolution authorizing, adopting and approving, with or without variation, the Arrangement and the Plan of Arrangement (collectively, the ~~Arrangement Resolution") 3. THIS COURT ORDERS that the Meeting shall be called, held and conducted in accordance with the CBCA, the notice of meeting of Fortune Shareholders, which accompanies the Information Circular (the "Notice of Meeting") and the articles and by-laws of Fortune, subject to what may be provided hereafter and subject to further order of this Court. 4. THIS COURT ORDERS that the record date (the "Record Date") for determination of the Fortune Shareholders entitled to notice of, and to vote at, the Meeting shall be May 11, THIS COURT ORDERS that the only persons entitled to attend or speak at the Meeting shall be:

94 -3- a) the Fortune Shareholders or their respective proxyholders; b) the officers, directors, auditors and advisors of Fortune; c) representatives and advisors of Kneat Solutions Limited ("Kneat"); d) the Director; and e) other persons who may receive the permission of the Chair of the Meeting. 6. THIS COURT ORDERS that Fortune may transact such other business at the Meeting as is contemplated in the Information Circular, or as may otherwise be properly before the Meeting. Quorum 7. THIS COURT ORDERS that the Chair of the Meeting shall be determined by Fortune and that the quorum at the Meeting shall be two persons present and each entitled to vote thereat and holding or representing in the aggregate not less than 10% of the issued and outstanding Fortune Shares. Amendments to the Arrangement and Plan of Arrangement 8. THIS COURT ORDERS that Fortune is authorized to make, subject to the terms of the Transaction Agreement, and paragraph 9, below, such amendments, modifications or supplements to the Arrangement and the Plan of Arrangement as it may determine without any additional notice to the Fortune Shareholders, or others entitled to receive notice under paragraphs 12 and 13 hereof, and the Arrangement and Plan of Arrangement, as so amended, modified or supplemented shall be the Arrangement and Plan of Arrangement to be submitted to the Fortune Shareholders at the Meeting and shall be the subject of the Arrangement

95 ~~ Resolution. Amendments, modifications or supplements may be made following the Meeting, but shall be subject to review and, if appropriate, further direction by this Honourable Court at the hearing for the final approval of the Arrangement. 9. THIS COURT ORDERS that, if any amendments, modifications or supplements to the Arrangement or Plan of Arrangement as referred to in paragraph 8, above, would, if disclosed, reasonably be expected to affect a Fortune Shareholder's decision to vote for or against the Arrangement Resolution, notice of such amendment, modification or supplement shall be distributed, subject to further order of this Honourable Court, by press release, newspaper advertisement, prepaid ordinary mail, or by the method most reasonably practicable in the circumstances, as Fortune may determine. Amendments to the Information Circular 10. THIS COURT ORDERS that Fortune is authorized to make such amendments, revisions and/or supplements to the draft Information Circular as it may determine and the Information Circular, as so amended, revised and/or supplemental, shall be the Information Circular to be distributed in accordance with paragraphs 12 and 13. Adjournments and Postponements 1 1. THIS COURT ORDERS that Fortune, if it deems advisable and subject to the terms of the Transaction Agreement, is specifically authorized to adjourn or postpone the Meeting on one or more occasions, without the necessity of first convening the Meeting or first obtaining any vote of the Fortune Shareholders respecting the adjournment or postponement, and notice of any such adjournment or postponement shall be given by such method as Fortune may

96 -5 - determine is appropriate in the circumstances. This provision shall not limit the authority of the Chair of the Meeting in respect of adjournments and postponements. Notice of Meeting 12. THIS COURT ORDERS that, in order to effect notice of the Meeting, Fortune shall send the Information Circular (including the Notice of Application and this Interim Order), the Notice of Meeting, the form of proxy and the letter of transmittal, along with such amendments or additional documents as Fortune may determine are necessary or desirable and are not inconsistent with the terms of this Interim Order (collectively, the "Meeting Materials"), to the following: a) the registered Fortune Shareholders at the close of business on the Record Date, at least twenty-one (21) days prior to the date of the Meeting, excluding the date of sending and the date of the Meeting, by one or more of the following methods: i) by pre-paid ordinary or first class mail at the addresses of the Fortune Shareholders as they appear on the books and records of Fortune, or its registrar and transfer agent, at the close of business on the Record Date and if no address is shown therein, then the last address of the person known to the Corporate Secretary of Fortune; ii) by delivery, in person or by recognized courier service or inter-office mail, to the address specified in (i) above; or iii) by facsimile or electronic transmission to any Fortune Shareholder, who is identified to the satisfaction of Fortune, who requests such

97 transmission in writing and, if required by Fortune, who is prepared to pay the charges for such transmission; b) non-registered Fortune Shareholders by providing sufficient copies of the Meeting Materials to intermediaries and registered nominees in a timely manner, in accordance with National Instrument of the Canadian Securities Administrators; and c) the respective directors and auditors of Fortune, and to the Director appointed under the CBCA, by delivery in person, by recognized courier service, by prepaid ordinary or first class mail or, with the consent of the person, by facsimile or electronic transmission, at least twenty-one (21) days prior to the date of the Meeting, excluding the date of sending and the date of the Meeting; and that compliance with this paragraph shall constitute sufficient notice of the Meeting. 13. THIS COURT ORDERS that, in the event that Fortune elects to distribute the Meeting Materials, Fortune is hereby directed to distribute the Information Circular (including the Notice of Application, and this Interim Order), and any other communications or documents determined by Fortune to be necessary or desirable (collectively, the "Court Materials") to the Fortune Option holders and the Fortune Warrant holders by any method permitted for notice to Fortune Shareholders as set forth in paragraphs 12(a) or 12(b), above, or by to the holders of such Fortune Options or Fortune Warrants who are directors, officers or employees of Fortune, concurrently with the distribution described in paragraph 12 of this Interim Order. Distribution to such persons shall be to their addresses as they appear on the books and records of Fortune or its registrar and transfer agent at the close of business on the Record Date.

98 -~- 14. THIS COURT ORDERS that accidental failure or omission by Fortune to give notice of the meeting or to distribute the Meeting Materials or Court Materials to any person entitled by this Interim Order to receive notice, or any failure or omission to give such notice as a result of events beyond the reasonable control of Fortune, or the non-receipt of such notice shall, subject to further order of this Honourable Court, not constitute a breach of this Interim Order nor shall it invalidate any resolution passed or proceedings taken at the Meeting. If any such failure or omission is brought to the attention of Fortune, it shall use its best efforts to rectify it by the method and in the time most reasonably practicable in the circumstances. 15. THIS COURT ORDERS that Fortune is hereby authorized to make such amendments, revisions or supplements to the Meeting Materials and Court Materials, as Fortune may determine in accordance with the terms of the Transaction Agreement ("Additional Information"), and that notice of such Additional Information may, subject to paragraph 9, above, be distributed by press release, newspaper advertisement, pre-paid ordinary mail, or by the method most reasonably practicable in the circumstances, as Fortune may determine. 16. THIS COURT ORDERS that distribution of the Meeting Materials and Court Materials pursuant to paragraphs 12 and 13 of this Interim Order shall constitute notice of the Meeting and good and sufficient service of the within Application upon the persons described in paragraphs 12 and 13 and that those persons are bound by any orders made on the within Application. Further, no other form of service of the Meeting Materials or the Court Materials or any portion thereof need be made, or notice given or other material served in respect of these proceedings and/or the Meeting to such persons or to any other persons, except to the extent required by paragraph 9, above.

99 Solicitation and Revocation of Proxies 17. THIS COURT ORDERS that Fortune is authorized to use the letter of transmittal and proxies substantially in the form of the drafts accompanying the Information Circular, with such amendments and additional information as Fortune may determine are necessary or desirable, subject to the terms of the Transaction Agreement. Fortune is authorized, at its expense, to solicit proxies, directly or through its officers, directors or employees, and through such agents or representatives as they may retain for that purpose, and by mail or such other forms of personal or electronic communication as it may determine. Fortune may waive generally, in its discretion, the time limits set out in the Information Circular for the deposit or revocation of proxies by Fortune Shareholders, if Fortune deems it advisable to do so. 18. THIS COURT ORDERS that Fortune Shareholders shall be entitled to revoke their proxies in accordance with section 148(4) of the CBCA (except as the procedures of that section are varied by this paragraph) provided that any instruments in writing delivered pursuant to s.148(4)(a)(i) of the CBCA: (a) may be deposited at the registered office of Fortune or with the transfer agent of Fortune as set out in the Information Circular; and (b) any such instruments must be received by Fortune at its head office at any time up to and including the last Business Day immediately preceeding the Meeting (or any adjournment or postponement thereof, or to the chairman at the Meeting on the day of the Meeting (or any adjournment or postponement thereof, or in any other manner permitted by law.

100 Voting 19. THIS COURT ORDERS that the only persons entitled to vote in person or by proxy on the Arrangement Resolution, or such other business as may be properly brought before the Meeting, shall be those Fortune Shareholders who hold voting common shares of Fortune as of the close of business on the Record Date. Illegible votes, spoiled votes, defective votes and abstentions shall be deemed to be votes not cast. Proxies that are properly signed and dated but which do not contain voting instructions shall be voted in favour of the Arrangement Resolution. 20. THIS COURT ORDERS that votes shall be taken at the Meeting on the basis of one vote per common share and that in order for the Plan of Arrangement to be implemented, subject to further Order of this Honourable Court, the Arrangement Resolution must be passed, with or without variation, at the Meeting by: a) an affirmative vote of at least two-thirds (66213%) of the votes cast at the Meeting in person or by proxy by the Fortune Shareholders; and b) a majority of the votes attached to the Fortune Shares held by Fortune Shareholders, excluding the votes attached to Fortune Shares held by persons described in items (a) through (d) of section 8.1(2) of MI Such votes shall be sufficient to authorize Fortune to do all such acts and things as may be necessary or desirable to give effect to the Arrangement and the Plan of Arrangement on a basis consistent with what is provided for in the Information Circular without the necessity of any

101 ~[I~ further approval by the Fortune Shareholders, subject only to final approval of the Arrangement by this Honourable Court. 21. THIS COURT ORDERS that in respect of matters properly brought before the Meeting pertaining to items of business affecting Fortune (other than in respect of the Arrangement Resolution), each Fortune Shareholder is entitled to one vote for each voting common share held. Dissent Rights 22. THIS COURT ORDERS that each registered Fortune Shareholder shall be entitled to exercise Dissent Rights in connection with the Arrangement Resolution in accordance with section 190 of the CBCA (except as the procedures of that section are varied by this Interim Order and the Plan of Arrangement) provided that, notwithstanding subsection 190(5) of the CBCA, any Fortune Shareholder who wishes to dissent must, as a condition precedent thereto, provide written objection to the Arrangement Resolution to Fortune in the form required by section 190 of the CBCA and the Transaction Agreement, which written objection must be received by Fortune not later than 4:00 p.m. (Toronto time) on the last business day immediately preceding the Meeting (or any adjournment or postponement thereof, and must otherwise strictly comply with the requirements of the CBCA. For purposes of these proceedings, the "court" referred to in section 190 of the CBCA means this Honourable Court. 23. THIS COURT ORDERS that any Fortune Shareholder who duly exercises such Dissent Rights set out in paragraph 22 above and who: i) is ultimately determined by this Honourable Court to be entitled to be paid fair value for his, her or its voting common shares, shall be deemed to have

102 -11 - transferred those voting common shares as of the Arrangement Effective Time, without any further act or formality and free and clear of all liens, claims or encumbrances to Fortune for cancellation in consideration for a payment of cash from Fortune equal to such fair value; or ii) is for any reason ultimately determined by this Honourable Court not to be entitled to be paid fair value for his, her or its voting common shares pursuant to the exercise of the Dissent Right, shall be deemed to have participated in the Arrangement on the same basis and at the same time as any non-dissenting Fortune Shareholder; but in no case shall Fortune or any other person be required to recognize such Fortune Shareholders as holders of voting common shares of Fortune at or after the date upon which the Arrangement becomes effective and the names of such Fortune Shareholders shall be deleted from Fortune's register of holders of voting common shares at that time. Hearing of Application for Approval of the Arrangement 24. THIS COURT ORDERS that upon approval by the Fortune Shareholders of the Plan of Arrangement in the manner set forth in this Interim Order, Fortune may apply to this Honourable Court for final approval of the Arrangement. 25. THIS COURT ORDERS that distribution of the Notice of Application and the Interim Order in the Information Circular, when sent in accordance with paragraphs 12 and 13 shall constitute good and sufficient service of the Notice of Application and this Interim Order and no other form of service need be effected and no other material need be served unless a Notice of Appearance is served in accordance with paragraph 26.

103 THIS COURT ORDERS that any Notice of Appearance served in response to the Notice of Application shall be served on the solicitors for Fortune as soon as reasonably practicable, and, in any event, no less than 2 days before the hearing of this Application at the following address: FOGLER RUBINOFF LLP 77 King Street West Suite 3000, P.O. Box 95 TD Centre Toronto, ON MSK 1 G8 Attention: W. Ross MacDougall Lawyers for Fortune Gold Corp. 27. THIS COURT ORDERS that, subject to further order of this Honourable Court, the only persons entitled to appear and be heard at the hearing of the within application shall be: i) Fortune; ii) Kneat; iii) the Director ;and iv) any person who has filed a Notice of Appearance herein in accordance with the Notice of Application, this Interim Order and the Rules of Civil Procedure. 28. THIS COURT ORDERS that any materials to be filed by Fortune in support of the within Application for final approval of the Arrangement may be filed up to one day prior to the hearing of the Application without further order of this Honourable Court.

104 THIS COURT ORDERS that in the event the within Application for final approval does not proceed on the date set forth in the Notice of Application, and is adjourned, only those persons who served and filed a Notice of Appearance in accordance with paragraph 26 shall be entitled to be given notice of the adjourned date. Precedence 30. THIS COURT ORDERS that, to the extent of any inconsistency or discrepancy between this Interim Order and the terms of any instrument creating, governing or collateral to the Fortune securityholders or the articles or by-laws of Fortune, this Interim Order shall govern. Extra-Territorial Assistance 31. THIS COURT seeks and requests the aid and recognition of any court or any judicial, regulatory or administrative body in any province of Canada and any judicial, regulatory or administrative tribunal or other court constituted pursuant to the Parliament of Canada or the legislature of any province and any court or any judicial, regulatory or administrative body of the United States or other country to act in aid of and to assist this Honourable Court in carrying out the terms of this Interim Order. Variance 32. THIS COURT ORDERS that Fortune shall be entitled to seek leave to vary this Interim Order upon such terms and upon the giving of such notice as this Honourable Court may direct. ENl'cr~~:U ~1T / INSCRIT A TORONTO ON / BOOK N0: LE / DANS LE REGISTRE N0. MAY IP~R / PAR,

105 FORTUNE BAY CORP. IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONSACT, R.S.C. 1985, c. C-44, AS AMENDED; AND IN THE MATTER OF RULES 14.05(2) AND 14.05(3)0 OF THE RULES OF CIVIL PROCEDURE; and Court File No. CV OOCL ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING FORTUNE BAY CORP., ITS SHAREHOLDERS AND CANADA LIMITED INTERIM ORDER FOGLER, RUBINOFF LLP Lawyers 77 King Street West Suite 3000, P.O. Box 95 TD Centre Toronto, ON MSL 1G8 W. Ross MacDougall (LSUC #: 49840A) Tel: (416) Fax: (416) Lawyers for the Applicant, Fortune Bay Corp.

106 APPENDIX D SECTION 190 OF THE CBCA Right to dissent 190 (1) Subject to sections 191 and 241, a holder of shares of any class of a corporation may dissent if the corporation is subject to an order under paragraph 192(4)(d) that affects the holder or if the corporation resolves to (a) amend its articles under section 173 or 174 to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares of that class; (b) amend its articles under section 173 to add, change or remove any restriction on the business or businesses that the corporation may carry on; (c) amalgamate otherwise than under section 184; (d) be continued under section 188; (e) sell, lease or exchange all or substantially all its property under subsection 189(3); or (f) carry out a going-private transaction or a squeeze-out transaction. Further right (2) A holder of shares of any class or series of shares entitled to vote under section 176 may dissent if the corporation resolves to amend its articles in a manner described in that section. If one class of shares (2.1) The right to dissent described in subsection (2) applies even if there is only one class of shares. Payment for shares (3) In addition to any other right the shareholder may have, but subject to subsection (26), a shareholder who complies with this section is entitled, when the action approved by the resolution from which the shareholder dissents or an order made under subsection 192(4) becomes effective, to be paid by the corporation the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted or the order was made. No partial dissent (4) A dissenting shareholder may only claim under this section with respect to all the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder. Objection (5) A dissenting shareholder shall send to the corporation, at or before any meeting of shareholders at which a resolution referred to in subsection (1) or (2) is to be voted on, a written objection to the resolution, unless the corporation did not give notice to the shareholder of the purpose of the meeting and of their right to dissent. Notice of resolution (6) The corporation shall, within ten days after the shareholders adopt the resolution, send to each shareholder who has filed the objection referred to in subsection (5) notice that the resolution has been adopted, but such notice is not required to be sent to any shareholder who voted for the resolution or who has withdrawn their objection. Demand for payment (7) A dissenting shareholder shall, within twenty days after receiving a notice under subsection (6) or, if the shareholder does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the corporation a written notice containing (a) the shareholder's name and address; (b) the number and class of shares in respect of which the shareholder dissents; and (c) a demand for payment of the fair value of such shares. D-1

107 Share certificate (8) A dissenting shareholder shall, within thirty days after sending a notice under subsection (7), send the certificates representing the shares in respect of which the shareholder dissents to the corporation or its transfer agent. Forfeiture (9) A dissenting shareholder who fails to comply with subsection (8) has no right to make a claim under this section. Endorsing certificate (10) A corporation or its transfer agent shall endorse on any share certificate received under subsection (8) a notice that the holder is a dissenting shareholder under this section and shall forthwith return the share certificates to the dissenting shareholder. Suspension of rights (11) On sending a notice under subsection (7), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section except where (a) the shareholder withdraws that notice before the corporation makes an offer under subsection (12), (b) the corporation fails to make an offer in accordance with subsection (12) and the shareholder withdraws the notice, or (c) the directors revoke a resolution to amend the articles under subsection 173(2) or 174(5), terminate an amalgamation agreement under subsection 183(6) or an application for continuance under subsection 188(6), or abandon a sale, lease or exchange under subsection 189(9), in which case the shareholder's rights are reinstated as of the date the notice was sent. Offer to pay (12) A corporation shall, not later than seven days after the later of the day on which the action approved by the resolution is effective or the day the corporation received the notice referred to in subsection (7), send to each dissenting shareholder who has sent such notice (a) a written offer to pay for their shares in an amount considered by the directors of the corporation to be the fair value, accompanied by a statement showing how the fair value was determined; or (b) if subsection (26) applies, a notification that it is unable lawfully to pay dissenting shareholders for their shares. Same terms (13) Every offer made under subsection (12) for shares of the same class or series shall be on the same terms. Payment (14) Subject to subsection (26), a corporation shall pay for the shares of a dissenting shareholder within ten days after an offer made under subsection (12) has been accepted, but any such offer lapses if the corporation does not receive an acceptance thereof within thirty days after the offer has been made. Corporation may apply to court (15) Where a corporation fails to make an offer under subsection (12), or if a dissenting shareholder fails to accept an offer, the corporation may, within fifty days after the action approved by the resolution is effective or within such further period as a court may allow, apply to a court to fix a fair value for the shares of any dissenting shareholder. Shareholder application to court (16) If a corporation fails to apply to a court under subsection (15), a dissenting shareholder may apply to a court for the same purpose within a further period of twenty days or within such further period as a court may allow. Venue (17) An application under subsection (15) or (16) shall be made to a court having jurisdiction in the place where the corporation has its registered office or in the province where the dissenting shareholder resides if the corporation carries on business in that province. D-2

108 No security for costs (18) A dissenting shareholder is not required to give security for costs in an application made under subsection (15) or (16). Parties (19) On an application to a court under subsection (15) or (16), (a) all dissenting shareholders whose shares have not been purchased by the corporation shall be joined as parties and are bound by the decision of the court; and (b) the corporation shall notify each affected dissenting shareholder of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel. Powers of court (20) On an application to a court under subsection (15) or (16), the court may determine whether any other person is a dissenting shareholder who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting shareholders. Appraisers (21) A court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders. Final order (22) The final order of a court shall be rendered against the corporation in favour of each dissenting shareholder and for the amount of the shares as fixed by the court. Interest (23) A court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution is effective until the date of payment. Notice that subsection (26) applies (24) If subsection (26) applies, the corporation shall, within ten days after the pronouncement of an order under subsection (22), notify each dissenting shareholder that it is unable lawfully to pay dissenting shareholders for their shares. Effect where subsection (26) applies (25) If subsection (26) applies, a dissenting shareholder, by written notice delivered to the corporation within thirty days after receiving a notice under subsection (24), may (a) withdraw their notice of dissent, in which case the corporation is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; or (b) retain a status as a claimant against the corporation, to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the corporation but in priority to its shareholders. Limitation (26) A corporation shall not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that (a) the corporation is or would after the payment be unable to pay its liabilities as they become due; or (b) the realizable value of the corporation's assets would thereby be less than the aggregate of its liabilities. D-3

109 APPENDIX E INFORMATION CONCERNING FORTUNE AND ANNUAL MEETING MATTERS E-1

110 APPENDIX E INFORMATION CONCERNING FORTUNE AND ANNUAL MEETING MATTERS TABLE OF CONTENTS NOTICE TO READER... E-2 DOCUMENTS INCORPORATED BY REFERENCE... E-2 CORPORATE STRUCTURE... E-2 Name and Incorporation... E-2 GENERAL DEVELOPMENT OF THE BUSINESS... E-3 History... E-3 Financing... E-5 SELECTED FINANCIAL INFORMATION AND MANAGEMENT DISCUSSION AND ANALYSIS... E-5 Selected Information... E-5 Management's Discussion and Analysis... E-5 DESCRIPTION OF THE SECURITIES... E-5 Fortune Shares... E-5 Fortune Options... E-6 Fortune Warrants... E-6 SECURITY BASED COMPENSATION ARRANGEMENTS... E-6 Stock Option Plan... E-6 Deferred Share Unit Plan... E-6 PRIOR SALES... E-9 STOCK EXCHANGE PRICE... E-9 EXECUTIVE COMPENSATION... E-9 Compensation Discussion and Analysis... E-9 Performance Graph... E-11 Summary Compensation Table... E-11 Outstanding Share-Based Awards and Stock Option Awards Named Executive Officers... E-12 Incentive Plan Awards Value Vested or Earned during the Most Recently Completed Financial Year E-13 Long-Term Incentive Plan and Pension Plans... E-13 Termination and Change of Control Benefits... E-13 Director Compensation... E-14 Equity Compensation Plan Information... E-16 ARM'S LENGTH TRANSACTIONS... E-17 LEGAL PROCEEDINGS... E-17 AUDITORS, TRANSFER AGENTS AND REGISTRARS... E-17 Auditor... E-17 Transfer Agent and Registrar... E-17 MATERIAL CONTRACTS... E-17 STATEMENT OF CORPORATE GOVERNANCE PRACTICES... E-17 E-1

111 NOTICE TO READER The following is a summary of Fortune Bay Corp. ("Fortune" or the "Company") and its business and operations, which should be read together with the more detailed information and financial data and statements contained elsewhere in the management information circular of Fortune Bay Corp. dated May 13, 2016, to which this Appendix E is attached (the "Circular"). The information contained in this Appendix E unless otherwise indicated, is given as of April 30, All capitalized terms used in this Appendix E and not defined herein have the meaning ascribed to such terms in the "Glossary of Terms" or elsewhere in the Circular. Unless otherwise indicated herein, references to "$", "Cdn$" or "Canadian dollars" are to Canadian dollars. See "Currency and Exchange Rates" in the Circular. See also in the Circular, "Cautionary Note Regarding Forward-Looking Statements and Risks". DOCUMENTS INCORPORATED BY REFERENCE Information in respect of Fortune has been incorporated by reference in this Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Fortune at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7, Telephone (902) , Fax: (902) or by at info@fortunebaycorp.com and are also available electronically at The following documents, filed by Fortune with securities commissions or similar regulatory authorities in Canada in which Fortune is a reporting issuer, are specifically incorporated by reference in, and form an integral part of, this Circular: (a) Fortune's annual audited consolidated financial statements for the fiscal years ended December 31, 2015 and 2014, which comprise the consolidated statements of financial position as at December 31, 2015, 2014 and 2013, and the consolidated statements of loss and comprehensive loss, consolidated statements of change in equity and the consolidated statements of cash flows for the years ended December 31, 2015, 2014 and 2013, and related notes, together with the auditors' reports thereon contained therein; (b) (c) Management's discussion and analysis of the financial condition and results of operations of Fortune for the years ended December 31, 2015 and 2014; and Annual Information Circular for the fiscal year ended December 31, 2015 (the "AIF"). CORPORATE STRUCTURE Name and Incorporation The Company was incorporated under the name of Canada Limited pursuant to the Canada Business Corporations Act by Articles of Incorporation effective December 12, 2013 as part of a plan of arrangement (the "Brigus Plan of Arrangement") to reorganize Brigus Gold Corp. ("Brigus"), which was completed on March 5, 2014 (the "Brigus Arrangement"). Articles of Amendment were filed on January 13, 2014 to change the name of Canada Limited to "Fortune Bay Corp." Fortune's head and registered office is located at Suite 2001, 1969 Upper Water Street, Halifax, Nova Scotia, B3J 3R7. E-2

112 GENERAL DEVELOPMENT OF THE BUSINESS History Fortune is a junior exploration company listed on the TSX. The Company has been in the process of exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. Currently, Fortune is engaged in the exploration and potential development of the Goldfields project, located in northern Saskatchewan and consists of two gold deposits: the Box deposit and the Athona deposit. The Company also holds the Ixhuatán project located in the northern Chiapas State in Mexico (the "Ixhuatán Project") and a net smelter royalty ("NSR") on the Huizopa project (the "Huizopa Project") located in Chihuahua, Mexico. On March 5, 2014, Brigus, Primero Mining Corp. ("Primero") and Fortune completed the Brigus Arrangement, pursuant to which Primero acquired all of the issued and outstanding shares of Brigus by way of a court approved Brigus Plan of Arrangement, which included Brigus spinning out certain assets (together, "The Exploration Properties Business of Fortune Bay Corp.") into Fortune by way of an internal reorganization (the "Brigus Master Reorganization"). Pursuant to the Brigus Arrangement, Primero acquired Brigus' Black Fox mine and surrounding properties in Ontario, Canada. The Exploration Properties Business of Fortune Bay Corp. spun out to Fortune primarily consisted of the Goldfields Project in Saskatchewan, Canada, the Ixhuatán Project in Chiapas, Mexico, the NSR on the Huizopa Project in Chihuahua, Mexico and several properties in the Dominican Republic. The Dominican Republic properties were subsequently sold in The consideration received by the shareholders of Brigus consisted of of a common share of Primero, a nominal cash payment of $ , and 0.1 of a Fortune Share for each common share of Brigus held. Brigus' outstanding options were exchanged for Primero options and were adjusted in accordance with their terms such that the number of Primero shares received upon exercise and the respective exercise prices reflected the exchange ratio described above. Brigus' outstanding warrants were not redeemed or exchanged as part of the Brigus Arrangement and continued to be governed by and subject to the applicable Brigus warrant indentures. The Brigus warrants were adjusted such that the number of Primero shares and Fortune Shares received upon exercise reflected the exchange ratio described above. In addition, Brigus' US$48.1 million 6.5% senior unsecured convertible debentures (the "Convertible Debentures") due March 31, 2016 remained outstanding. On March 31, 2016, Primero redeemed the Convertible Debentures with cash. Pursuant to the Brigus Arrangement, Brigus subscribed for an additional 9.9% interest in Fortune in consideration for a cash payment equal to $10 million, with the amount by which the cash subscription proceeds exceeded the fair market value of the Fortune Shares being issued was recorded by way of contributed surplus to the capital of Fortune. The carrying value of The Exploration Properties Business of Fortune Bay Corp. contributed to the Company pursuant to the Brigus Master Reorganization consisted of the following: March 4, 2014 $ Assets Cash 108,047 Accounts receivable 22,147 Prepaid expenses and deposits 20,057 Investments 840,000 Assets held for sale 700,000 Reclamation deposit 37,210 E-3

113 Property and equipment 225,564 Exploration and evaluation assets 13,729,241 Total Assets 15,682,266 Liabilities Accounts payable and accrued liabilities 61,996 Deferred tax liability 115,440 Total Liabilities 177,436 Carrying Value 15,504,830 The difference between the allocated Brigus retained earnings, income and expenses, and other comprehensive income up to the close of the Brigus Master Reorganization and the carrying values of the net assets contributed and recorded under the continuity of interest accounting, to the common shares issued in connection with the closing of the Brigus Master Reorganization on March 4, 2014 of $10,314,289 was recorded as a credit to retained earnings. On March 19, 2014, the Company completed the sale of the Dominican Republic properties. This resulted in the Company recording a gain on the sale of assets held for sale of $119,848 in the consolidated statement of loss. On April 1, 2014, the Company completed a non-brokered flow-through financing for aggregate gross proceeds of $450,000. The Company issued 1,607,144 units at a price of $0.28 per unit, with each unit consisting of one flowthrough Fortune Share and one half of one Fortune Warrant. Each whole Fortune Warrant entitles the holder to acquire one Fortune Share at an exercise price of $0.30 per Fortune Share until April 1, Directors of the Company subscribed for all units of the financing. In May 2014, the Company engaged professional advisors to complete a strategic review process to explore alternatives for the enhancement of shareholder value. Management's strategic review process continued throughout 2015 and considered various alternatives for the Company, including the potential sale of the Company's exploration assets, and other options identified by executive management with the fundamental objective of realizing the best value for the Fortune Shareholders. On February 10, 2016, the Company announced that it had signed the Transaction Agreement with Kneat and SpinCo, whereby Fortune will: (i) spin-out its Fortune Mineral Properties by way of the Plan of Arrangement; and (ii) acquire 100% of the issued and outstanding Kneat Shares by way of a concurrent Scheme of Arrangement in Ireland. See "The Transaction The Arrangement" and "The Transaction The Merger" in the Circular. On March 21, 2016 Kneat issued a secured redeemable debenture (the "Debenture") to Fortune in the principal amount of 1,000,000 (the "Principal Sum") maturing on July 1, 2016 (the "Maturity Date") and bearing interest at a rate of 7.25% per annum. As general and continuing security for the due payment of the Debenture by Kneat to Fortune, Kneat has granted a first charge over all the property of Kneat, constituting a lien on all of the present and future property of Kneat. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between the Company and Kneat. In addition, the required Fortune Cash Balance (as defined in the Transaction Agreement) will be reduced by the amount of the Principal Sum plus all accrued interest. In addition, on March 24, 2016, the Company completed a non-brokered private placement financing for aggregate gross proceeds of $2,300,000, pursuant to which Fortune issued 7,665,549 Fortune Shares at an issue price of $0.30 per Fortune Share. E-4

114 Financing Neither Fortune nor any Non-Arm's Length Party to the Transaction is obtaining any financing in conjunction with the Transaction. SELECTED FINANCIAL INFORMATION AND MANAGEMENT DISCUSSION AND ANALYSIS Selected Information The following table presents selected financial information of Fortune for the periods indicated. This table should be read in conjunction with the audited financial statements of Fortune for the period from incorporation on December 13, 2013 to December 31, 2013 and for the years ended December 31, 2014 and 2015 and the respective notes thereto, which are incorporated into this Circular by reference and are available on SEDAR at under the Company's profile. Year ended December 31, 2015 (audited) Year ended December 31, 2014 (audited) For the period from incorporation on December 13, 2013 to December 31, 2013 (audited) Total Operating Expenses $2,086,982 $1,037,914 $49,736,486 Amounts deferred in connection with the Arrangement Nil Nil Nil Management's Discussion and Analysis Management's discussion and analysis of the financial condition and results of operations of Fortune for the years ended December 31, 2015 and 2014 are incorporated into this Circular be reference. Copies of these MD&As may be obtained on request without charge from the Corporate Secretary of Fortune at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7, Telephone (902) , Fax: (902) or by at and are also available electronically at These MD&As should be read in conjunction with the financial statements of Fortune for the years ended December 31, 2015 and 2014 and the accompanying notes thereto, which are incorporated into this Circular by reference and are available on SEDAR at under Fortune's profile. Certain information included in such MD&As is forward-looking and based upon assumptions and anticipated results that are subject to uncertainties. Should one or more of these uncertainties materialize or should the underlying assumptions prove incorrect, actual results may vary significantly from those expected. See "Cautionary Note Regarding Forward-Looking Statements and Risks" in the Circular. DESCRIPTION OF THE SECURITIES Fortune Shares Fortune Shares are not subject to any future call or assessment and do not have any pre-emptive, conversion or redemption rights, and all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the Fortune Shares, all of which rank equally as to all benefits which might accrue to the holders of the Fortune Shares. All holders of Fortune Shares are entitled to receive a notice of any general meeting to be convened by Fortune. At any general meeting of Fortune, subject to the restrictions on joint registered owners of Fortune Shares, every Fortune Shareholder has one vote for each Fortune Share of which he or she is the registered owner. Voting rights may be exercised in person or by proxy. The holders of Fortune Shares are entitled to share pro rata in any: (i) dividends if, as and when declared by the Fortune Board, and (ii) such assets of Fortune as are distributable to shareholders upon liquidation of Fortune. E-5

115 Fortune Options There are currently 2,000,000 Fortune Options outstanding. Upon completion of the Transaction, the Fortune Options will be consolidated on a one-for-three basis (1:3) resulting in a total of 666,667 Fortune Options at an average exercise price of $0.90. At the Meeting, Fortune Shareholders will be asked to approve the Fortune Amended Stock Option Plan. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan" and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan. Fortune Warrants There are currently 803,572 Fortune Warrants outstanding. Upon completion of the Transaction, the Fortune Warrants will be consolidated on a one-for-three basis (1:3) resulting in a total of 267,857 Fortune Warrants at an exercise price of $0.90. In addition, consistent with the terms of the Arrangement, holders of the Fortune Warrants will receive one and one-half (1.5) SpinCo Warrants for every three (3) Fortune Warrants held, exercisable at $0.60 per SpinCo Warrant. SECURITY BASED COMPENSATION ARRANGEMENTS Stock Option Plan At the Meeting, Fortune Shareholders will be asked to approve the Fortune Amended Stock Option Plan. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan" and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan. Deferred Share Unit Plan Management and the Fortune Board believe it is important for the Company to implement the Deferred Share Unit Plan (the "DSUP") for the directors and senior officers of the Company such as the CEO and the CFO or any other senior executive or officer of the Company, as approved by the Fortune Board, subject to the applicable Securities Laws and the policies of the stock exchange (the "Senior Officers"). The DSUP was approved by the Fortune Shareholders on June 23, The DSUP is intended to further align the interests of directors and Senior Officers with Fortune Shareholders' interests and the Company's values of behaving like an owner, continuously improving the Company and delivering results, so as to increase the value of the Fortune Shares going forward. At the Meeting, in connection with the anticipated listing of the New Fortune on the TSXV, Fortune Shareholders will be asked to approve the DSUP. See "Other Matters to be Considered at the Meeting Approval of the DSUP". If approved at the Meeting, it is expected that the Resulting Issuer will maintain the DSUP (see in the Circular, "Other Matters To Be Considered At The Meeting Approval of the DSUP"). Summary of the Deferred Share Unit Plan The following information is intended to be a brief description of the DSUP and is qualified in its entirety by the full text of the DSUP, which is available for review up until the day preceding the Meeting at Fortune's head office at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7, and will be available at the Meeting. Payment of Director's Retainer; Discretionary Grants; Limitations on Fortune Shares to Be Issued Directors may elect each year to receive all or part of their annual retainer in deferred share units (each a "DSU" and collectively, the "DSUs") having a market value equal to the portion of the retainer to be received in that form, subject to such limits as the Fortune Board may impose. The Fortune Board may also grant, each year, DSUs to directors or Senior Officers having a market value not greater than the annual retainer or base salary for each such director or Senior Officer, respectively. The maximum number of Fortune Shares that may be issued under the DSUP is 2,000,000, representing approximately 5.6% of the outstanding Fortune Shares as of April 30, The E-6

116 number of DSUs to be issued will be determined by dividing the amount of the retainer or base salary determined as the basis for the award by the volume-weighted average trading price of the Fortune Shares (as reported by the TSX) for the five (5) trading days immediately preceding the date the DSUs are awarded. Subject to vesting, each DSU may be redeemed for one (1) Fortune Share upon the participant ceasing to hold any position with the Company (whether by termination, retirement, change of control or death). The number of securities issuable to insiders, at any time, under all security based compensation arrangements, cannot exceed 10% of the issued and outstanding Fortune Shares. The number of securities issued to Insiders, within any one (1) year period, under all security based compensation arrangements, cannot exceed 10% of the issued and outstanding Fortune Shares. Vesting DSUs awarded to directors and Senior Officers will vest based on the following vesting schedule: 25% immediately on the Award Date (as defined in the DSUP), 25% on the one year anniversary of the Award Date, 25% on the two year anniversary of the Award Date and 25% on the three year anniversary of the Award Date. Early vesting is provided in the event of termination without cause, resignation at the request of the Company, death, or on the occurrence of a change of control (as defined in the DSUP) of the Company. Redemption of Deferred Share Units Subject to certain limitations and unless the DSUs have expired or been terminated in accordance with the DSUP, the DSUs shall be settled as per Section 5.5 of the DSUP. The participant (or, if deceased, his or her estate) shall receive as soon as practicable after the Settlement Date (as defined in the DSUP), but no later than the last business day of the calendar year following the calendar year in which the Separation Date (as defined in the DSUP) occurs, the number of Fortune Shares represented by the vested DSUs then recorded in the name of such participant, less any number of Fortune Shares representing the amount which may be required to be withheld or deducted under applicable taxation or other laws. Death of Participant Prior to Redemption If a participant dies prior to the redemption of the DSUs credited to the account of such participant under the DSUP, there shall be issued to the estate of such participant on or about the thirtieth (30th) day after the Company is notified of the death of the participant a number of Fortune Shares equivalent to the amount which would have been issued to the participant pursuant to the DSUP, calculated on the basis that the day on which the participant died is the Settlement Date and that all such DSUs vested on such date. Adjustment Provisions The number of Fortune Shares for which a DSU may be redeemed shall be adjusted proportionately in the event of (a) a subdivision, redivision or consolidation of the Fortune Shares of the Company into a greater or lesser number of Fortune Shares, (b) a reclassification or change of the Fortune Shares into a different class or type of securities, or (c) any other capital reorganization of the Company, or a consolidation, amalgamation or merger of the Company with or into any other entity or the sale of the properties and assets of the Company as or substantially as an entirety to any other entity. Assignability and Transferability Except as required by law, the rights of a participant under the DSUP are not capable of being assigned, transferred, alienated, sold, encumbered, pledged, mortgaged or charged and are not capable of being subject to attachment or legal process for the payment of any debts or obligations of the participant. Amendments, Suspension or Termination of the DSUP The Fortune Board may, in its sole discretion, at any time and from time to time: E-7

117 (i) (ii) (iii) amend or suspend the DSUP in whole or in part; amend or discontinue any DSUs granted under the DSUP; and terminate the DSUP, without prior notice to or approval by any participants or Fortune Shareholders. Without limiting the generality of the foregoing, the Fortune Board may: (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) make amendments of a "housekeeping" nature, including any amendment for the purpose of curing any ambiguity, error or omission in the DSUP or to correct or supplement any provision of the DSUP that is inconsistent with any other provision hereof; amend the definition of "Participant" or the eligibility requirements for participating in the DSUP, where such amendment would not have the potential of broadening or increasing insider participation; amend the manner in which participants may elect to participate in the DSUP or elect the dates on which DSUs shall be redeemed; amend the provisions of this DSUP relating to the redemption of DSUs and the dates for the redemption of the same; make any amendment which is intended to ensure compliance with applicable laws and the requirements of the TSX; make any amendment which is intended to provide additional protection to Fortune Shareholders (as determined at the discretion of the Fortune Board); make any amendment which is intended to remove any conflicts or other inconsistencies which may exist between any terms of the DSUP and any provisions of any applicable laws and the requirements of the TSX; make any amendment which is intended to cure or correct any typographical error, ambiguity, defective or inconsistent provision, clerical omission, mistake or manifest error; make any amendment which is not expected to materially adversely affect the interests of the Fortune Shareholders; and make any amendment which is intended to facilitate the administration of the DSUP. Any such amendment, suspension, or termination shall not adversely affect the DSUs previously granted to a participant at the time of such amendment, suspension or termination, without the consent of the affected participant. No modification or amendment to the following provisions of the DSUP shall be effective unless and until the Company has obtained the approval of the Fortune Shareholders in accordance with the rules and policies of the TSX: (xiv) (xv) the number of Fortune Shares reserved for issuance under the DSUP (including a change from a fixed maximum number Fortune Shares to a fixed maximum percentage of Fortune Shares); the definition of "Participant" or the eligibility requirements for participating in the DSUP, where such amendment would have the potential of broadening or increasing Insider participation; and E-8

118 (xvi) the extension of any right of a Participant under the DSUP beyond the date on which such right would originally have expired. No amendment, suspension or discontinuance of the DSUP or of any granted DSUs may contravene the requirements of the TSX or any securities commission or regulatory body to which the DSUP or the Company is now or may hereafter be subject. If the Fortune Board terminates the DSUP, no new DSUs (other than DSUs that have been granted but vest subsequently pursuant the DSUP) will be credited to the account of a participant, but previously credited (and subsequently vesting) DSUs shall be redeemed in accordance with the terms and conditions of the DSUP existing at the time of termination. The DSUP will finally cease to operate for all purposes when the last remaining participant receives the redemption price for all DSUs recorded in the participant's account. Termination of the DSUP shall not affect the ability of the Fortune Board to exercise the powers granted to it hereunder with respect to DSUs granted under the DSUP prior to the date of such termination. PRIOR SALES On March , the Company completed a non-brokered private placement financing for aggregate gross proceeds of $2,300,000, pursuant to which Fortune issued 7,665,549 Fortune Shares at an issue price of $0.30 per Fortune Share. STOCK EXCHANGE PRICE The outstanding Fortune Shares are listed on the TSX under the trading symbol "FOR". The Fortune Shares became eligible to commence trading on the TSX on March 17, On February 10, 2016, Fortune issued a press release announcing the Transaction. On February 9, 2016, the last trading day before it was announced that Fortune and Kneat had entered into the Transaction Agreement, the closing price of the Fortune Shares on the TSX was $0.27. The following table sets forth the high and low sales prices and trading volumes of board lots of Fortune Shares as reported by the TSX from March 17, 2014 to April 30, Price Range (1) Month High Low Trading Volume (2) April ,407 Quarter Ended March ,596 Quarter Ended December ,943 Quarter Ended September ,398 Quarter Ended June ,058,109 Quarter Ended March ,083,151 Quarter Ended December ,235,840 Quarter Ended September ,377,108 Source: TSX (1) Includes intra-day lows and highs. (2) Total volume traded in the period. EXECUTIVE COMPENSATION Compensation Discussion and Analysis The following discussion and analysis sets out the Company's philosophy and objectives in determining executive compensation and explains how its policies and practices implement that philosophy. For purposes of this section, the term "Named Executive Officers" refers to the Chief Executive Officer, the Chief Financial Officer of the Company and the former President and Chief Operating Officer (the "COO"). E-9

119 Overview The Company's approach to executive compensation is to provide suitable compensation for executives that is internally equitable, externally competitive and reflects individual achievement. Fortune will attempt to maintain compensation arrangements that will attract and retain highly qualified individuals who are able and capable of carrying out the objectives of the Company. Fortune's compensation arrangements for the Named Executive Officers, in addition to salary, include compensation in the form of bonuses and, over a longer term, benefits arising from the grant of Fortune Options and DSUs. Given the stage of development of Fortune, compensation of the Named Executive Officers includes the granting of meaningful stock option awards and DSUs so as to attract and retain management and, to a certain extent, to conserve cash. This policy may be re-evaluated in the future to instead emphasize increased base salaries and cash bonuses with a reduced reliance on option awards and DSUs, depending upon the future development of the Company and other factors which may be considered relevant by the Fortune Board from time to time. The Nominations and Compensation Committee of the Fortune Board consists of two directors appointed to review the compensation of the Company's officers and to make recommendations to the Fortune Board regarding base salary, bonuses, stock option awards, DSUs and other benefits of Named Executive Officers, as well as negotiating services and employment agreements on behalf of the Company. The Nominations and Compensation Committee in 2015 consisted of Dr. Michael Gross (Chair) and Mr. Derrick Gill. Information on the Company's Nomination and Compensation Committee and the skills and experience of its members in making decisions with respect to compensation policies and practices of the Company can be found in "Corporate Governance Practices Fortune Board Committees The Nominations and Compensation Committee" in this Appendix E. The Company's executive compensation program is designed to recognize the fundamental value added to the Company by having a motivated and committed management team whose short, medium and long-term objectives are aligned with those of Fortune Shareholders. In determining executive compensation, the Company's Nominations and Compensation Committee bears in mind the relatively small size of the Company, the financial resources of the Company and the size of the executive team. The Company's Nominations and Compensation Committee relies on general discussion and informal comparisons to similar exploration and development stage companies, while giving consideration to the experience, qualifications and performance of the executive, in determining executive compensation. The Company's executive compensation is typically comprised of three primary components: (i) (ii) (iii) base salary; a short-term incentive plan, which includes the potential for cash bonuses; and a long-term incentive plan, which consists of grants of Fortune Options and DSUs. The base salary of each executive is reviewed and evaluated by the Company's Nominations and Compensation Committee annually based on the philosophy, objectives and criteria outlined above. A short-term incentive award, if any, in the form of a cash bonus, may be awarded to an executive each year, as determined by the Company's Nominations and Compensation Committee, based on the philosophy, objectives and criteria outlined above, with some use of formal objectives. With respect to long-term incentives, each year an executive may be awarded Fortune Options and DSUs. The amount of the long-term incentive shall be determined by the Nominations and Compensation Committee and recommended to the Fortune Board, based on the philosophy, objectives and criteria outlined above, taking into account previous stock option and DSUs grants. The Nominations and Compensation Committee has discretion in determining both short-term incentive awards and the grant of stock options and DSUs. E-10

120 The Company has not engaged compensation advisors in the past and has no immediate plans to engage compensation advisors. Approach to Risk The Fortune Board is aware that compensation practices can have unintended risk consequences. The Nominations and Compensation Committee reviews the Company's compensation policies to identify any practice that might encourage an employee to expose the Company to unacceptable risk. At the present time, the Nominations and Compensation Committee is satisfied that the current executive compensation program does not encourage the executives to expose the business to inappropriate risk. The Fortune Board takes a conservative approach to executive compensation rewarding individuals for the success of the Company once that success has been demonstrated and incenting them to continue that success through the grant of long-term incentive awards. Hedging Policy No Named Executive Officer or director has purchased any financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the Named Executive Officer or director, notwithstanding that there is no policy prohibiting such purchase as of the date of this Circular. Performance Graph The following graph illustrates the Company's cumulative shareholder return (assuming the reinvestment of cash dividends of which there have been none) based upon a $100 investment from March 17, 2014, the date of the first Fortune trade, to December 31, 2015, compared to the cumulative total shareholder return from a similar investment in the S&P/TSX Composite Index over the same period. Summary Compensation Table Securities legislation requires the disclosure of compensation received by each "Named Executive Officer" of the Company for the three most recently completed financial years. "Named Executive Officer" is defined by the legislation to mean (i) each of Chief Executive Officer and Chief Financial Officer of the Company, (ii) each of the Company's three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the Chief Executive Officer and Chief Financial Officer, at the end of the most recently completed financial year and whose total compensation exceeds $150,000, and (iii) any additional individual for whom disclosure would have been provided under (ii) but for the fact that the individual was not E-11

121 serving as an executive officer of the Company at the end of the most recently completed financial year-end of the Company. For the fiscal year ended December 31, 2015, the Company had three Named Executive Officers, namely Wade K. Dawe, the CEO, Sarah Oliver, the CFO, and Brent MacKinnon, the former President and COO. The following table sets forth a summary of all compensation for the last three fiscal years for each of the Named Executive Officers as of December 31: Outstanding Share-Based Awards and Stock Option Awards Named Executive Officers The following table sets forth the details in respect of outstanding Fortune Options granted to each Named Executive Officer as of December 31, The value shown for unexercised in-the-money options is calculated based on a price of $0.28 per Fortune Share (being the closing price of a Fortune Share on the TSX on the last day of the year ended December 31, 2015, on which the Fortune Shares were traded on the TSX), less the respective exercise price of the Fortune Options, multiplied by the number of Fortune Options exercisable. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. E-12

122 Incentive Plan Awards Value Vested or Earned during the Most Recently Completed Financial Year The following table sets forth the value of the Fortune Option awards that vested for each Named Executive Officer in 2015, as well as the non-equity incentive plan compensation earned during the financial year ended December 31, Currently, the Company does not have any other equity incentive plans other than its Fortune Stock Option Plan and the DSUP. At the Meeting, the Fortune Shareholders will be asked to approve the Fortune Amended Stock Option Plan Resolution. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan" in the Circular and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan Resolution and the summary of the Fortune Amended Stock Option Plan. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. Please see "Security Based Compensation Arrangements Deferred Share Unit Plan" in this Appendix E for a detailed summary of the DSUP. Name and principal position Option-based awards value vested during the year ($) (1)(2) Non-equity incentive plan compensation value earned during the year ($) (4) Wade K. Dawe, Chairman and CEO Nil Nil Sarah Oliver, CFO Nil Nil Brent MacKinnon, Former COO (3) Nil Nil Notes: (1) Value vested is calculated as the dollar value that would have been realized had the option been exercised on the date that it vested less the related exercise price multiplied by the number of vesting options. (2) Certain stock option awards that vested for each Named Executive Officer in 2015 had exercise prices that were above the market value of the Fortune Shares at the time of vesting, and therefore had no reportable value. (3) In connection with the proposed Transaction and the change in nature of the business, it was announced on February 10, 2016 that Mr. MacKinnon ceased to be the President and COO of Fortune. (4) Represents cash bonuses awarded to the NEOs in respect of the year ended December 31, Options Re-pricings The Company did not re-price any options during the financial year ended December 31, Long-Term Incentive Plan and Pension Plans The Company does not currently have a long-term incentive plan or pension plan for directors or executive officers, other than the Fortune Stock Option Plan and the DSUP. Termination and Change of Control Benefits Effective January 14, 2014, Wade K. Dawe was appointed as the CEO of the Company. Pursuant to his employment contract, Mr. Dawe is entitled to an annual salary of $180,000, payable monthly. Should a "change in control" event, as defined in his employment contract, occur for the Company, Fortune shall pay Mr. Dawe a lump sum amount equal to three (3) times his base salary plus the prior year's bonus equivalent. In addition, benefits shall continue to be payable for 36 months from the date of departure. In the event of a change in control, all Fortune Options held by him will vest immediately and Mr. Dawe shall be provided with a minimum of twelve months to exercise the Fortune Options. Effective November 10, 2014, Sarah Oliver was appointed as the CFO of the Company. Pursuant to her employment contract, Ms. Oliver is entitled to an annual salary of $130,000, payable monthly. Should a "change in control" event, as defined in her employment contract, occur for the Company, Ms. Oliver will receive a lump sum payment equal to 18 months of her then current base salary. In addition, benefits shall continue to be payable for 18 months from the date of departure. In the event of a change in control, all Fortune Options held by her will vest immediately and Ms. Oliver shall be provided with a minimum of twelve months to exercise the Fortune Options. The Transaction will constitute a change of control, and Mr. Dawe and Ms. Oliver will be entitled to receive $540,000 and $195,000, respectively, upon completion of the Transaction. In lieu of the lump sum payments due on a Change of Control to Mr. Dawe and Ms. Oliver, the Company will issue 833,333 Fortune Shares (at a deemed value of $0.30 per Fortune Share) and pay $75,000 (which payment reflects the amount of estimated salary deferral E-13

123 since November 1, 2015 until the date of closing of the Transaction) to Mr. Dawe, and will issue 216,667 Fortune Shares (at a deemed value of $0.30 per Fortune Share) and pay $65,000 (which payment is calculated based on the estimated tax to be incurred by Ms. Oliver) to Ms. Oliver. See "The Transaction The Arrangement Interest of Certain Persons in the Transaction" in the Circular. At the Meeting, Fortune Shareholders will be asked to approve the Compensation Shares, which include an aggregate of 1,050,000 Fortune Shares that Fortune proposes to issue to Mr. Dawe and Ms. Oliver in lieu of their respective Change of Control payments. See "Other Matters to be Considered at the Meeting Approval of the Compensation Shares". Effective November 10, 2014, Mr. Brent MacKinnon was appointed the President and Chief Operating Officer of the Company. Pursuant to his employment contract, Mr. MacKinnon was entitled to an annual salary of $250,000, payable monthly. In the event of a "change in control" event, as was defined in his employment contract, Mr. MacKinnon would be entitled to receive a lump sum payment equal to 24 months of his then current base salary. In connection with the proposed Transaction and the change in nature of the business, Mr. MacKinnon ceases to act as the President and COO of Fortune. In accordance with Mr. MacKinnon's cessation of employment with Fortune, Fortune was obligated to pay Mr. MacKinnon a full year salary ($250,000), of which all remaining amounts owed were paid in full on January 15, In addition, Mr. MacKinnon is eligible to participate in Fortune's health and dental plan, including life insurance until November 18, The advisory services for the Vice-President-Exploration position are provided by an independent consultant, as required. Director Compensation For the year ended December 31, 2015, non-employee directors were compensated by cash-based and option-based directors fees, issued in accordance with the Fortune Stock Option Plan. The Company is eligible to grant Fortune Options and the DSUs to directors under the Fortune Stock Option Plan and the DSUP, respectively. At the Meeting, Fortune Shareholders will be asked to approve the Fortune Amended Stock Option Plan. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan" and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan. See "Security Based Compensation Arrangements Deferred Share Unit Plan" in this Appendix E for a detailed summary of the DSUP. During the year ended December 31, 2015, the following cash was paid and Fortune Options were issued to nonemployee directors of the Company. No DSUs were granted to non-employees directors of the Company during the year ended December 31, Name Cash payments made in fiscal year 2015 Number of Fortune Options granted Michael Gross $12,000 Nil Derrick Gill $12,000 Nil David Peat $12,000 Nil Darren Nantes $6, ,000 As of December 31, 2015, non-employee directors of the Company held the following Fortune Options: Name Number of Fortune Options held Michael Gross 100,000 Derrick Gill 100,000 David Peat 100,000 E-14

124 Darren Nantes 100,000 The directors are indemnified by the Company against all costs, charges and expenses reasonably incurred by such director in respect of any action or proceeding to which such director is made a party by reason of being a director of the Company, subject to the limitations in respect thereof contained in the CBCA. Directors are reimbursed for their out-of-pocket expenses incurred in attending directors' and committee meetings. The following table summarizes the compensation earned, awarded or granted to each of the non-employee directors of the Company for the year ended December 31, 2015: Name Fees earned ($) Sharebased awards ($) Option-based awards ($) (1) Non-equity incentive plan compensation ($) All other compensation ($) Total ($) Michael Gross 12,000 Nil Nil Nil Nil 12,000 Derrick Gill 12,000 Nil Nil Nil Nil 12,000 David Peat 12,000 Nil Nil Nil Nil 12,000 Darren Nantes 6,230 Nil 20,000 Nil Nil 26,230 Note: (1) This column reflects the estimated grant date fair value of Fortune Options granted during the year that will be recognized as compensation expense by the Company for financial reporting purposes, as determined in accordance with IFRS. The estimated fair value of Fortune Options is calculated using the Black-Scholes Option Pricing Model. The Black-Scholes valuation model values the option-based awards granted during the year at a weighted average fair value of $0.20 per Fortune Option based on the following weighted average assumptions: a 4.5 year expected term, 99 % volatility, risk-free interest rate of 0.65 % per annum, and a dividend rate of 0%. Outstanding Stock Option Awards Directors The following table sets forth the details in respect of outstanding Fortune Options granted to each of the nonemployee directors as of December 31, The value shown for unexercised in-the-money Fortune Options is calculated based on a price of $0.28 per Fortune Share (being the closing price of a Fortune Share on the TSX on the last day of the year ended December 31, 2015, on which the Fortune Shares were traded on the TSX), less the respective exercise price of the Fortune Options, multiplied by the number of options exercisable. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. Incentive Plan Awards Value Vested or Earned During the Year Directors The following table sets forth the value of the Fortune Option based awards that vested for each non-employee director in 2015, as well as the non-equity incentive plan compensation earned during the financial year ended December 31, Currently, the Company does not have any other equity incentive plans other than its Fortune Stock Option Plan and the DSUP. At the Meeting, the Fortune Shareholders will be asked to approve the Fortune Amended Plan Resolution. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended E-15

125 Stock Option Plan" in the Circular and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan Resolution and the summary of the Fortune Amended Stock Option Plan. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. See "Security Based Compensation Arrangements Deferred Share Unit Plan" in this Appendix E for a detailed summary of the DSUP. Name and principal position Option-based awards value vested during the year ($) (1)(2) Non-equity incentive plan compensation value earned during the year ($) (3) Michael Gross Nil Nil Derrick Gill Nil Nil David Peat Nil Nil Darren Nantes Nil Nil Notes: (1) Value vested is calculated as the dollar value that would have been realized had the option been exercised on the date that it vested less the related exercise price multiplied by the number of vesting options. (2) Certain Fortune Option awards that vested for each non-employee director in 2015 had exercise prices that were above the market value of the Fortune Shares at the time of vesting, and therefore had no reportable value. (3) Represents cash bonuses awarded to the non-employee directors in respect of the year ended December 31, Directors' and Officers' Liability Insurance The Company maintains directors' and officers' liability and corporate reimbursement insurance with a $5,000,000 aggregate limit of liability at an annual premium for the 12 months ending April 30, 2016 of $11,300, which is expected to be renewed or extended under the same terms until the Transaction is complete. Generally, under this insurance, protection is provided to individual directors and officers in the event that the Company is unable to indemnify them for their actions (this is not subject to a deductible). The policy will also reimburse the Company for indemnification paid to individual directors and officers as per the Company's indemnity agreements (subject to the deductible). Finally, reimbursement is available for the Company for securities related loss that arises (also subject to the deductible). The major exclusions under the policy include (but are not limited to): illegal profit or fraud, bodily injury and property damage, pension related losses, and pollution. The deductible for both directors' and officers' indemnification as well as corporate reimbursement under the policy is $25,000 per loss. Consistent with standard practice in similar transactions, in order to ensure that the directors and officers of Fortune do not lose or forfeit their protection under liability insurance policies maintained by Fortune, the Transaction Agreement provides for the maintenance of such protection for six (6) years. See "The Transaction The Arrangement - Transaction Agreement - Insurance and Indemnification" above. Equity Compensation Plan Information Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes relevant information as of December 31, 2015 with respect to compensation plans under which equity securities are authorized for issuance. Currently, the Company does not have any other equity incentive plans other than the Fortune Stock Option Plan and the DSUP. At the Meeting, Fortune Shareholders will be asked to approve the Fortune Amended Stock Option Plan. See "Other Matters to be Considered at the Meeting Approval of the Fortune Amended Stock Option Plan" and "Appendix G Information Concerning New Fortune Options to Purchase Securities Stock Option Plan" for details of the Fortune Amended Stock Option Plan. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. See "Security Based Compensation Arrangements Deferred Share Unit Plan" in this Appendix E for a detailed summary of the DSUP. E-16

126 Plan Category Number of Fortune Shares to be issued upon exercise of outstanding Fortune Options Weighted-average exercise price of outstanding Fortune Options Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by shareholders 2,000,000 $ ,850 Equity compensation plans not approved by shareholders Nil Nil Nil As at April 30, 2016, 2,000,000 Fortune Options, being 5.6% of the 35,494,045 currently issued Fortune Shares of the Company, were issued and outstanding. No DSUs were issued in the fiscal year ended December 31, 2015 and none are currently outstanding. ARM'S LENGTH TRANSACTIONS The proposed Transaction is an Arm's Length Transaction. LEGAL PROCEEDINGS Fortune has not been and nor is it presently involved in any legal proceedings material to it and no such proceedings are, to the best of its knowledge, contemplated. AUDITORS, TRANSFER AGENTS AND REGISTRARS Auditor The auditors of Fortune are PricewaterhouseCoopers LLP, Summit Place, 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, Canada B3J 3P6. Transfer Agent and Registrar The registrar and transfer agent for the Fortune Shares is Computershare Investor Services, 100 University Avenue, 8 th Floor, Toronto, Ontario, M5J 2Y1. MATERIAL CONTRACTS Fortune has not entered into any material contracts, outside of the ordinary course of business, prior to the date hereof, other than the Transaction Agreement dated February 9, 2016 between Fortune, Kneat and SpinCo in connection with the Transaction (see "The Arrangement The Transaction Agreement" in the Circular for details of the Transaction Agreement). The Transaction Agreement will be available for inspection without charge at the registered office of Fortune at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia, B3J 3R7 during ordinary business hours from the date hereof until the closing of the Transaction and for a period of 30 days thereafter. In addition, the Transaction Agreement is available through the Canadian System for Electronic Documents Analysis and Retrieval ("SEDAR") website at under Fortune's profile. STATEMENT OF CORPORATE GOVERNANCE PRACTICES The Canadian Securities Administrators have published National Instrument Disclosure of Corporate Governance Practices ("NI "), National Policy Corporate Governance Guidelines ("NP ") and National Instrument Audit Committees ("NI "). These instruments set out a series of guidelines and requirements for effective corporate governance (collectively, the "Guidelines"). The Guidelines address matters such as the constitution and independence of corporate boards, the functions to be performed by boards and their committees and the effectiveness and education of board members. NI requires disclosure by each listed corporation of its approach to corporate governance with reference to the Guidelines. E-17

127 Set out below is a description of the Company's approach to corporate governance in relation to the Guidelines. Board of Directors NI sets out the standard for director independence. Under NI , a director is independent if he or she has no direct or indirect "material relationship" with the Company. Under NI , a "material relationship" is a relationship which could, in the view of the Fortune Board, be reasonably expected to interfere with the exercise of a director's independent judgment. NI also sets out certain situations where a director will automatically be considered to have a material relationship with the Company. The Fortune Board currently consists of five members, namely, Wade K. Dawe, Derrick Gill, Michael Gross, David Peat and Darren Nantes. Four of the directors are independent directors, namely, Derrick Gill, Michael Gross, David Peat and Darren Nantes. They are considered to be independent directors since none of them, in the view of the Fortune Board, has a direct or indirect material relationship with the Company, which could reasonably be expected to interfere with the exercise of such director's independent judgement. Mr. Dawe is considered to be a non-independent director as he is the Chairman and CEO of the Company. The Fortune Board relies on senior outside legal counsel to provide advice and consultation on current and anticipated matters of corporate governance. The independent directors will meet in-camera, from time to time, with the Company's outside legal counsel participating by invitation, when deemed appropriate by the independent directors. At the present time, the Fortune Board believes that the knowledge, experience and qualifications of its independent directors are sufficient to ensure that the Fortune Board can function independently of management and discharge its responsibilities. During the year ended December 31, 2015, there were eight meetings of the Fortune Board. Dr. Gross and Mr. Gill attended all meetings. Mr. Peat attended seven meetings. Mr. Nantes attended seven meetings, which were all of the meetings held since his appointment to the Fortune Board on June 23, Currently, the following directors serve on the boards of directors of other public companies, as listed below: Director Wade K. Dawe Michael Gross David Peat Public Company Board Member Immunovaccine Inc. (TSX) Metallum Resources Inc. (TSXV) Stockport Exploration Inc.(TSXV) Biosign Technologies Inc. (TSXV) Gabriel Resources Ltd. (TSX) AQM Copper Inc. (TSXV) Electrum Special Acquisition Corp. (NASDAQ) Board Mandate The Charter of the Fortune Board outlines the mandate of the Fortune Board. The Fortune Board has the following duties and responsibilities, which may be initially reviewed by the applicable committees of the Fortune Board before being recommended to the full Fortune Board for approval: (a) Strategic Planning: (i) (ii) ensuring that a company-wide strategic planning process is in place and approving the resulting business plan on at least an annual basis. This business plan should take into account, at a minimum the short and longer term opportunities and risks of the business; approving Fortune Bay's annual operating and capital budgets; and E-18

128 (iii) reviewing performance results in relation to the business plan and budgets. (b) Risk Management and Internal Controls: (i) (ii) (iii) (iv) (v) identifying and assessing the principal risks of Fortune's business and ensuring the implementation of systems to mitigate these risks; ensuring the integrity of Fortune's internal control and management information systems and the safeguarding of Fortune's assets; reviewing, approving, and as required, overseeing compliance with Fortune's Disclosure Policy by directors, officers, senior management and other employees; reviewing, approving and overseeing Fortune's disclosure, controls and procedures; and reviewing and approving the Code of Business Conduct of Fortune with the purpose of promoting integrity and deterring wrongdoing, and encouraging and promoting a culture of ethical business conduct, and as required, overseeing compliance with Fortune's Code of Business Conduct by directors, officers, senior management and other employees. (c) Chief Executive Officer and Senior Management: (i) (ii) (iii) (iv) appointing the CEO of Fortune and determining the terms and conditions of his appointment; developing, along with the CEO, a written position description for the role of the CEO; satisfying itself as to the integrity of the CEO; and providing attention to succession planning, including the appointment, training, monitoring and continuing education of the CEO, officers and senior management. (d) Governance: (i) (ii) developing Fortune's approach to governance practices, including expectations and responsibilities of individual directors, including expectations for attendance at meetings and the level of engagement that is expected of members of the Fortune Board; approving the nomination of directors to the Fortune Board, as well as: (I) determining which directors, in the reasonable opinion of the Fortune Board, are independent pursuant to applicable legislation and regulatory requirements; (II) developing qualifications and criteria for the selection of directors; and (III) appointing the Fortune Board Chairman, lead independent director, if applicable, and the Chair and members of each committee of the Fortune Board in consultation with the relevant committee. (iii) (iv) determining that Audit Committee members meet all applicable legislative, regulatory and listing qualifications, including financial literacy and independence; providing an orientation program for new directors and continuing education opportunities for all directors; E-19

129 (v) (vi) (vii) assessing annually the effectiveness of the Fortune Board Chairman and/or lead independent director, each committee of the Fortune Board and their respective Chairs, as well as individual directors; developing position descriptions for the Chairman, the lead independent director and for each committee Chair so that they may be evaluated objectively; and appointing and removing Fortune's corporate secretary. (e) Financial Reporting, Auditors and Transactions: (i) (ii) (iii) (iv) reviewing and approving, as required, Fortune's financial statements and related financial information; appointing, subject to the approval of shareholders, and removing the external auditor; appointing and removing of Fortune's CFO; and delegating, to the extent permitted by law, to the CEO, other officers and senior management appropriate powers to manage the business affairs of Fortune. (f) Legal Requirements and Communication: (i) (ii) (iii) overseeing the adequacy of Fortune's processes to ensure compliance by Fortune with applicable legal and regulatory requirements; developing and implementing measures through which the Fortune Board can receive feedback from security holders; and performing any other function that is prescribed by law that has not been delegated by the Fortune Board to a committee of the Fortune Board or to management. (g) Oversight of Fortune's Environmental Risks: (i) Review and monitor Fortune's environment policy and environmental management system. Position Descriptions The position descriptions for the Fortune Board Chairman are outlined in the Charter of the Fortune Board. The Fortune Board Chairman and/or lead independent director shall lead the Fortune Board in all aspects of its work and are responsible to effectively managing the affairs of the Fortune Board and ensuring that the Fortune Board is properly organized and functions efficiently. As appropriate, the Chairman and/or the lead independent director will advise the CEO in matters concerning the Fortune Board, including the relationship between management and the Fortune Board. Specifically, the Board Chairman shall: (a) (b) (c) (d) provide the leadership necessary to enable the Fortune Board to carry out its duties and responsibilities described in the Fortune Board Charter; work with the CEO, other officers and senior management to monitor progress on the business plan, annual budgets, policy implementation and succession planning; provide advice, counsel and mentorship to the CEO and fellow members of the Fortune Board; foster an effective working relationship between the Fortune Board and management; E-20

130 (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) chair the Fortune Board meetings; determine, in consultation with the CEO, the Secretary, the Chairs of committees, the frequency, dates and location of meetings of the Fortune Board, the committees of the Fortune Board, and of the Fortune Shareholders; review the meeting agendas to ensure that all required business comes before the Fortune Board so that it may effectively and efficiently carry out its duties and responsibilities; ensure that all items requiring Fortune Board and committee approval are tabled as appropriate; ensure the proper flow of information to the Fortune Board; review, with the corporate secretary and CEO, the adequacy and timing of information and materials in support of management proposals to the Fortune Board; in conjunction with the relevant committee of the Fortune Board and its Chair, review and assess individual director's meeting attendance records and the effectiveness and performance of the Fortune Board, its committees, committee Chairs and individual directors; act for the CEO and exercise his/her authority in the event that the CEO is absent and is unable to act where action by the CEO is necessary to protect the interests of Fortune; attend committee meetings in a non-voting capacity as deemed appropriate by the Fortune Board Chairman; ensure that an opportunity exists at each regular meeting for the independent directors to meet separately without non-independent directors and management personnel present; and carry out other functions or assignments as requested by the Fortune Board. Orientation and Continuing Education The Fortune Board does not provide an orientation or education program for Fortune Board members, as it believes that such programs are generally more appropriate for companies of significantly larger size and complexity than the Company and which may have significantly larger boards of directors. The Fortune Board members have considerable industry and public company experience and rely on this experience and their backgrounds in business to best determine how to maintain and enhance their skills. Ethical Business Conduct The Company has adopted a Code of Business Conduct and Ethics (the "Code") to which all directors, officers and employees of the Company must adhere. The Code is a comprehensive set of expectations, obligations and responsibilities relating to ethical conduct, corporate reporting, conflicts of interests and compliance with legal and regulatory obligations and with the Company's policies, including its environmental, health and safety, nondiscrimination and other policies. A copy of the Code may be examined and/or obtained by accessing the Company's website at Under the Code, directors, officers and employees are required to promptly report any problems or concerns and any actual or potential violation of the Code to their supervisor. The Fortune Board monitors compliance with the Code by requiring management to advise it of any reports received regarding violations of the Code. The Company also has a Whistleblower Policy, which sets out the procedures for the receipt and treatment of complaints or concerns received by the Company regarding any impropriety or inaccuracy in respect of its financial statement disclosure or regarding its accounting procedures or practices, internal accounting controls, auditing E-21

131 matters or any violations of the Code. The policy includes provision for the submission or reporting by employees (including officers) of the Company or others, on a confidential and anonymous basis, of any such complaints or concerns to the Chairman of the Audit Committee. Complaints or concerns are investigated by the Audit Committee or by persons designated by the Audit Committee. In respect of any transactions or agreements involving the Company and in respect of which a director of the Company has a material interest or a conflict or potential conflict of interest, that director, in order that the members of the Fortune Board exercise independent judgment in respect thereto, is required to disclose such to the Fortune Board prior to any such transaction or agreement being considered by the Fortune Board and is not permitted to vote on any Fortune Board resolution with respect thereto. Should any officer similarly have any such material interest or conflict or potential conflict of interest, such officer must similarly disclose such to the Fortune Board. Nomination of Directors Prior to their standing for election, new nominees to the Fortune Board will be reviewed by the entire Fortune Board. The Nominations and Compensation Committee will have the responsibility of making recommendations to the Fortune Board with respect to the new nominees and for assessing directors on an on-going basis. The Company considers it important to retain directors with significant business experience in the industry, and therefore the Company's practice is to not set term limits for its directors. Individual directors are invited to propose new nominees to the Fortune Board having regard to the Company's business strategy and the current composition of the Fortune Board. Board Committees The Board currently has two committees: (i) the Audit Committee and (ii) the Nominations and Compensation Committee. All such committees report directly to the Fortune Board. From time-to-time, based on need, ad hoc committees of the Fortune Board may also be appointed. The Audit Committee The Audit Committee is currently composed of four directors, being David Peat (Chair), Michael Gross, Derrick Gill and Darren Nantes. The Company's Audit Committee members are considered to be independent directors. All such members are "financially literate", as such term is used in NI (i.e., having the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the relevant entity's financial statements). Certain additional information in respect of the education and experience relevant to the performance by each member of the Audit Committee of such member's responsibilities as a member of the Audit Committee is contained under the heading "Audit Committee and Related Information" in the Company's AIF for the year ended December 31, 2015, which is filed under the Company's profile on SEDAR at The Audit Committee operates under a written charter, being its Terms of Reference, a copy of which is annexed as Appendix "A" to the Company's AIF. The Audit Committee meets with the Company's Chief Financial Officer and financial management personnel and/or its independent auditors at least four times a year, and at least once every quarter, to review and assist, as part of its "Terms of Reference", the Fortune Board in its oversight responsibilities relating to, among other matters, the quality and integrity of the Company's financial statements and MD&A, the accounting and financial reporting principles and procedures of the Company and the adequacy of the Company's system of internal controls. The Audit Committee meets with the Company's independent auditors at least once per year without the presence of management and as well communicates directly with such auditors as circumstances warrant. The Audit Committee reviews, among other things, the Company's financial reporting practices and procedures, the Company's annual and quarterly financial statements and MD&A prior to their issuance to shareholders and filing with regulatory agencies, E-22

132 actual and prospective changes in significant accounting policies and their effect, the planned scope of examinations by the Company's independent auditors and their findings and recommendations and the scope of audit and nonaudit services provided by the independent auditors. It also recommends to the Fortune Board the independent auditors to be proposed to the Fortune Shareholders for appointment at the Company's annual meeting and approves the remuneration of such auditors. During the year-ended December 31, 2015, there were four meetings of the Company's Audit Committee and one in-camera meeting was held with the Company's auditors. Dr. Gross and Mr. Gill were present at all Audit Committee meetings held during the year. Mr. Peat was present for three meetings. Mr. Nantes was present for three meetings, which were all of the meetings held since his appointment to the Fortune Board on June 23, In response to recent regulatory initiatives in Canada, the Audit Committee has also reviewed the Company's use of its independent auditors for non-audit services. In the fiscal year ended December 31, 2015, the Company incurred fees from said auditors totaling $17,500 for audit, $nil for audit-related, $129,193 for all other fees, which related to transaction services and due diligence fees, and $13,500 for tax compliance services. The Audit Committee believes that the extent to which the Company uses its independent auditors for non-audit services is not significant and accordingly does not affect their independence. Further information in respect of the foregoing is contained under the heading "Audit Committee and Related Information" in the AIF. The Nominations and Compensation Committee The Nominations and Compensation Committee is currently composed of the following two independent directors: Derrick Gill and Michael Gross. Dr. Gross serves as chairperson of the Nominations and Compensation Committee. The Fortune Board has adopted a Nominations and Compensation Committee Charter, which, among other responsibilities, requires the Nominations and Compensation Committee is to identify individuals qualified to become board members, recommend to the Fortune Board proposed nominees for membership on the Fortune Board, and to establish, administer, and evaluate the compensation philosophy, policies and plans for non-employee directors and executive officers; make recommendations to the Fortune Board regarding director and executive compensation; and review the performance and determine the compensation of the president and chief executive officer, based on criteria including the Company's performance and accomplishment of long-term strategic objectives. The Nominations and Compensation Committee conducted three meetings during the year-ended December 31, 2015, and both members were in attendance at all meetings. Assessments Fortune Board effectiveness is assessed by the Fortune Board as a whole, considering the operation of the Fortune Board committees, the adequacy of information provided to directors, the quality of communication between the Board and management and the historic growth and performance of the Company. The Fortune Board believes that this informal assessment has permitted the Fortune Board to operate effectively. Director Term Limits The Company has not adopted director term limits for directors. However, the Chairman and/or lead independent director and the Fortune Board regularly assess the effectiveness and contribution of directors. The Company feels that its current governance system is sufficient to ensure that the Fortune Board from year to year is composed of directors with the appropriate knowledge and skills necessary to enhance the long-term performance of the Company. Furthermore, the Company recognizes the significant value that can be offered by long-serving directors, including the breadth of experience and familiarity with the Company and its industry of those members that have joined the Fortune Board. As such, the Company believes that it would not be best suited to the needs of the Company to adopt director terms limits or any formal board renewal mechanisms other than those already in place and discussed in this Circular. E-23

133 Gender Diversity Effective December 31, 2014, NI was amended to create new disclosure requirements for management information circulars. Among other things, these amendments are intended to increase the information provided to shareholders on the representation of women on an issuer's board of directors and among its executive officers. These amendments do not require issuers to adopt gender diversity policies or targets regarding the representation of women on its board of directors or among its executive officers, but rather require issuers to disclose if any procedures are currently in place in this respect. The Fortune Board is aware of the benefit of diversity on the Fortune Board and within the management team of the Company. The Company has adopted a policy related to the diversity and representation of women on the Fortune Board or with the management team. The Fortune Board has delegated to the Nominations and Compensation Committee the responsibility of overseeing and ensuring the implementation of the policy. The Nominations and Compensation Committee takes gender diversity into consideration during the recruitment and selection process of Fortune Board and management positions. The Company ensures there is a diverse Fortune Board, with a sufficient number of directors, to encourage a variety of opinions and insights on matters which come before the Fortune Board, while at the same time limiting its membership to a number of directors that facilitates effective and efficient decision-making. Recommendations concerning director appointments are based on merit and performance, with diversity taken into consideration. Diversity is considered advantageous as it relates to qualifications, insights and experiences. In the recruitment for new directors or officers, the Nominations and Compensation Committee will consider the level of female representation and diversity on the Fortune Board and in management. This will be one of several factors used in its search process. This will be achieved through continuously monitoring the level of female representation on the Fortune Board and in management positions and, where appropriate, recruiting qualified female candidates as part of the Company's overall recruitment and selection process to fill Fortune Board or management positions. Where the Nominations and Compensation Committee believes that a male candidate and a female candidate each offer the Company substantially the same skill set and perspective, the Nominations and Compensation Committee anticipates that it will consider numerous other factors beyond gender and the overall level of female representation in deciding which candidate to offer a position to. Due to the size of the Company, its activities, and its small number of employees, the Company has not yet set measurable objectives for achieving gender diversity. The Company will consider establishing measureable objectives as it grows and develops. The Fortune Board has not adopted targets regarding the representation of women on the Fortune Board and in executive officer positions due to the small size of the Company and the need to consider a balance of criteria in each individual appointment. It is important that each appointment to the Fortune Board or in executive officer positions be made based on the merits of the individual and the need of the Company at that point in time. In addition, targets based on specific criteria such as gender could limit the Fortune Board's ability to ensure that the overall composition of the Fortune Board or management of the Company meets the needs of the Company. Currently one out of two (50%) of the executive officers of the Company is a female, and none (0%) of the five directors is female. E-24

134 APPENDIX F INFORMATION CONCERNING KNEAT F-1

135 APPENDIX F INFORMATION CONCERNING KNEAT TABLE OF CONTENTS CORPORATE STRUCTURE... F-2 Name and Incorporation... F-2 Intercorporate Relationships... F-2 GENERAL DEVELOPMENT OF THE BUSINESS... F-2 Overview... F-2 History... F-3 Narrative Description of the Business... F-4 SELECTED FINANCIAL INFORMATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS... F-9 Annual Financial Information... F-9 Quarterly Information... F-9 Management's Discussion And Analysis... F-9 Trends... F-10 DESCRIPTION OF SECURITIES... F-10 CONSOLIDATED CAPITALIZATION... F-11 PRIOR SALES... F-12 STOCK EXCHANGE PRICE... F-12 EXECUTIVE COMPENSATION... F-12 Summary Compensation Table... F-13 Incentive Plan Awards... F-13 Defined Benefits Plans... F-13 Defined Contribution Plans... F-13 Deferred Compensation Plans... F-13 Termination and Change of Control Benefits... F-13 DIRECTOR COMPENSATION... F-13 Incentive Plan Awards - Outstanding Share-Based Awards and Option-Based Awards... F-14 NON-ARM'S LENGTH PARTY TRANSACTIONS... F-14 LEGAL PROCEEDINGS... F-15 MATERIAL CONTRACTS... F-15 RISK FACTORS... F-15 SCHEDULE 1 AUDITED FINANCIAL STATEMENTS OF KNEAT SOLUTIONS LIMITED... 1 SCHEDULE 2 MANAGEMENT DISCUSSION & ANALYSIS OF KNEAT SOLUTIONS LIMITED FOR THE FISCAL YEARS ENDED DECEMBER 31, 2015 AND F-1

136 The following is a summary of Kneat Solutions Limited, its business and operations (referred to in this Appendix F as "Kneat", "we", "our" or "us"), which should be read together with the more detailed information and financial statements contained elsewhere in the management information circular of Fortune Bay Corp. dated May 13, 2016, to which this Appendix F is attached (the "Circular"). The information contained in this Appendix F, unless otherwise indicated, is given as of April 30, All capitalized terms used in this Appendix F and not defined herein have the meaning ascribed to such terms in the "Glossary of Terms" or elsewhere in the Circular. Unless otherwise indicated herein, references to"$" are to Canadian dollars, references to "US$" are to United States dollars and references to " " are to the European Euro. See "Currency and Exchange Rates" in the Circular. See also "Cautionary Note Regarding Forward-Looking Statements and Risks" in the Circular. CORPORATE STRUCTURE Name and Incorporation Kneat Solutions Limited was incorporated under the laws of the Republic of Ireland by Memorandum and Articles of Association on February 4, The head and registered office of Kneat is located at Unit 7, Castletroy Park Business Centre, Castletroy, Limerick, Ireland. Intercorporate Relationships Kneat has one subsidiary, Kneat Solutions, Inc., a 100% wholly-owned subsidiary incorporated in 2014 in Pennsylvania, United States of America. Kneat Solutions, Inc. will continue to be a wholly-owned subsidiary of Kneat Solutions Limited following completion of the Transaction. GENERAL DEVELOPMENT OF THE BUSINESS Overview Kneat is a privately owned company operating from its head office in Limerick, Ireland. Kneat designs, develops and supplies software for data and document management within regulated environments. Kneat's current product is Kneat Gx, a configurable, commercial off the shelf application focused on validation lifecycle management and testing within the life sciences industry (i.e., Biotech, Pharmaceutical and Medical Device manufacturing). Complete and comprehensively documented validation of processes, products, equipment and software is a significant and impactful regulatory requirement in the life sciences industry. The Kneat Gx application provides a compliant e-solution that enables life science companies to become efficient and compliant with an automated process that has traditionally been manual, in-efficient and 100% paper-based. The goal is for Kneat Gx to be the global standard for regulated data and documentation management across all industries, where good data management, good documentation practices and regulatory compliance are highly valued. Every manufacturing process, every piece of equipment and every computer system involved in the manufacturing process of pharmaceutical, biotechnology and medical device products must be validated in accordance with current Good Manufacturing Practice ("cgmp") regulations. Validation necessitates extensive signed and time stamped documentary evidence that all aspects of these systems are designed and tested to ensure that they will repeatedly produce products to the approved specifications. This documentation is subject to audit by global regulatory authorities such as the United States of America Food and Drug Administration and the European Medicines Agency. Traditionally validation and cgmp testing has been a manual paper intensive activity. Test documents must be developed, printed, approved, executed, post approved and filed away ready for regulatory audit in the future. Everything is done on paper using wet ink to record, apply proof signature and date, etc. It is a data and document minefield that leaves healthcare companies susceptible to delays, high costs and non-compliance. Non-compliance can lead to regulatory fines, recalls, threats to patient safety and delays to market. Non-compliance can cost companies billions of dollars in penalties, lost revenues and remediation. F-2

137 The solution that Kneat Gx provides to its customers is a complex one that has taken a dedicated professional team of industry experts nine years of intense research and development to overcome, consuming over 220,000 man hours, costing in excess of 9.5 million and delivering 700,000 lines of cutting edge technology. Kneat's customers cite Kneat Gx's innovation, ease of use, its central and dynamic data management, its configurability and its electronic records and signatures capabilities as the key differentiators that set it apart in the market. In addition, Kneat's team of developers, training manuals and customer support is considered best in class by its customers. Kneat Gx was launched on the market in the third quarter of 2014, and in a short time it achieved significant traction in a highly regulated and multi-billion dollar market. Kneat has secured several blue chip customers to date, and all of these companies are expanding or planning to expand Kneat across their global organizations in the near to long term. Kneat possesses a best in class quality management system and is certified to ISO 9001 quality management system. In addition, it adheres to all applicable life science regulations such as all current cgmps, Good Automation Manufacturing Practice ("GAMP5"), International Conference on Harmonization ICH Q8, Q9 and Q10, EU Annex 11, FDA CFR Title 21 Part 11 governing Electronic Records and Electronic Signatures. Adhering to these regulations and guidelines is a mandatory requirement in order to supply to this highly regulated market. Potential customers must perform extensive audits to verify compliance prior to purchasing Kneat's products. Audits performed by customers to date have been completed efficiently and have resulted in customer implementation occurring soon after the audits, as no significant issues have been brought forth during the audits. History Financial year ended December 31, 2013 Throughout the financial year ended December 31, 2013, Kneat raised in excess of 1.6 million through the issuance of Kneat Ordinary Shares and Kneat A Ordinary Shares. Funds were used in ongoing development of the Kneat Gx platform, including increasing its functionality. Costs of approximately 0.5 million were incurred and capitalized specifically to further develop the Kneat Gx platform. Financial year ended December 31, 2014 In order to increase its profile within the industry and gain additional expertise, James Osborne, Eric McGrath and Ian Ainsworth were appointed as non-executive directors of Kneat in As Kneat progressed significantly with customers in the United States, a presence in the United States was required. Thus, Kneat Solutions, Inc., a 100% wholly-owned subsidiary of Kneat, was incorporated in Pennsylvania, United States. Kneat raised in excess of 0.58 million through the issuance of Kneat Ordinary Shares and Kneat A Ordinary Shares. These funds were used to further develop the Kneat Gx platform, extend marketing and sales efforts and service newly acquired customers. Costs of approximately 0.7 million were incurred and capitalized specifically to further develop the Kneat Gx platform. The financial year ended December 31, 2014 was the first year in which Kneat was able to execute contracts with customers and recognize revenue. Kneat secured two multi-national biotech and diagnostics customers and recognized their first revenue from operations totalling approximately 0.2 million. Financial year ended December 31, 2015 Kneat raised in excess of 1.78 million through the issuance of Kneat Ordinary and Kneat A Ordinary Shares. These funds were used to further develop the Kneat Gx platform, extend sales reach throughout Europe and the United States and service current and newly acquired customers. Costs of approximately 0.7 million were incurred and capitalized specifically to further develop the Kneat Gx platform. Three additional multi-national customers were secured through the execution of license, maintenance and service agreements. Revenue totalling approximately 0.7 million was recognized. F-3

138 Recent Developments On February 9, 2016, Kneat signed the Transaction Agreement with Fortune and SpinCo, whereby Fortune will: (i) spin-out its Fortune Mineral Properties by way of the Plan of Arrangement; and (ii) acquire 100% of the issued and outstanding Kneat Shares by way of a concurrent Scheme of Arrangement in Ireland. See "The Transaction The Arrangement" and "The Transaction The Merger" in the Circular. On March 21, 2016 Kneat issued a secured redeemable debenture (the "Debenture") to Fortune in the principal amount of 1,000,000 (the "Principal Sum") maturing on July 1, 2016 (the "Maturity Date") and bearing interest at a rate of 7.25% per annum. As general and continuing security for the due payment of the Debenture by Kneat to Fortune, Kneat has granted a first charge over all the property of Kneat, constituting a lien on all of the present and future property of Kneat. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between Fortune and Kneat. In addition, the required Fortune Cash Balance (as defined in the Transaction Agreement) will be reduced by the amount of the Principal Sum plus all accrued interest. Narrative Description of the Business Principal Products Kneat Gx is a platform software product that meets the stringent pharmaceutical industry regulatory requirements. It has been designed to allow the customer to configure and manage many regulated data and document solutions. There are no restrictions regarding process structure, look and feel that is forced on any individual customer and no coding knowledge is needed to set up solutions on and use the platform. In addition, the Kneat functionality is leveraged over and over to create the many regulated solutions that can be configured. For this reason, there is no module extensions and no additional cost when a customer decides to expand it into other business applications. Kneat's platform is easily integrated with other enterprise applications and offers full enterprise scalability as required. Kneat Gx can be used to completely tailor a solution to implement many business processes including the following: all forms of validation, including equipment, computer, cleaning, laboratory, method, and process; periodic review and re-validation management; equipment changeover management; risk lifecycle management (risk assessments); automation lifecycle management; change control, corrective and preventative action and deviation management; commissioning and qualification; and project and construction management. As an entry route into the life sciences sector, Kneat is initially focused on regulated testing and validation business processes. However, the potential market for validation services in the biotechnology, pharmaceutical and medical device sectors is significant. As the product gains momentum and functionality, Kneat expects to expand into other areas within the biotechnology, pharmaceutical and medical device industries such as production, project management and document management. Kneat's existing customers are currently expanding the platform into some of these areas. Kneat Gx is an enterprise web browser application (i.e., all application software resides on a central server and it is accessed via a web browser client), which is developed using the latest cutting edge technologies. It can be accessed via PC, laptop, tablet or ipad. It is secure, high performing and feature rich with data integrity and electronic signature capability engrained into its architecture. It is fully configurable, which allows authorized users' to set up or modify many business processes and no coding skills are required by the users. This allows customers to customize document templates, documents, business processes, etc. in-house without the assistance of a coding expert. F-4

139 It is especially relevant to highly regulated processes, where the ability to enforce best practices and to have real time global visibility is valued, thereby increasing compliance, driving efficiency and speed to market. These needs are present in many industries such as oil and energy, aviation, nuclear, automation and many others. In the near term Kneat is focused on the life sciences industry, where there are significant opportunity. However, other verticals are expected to be targeted in the medium and long term growth strategy of Kneat. Kneat estimates a market size for Validation lifecycle management of US$1 billion per annum solely within the life sciences sector, which is the initial target area within Europe and the United States. Validation is a subset of the wider global enterprise governance, risk, and compliance market. According to Markets and Markets, this market is expected to grow from US$15.98 billion in 2015 to US$31.77 billion by 2020 ( Stage of Product Development Kneat's platform has been fully developed and implemented at several customer sites. The next phase in developing Kneat's platform over the next twelve to eighteen months includes: enhancement to performance and concurrency; new functionality to accelerate user adoption in the current target areas and expansion into more of the customers' business areas; enhancements to the user experience; and expanding the offering to include multi-tenant software as a service ("SaaS"). Core code for the SaaS model is already in place. Currently, Kneat Gx is delivered to the customer as a single tenant application in the cloud or on premise. Single tenant means that each version of the software is dedicated to each customer, while multi-tenant means each version of the software can be shared between multiple customers. Multi-tenant is a lower cost delivery and maintenance model, which is especially suited to the small and medium size enterprises, because it allows them to get up and running immediately with no information technology infrastructural overheads. These companies do not have the IT muscle of the larger companies. Kneat is actively transitioning Kneat Gx to a dual SaaS single or multi-tenant application in tandem with growing the existing customer base. Expanding the offering to include multi-tenant SaaS will add significantly to the global scalability of Kneat. It will facilitate on two fronts: it will enable Kneat to sell and deliver the solution quickly to small and medium size enterprises resulting in fast, recurring subscription revenues; and it will enable Kneat to reduce the expertise and cycle time associated with selling to the larger enterprises. This market can trial and evaluate immediately online, and then Kneat can supply the customer with an on premise deployment. Channel partners will be leveraged for the deployment and support. Though the core code is in place, Kneat Gx requires some additional features and performance enhancements to enable it to be delivered as a pure multi-tenant SaaS model, which will be the focus of development over the near and medium term. Revenue streams During the financial years ended December 31, 2014 and December 31, 2015, Kneat recognized revenue from three main sources: license fees, maintenance fees and service fees. There was no revenue recognized in License fees: Kneat licenses its software using a perpetual concurrent model. It consists of an upfront fee to purchase the license. Concurrent user licenses may be shared between multiple users with maximum users to concurrent licenses established for each customer. F-5

140 Maintenance fees: Maintenance fees are established annually. Maintenance entitles the customer to front line support and software upgrades. Upgrades are normally released at least every six months; however, the customer is able to choose when they wish to upgrade. Services fees: Service fees vary by customer depending on the customer specific needs. Service fees may include such services as special training, development of tailored functionality, implementation and deployment services. The composition of the revenue streams for the two most recent financial years is as follows: Revenue stream 2015 ( ) 2014 ( ) License fees 142,122 58,839 Maintenance fees 46,186 9,473 Service fees 507, ,768 Total 695, ,080 The current customer base consists of several multi-national pharmaceutical manufacturers. Customers are quoting between 50% and 85% savings in man hours as a result of using Kneat. The actual savings depend on the business process being automated on the Kneat Gx platform. The savings in man hours has resulted in a quicker time to market for products and a significantly more efficient validation process, while also enhancing the compliance capability to the strict regulations of the industry. The pricing strategy currently deployed by Kneat is based on the number of concurrent licenses deployed at the customer locations. The individual licenses pricing strategy differs by customer and in a wide range per license depending on the purchased quantity and number of users. Maintenance fees are charged annually with pricing being set in proportion to the number of concurrent licenses at the customer site. Maintenance fees are typically charged to the customer per annum per license. Pricing for services is determined on an individual customer basis depending on the type of service being performed. Typically, service charges are priced per man day, depending on the service and the skill level required. Operations Kneat operates from the head office location in Limerick, Ireland. This location houses all of the 32 current employees, including the executives, program coders and quality management. The customer service and sales strategy is also centred from the head office location. Services have historically all been delivered centrally with travel to customer locations done as necessary. All program coding has been completed in-house with no outsourcing to third parties. The program code has been developed over a nine-year time frame by several long-term Kneat employees. These employees have signed confidentiality and non-compete clauses in their employment agreements; however, management believes there is limited risk associated with the ability of an individual to leave Kneat and to start direct competition with Kneat, given the length of time, man hours and quality of documentation that have been invested into the Kneat product and business. Kneat's head office is currently a leased location with annual lease payments of approximately 50,000 per annum. The lease is long term and remains in good standing. Given that a significant portion of Kneat's revenue is derived from customs in the United States, Kneat is also impacted by changes in the economic and regulatory environment in the United States. F-6

141 Market Currently, Kneat is focused on the European Union and United States biotechnology and pharmaceutical manufactures, who are seeking on premise solutions. Generally, these are medium to large manufacturers who have their own internal IT resources. Kneat's initial business focus is validation as the entry point into the customer and then to expand to other business areas such as production, quality, laboratory and engineering. This process has been validated with all existing customers in both the European market and United States market. As the technology matures and Kneat releases a multi-tenant SaaS model, the focus will expand to the small and medium enterprises who have less IT resources to manage on premise enterprise software systems. The World Health Organization (WHO) estimates that the global pharmaceutical market is worth US$300 billion each year, which is expected to rise to US$400 billion within the next three years ( The market for pharmaceuticals in the United States is the largest market in the world, and it continues to grow and spending continues to increase in the area of research and development. As pharmaceutical companies increase their spending on research and development and try to push more output through annually, they will look to cut costs in production and manufacturing. This is where Kneat will fit into their overall business plan by decreasing the cost and time associated with the production and manufacturing of products. In addition, regulatory oversight is becoming more and more stringent and costly. Kneat will reduce the cost of regulatory compliance for the industry. Marketing plans and Strategies One of Kneat's key objectives is to onboard sales staff that will focus solely on acquiring new customers throughout the United States and European Union and also on expanding Kneat's reach within the current customer base. By hiring three sales managers during the fiscal year 2016, it is anticipated that these individuals will drive the marketing strategy and revenue growth required for Kneat to meet aggressive revenue and profitability targets. Marketing and distribution costs for the 2016 financial year are anticipated to be approximately 270,000 and salaries and wages of 280,000 for the sales managers. Kneat's projections are based on initially selling licenses, maintenance and services associated with on-premise deployments to larger organizations, who can afford the IT Infrastructure, initial deployment and ongoing running costs. In mid-2017, Kneat expects to release a multi-tenant SaaS model, which will allow small to medium enterprises access to Kneat's services immediately with minimal information technology overheads, giving them access to deep enterprise software without the large spend on IT and professional services. This low cost delivery model will increase the market size, minimize sales cycle times, reduce barriers to entry and add significantly to the global scalability of Kneat. Channel partners are also expected to become a key part of the marketing and sales strategy in the near term. Kneat's current focus is to go direct with services in the short term, and subsequently to enable partners on the back of product maturity. Kneat's intention is not to develop its own global professional services firm but to develop and market leading edge software and to leave significant aspects of services to key partners, who are established and have global reach. We expect to deliver to small and medium size businesses via SaaS and larger companies via the reseller on premise model. Currently, Kneat has several partner relationships in the United States and the European Union. Competitive conditions The most significant competition for Kneat is from the current solutions, which are manual, paper-based and leverage document management systems and typical Microsoft Office tools. These solutions provide poor levels of control, no level of automation and they cannot remove paper from the process. F-7

142 With increasing regulatory oversight and the sheer increase in paperwork that comes with it, the industry is struggling to cope with this data management burden. The industry is actively seeking electronic solutions that can drive efficiency and compliance. There are few solutions on the market that address this need. Kneat's overriding advantage is that it is a 100% web based solution (i.e., application is all server side) that is built on the latest technologies and designed specifically for the life sciences industry, where stringent regulatory requirements must be met. The competitors' products fall short, as they are older technologies and they were not designed specifically for the life sciences industry. Competitors often require software plug-ins to enable compliance with pharmaceutical regulations or they must integrate with other applications to complete the business needs. These integrations lead to a poorer user experience, compounded potential IT breakdowns and an inefficient process. Kneat provides a dynamic data capability. As data is entered into Kneat's documents, an underlying structured data model is created. The data is centrally managed and can be shared across multiple documents in a structured manner. This capability is highly valued by customers, as it delivers unprecedented efficiencies and compliance. It is a pillar of the Kneat system and is not available from the competitors. Unlike any of the competitors, multiple users can collaborate from any place in real time in a single instance of a document for both authoring, review and electronic test execution. Documents are never "checked out" of the application, enabling powerful global transparency and control. This also ensures there are not multiple versions of documents or conflicting edits within documents. Kneat Gx allows seamless transition of a test document from the approved state to an electronic execution state. Online test document execution with electronic signatures is a significant compliance and efficiency advantage. Kneat Gx allows customers to create a configurable pre-defined templated process that may consist of one or many documents and/or forms. Once an instance of the process is initiated, the full set of document deliverables are instantly created. All common process data is centrally managed and populated across all documents. This enables a standard approach to any type of project or process. No other product is capable of this, and it is this feature that is giving some customers an 85% reduction in man hours on specific processes. This feature also leverages the Kneat dynamic data capability. In the future, this feature will enable broader industry disruption when it will enable any SaaS customer to clone pre-defined process solutions from a Kneat Hub. In Kneat Gx, electronic records and signatures functionality is designed in from the start of development. As an example of this capability, a customer can have any user apply their electronic signature in any location within a document. This is mandatory for data integrity and compliance. In a paper environment, everything must be signed and dated by hand using wet ink on paper. Due to the fact that Kneat is a 100% fully integrated web application, it can be seamlessly used on any device (laptop, ipad, tablet, PC). Future developments In order to reach Kneat's goal to be the global standard for regulated data and documentation management across all industries, where good data management, good documentation practices and regulatory compliance are highly valued, Kneat expects to invest approximately 5 million in the following key areas: medium term product development goals of new features, enhanced user experience and multi-tenant SaaS; medium term customer acquisition targets; and operations management requirements. Specifically, this will include the product enhancements and functionality required to meet the goal of having a functioning SaaS model to target the small to medium size businesses. This functionality and code is already in development and is estimated to be completed in the next twelve to eighteen months. F-8

143 Kneat has developed a detailed roadmap that outlines all the enhancements and technology updates that are planned in the next one to five years. The roadmap includes a plan and timeline for the following categories of the product development: Ease of Use and User-friendliness SaaS Enabling and management Search and Reporting Enhancements API Systems Integration Functionality Security, Access Control and Compliance Change Management CSV, Automation and other Dynamic Data Management Project Management Content Management In addition, Kneat management has budgeted time and expenses to invest in several key customers in order to grow the Kneat customer base. These new key customers include several additional multi-national customers, which Kneat is currently in various stages of negotiations with. The operations management requirements consist of hiring additional staff mainly in the area of coding and sales staff. The current Kneat business model has run on a thin staffing level of coders in order to keep costs to a minimum. In addition, there have been no employees fully dedicated to increasing sales or marketing of the Kneat platform. Propriety Protection All source code is copyright protected. SELECTED FINANCIAL INFORMATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS Annual Financial Information The following table contains certain financial information of Kneat for the fiscal years ended December 31, 2015 and December 31, Such information has been derived from Kneat's audited annual financial statements, which have been prepared in accordance with IFRS and are attached as Schedule 1 to this Appendix F, and should be read in conjunction with such financial statements. Year ended December 31, 2015 ( ) Year ended December 31, 2014 ( ) Total revenues 695, ,080 Loss from continuing operations 692, ,359 Net Loss 711, ,124 Total assets 2,806,398 1,582,239 Total liabilities 1,325,473 1,210,840 Cash dividends declared for common share holders - - Quarterly Information Kneat is currently a private company and did not prepare quarterly financial statements. Accordingly, no quarterly information is included. Management's Discussion And Analysis The MD&A of Kneat for the fiscal years ended December 31, 2015 and 2014 is attached as Schedule 2 to this Appendix F. The attached MD&A should be read in conjunction with Kneat's audited annual financial statements F-9

144 for the years ended December 31, 2015 and 2014, together with the notes thereto, which are attached as Schedule 1 to this Appendix F. Trends Kneat operates in a business environment that is subject to a number of risks, some of which are within Kneat's ability to manage and some of which are beyond its control. By adhering to its effective business strategies, Kneat can manage those risks within its control and partially mitigate the risks that are associated with the industry. Kneat has developed a unique and powerful data and document management platform that is revolutionizing the way complex data management processes are managed. However, like any junior company, there are risks that Kneat must be vigilant against, such as: not delivering on our product vision fast enough. For this reason the Kneat Board has decided to take on significant capital to accelerate product development; and existing established vendors in related spaces expand their products to compete with Kneat Gx. Kneat believes it will be very difficult for existing products to retrofit its data management competitive advantage into existing products. However, Kneat must assume that they will achieve it or something similar in time. Again accelerating product development and enhancing Kneat's innovation and competitive advantage will protect against this. DESCRIPTION OF SECURITIES Kneat Shares The following summary of the capital stock of Kneat is subject in all respects to applicable laws of the Republic of Ireland and our Memorandum and Articles of Association. The authorized share capital of Kneat consists of 1,300,000 Kneat Ordinary Shares, 800,000 Kneat A Ordinary Shares, 300,000 Kneat Convertible Shares, 300,000 Kneat A Convertible Shares and 300,000 Kneat A Preference Shares. As of April 30, 2016, 578,174 Kneat Ordinary Shares, 216,080 Kneat A Ordinary Shares, 232,000 Kneat Convertible Shares and 300,000 Kneat A Convertible Shares were issued and outstanding. Enterprise Ireland has agreed to exchange its Kneat Shares in Kneat, comprising 232,000 Kneat Convertible Shares and 300,000 Kneat A Convertible Shares, for the EI Loan, payable to Enterprise Ireland on the third anniversary of the Merger Effective Date. A summary of the rights of the Kneat Shares is set forth below. Kneat Ordinary Shares Holders of the ordinary shares are entitled to attend and vote at general meetings of Kneat. Kneat A Ordinary Shares Holders of "A" ordinary shares are not entitled to vote at the general meetings of Kneat for a period of three to five years from the date of allotment of such "A" ordinary shares. Kneat Convertible Shares, Kneat A Convertible Shares and Kneat A Preference Shares (together referred to as "Convertible Preference Shares") The cumulative redeemable Convertible Preference Shares do not carry any voting rights. The holder is entitled to a fixed cumulative preferential dividend at a rate of 8.00% per annum on the amount paid up (including share premium) on cumulative redeemable convertible preference shares. The accrued dividends/interest on the cumulative redeemable Convertible Preference Shares is calculated annually in arrears on each anniversary of the first allotment of cumulative redeemable Convertible Preference Shares and will only be paid to the holder in the F-10

145 event of cumulative redeemable Convertible Preference Shares being redeemed. If Kneat incurs research and development expenditure validated by the holder of cumulative redeemable Convertible Preference Shares up to the amount of paid up preference share capital, the rate of the dividend will be reduced to 3.00%. Kneat incurred research and development expenditure validated by the holder of cumulative redeemable convertible preference shares and avails of the reduced dividend/interest rate of 3.00%. If an investment in Kneat takes place and places a valuation of Kneat above a certain threshold of the amount of allotted and fully paid up cumulative redeemable Convertible Preference Share capital within five years of the first allotment of the cumulative redeemable Convertible Preference Shares, the holder of cumulative redeemable Convertible Preference Shares has the option to convert cumulative redeemable Convertible Preference Shares to the new shares in Kneat, defined as the shares allotted to the investor for their investment in Kneat. The option lapses after sixty days from notification of the holder of cumulative redeemable Convertible Preference Shares by Kneat about the investment. Since the option is not exercisable at the discretion of the holder, but only on the occurrence of an uncertain future event, it is not separated as equity. An uncertain future event has to occur for the option holder to have discretion. The cumulative redeemable Convertible Preference Shares are redeemable on the fifth anniversary of the date of allotment (the "redemption date"). The redemption price is equal to the aggregate amount paid up plus interest. Should Kneat be unable to pay the redemption price on the redemption date, Kneat will redeem the cumulative redeemable Convertible Preference Shares as soon as it is capable of doing so. Kneat Options As of April 30, 2016, a total of 30,558 Kneat incentive stock options were issued and outstanding. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an estimated exercise price of $0.90 will be granted by Fortune to former holders of the Kneat options and other individuals as the New Fortune Board deems appropriate. See "Appendix G Information Concerning New Fortune Options to Purchase Securities". Kneat Debenture On March 21, 2016 Kneat issued a secured redeemable debenture (the "Debenture") to Fortune in the principal amount of 1,000,000 (the "Principal Sum") maturing on July 1, 2016 (the "Maturity Date") and bearing interest at a rate of 7.25% per annum. The Debenture is redeemable in whole at any time or in part (such part being 10,000 or an integral multiple thereof) from time to time prior to the Maturity Date, at the option of Kneat, at a price equal to the Principal Sum to be redeemed and any accrued and unpaid interest. As general and continuing security for the due payment of the Debenture by Kneat to Fortune, Kneat has granted a first charge over all the property of Kneat, constituting a lien on all of the present and future property of Kneat. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between Fortune and Kneat. In addition, the required Fortune Cash Balance (as defined in the Transaction Agreement) will be reduced by the amount of the Principal Sum plus all accrued interest. CONSOLIDATED CAPITALIZATION The following table sets forth the capitalization of Kneat as at the dates indicated. The table should be read in conjunction with the financial statements of Kneat, and the notes thereto, attached as Schedule 1 to this Appendix F as well as the other disclosure contained in this Appendix F. F-11

146 Designation of Security (1)(2) Amount Authorized Amount Outstanding as of December 31, 2015 (Audited) ( ) Amount Outstanding as of April 30, 2016 (Unaudited) ( ) Kneat Ordinary Shares 1,300, , ,174 Kneat A Ordinary Shares 800, , ,080 Kneat Convertible Shares 300, , ,000 Kneat A Convertible Shares 300, , ,000 Kneat A Preference Shares 300,000 Nil Nil Current Liabilities N/A 560,053 1,463,005 Non-current Liabilities N/A 765, ,000 Retained Earnings (Deficit) N/A (6,812,276) (7,300,000) Notes: (1) In addition, up to 33,978 at December 31, 2015 (30,558 at April 30, 2016) Kneat Shares are reserved for issuance pursuant to the exercise of the Kneat incentive stock options. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an estimated exercise price of $0.90 will be granted by Fortune to former holders of the Kneat options and other individuals as the New Fortune Board deems appropriate. See "Appendix G Information Concerning New Fortune Options to Purchase Securities". (2) On March 21, 2016 Kneat issued the 1,000,000 Debenture to Fortune maturing on July 1, 2016 and bearing interest at a rate of 7.25% per annum. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between Fortune and Kneat. See in this Appendix F, "Description of Securities Kneat Debenture". PRIOR SALES In the twelve month period preceding the date of this Circular, the following Kneat Shares have been issued: Date Number of Kneat Shares Issue Price Per Kneat Share ( ) Aggregate Issue Price ( ) Nature of Consideration Received April 21, 2015-May 28, ,682 (1) ,345 Cash April 21, 2015-June 25, ,075 (1) ,562 Cash June 10, 2015-January 1, ,072 (2) ,124 Cash Total 87,829 1,415,031 Notes: (1) Of this number, 6,811 Kneat Shares were sold to Non-Arm's Length Parties of Kneat. (2) Of this number, 186 Kneat Shares were sold to Non-Arm's Length Parties of Kneat. There is no public market for any securities of Kneat. STOCK EXCHANGE PRICE EXECUTIVE COMPENSATION Kneat is not a reporting issuer in any jurisdiction. As a result, certain information required by Form F6 - Statement of Executive Compensation ("Form F6") has been omitted pursuant to Section 1.3(8) of Form F6. For purposes of this section, the term "NEOs" refers to the Chief Executive Officer and two (2) executive directors of Kneat. F-12

147 Summary Compensation Table The following table discloses a summary of compensation paid to Kneat's NEOs, comprising those persons named in the table below, for the three most recently completed financial years. Name and principal position Year Salary ( ) Optionbased awards ( ) Sharebased awards ( ) Non-equity incentive plan compensation ( ) Pension value ( ) All other compensation ( ) Total compensation ( ) Annual incentive plans ( ) Long-term incentive plans ( ) Edmond Ryan Chief Executive Officer ,500 64,500 64,708 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 64,500 64,500 64,708 Brian Ahearne Director of Quality ,182 50,000 50,000 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 50,182 50,000 50,000 Kevin Fitzgerald Director of Research & Development ,000 50,000 50,000 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 50,000 50,000 50,000 Incentive Plan Awards As at December 31, 2015, the NEOs did not have any option-based awards or share-based awards outstanding. Defined Benefits Plans Kneat currently does not intend to have a defined benefits pension plan. Defined Contribution Plans Kneat currently operates a defined contribution pension plan for employees. A defined contribution plan is a postemployment benefit plan, under which Kneat pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense through the consolidated statement of comprehensive income as incurred. The pension charge for the defined contribution plan for the financial year 2015 was 6,240 (2014 5,340). Deferred Compensation Plans Kneat currently does not intend to have a deferred compensation plan. Termination and Change of Control Benefits There are no contracts, agreements, plans or arrangements that provide for payments to any current NEO at, following, or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of Kneat or its subsidiary or a change in a NEOs responsibilities (excluding perquisites and other personal benefits if the aggregate of this compensation is less than 50,000). DIRECTOR COMPENSATION For Kneat's most recently completed fiscal year ended December 31, 2015, except as noted below, no compensation of any kind was accrued, owing or paid to any of Kneat's non-executive directors for acting in their capacity as such F-13

148 Name Fees ( ) Share- Based Award ( ) Option Based Awards ( ) Non-equity Incentive Plan Compensation Pension Value ( ) All Other Compensation ( ) Total Compensation ( ) Paul Breen 10,000 (1) Nil Nil Nil Nil Nil 10,000 James Osborne Ian Ainsworth 10,000 (1) 40,005 (2) Nil Nil Nil Nil 50,005 Nil Nil Nil Nil Nil Nil Nil Eric McGrath Nil Nil Nil Nil Nil Nil Nil Notes: (1) This amount has not been claimed and it is expected that Kneat options will be granted in lieu going forward. (2) Mr. Osborne was granted 2,727 Kneat A Ordinary Shares in lieu of payment for consulting fees. Incentive Plan Awards - Outstanding Share-Based Awards and Option-Based Awards The following table sets forth all awards outstanding for each of the non-executive directors of Kneat as of December 31, 2015: Option-Based Awards Share-Based Awards Name Number of securities underlying unexercised options (#) Option exercise price ( ) Option expiration date (mm/dd/yyyy) Value of unexercised in the money options (1) ( ) Number of shares or units of shares that have not vested (#) Market or payout value of share based awards that have not vested ( ) Market or payout value of vested share based awards not paid out or distributed ( ) Paul Breen 7, /25/2021 Nil 1, /06/2022 Nil 343 Nil 2, /01/2023 1,023 James Osborne Nil Nil Nil Nil Nil Nil Nil Nil Ian Ainsworth Nil Nil Nil Nil Nil Nil Nil Eric McGrath Nil Nil Nil Nil Nil Nil Nil Note: (1) There is no public market for any securities of Kneat. Consequently, no market value can be established NON-ARM'S LENGTH PARTY TRANSACTIONS Other than the related party transactions set out in the audited financial statements of Kneat attached as Schedule 1 to this Appendix F, in connection with any transactions completed within the previous five years prior to the date hereof, Kneat has not provided or proposed to provide any assets or services to or obtained or proposed to obtain any assets or services from any director or officer of Kneat, any principal securityholder disclosed elsewhere in this Circular, or any Associates or Affiliates of the foregoing. F-14

149 LEGAL PROCEEDINGS Kneat has not been nor is it presently involved in any legal proceedings material to it and no such proceedings are, to the best of its knowledge, contemplated. MATERIAL CONTRACTS Kneat has not entered into any material contracts, outside of the ordinary course of business, prior to the date hereof, other than the Transaction Agreement dated February 9, 2016 between Fortune, Kneat and SpinCo in connection with the Transaction (see "The Arrangement The Transaction Agreement" in the Circular for details of the Transaction Agreement). The Transaction Agreement will be available for inspection without charge at the registered office of Fortune at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7 during ordinary business hours from the date hereof until the closing of the Transaction and for a period of 30 days thereafter. In addition, the Transaction Agreement is available through the Canadian System for Electronic Documents Analysis and Retrieval (SEDAR) website at under Fortune's profile. RISK FACTORS Fortune Shareholders should carefully consider a number of risk factors in evaluating whether to approve the Merger, including the risks and uncertainties described below and other information contained in the Circular, including the audited financial statements and accompanying notes, appearing elsewhere in the Circular. The risks and uncertainties below are not the only ones Kneat faces. Additional risks not currently known to Kneat or that Kneat currently believes are immaterial may also impair its operating results, financial condition and liquidity. Kneat's business is also subject to general risks and uncertainties that affect many other companies. These risks discussed below are not presented in order of importance or probability of occurrence. The length of Kneat's sales cycle can fluctuate significantly which could result in significant fluctuations in license revenues being recognized from quarter to quarter The decision by a customer to license Kneat's software products or purchase its services often involves a comprehensive implementation process across the customer's network or networks. As a result, the licensing and implementation of Kneat's software products and any related services may entail a significant commitment of resources by prospective customers, accompanied by the attendant risks and delays frequently associated with significant technology implementation projects. Given the significant investment and commitment of resources required by an organization to implement Kneat's software products, its sales cycle may be longer compared to other companies within Kneat's own industry, as well as companies in other industries. Also because of changes in customer spending habits, it may be difficult for Kneat to budget, forecast and allocate its resources properly. In weak economic environments, it is not uncommon to see reduced information technology spending. It may take several months, or even several quarters, for marketing opportunities to materialize. If a customer's decision to license Kneat's software is delayed or if the implementation of these software products takes longer than originally anticipated, the date on which Kneat may recognize revenues from these licenses would be delayed. Such delays and fluctuations could cause Kneat's revenues to be lower than expected in a particular period, and Kneat may not be able to adjust its costs quickly enough to offset such lower revenues, potentially negatively impacting its business, operating results and financial condition. If Kneat does not continue to develop technologically advanced products, future revenues and its operating results may be negatively affected Kneat's success depends upon its ability to design, develop, test, market, license and support new software products, services, and enhancements of current products and services on a timely basis in response to both competitive threats and marketplace demands. Examples of significant trends in the software industry include cloud computing, mobility, social media and other SaaS. In addition, Kneat's software products, services, and enhancements must remain compatible with standard platforms and file formats. Moreover, if new industry standards emerge that Kneat F-15

150 does not anticipate or adapt to, or with rapid technological change occurring, if alternatives to its services and solutions are developed by its competitors, Kneat's software products and services could be rendered obsolete, causing Kneat to lose market share and, as a result, harm its business and operating results, and its ability to compete in the marketplace. If Kneat's software products and services do not gain market acceptance, its operating results may be negatively affected Kneat intends to pursue the goal for Kneat Gx to be the global standard for regulated data and documentation management across all industries, where good data management, good documentation practices and regulatory compliance are keys to success. Kneat intends to pursue its strategy through, among other things, its proprietary research and the development of new software product and service offerings, as well as through acquisitions. In response to customer demand, it is important to Kneat's success that it continues to enhance its software products and services and to seek to set the standard for Kneat Gx capabilities. The primary market for its software products and services is rapidly evolving, which means that the level of acceptance of products and services that have been released recently or that are planned for future release by the marketplace is not certain. If the markets for Kneat's software products and services fail to develop, develop more slowly than expected or become subject to increased competition, its business may suffer. As a result, Kneat may be unable to: (i) successfully market its current products and services, (ii) develop new software products and services and enhancements to current software products and services, (iii) complete customer implementations on a timely basis, or (iv) complete software products and services currently under development. In addition, increased competition could put significant pricing pressures on Kneat's products which could negatively impact its margins and profitability. If Kneat's software products and services are not accepted by its customers or by other businesses in the marketplace, Kneat's business, operating results and financial condition will be materially affected. Kneat's investment in its current research and development efforts may not provide a sufficient, timely return The development of Kneat Gx is a costly, complex and time-consuming process, and the investment in Kneat's software product development often involves a long wait until a return is achieved on such an investment. Kneat is making, and will continue to make, significant investments in software research and development and related product opportunities. Investments in new technology and processes are inherently speculative. Commercial success depends on many factors, including the degree of innovation of the software products and services developed through Kneat's research and development efforts, sufficient support from its strategic partners, and effective distribution and marketing. Accelerated software product introductions and short product life cycles require high levels of expenditures for research and development. These expenditures may adversely affect Kneat's operating results if they are not offset by revenue increases. Kneat believes that it must continue to dedicate a significant amount of resources to its research and development efforts in order to maintain its competitive position. However, significant revenues from new software product and service investments may not be achieved for a number of years, if at all. Moreover, new software products and services may not be profitable, and even if they are profitable, operating margins for new software products and services may not be as high as projected. Kneat has a limited operating history and its future profitability is uncertain Kneat has a limited operating history, and its business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with establishing a new software development company. If Kneat continues to incur operating losses and fails to become a profitable company, it may be unable to continue its operations. Kneat expects to continue to operate at a net loss for the next several years, as it continues its software development efforts and continues to further develop its sales, marketing and distribution capabilities. Kneat needs to raise additional capital to operate its business Kneat is an early commercial-stage company focused on product development and commercialization and have generated only limited product revenues to date. For the foreseeable future, Kneat will have to fund all of its operations and capital expenditures primarily from the net proceeds of future offerings and grants of securities. F-16

151 Kneat's actual capital requirements will depend on many factors. If Kneat experiences unanticipated cash requirements, it may need to seek additional sources of financing, which may not be available on favorable terms, if at all. If Kneat does not succeed in raising additional funds on acceptable terms, it may be forced to discontinue product development and/or commercialization, reduce or forego sales and marketing efforts and attractive business opportunities or discontinue operations. Kneat has a history of losses and we may never achieve or sustain profitability Kneat has incurred substantial losses since its inception, and it may not achieve profitability in the foreseeable future, if at all. Kneat expects to incur net losses and negative cash flows for the foreseeable future due in part to increasing research and development expenses, marketing expenses and hiring additional personnel. As a result, Kneat will need to generate significant revenues in order to achieve and maintain profitability. Kneat may not be able to generate these revenues or achieve profitability in the future. Even if Kneat does achieve profitability, it may not be able to sustain or increase profitability. Kneat has limited access to the capital markets, and, even if it can raise additional funding, it may be required to do so on terms that are dilutive to you Kneat has limited access to the capital markets to raise capital. The capital markets have been unpredictable in the recent past for other software development companies and unprofitable companies such as Kneat. In addition, it is generally difficult for early commercial-stage companies to raise capital. The amount of capital that a company such as Kneat is able to raise often depends on variables that are beyond its control. As a result, Kneat may not be able to secure financing on terms attractive to it, or at all. If Kneat is able to consummate a financing arrangement, the amount raised may not be sufficient to meet its future needs. If adequate funds are not available on acceptable terms, or at all, Kneat's business, results of operations, financial condition and its continued viability will be materially adversely affected. Current Kneat Shareholders will own approximately 68.7% of the capital stock of the Resulting Issuer upon the closing of the Transaction. They will therefore be able to exert significant control over matters submitted to shareholders for approval After the Merger Effective Date, current Kneat Shareholders will, in the aggregate, beneficially own approximately 68.7% of the capital stock of the Resulting Issuer upon the Merger Effective Date. As a result, these shareholders, if they acted together, could significantly influence or even unilaterally approve matters requiring approval by the Resulting Issuer's shareholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of these shareholders may not always coincide with the interests of other shareholders. This significant concentration of share ownership may adversely affect the value of the capital stock of the Resulting Issuer, because investors often perceive disadvantages in owning stock in companies with controlling shareholders. Failure to protect Kneat's intellectual property could harm its ability to compete effectively Kneat is highly dependent on our ability to protect our proprietary technology. We rely on a combination of trade secret laws, as well as non-disclosure agreements and other contractual provisions to establish and maintain its proprietary rights. Kneat currently does not own any patents or have any patents pending. Kneat intends to protect its intellectual property rights vigorously; however, there can be no assurance that these measures will, in all cases, be successful. Software piracy has been, and is expected to be, a persistent problem for the software industry, and piracy of its software products represents a loss of revenue to Kneat. Where applicable, certain of Kneat's license arrangements have required it to make a limited confidential disclosure of portions of the source code for its software products, or to place such source code into escrow for the protection of another party. Despite the precautions Kneat has taken, unauthorized third parties, including its competitors, may be able to copy certain portions of Kneat's software products or reverse engineer or obtain and use information that Kneat regards as proprietary. Also, Kneat's competitors could independently develop technologies that are perceived to be substantially equivalent or superior to its technologies. F-17

152 Kneat's competitive position may be adversely affected by its possible inability to effectively protect Kneat's intellectual property. In addition, certain of its products contain open source software. Licensees of open source software may be required to make public certain source code or to make certain derivative works available to others. While Kneat monitors and controls the use of open source software in its products and in any third party software that is incorporated into its products, and Kneat tries to ensure that no open source software is used in such a way as to require it to disclose the source code to the related product or service, there can be no guarantee that such use could not inadvertently occur. If this happened it could harm Kneat intellectual property position and have a material adverse effect on its business, results of operations and financial condition. Other companies may claim that Kneat infringes their intellectual property, which could materially increase costs and materially harm its ability to generate future revenues and profits Claims of infringement are becoming increasingly common as the software industry develops and as related legal protections, including patents, are applied to software products. Although Kneat does not believe that its products infringe on the rights of third parties, third parties have and will continue to assert infringement claims against it in the future. Although most of Kneat's technology is proprietary in nature, Kneat does include certain third party and open source software in its software products. In the case of third party software, Kneat believes this software is licensed from the entity holding the intellectual property rights. Although Kneat believes that it has secured proper licenses for all third-party intellectual property that is integrated into its products, third parties may continue to assert infringement claims against Kneat in the future, including the sometimes aggressive and opportunistic actions of non-practicing entities whose business model is to obtain patent-licensing revenues from operating companies such as us. Any such assertion, regardless of merit, may result in litigation or may require Kneat to obtain a license for the intellectual property rights of third parties. Such licenses may not be available or they may not be available on commercially reasonable terms. In addition, as Kneat continues to develop software products and expand its portfolio using new technology and innovation, Kneat's exposure to threats of infringement may increase. Any infringement claims and related litigation could be time-consuming, disruptive to Kneat's ability to generate revenues or enter into new market opportunities and may result in significantly increased costs as a result of Kneat's defense against those claims or its attempt to license the intellectual property rights or rework Kneat's products to avoid infringement of third party rights. Typically Kneat's agreements with our partners and customers contain provisions which require Kneat to indemnify them for damages sustained by them as a result of any infringement claims involving Kneat's products. Any of the foregoing infringement claims and related litigation could have a significant adverse impact on Kneat's business and operating results as well as its ability to generate future revenues and profits. Impact of Laws Kneat will operate offices in Ireland, and upon completion of the Transaction will continue to offer its products and services in the European Union, Canada, the United States and eventually in other countries. Kneat is and will be subject to a variety of laws in the European Union, Canada, the United States and abroad, including laws regarding consumer protection, privacy, intellectual property, taxation and content suitability, distribution and antitrust, that are continuously evolving and developing. The scope, enforcement and interpretation of the laws that are or may be applicable to Kneat and its subsidiaries are often uncertain and may be conflicting, particularly laws outside of Canada and the United States. It is also likely that as business grows and evolves to a greater number of countries, Kneat will become subject to laws and regulations in additional jurisdictions. Compliance with applicable laws or regulations could be very difficult or liability could arise under these laws or regulations, including due to amendments to or evolving interpretation and enforcement of such laws and regulations. As a result, Kneat could be directly harmed, and may be forced to implement new measures to reduce the exposure to this liability. This may require substantial resources to be expended or a modification of its products and services, which would harm the business, financial condition and results of operations of Kneat. Foreign Currency and Exchange Rate Risk Kneat currently reports its results in the European Euro. It is expected that upon completion of the Transaction, the Resulting Issuer's revenue will be reported in the Canadian dollar. Fluctuations in the cross exchange rates between the European Euro, United States dollar and Canadian dollar may have a material adverse effect on the business, F-18

153 financial condition and operating results of the Resulting Issuer. To date, Kneat has not engaged in exchange rate hedging activities, and the Resulting Issuer may not do so in the foreseeable future. Current and future competitors could have a significant impact on Kneat ability to generate future revenues and profits The markets for Kneat's software products and services are intensely competitive and are subject to rapid technological change and other pressures created by changes in its industry. The convergence of many technologies has resulted in unforeseen competitors arising from companies that were traditionally not viewed as threats to Kneat's marketplace. Kneat expects competition to increase and intensify in the future as the pace of technological change and adaptation quickens and as additional companies enter its markets, including those competitors who offer similar solutions as Kneat does, but offer it through a different form of delivery. We could lose market share if our current or prospective competitors: (i) introduce new competitive products or services, (ii) add new functionality to existing products and services, (iii) acquire competitive products and services, (iv) reduce prices, or (v) form strategic alliances with other companies. If other businesses were to engage in aggressive pricing policies with respect to competing products, or if the dynamics in Kneat's marketplace resulted in increasing bargaining power by the consumers of Kneat's software products and services, Kneat would need to lower the prices it charges for the products and services Kneat offers. This could result in lower revenues or reduced margins, either of which may materially and adversely affect Kneat's business and operating results. Additionally, if prospective consumers choose other methods of data and document management within regulated environments, different from that which we offer, Kneat business and operating results could also be materially and adversely affected. Kneat must continue to manage its internal resources during periods of company growth or its operating results could be adversely affected Kneat's growth, coupled with the rapid evolution of its markets, may place, significant strains on Kneat's administrative and operational resources and increased demands on its internal systems, procedures and controls. Kneat's administrative infrastructure, systems, procedures and controls may not adequately support its operations. In addition, Kneat's management may not be able to achieve the rapid, effective execution of the product and business initiatives necessary to successfully implement Kneat's operational and competitive strategy. If Kneat is unable to manage growth effectively, its operating results will likely suffer which may, in turn, adversely affect its business. If Kneat loses the services of our executive officers or other key employees or if it is not able to attract or retain top employees, Kneat's business could be significantly harmed. Kneat's performance is substantially dependent on the performance of its executive officers and key employees. Kneat does not maintain "key person" life insurance policies on any of its employees. Kneat's success is also highly dependent on its continuing ability to identify, hire, train, retain and motivate highly qualified management, technical, sales and marketing personnel. In particular, the recruitment of top research developers and experienced salespeople remains critical to its success. Competition for such people is intense, substantial and continuous, and Kneat may not be able to attract, integrate or retain highly qualified technical, sales or managerial personnel in the future. In addition, in its effort to attract and retain critical personnel, Kneat may experience increased compensation costs that are not offset by either improved productivity or higher prices for its software products or services. Unexpected events may materially harm Kneat's ability to align incurred expenses with recognized revenues Kneat incurs operating expenses based upon anticipated revenue trends. Since a high percentage of these expenses are relatively fixed, a delay in recognizing revenues from transactions related to these expenses (such a delay may be due to the factors described elsewhere in this risk factor section or it may be due to other factors) could cause significant variations in operating results from quarter to quarter, and such a delay could materially reduce operating income. If these expenses are not subsequently matched by revenues, Kneat's business, financial condition, or results of operations could be materially and adversely affected. Kneat may fail to achieve its financial forecasts due to inaccurate sales forecasts or other factors F-19

154 Kneat's revenues and particularly its software license revenues are difficult to forecast, and, as a result its quarterly operating results can fluctuate substantially. Kneat uses a "pipeline" system, a common industry practice, to forecast sales and trends in its business. By reviewing the status of outstanding sales proposals to its customers and potential customers, Kneat makes an estimate as to when a customer will make a purchasing decision involving its software products. These estimates are aggregated periodically to make an estimate of Kneat's sales pipeline, which Kneat uses as a guide to plan its activities and make financial forecasts. Kneat's sales pipeline is only an estimate and may be an unreliable predictor of actual sales activity, both in a particular quarter and over a longer period of time. Many factors may affect actual sales activity, such as weakened economic conditions, which may cause Kneat's customers and potential customers to delay, reduce or cancel IT related purchasing decisions and the tendency of some of Kneat's customers to wait until the end of a fiscal period in the hope of obtaining more favourable terms from Kneat. If actual sales activity differs from Kneat's pipeline estimate, then Kneat may have planned its activities and budgeted incorrectly and this may adversely affect its business, operating results and financial condition. Kneat's software products and services may contain defects that could harm its reputation, be costly to correct, delay revenues, and expose Kneat to litigation Kneat's software products and services are highly complex and sophisticated and, from time to time, may contain design defects, software errors, hardware failures or other computer system failures that are difficult to detect and correct. Errors may be found in new software products or services or improvements to existing products or services after delivery to Kneat's customers. If these defects are discovered, Kneat may not be able to successfully correct such errors in a timely manner. In addition, despite the extensive tests Kneat conducts on all its software products or services, Kneat may not be able to fully simulate the environment in which its products or services will operate and, as a result, Kneat may be unable to adequately detect the design defects or software or hardware errors which may become apparent only after the products are installed in an end-user's network, and users have transitioned to Kneat's services. The occurrence of errors and failures in Kneat's software products or services could result in the delay or the denial of market acceptance of its products and alleviating such errors and failures may require Kneat to make significant expenditure of its resources. Customers often use Kneat services and solutions for critical business processes and as a result, any defect or disruption in Kneat's solutions, any data breaches or misappropriation of proprietary information, or any error in execution, including human error or intentional third-party activity such as denial of service attacks or hacking, may cause customers to reconsider renewing their contract with Kneat. The errors in or failure of Kneat's software products and services could also result in Kneat losing customer transaction documents and other customer files, causing significant customer dissatisfaction and possibly giving rise to claims for monetary damages. The harm to Kneat's reputation resulting from product and service errors and failures may be materially damaging. Since Kneat regularly provides a warranty with its software products, the financial impact of fulfilling warranty obligations may be significant in the future. Kneat's agreements with its strategic partners and end-users typically contain provisions designed to limit its exposure to claims. These agreements regularly contain terms such as the exclusion of all implied warranties and the limitation of the availability of consequential or incidental damages. However, such provisions may not effectively protect Kneat against claims and the attendant liabilities and costs associated with such claims. Any claims for actual or alleged losses to Kneat's customers' businesses may require Kneat to spend significant time and money in litigation or arbitration or to pay significant settlements or damages. Defending a lawsuit, regardless of merit, can be costly and would divert management's attention and resources. Although Kneat maintain errors and omissions insurance coverage and comprehensive liability insurance coverage, such coverage may not be adequate to cover all such claims. Accordingly, any such claim could negatively affect its business, operating results or financial condition. Unauthorized disclosures and breaches of security data may adversely affect Kneat's operations Kneat have strict measures to protect its information systems against unauthorized access and disclosure of personal information and of Kneat's confidential information and confidential information belonging to its customers. Kneat has policies and procedures in place dealing with data security and records retention. However, there is no assurance that the security measures Kneat has put in place will be effective in every case. Breaches in security could result in a negative impact for Kneat and for its customers, affecting Kneat's and its customers' businesses, assets, revenues, brands and reputations and resulting in penalties, fines, litigation and other potential liabilities, in each case depending on the nature of the information disclosed. Security breaches could also affect Kneat's relations with its customers, injure Kneat's reputation and harm its ability to keep existing customers and to attract new customers. F-20

155 These risks to Kneat's business may increase as it expands the number of web-based and cloud-based products and services Kneat offers. Kneat may become involved in litigation that may materially adversely affect it From time to time in the ordinary course of Kneat's business, it may become involved in various legal proceedings, including commercial, product liability, employment, class action and other litigation and claims, as well as governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management's attention and resources and cause Kneat to incur significant expenses. Furthermore, because litigation is inherently unpredictable, the results of any such actions may have a material adverse effect on Kneat's business, operating results or financial condition. Kneat's operating results could be adversely affected by any weakening of economic conditions Kneat's overall performance depends in part on worldwide economic conditions. Certain economies have experienced periods of downturn as a result of a multitude of factors, including, but not limited to, turmoil in the credit and financial markets, concerns regarding the stability and viability of major financial institutions, declines in gross domestic product, increases in unemployment and volatility in commodity prices and worldwide stock markets, and excessive government debt. The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength and sustainability of any recovery, are unknown and are beyond Kneat's control. Moreover, any instability in the global economy affects countries in different ways, at different times and with varying severity, which makes the impact to Kneat's business complex and unpredictable. During such downturns, many customers may delay or reduce technology purchases. Contract negotiations may become more protracted or conditions could result in reductions in the licensing of Kneat's software products and the sale of cloud and other services, longer sales cycles, pressure on Kneat's margins, difficulties in collection of accounts receivable or delayed payments, increased default risks associated with Kneat's accounts receivables, slower adoption of new technologies and increased price competition. In addition, deterioration of the global credit markets could adversely impact Kneat's ability to complete licensing transactions and services transactions, including maintenance and support renewals. Any of these events, as well as a general weakening of, or declining corporate confidence in, the global economy, or a curtailment in government or corporate spending could delay or decrease Kneat's revenues, and therefore have a material adverse effect on its business, operating results and financial condition. Stress in the global financial system may adversely affect Kneat's finances and operations in ways that may be hard to predict or to defend against Financial developments seemingly unrelated to Kneat or to its industry may adversely affect Kneat over the course of time. For example, material increases in any applicable interest rate benchmarks may increase the debt payment costs for Kneat's credit facilities. Credit contraction in financial markets may hurt its ability to access credit in the event that Kneat identifies an acquisition opportunity or require significant access to credit for other reasons. A reduction in credit, combined with reduced economic activity, may adversely affect businesses and industries that collectively constitute a significant portion of Kneat's customer base. As a result, these customers may need to reduce their licensing of Kneat's software products or their purchases of Kneat's services, or Kneat may experience greater difficulty in receiving payment for the licenses and services that these customers purchase from it. Any of these events, or any other events caused by turmoil in world financial markets, may have a material adverse effect on Kneat's business, operating results, and financial condition. F-21

156 SCHEDULE 1 AUDITED FINANCIAL STATEMENTS OF KNEAT SOLUTIONS LIMITED 1

157 Kneat Solutions Limited Audited non-statutory consolidated financial statements For the year ended 31 December 2015 These audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ( IFRS ) are for the purposes of the Transaction as detailed at note 21 of these audited non-statutory consolidated financial statements.

158 CONTENTS Page General information 2 Directors responsibilities statement 3 Independent auditors report 4 Consolidated statement of comprehensive income 5 Consolidated statement of financial position 6 Consolidated statement of changes in equity 7 Consolidated statement of cash flows 8 Notes to the consolidated financial statements 9 1

159 GENERAL INFORMATION Directors Executive: Brian Ahearne (Irish) Kevin Fitzgerald (Irish) Edmund Ryan (Irish) Non-Executive: Paul V. Breen (Irish) James Osborne (Irish) (appointed on 25 August 2014) Eric McGrath (Irish) (appointed on 22 August 2014) Ian Ainsworth (Canadian) (appointed on June ) Company Secretary Brian Ahearne Registered office Unit No 7 Castletroy Park Business Centre Castletroy Limerick Ireland Company number Independent auditors Solicitors Primary Bank Deloitte* Chartered Accountants and Statutory Audit Firm Deloitte and Touche House Charlotte's Quay Limerick Ireland Mason Hayes & Curran South Bank House Barrow Street Dublin 4 Ireland Bank of Ireland 125 O Connell Street Limerick Ireland * On February 10, 2016 the Company executed a transaction agreement with Fortune Bay Corp. ( Fortune Bay ) whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a wellfunded, publicly traded software company. Audited financial statements for the years ended 31 December 2015, 2014 and 2013 are being prepared in accordance with IFRS (the IFRS audited financial statements ). These IFRS audited financial statements have been prepared for inclusion in Fortune Bay s management information circular and Kneat s Irish Scheme of Arrangement Circular. See note 21 for further detail. The IFRS audited financial statements are being audited by Deloitte. 2

160 KNEAT SOLUTIONS LIMITED Directors responsibilities statement For the year ended 31 December 2015 DIRECTORS RESPONSIBILITIES STATEMENT The Directors are responsible for the preparation of financial statements which give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standard Board (IASB) ( applicable accounting standards ) In preparing those financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standard Board (IASB). They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company s website. KNEAT SOLUTIONS LIMITED INDEPENDENT AUDITORS REPORT 3

161

162 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December Notes REVENUE 4 695, ,080 Cost of sales 5 (371,009) (235,260) Gross profit/(loss) 324,502 (35,180) OPERATING EXPENSES Administrative expenses 5 (1,016,872) (752,179) Operating loss (692,370) (787,359) Interest payable and similar charges 7 (19,254) (17,765) Loss on ordinary activities before taxation (711,624) (805,124) Income taxes- corporation tax Total comprehensive loss for the year (711,624) (805,124) Loss per share basic and diluted (0.95) (1.23) Weighted average number of common shares outstanding (note 9) 748, ,550 All income and expenses arose solely from continuing operations. There were no recognised gains or losses other than those dealt with in the consolidated statement of comprehensive income. The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 5

163 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2015 Notes 31 December December 2014 ASSETS Non-current assets Property, plant, equipment and leasehold improvements , ,231 Intangible assets 12 1,149, ,701 Accounts receivable , ,757 Current assets Cash and cash equivalents ,163 12,971 Accounts receivable , ,579 Total assets 2,806,398 1,582,239 EQUITY AND LIABILITIES Capital and reserves Issued share capital , ,351 Share premium 17 7,226,569 5,556,559 Share based payment reserve , ,141 Retained (deficit) (6,812,276) (6,100,652) Total equity 1,480, ,399 LIABILITIES Non-current liabilities Cumulative redeemable convertible preference shares , ,689 Accounts payable and deferred income , ,985 Current liabilities Directors current account , ,596 Accounts payable and deferred income , ,570 Total liabilities 1,325,473 1,210,840 Total equity and liabilities 2,806,398 1,582,239 The consolidated financial statements set out on pages 5 to 32 were approved by the Board of Directors on 9 May 2016 and signed on its behalf by: Brian Ahearne Brian Ahearne, Director Kevin Fitzgerald Kevin Fitzgerald, Director The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 6

164 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2015 Issued share capital ordinary shares Issued share capital A ordinary shares Share premium (note 17) Share based payment reserve* Retained (deficit) Total Total equity at 1 January , ,973 5,012, ,427 (5,295,528) 545,232 Shares issued 13,093 26, , ,577 Recognition of share based payments ,714-47,714 Loss for the year (805,124) (805,124) Total equity at 31 December , ,660 5,556, ,141 (6,100,652) 371,399 Shares issued 77,483 35,420 1,670, ,782,913 Recognition of share based payments ,237-38,237 Loss for the year (711,624) (711,624) Total equity at 31 December , ,080 7,226, ,378 (6,812,276) 1,480,925 *The share based payment reserve represents the fair value of the share options granted less the fair value of share options that are exercised, cancelled or forfeited The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 7

165 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2015 Notes 31 December 31 December Loss on ordinary activities before taxation (711,624) (805,124) Adjustments to reconcile loss on ordinary activities before taxation to net cash used in operating activities: Adjustments for non-cash items: Depreciation of property, plant and equipment 11 23,983 13,486 Recognition of share based payments 17 19,147 28,625 Interest expense on cumulative redeemable convertible preference shares 15,873 15,916 Amortisation of intangible assets , ,260 Increase in non-current assets 14 (44,475) (76,631) Increase in non-current liabilities 16 1,873 10,985 Changes in working capital: Increase in accounts receivable 14 (121,606) (59,286) Increase in accounts payable , ,539 (Decrease)/increase in Directors current account 15 (53,502) 132,802 Net cash used in operating activities (348,933) (351,428) Investing activities Capitalised development cost 12 (678,764) (679,626) Capitalised share option expense 19,090 19,089 Payments to acquire tangible fixed assets 11 (85,114) (58,531) Net cash used in investing activities (744,788) (719,068) Financing activities Proceeds from issue of ordinary shares 17 1,782, ,577 Net cash provided by financing activities 1,782, ,577 Net increase/(decrease) in cash and cash equivalents 689,192 (486,919) Cash and cash equivalents at the beginning of the year 12, ,890 Cash and cash equivalents at the end of the year 702,163 12,971 The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 8

166 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Nature of business Kneat Solutions Limited (the Company ) is a computer software development company. The principal activity of the Company is to develop and market a software application for modelling regulated data intensive processes for for Pharmaceutical, Biotech and Medical Device manufacturers. The Company was incorporated in 2006 with registration number , in Ireland and its registered office is Unit 7, Castletroy Park Business Centre, Castletroy, Limerick. Kneat Solutions Inc. (the Subsidiary ) is a wholly owned subsidiary of the Company, incorporated in 2014 in the United States of America with registered office in Morristown, Pennsylvania, the United States of America. The consolidated financial statements of the Company, as at and for the years ended 31 December 2015 and 31 December 2014, comprise the Company and the Subsidiary (collectively the Group ). 2. Basis of preparation (a) Going concern The consolidated financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group has the resources necessary to continue in business for the foreseeable future. In making this assessment the Directors have considered a wide range of information relating to present and future conditions. The Company has developed a software application for modelling regulated data intensive processes for Pharmaceutical, Biotech and Medical Device manufacturers. The Directors of the Company can demonstrate that the software application reached technical feasibility in January The software application generated its first revenues in 2014 and continued to generate revenues in Revenues grew significantly from 2014 to The Group has been negotiating contracts with new customers and the negotiations are at an advanced stage. As a result, the Directors are confident that sales revenues will increase significantly in The Company established the Subsidiary in The Subsidiary generates revenues in the United States of America. The Group is financed through the provision of funds raised through a business expansion scheme, private shareholder capital and a current account facility from the Group's Directors. In 2015 further funds of 1,782,913 were provided to the Group. In addition, there is no maturity date and no interest charged on the Directors loan accounts, except the loan from Kevin Fitzgerald. On February 10, 2016 the Company executed a transaction agreement with Fortune Bay whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a well-funded, publicly traded software company. (See note 21 for further details). The arrangement will provide the funding necessary to continue developing new features of the software application and to increase revenues. As a result, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the audited consolidated financial statements. 9

167 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Basis of preparation (continued) (b) Critical accounting judgements and estimates The preparation of the financial statements in conformity with IFRS requires Directors and key management to make judgements and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results could differ from these estimates. Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical accounting judgements and estimates in applying accounting policies that have the most significant impact on the amounts recognised in the consolidated financial statements are as follows: Where the Directors and key management determine that an intangible asset has been internally generated by the Group, the value of the intangible asset has been derived by establishing the current cost associated with generating this asset based on direct costs and reasonable allocations of indirect costs. For the software application, the useful economic life represents the Directors estimate of the expected term over which the Group will receive benefits from the software application. See note 12 for further detail. The fair value of the share options granted by the Company is estimated by the Directors based on historical data including the share options exercise price, price per share at the granting date established by the Directors referring to the funding round immediately preceding the grant date, volatility of underlying share, number of share options being exercised, the estimated period of time that the Directors expect the employees to hold their share options and dividend yield. See note 17 for further detail. The Group made a loss for the year. The Directors consider the financial statements are prepared on a going concern basis. See note 2(a) for further detail. 3. Accounting policies (a) Statement of compliance The Group has adopted International Financial Reporting Standards ( IFRS ) for the first time for the year ended 31 December In accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards ( IFRS 1 ) the date of transition of the Group to IFRS is 1 January The consolidated financial statements have been prepared in accordance with IFRS and interpretations issued by the International Accounting Standards Board ( IASB ). The Group has consistently applied the accounting policies used throughout all periods presented as if these policies had always been in effect. On February 10, 2016 the Company executed a transaction agreement with Fortune Bay Corp. ( Fortune Bay ) whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a wellfunded, publicly traded software company. Audited financial statements for the years ended 31 December 2015, 2014 and 2013 are being prepared in accordance with IFRS (the IFRS audited financial statements ). These financial statements have been prepared for inclusion in Fortune Bay s management information circular and Kneat s Irish Scheme of Arrangement Circular. Refer to note 21 for further details. The IFRS audited financial statements are being audited by Deloitte. Twohig & Co., an Irish Registered Auditor have audited the financial statements for the years ended 31 December 2014 and 2013, prepared in accordance with Irish GAAP. 10

168 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (b) Basis of consolidation A subsidiary is an entity controlled by the Company. The Company controls an entity when it is exposed to, or has rights to returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the Subsidiary are included in the consolidated financial statements from 15 March 2014, the date that control commenced. Upon the loss of control, the Company derecognises the assets and liabilities of a subsidiary, any non-controlling interests and the other components of equity related to a subsidiary. Any resulting gain or loss is recognised in the consolidated statement of comprehensive income. Material balances and transactions between the Company and its subsidiary, and any unrealised gains arising from these transactions, are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Kneat Solutions Inc. is a wholly owned subsidiary of the Company, incorporated in March 2014 in the United States of America with registered office in Morristown, Pennsylvania, United States of America. The Company holds one ordinary share in the Subsidiary of $1. The Company has not entered into any guarantee in relation to the Subsidiary. (c) Functional currency The consolidated financial statements are presented in the Company s functional currency, the Euro ( EUR or ) and rounded to the nearest, reflecting the fact that the Company trades from the Republic of Ireland, the Company s share capital is issued in the Republic of Ireland and the costs are primarily in. (d) Revenue Under International Accounting Standard 18, Revenue ( IAS 18 ), revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The Group is involved in development and marketing of a software application for modelling regulated data intensive processes for Pharmaceutical, Biotech and Medical Device manufacturers. Revenue from the services rendered is measured at the fair value of the consideration received or receivable and is recognised in the consolidated statement of comprehensive income in proportion to the stage of completion of the service at the reporting date. Revenue in respect of each line of service is recognised as follows: Revenue from software licensing is recognised upon delivery to the customer where there are no significant obligations of the Group remaining following delivery and the customer has accepted the software application. Revenue from annual servicing/maintenance fees is recognised over the period to which the servicing/maintenance contract relates. Revenue from pre-sale/installation services is recognised in the period the pre-sale/installation service is performed. (e) Expenses All expenses other than finance cost are recognised in the consolidated statement of comprehensive income on an accruals basis. 11

169 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (f) Taxes Current income tax-corporation tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date in Ireland and the United States of America. The Company recognises interest and penalties, if any, related to uncertain tax positions in income tax expense. Value added tax Revenue and expenses are recognised net of the amount of value added tax, except when the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authorities, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. The net amount of value added tax recoverable from, or payable to, the taxation authorities is included as part of accounts receivable or accounts payable in the consolidated statement of financial position. Deferred tax Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the reporting date. Provision is made at the rates expected to apply when the temporary differences reverse. Temporary differences are differences between the Groups taxable profits and its results as stated in the consolidated financial statements that arise from the inclusion of gains and losses in taxable profits in periods different from those in which they are recognised in the consolidated financial statements. A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted. Deferred tax is measured at the tax rates that are expected to apply in the years in which the temporary differences are expected to reverse based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. Research and development tax credits Tax credits for research and development are recognised at their fair value based on amounts recoverable from the tax authorities in current and future years. A credit is recognised in the consolidated statement of comprehensive income against the related expense. (g) Leasing Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives are recognised as a reduction of the total lease expense, over the term of the lease. (h) Foreign currency translation The consolidated financial statements are presented in. Monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the spot rate at the reporting date. All differences are recognised in the consolidated statement of comprehensive income. Non-monetary items measured at historical cost are translated into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried at fair value, if any, are translated at the spot rate of the date the fair value was determined. All exchange differences are recognised in the consolidated statement of comprehensive income. 12

170 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (i) Property, plant, equipment and leasehold improvements Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an asset comprises the purchase price and any directly attributable costs of bringing the asset to the working condition and location of its intended use. Subsequent costs are included as part of the asset s carrying amount, or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Leasehold improvements are stated at cost and are depreciated over the shorter of the useful life of the improvement or the remaining lease term. All other costs, such as repairs and maintenance, are charged to the consolidated statement of comprehensive income during the period in which they are incurred. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation is calculated using the following annual rate: Property, plant and equipment Leasehold improvement % Rate 12.5% per annum 12.5% per annum The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the consolidated statement of comprehensive income. (j) Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments, with maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to insignificant changes in value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. (k) Financial liabilities and equity issued by the Company Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions: (i) Financial instruments include no contractual obligations on the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party; (ii) Where the instrument will or may be settled in the Company s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company s own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial asset for a fixed number of its own equity instruments. As all shares issues are in Company s functional currency, to the extent that the above definition is not met, the proceeds of issue of shares are classified as financial liabilities. Ordinary shares and A ordinary shares are classified as equity. Ordinary shares issued by the Company are initially measured at nominal value with the excess consideration received recorded in a share premium. Cumulative redeemable convertible preference shares are classified as financial liabilities.. 13

171 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (l) Classification, recognition and measurement of financial assets and liabilities Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured initially at fair value (transaction price) net of transaction costs that are directly attributable to the acquisition of these financial assets. Subsequent to initial recognition, loans and receivables are measured at amortised cost. Accounts receivable are classified as loans and receivables The Group derecognises loans and receivables when the contractual rights to the cash flows from the loans and receivables expire or it transfers loans and receivables and the transfer qualifies for de-recognition. Financial liabilities are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Directors loans, cumulative redeemable convertible preference shares and accounts payable are classified as financial liabilities. The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire. (m) Intangible assets According to International Accounting Standard 38, Intangible Assets ( IAS 38 ), an intangible asset is an identifiable non-monetary asset without physical substance. Research and development Expenditure on research activities undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in the consolidated statement of comprehensive income as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if the Group can demonstrate that it meets all of the following criteria: The technical feasibility of completing the intangible asset so that it will be available for use or sale; Intention to complete the intangible asset and use or sell it; Ability to use or sell the intangible asset; The intangible asset will generate probable future economic benefits; The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and The ability to measure reliably the expenditure attributable to the intangible asset during its development. The expenditure capitalised in respect of intangible assets includes the cost of direct labour and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use. Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses. Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the consolidated statement of comprehensive income as incurred. 14

172 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (m) Intangible assets (continued) Research and development (continued) Intangible assets are amortised based on the cost of an asset less its residual value. Intangible assets have finite useful lives. Amortisation is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful economic life of intangible assets, from the date that the asset is available for use, based on the following annual rate: % Rate Software application 20% Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (n) Impairment At each reporting date, the Group reviews the carrying amount of its applicable assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists the recoverable amount is estimated in order to determine the extent of the impairment loss and the carrying amount of the asset is reduced to its recoverable amount, as calculated. An impairment loss is recognised immediately in the consolidated statement of comprehensive income. An impairment loss recognised in a prior year is reversed if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that it does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Impairment reversals are recognised immediately in the consolidated statement of comprehensive income. (o) Employee benefits Share-based payments The Company operates equity settled share based remuneration plans for the remuneration of a number of key employees. All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Share based payments are recognised as an expense in the consolidated statement of comprehensive income with a corresponding credit to retained earnings in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. Upon exercise of share options, the proceeds received up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. 15

173 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (o) Employee benefits (continued) Defined contribution plans The Group operates a defined contribution pension plan for employees. A defined contribution plan is a postemployment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense through the consolidated statement of comprehensive income as incurred. Short-term benefits Liabilities for employee benefits for wages, social insurance costs and annual leave entitlements represent present obligations resulting from employees services provided up to the reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at the reporting date. (p) Standards, amendments and interpretations effective in the current period There are a number of new or amended standards, amendments and interpretations with effect from 1 January 2015 to 31 December 2015 that have an impact on the consolidated financial statements of the Group. The Group has adopted such standards. (r) Standards, interpretations and amendments to published standards that are not yet effective IFRS 9, Financial Instruments ( IFRS 9 ) IFRS 9, issued on 24 July 2014 is the IASB s replacement of IAS 39 Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting of financial instruments. IFRS 9 is mandatorily effective for periods beginning on or after 1 January 2018 with early adoption permitted. The Directors do not anticipate that the adoption of IFRS 9 will have significant impact on the consolidated financial statements of the Group. IFRS 15, Revenue from contracts with customers ( IFRS 15 ) IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. It will supersede the following revenue Standards and Interpretations upon its effective date: IAS 18 Revenue; IAS 11 Construction Contracts; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for the Construction of Real Estate; IFRIC 18 Transfers of Assets from Customers; and SIC 31 Revenue-Barter Transactions Involving Advertising Services. IFRS 15 will cover revenue arising from contracts with customers. Under IFRS 15, a customer of an entity is a party that has contracted with the entity to obtain goods or services that are an output of the entity s ordinary activities in exchange for consideration. 16

174 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (r) Standards, interpretations and amendments to published standards that are not yet effective (continued) IFRS 15, Revenue from contracts with customers ( IFRS 15 ) (continued) IFRS 15 has a single model to deal with revenue from contracts with customers. Its core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 is mandatorily effective for periods beginning on or after 1 January 2018 with early adoption permitted. The Directors are currently assessing the impact of IFRS 15 on the consolidated financial statements of the Group. IFRS 16, Leases ( IFRS16 ) IFRS 16 was issued on January 13, 2016 and replaces the current guidance in IAS 17, Leases ( IAS 17 ). IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16 s approach to lessor accounting substantially unchanged from IAS 17. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. The Directors are currently assessing the impact of IFRS 16 on the consolidated financial statements of the Group. IAS 12, Income taxes ( IAS 12 ) The IASB published final amendments to IAS 12 on January 19, The purpose of these changes is to clarify when a deferred tax asset should be recognised for unrealised losses. The amendments are effective for annual periods beginning on or after January 1, 2017, with early adoption permitted. The Directors are currently assessing the impact of IAS 12 on the consolidated financial statements of the Group. IAS 7, Statement of cash flows ( IAS 7 ) The IASB published final amendments to IAS 7 on January 29, The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity s financing activities. The amendments come with the objective that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendments are effective for annual periods beginning on or after January 1, 2017, with early adoption permitted. The Directors are currently assessing the impact of IAS 7 on the consolidated financial statements of the Group. KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December

175 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (r) Standards, interpretations and amendments to published standards that are not yet effective (continued) Amendments to IAS 1 Presentation of Financial Statements ( IAS 1 ) Disclosure Initiative The amendments were a response to comments that there were difficulties in applying the concept of materiality in practice as the wording of some of the requirements in IAS 1 had in some cases been read to prevent the use of judgement. Certain key highlights in the amendments are as follows: An entity should not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. An entity need not provide a specific disclosure required by an IFRS if the information resulting from that disclosure is not material. In the other comprehensive income section of a statement of profit or loss and other comprehensive income, the amendments require separate disclosures for the following items: the share of other comprehensive income of associates and joint ventures accounted for using the equity method that will not be reclassified subsequently to profit or loss; and the share of other comprehensive income of associates and joint ventures accounted for using the equity method that will be reclassified subsequently to profit or Joss. The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2016 with earlier application permitted. Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: a) when the intangible asset is expressed as a measure of revenue; or b) when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after 1 January 2016 with earlier application permitted. Annual improvements to IFRSs cycle Annual improvements to IFRSs cycle includes a number of amendments to the following four standards: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - IFRS 7 Financial Instruments: Disclosures IAS 19 Employee Benefits IAS 34 Interim Financial Reporting The amendments are effective for annual periods beginning on or after 1 January 2016, but can be applied earlier. The Directors are currently assessing the impact of all of the above amendments on the Group s financial statements. KN 18

176 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Revenue The Group has recorded revenue of 695,511 for the year ended 31 December 2015 (2014: 200,080). The Group has one revenue stream from sales and services of the software application. The Group operates in two geographical locations: the Republic of Ireland and the USA. 5. Expenses Operating loss is stated after the following: Included in cost of sales Amortisation of intangible assets 371, ,260 Included in administrative costs: Employees salaries and wages 316, ,252 Other administrative cost 205, ,005 Professional fees 204,643 34,826 Directors salaries 128, ,482 Social insurance costs 98,566 83,771 Software development cost 93,942 90,894 Consultancy fees 86, ,559 Rent and rates 51,481 44,288 Audit fees 40,000 4,682 Depreciation of property plant and equipment 23,983 13,486 Cost of share options 19,147 28,625 Defined contribution pension cost 6,240 5,340 R&D tax credit (258,337) (250,031) A percentage of Directors salaries directly attributable to preparing the intangible asset for its intended use amounting to 35,550 has been capitalised as a part of the cost of an intangible asset for the year ended 31 December 2015 (2014; 57,018). The average monthly number of employees (including the Directors) for the year ended 31 December 2015 was 23 (2014: 19). Defined contribution pension scheme The Group makes contributions to the defined contribution pension scheme of certain employees. The pension charge for the year amounted to 6,240 (2014: 5,340) and is recognised within administrative expenses. 6. Directors emoluments Remuneration and other emoluments 164, ,500 19

177 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Finance cost Dividends/interest on the cumulative redeemable convertible preference shares 15,873 15,916 Other interest payable 2,759 - Interest on overdue taxation 622 1,347 Loan interest payable ,254 17,765 The dividends/interest on the cumulative redeemable convertible preference shares is calculated annually in arrears at a rate of 3.00% (2014: 3.00%) per annum. 8. Income tax The reconciliation between the total tax charge for the year and the standard rate of corporation tax in Ireland applied to the loss for the year is as follows: Loss before tax (711,624) (805,124) Loss multiplied by the applicable tax rate of 12.5% (88,953) (100,641) Effect of Fixed asset depreciation 2,998 1,685 Amortisation of intangible asset 46,376 29,407 Capital allowances (17,949) (12,009) Revenue penalties Adjusted loss (57,450) (81,390) Losses carried forward 57,450 81,390 Total tax charge for the year - - The Group has gross operating losses carried forward as at 31 December 2015 of 6,549,599 (31 December 2014: 6,089,998). This represents accumulated losses for tax purposes of approximately 818,700 at 31 December 2015 (2014: 761,250). These can be set off against the Group s future trading profits. 9. Loss per share The calculation of the basic loss per share is based on the net loss for the year of 711,624 (2014: loss 805,124) divided by the weighted average number of shares in issue during the year of 748,738 (2014: 656,550). This results in a loss per share of 0.95 (2014: 1.23). The impact of the share options and cumulative redeemable convertible preference shares is anti-dilutive on the basic loss per share in 2015 and

178 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Operating lease arrangement The Company leases its offices under an operating lease agreement dated 11 July 2014, which is also the date of the commencement of the lease. The operating lease is subject to termination clauses at the expiration of the fifth year and the tenth year of the lease. The lease term is twenty five years with a reduced rent period of 18 months from the date of the commencement of the lease. The lease expense is recognised evenly over the lease term. The Group also leases computer equipment under operating lease agreements, with lease terms of three to five years. Lease incentives relate to the reimbursement of the fit out cost from the lessor and to the reduced rent period. A reduction of the total lease expense of 4,400 was recognised for the year ended 31 December 2015 in relation to the reimbursement of the fit out cost from the lessor (2014: 2,085). The Company s commitments under the operating lease, in the form of non-cancellable future lease payments are not reflected as a liability on its consolidated statement of financial position. The total of future minimum lease payments under non-cancellable operating leases is as follows; No later than one year 68,960 24,600 Later than one year and not later than five years 190, ,000 Later than five years Property, plant, equipment and leasehold improvements Property, plant equipment Leasehold improvements Total Cost At 1 January ,305-99,305 Additions in the year 14, , ,531 At 31 December , , ,836 Additions in the year 85,114-85,114 At 31 December , , ,950 Depreciation At 1 January ,119-36,119 Depreciation charge for the year 13,486-13,486 At 31 December ,605-49,605 Depreciation charge for the year 23,983-23,983 At 31 December ,588-73,588 Net book value At 31 December , , ,231 At 31 December , , ,362 21

179 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Intangible assets Software application Total Cost At 1 January , ,668 Development cost capitalised during the year 679, ,626 At 31 December ,176,294 1,176,294 Development cost capitalised during the year 678, ,764 At 31 December ,855,058 1,855,058 Amortisation At 1 January 2014 (99,333) (99,333) Amortisation charge for the year (235,260) (235,260) At 31 December 2014 (334,593) (334,593) Amortisation charge for the year (371,009) (371,009) At 31 December 2015 (705,602) (705,602) Carrying amounts At 31 December , ,701 At 31 December ,149,456 1,149,456 The basis by which amortisation is calculated is outlined in note 3(m). Amortisation is recognised through the consolidated statement of comprehensive income in cost of sales. 13. Cash and cash equivalents At 31 December 2015, cash and cash equivalents amount to 702,163 (31 December 2014: 12,971), which is held at Bank of Ireland. As at 31 December 2015 and 2014, no restrictions in the use of cash and cash equivalents exist. Two Directors Brian Ahearne and Kevin Fitzgerald have provided a guarantee of 50,000 in relation to the bank overdraft of the Company. 14. Accounts receivable As at 31 December 2015 As at 31 December 2014 Current R&D tax credit 214, ,786 Trade debtors 152,036 52,548 Other debtors 22,108 29,426 Unpaid share capital 13,505 26,993 VAT receivable 8,810 9,041 Prepayments 7,478 4, , ,579 Non-current R&D tax credit 257, , , ,757 The Directors and key management consider the carrying amounts of accounts receivable recognised in the consolidated statement of financial position to be a reasonable approximation of their fair value. 22

180 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Directors current account Directors current account Company controlled by Eric McGrath Kevin Fitzgerald Brian Ahearne Edmund Ryan At 31 December ,000 20,502 51,981 52,113 At 31 December ,000-39,981 31,113 The loan from the company controlled by Eric McGrath is repayable in May There is no maturity date on the other loans. There is no interest charged on the loans, except for the loan from Kevin Fitzgerald. 16. Accounts payable and deferred income 31 December December 2014 Current Accruals 169, ,405 Social insurance cost payable 90,773 94,613 Other payables 106,848 29,152 Lease incentives- deferred income 21,870 4, , ,570 Non-current Lease incentives- deferred income 122, , , ,985 The Directors and key management consider the carrying amounts of accounts payable recognised in the consolidated statement of financial position to be a reasonable approximation of their fair value. 17. Capital The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimization of the debt and equity balance. The Company s overall strategy remains unchanged from The capital of the Company is as follows: 31 December December 2014 Authorised Voting ordinary shares of EUR 1 each 1,300,000 1,300,000 A ordinary shares of EUR 1 each 800, ,000 Allotted equity Voting ordinary shares of EUR 1 each - fully paid 577, ,851 Voting ordinary shares of EUR 1 each - unpaid 743 1,840 A ordinary shares of EUR 1 each fully paid 215, ,660 A ordinary shares of EUR 1 each unpaid 93 - Share premium 7,226,569* 5,556,559* *12,669 of share premium remains unpaid as at 31 December 2015 (2014: 25,153) The share premium represents the share purchase price in excess of the nominal 1 per share. Equity capital Holders of the ordinary shares are entitled to attend and vote at general meetings of the Company. Holders of A ordinary shares are not entitled to vote at the general meetings of the Company for a period of five years from the date of allotment of such A ordinary shares. 23

181 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Movement in ordinary shares for the year ended 31 December 2015 was as follows: Share class Shares at 01 January 2015 Shares issued Shares redeemed Shares at 31 December 2015 Ordinary shares 500,691 77, ,174 A ordinary shares 180,660 35, ,080 Movement in ordinary shares for the year ended 31 December 2014 was as follows: Share class Shares at 01 January 2014 Shares issued Shares redeemed Shares at 31 December 2014 Ordinary shares 487,598 13, ,691 A ordinary shares 153,973 26, ,660 Cumulative redeemable convertible preference shares 31 December December 2014 Authorised 900,000 of non-voting, cumulative redeemable convertible preference shares of EUR 1 each, consisting of 300,000 A preference shares, 300,000 A convertible shares and 300,000 convertible shares 900, ,000 Allotted and fully paid Non-voting, cumulative redeemable convertible preference shares of EUR 1 each 532, ,000 The cumulative redeemable convertible preference shares do not carry any voting rights. The holder is entitled to a fixed cumulative preferential dividend at a rate of 8.00% per annum on the amount paid up (including share premium) on cumulative redeemable convertible preference shares. The dividends/interest on the cumulative redeemable convertible preference shares is calculated annually in arrears on each anniversary of the first allotment of cumulative redeemable convertible preference shares and will only be paid to the holder in the event of cumulative redeemable convertible preference shares being redeemed. If the Company incurs research and development expenditure validated by the holder of cumulative redeemable convertible preference shares up to the amount of paid up preference share capital, the rate of the dividend will be reduced to 3.00%. The Company incurred research and development expenditure validated by the holder of cumulative redeemable convertible preference shares and avails of the reduced dividend/interest rate of 3%. If an investment in the Company takes place and places a valuation of the Company above a certain threshold of the amount of allotted and fully paid up cumulative redeemable convertible preference share capital within five years of the first allotment of the cumulative redeemable convertible preference shares, the holder of cumulative redeemable convertible preference shares has the option to convert cumulative redeemable convertible preference shares to the new shares in the Company, defined as the shares allotted to the investor for their investment in the Company. The option lapses after sixty days from notification of the holder of cumulative redeemable convertible preference shares by the Company about the investment. Since the option is not exercisable at the discretion of the holder, but only on the occurrence of an uncertain future event it is not separated as equity. An uncertain future event has to occur for the option holder to have discretion. 24

182 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Cumulative redeemable convertible preference shares (continued) The cumulative redeemable convertible preference shares are redeemable on the fifth anniversary of the date of allotment (the redemption date ). The redemption price is equal to the aggregate amount paid up plus interest. Should the Company be unable to be pay the redemption price on the redemption date, the Company will redeem the cumulative redeemable convertible preference shares as soon as the Company is capable of doing so. There was no movement in the number in cumulative redeemable convertible preference shares for the years ended 31 December 2015 and At 31 December 2015, preference dividends/interest on the cumulative redeemable convertible preference shares amount to 110,562 (31 December 2014: 94,689). Dividends/interest on the cumulative redeemable convertible preference shares charged for the year is disclosed in note 7. Share options The Company has adopted an employee share option scheme in order to incentivise key management and staff. Between the years 2011 and 2015 the Company granted share options to its management and employees, according to the Rules of the Share Options scheme, approved by the Directors of the Company on 3 March a) Rules governing the share options granted by the Company Share options vest over a four year period, at a rate of 25% of the aggregate number of share options issued on the anniversary of the date of awarding the share options. The vesting period is the time that an employee must wait in order to be able to exercise their share options. A share option may not be exercised more than ten years after the date of the granting of the share option and any share option not exercised by that time shall lapse immediately. A percentage of the share options may be exercised within 180 days of the employee leaving the Company. b) Estimate of the fair value of the share options granted by the Company The fair value of options granted to 31 December 2015 and to 31 December 2014 was determined using the Black-Scholes valuation model. Significant inputs into the valuation models were as follows: the share option exercise price; the price per share at the date of awarding the share option established in reference to the funding round immediately preceding the grant date; the risk free interest rate; the estimated period of time that the Directors and key management expected the employees to hold the share options; volatility of the share options; the dividend yield of the shares. 25

183 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Share options (continued) c) The fair value of the share options granted by the Company The movement on share options and their weighted average exercise price are as follows: Number of options Weighted average exercise price At 1 January , Granted 2, Forfeited (2,439) At 31 December , Granted - - Forfeited (1,708) At 31 December , The following are the weighted average assumptions used in calculating the value of the share options granted during the years ended 31 December 2015 and Weighted average share price n/a Exercise price n/a Expected volatility 49.25% 49.25% Expected life of the share option 6.5 years 6.5 years Expected dividend per share - - The risk free interest rate n/a 0.41% The Company estimates the expected volatility of the share options by using data for several unrelated public companies within the same industry as the Company that are considered to be comparable and for which historical information was available. The amount charged to the consolidated statement of comprehensive income in respect of these share options for the year ended 31 December 2015 is 19,147 (2014: 28,625). A percentage of share options expense directly attributable to preparing the intangible asset for its intended use amounting to 19,089 has been capitalised as a part of the cost of the intangible asset for the year ended 31 December 2015 (2014: 19,089). 26

184 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Share options (continued) c) The fair value of the share options granted by the Company (continued) No options were exercised for the year ended 31 December 2015 (2014: Nil). At 31 December 2015, the Company had the following share options outstanding*: Date of grant Exercise price Number of share options outstanding Number of share options exercisable Fair Value 31 December February ,973 8, February ,179 7, November ,568 2, June ,658 3, December ,976 2, July ,898 1, October , December At 31 December 2014, the Company had the following share options outstanding*: Date of grant Exercise price Number of share options outstanding Number of share options exercisable 25 February ,973 6, February ,179 5, November ,425 2, June ,658 2, December , July ,749 1, October , December *The vesting schedule for the stock options is over a four year period whereby 25% of the options vest on the first anniversary of the grant date, 25% vest on the second anniversary of the grant date, 25% vest on the third anniversary of the grant date and 25% vest on the fourth anniversary of the grant date. 18. Risk management a) Market risk Market risk embodies the potential for both losses and gains and includes currency risk and interest rate risk. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk exposure arises from the Group entering into transactions which are denominated in currencies other than its functional currency. 27

185 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Risk management (continued) a) Market risk (continued) Currency risk (continued) The Company is exposed to currency risk as at 31 December 2015, through the Subsidiary, whose functional currency is US dollar ( USD ). The Company is exposed to the risk that the exchange rate of its functional currency, relative to the USD may change in a manner that can have adverse effect on the value of that portion of the Company s assets or liabilities denominated in USD. It is not the policy of the Company to hedge its currency exposure through the use of derivative instruments. The Company s exposure to foreign currency risk is as follows: 31 December December 2014 United States Dollar ( USD ) 106,638 52,796 At 31 December 2015 and 31 December 2014, had the EUR strengthened by 5% in relation to USD, with all other variables held constant, the net assets of the Company would have decreased by 5,332 and 2,639 respectively. Weakening of the EUR in relation to USD, with all other variables held constant would have equal but opposite effect. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances, credit card borrowings and overdue taxation included within accounts payable on the consolidated statement of financial position. The Company holds cumulative redeemable convertible preference shares with a fixed dividend/interest rate. These are privately issued, with no secondary market. They are measured at amortised cost and bear a fixed dividend/interest rate and as a result the Company is not exposed to the cash flow interest rate risk on cumulative redeemable convertible preference shares. b) Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. At 31 December 2015 and 31 December 2014 the Company s financial assets exposed to credit risk amounted to the following: 31 December December 2014 Cash and cash equivalents 702,163 12,971 Accounts receivable 675, ,336 During the years ended 31 December 2015 and 31 December 2014, the Company did not hold any financial assets that were past due or impaired. Trade debtors of 152,036 are included in accounts receivable as at 31 December 2015 (2014: 52,548). Trade debtors are monitored on a regular basis in order to minimise material ageing and to ensure adequate collection. Cash balances are held with the payment bank, Bank of Ireland which is a reputable institution and the Company ensures that there are no indicators that would challenge the credit worthiness. The long-term credit rating, as determined by Standard & Poor s of Bank of Ireland is BBB- as at the date the consolidated financial statements were approved by the Board of Directors and authorised for issue. 28

186 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Risk management (continued) c) Liquidity risk Liquidity risk is the risk that the entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Directors and key management monitor liquidity regularly through the preparation and review of cash flow forecasts and budgets. The Group went through a number of funding rounds up to the date of approval of these consolidated financial statements. The following table shows the contractual, undiscounted cash flows of the Group s financial liabilities at 31 December 2015: All amounts stated in Less than 1 month 1-3 months 3 months to 1 year More than 1 year No stated maturity Financial liabilities Accounts payable 388, ,858 - Directors current account ,000-71,094 Cumulative redeemable convertible preference shares ,562 - The following table shows the contractual, undiscounted cash flows of the Group s financial liabilities at 31 December 2014: All amounts stated in Less than 1 month 1-3 months 3 months to 1 year More than 1 year No stated maturity Financial liabilities Accounts payable 238, ,985 - Directors current account , ,596 Cumulative redeemable convertible preference shares , Liabilities not carried at fair value but for which fair value is disclosed The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in these consolidated financial statements approximate their fair values. Fair value hierarchy as at 31 December All amounts stated in Total Level 1 Level 2 Level 3 Financial liabilities Financial liabilities held at amortised cost Cumulative redeemable convertible preference shares 642, ,562 - Total 642, ,562-29

187 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Liabilities not carried at fair value but for which fair value is disclosed (continued) Fair value hierarchy as at 31 December All amounts stated in Total Level 1 Level 2 Level 3 Financial liabilities Financial liabilities held at amortised cost Cumulative redeemable convertible preference shares 626, ,689 - Total 626, , Related parties Related party transactions are transfers of resources, services or obligations between related parties and the Group, regardless of whether a price has been charged. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions or is part of key management of the Group. The following are details on the related parties of the Group and transactions with the related parties. The Directors of the Company The Directors consider the key management are Brian Ahearne, Kevin Fitzgerald, Edmund Ryan, Paul V. Breen, James Osborne, Eric McGrath and Ian Ainsworth, each of whom are the Directors of the Company. Compensation awarded to key management personnel is summarised as follows: Short term employee benefits 164, ,500 Share based compensation 5,118 13, , ,048 Paul V. Breen held 10,594 shares options issued by the Company. These have a fair value 93,528 as at 31 December 2015 (2014: 93,528). No other Directors held shares options issued by the Company at the reporting date. The Directors interests in the shares of the Company as at 31 December 2015 were as follows: 31 December 2015 Ordinary shares James Osborne 2,727* Ian Ainsworth 6,807 Brian Ahearne** 117,036 Kevin Fitzgerald** 117,036 Edmund Ryan** 117,036 Eric McGrath** 44,467 A Ordinary shares James Osborne 16,417 Paul V. Breen 6,523 Eric McGrath 3,425 *These shares were issued to James Osborne on 24 March, 2015, at a price of per share, which equates to 40,005, in lieu of payment for legal fees. **Interest in shares is through ownership in a company whereby the Director exercises voting rights. 30

188 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Related parties (continued) The Directors of the Company (continued) The Directors' interests in the shares of the Company as at 31 December 2014 were as follows: 31 December 2014 Ordinary shares Brian Ahearne 117,036 Kevin Fitzgerald 117,036 Edmund Ryan 117,036 A Ordinary shares James Osborne 10,225 Paul V. Breen 6,523 Eric McGrath 3,425 James Osborne, Eric McGrath and Ian Ainsworth were appointed as Directors in The following table presents transactions with the Directors for the years ended and as at 31 December 2015 and Directors current account Company controlled by Eric McGrath Kevin Fitzgerald Brian Ahearne Edmund Ryan At 1 January ,113 61,681 Advances from Directors 100,000 20,502 21,868 - Repayments to Directors (9,568) At 31 December ,000 20,502 51,981 52,113 Advances from Directors Repayments to Directors - (20,502) (12,000) (21,000) At 31 December ,000-39,981 31,113 Ultimate controlling party During the year ended 31 December 2015, a majority of the Company s ordinary shares were assigned from Kevin Fitzgerald, Brian Ahearne, Edmund Ryan and a company controlled by Eric McGrath to Beek Investments Limited. Beek Investments Limited is the ultimate controlling party of the Company. Beek Investments Limited, a holding company incorporated in the Republic of Ireland in 2015, holds 395,575 ordinary shares in the Company as at 31 December Each of the following Directors of the Company holds 29.58% of the shares of Beek Investments Limited: Brian Ahearne, Kevin Fitzgerald and Edmund Ryan as at 31 December A company controlled by Eric McGrath holds a further 11.26% of the shares of Beek Investments Limited as at 31 December 2015 and The Subsidiary The Company holds 100% of the ownership interests in the Subsidiary, Kneat Solutions Inc. with registered office in Morristown, Pennsylvania, the United States of America. The principal activity of the Subsidiary is to sell a software application developed by the Company for modelling regulated data intensive processes for for Pharmaceutical, Biotech and Medical Device manufacturers. The Subsidiary is entitled to a management fee from the Company amounting to five percent of the value of software application license and license maintenance sales of the Subsidiary. The sales revenue recorded by the Subsidiary amounted to 505,317 for the year ended 31 December 2015 (2014: 201,185). The sales to the Subsidiary are made on terms equivalent to those that prevail in arm s length transactions. The amounts outstanding relate to management fees and amount to 2,304 as at 31 December 2015 (2014: 4,426). Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. 31

189 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Events after the reporting date On February 10, 2016, Kneat Solutions Limited and Fortune Bay Corp. transaction agreement pursuant to which Fortune Bay will: ( Fortune Bay ) entered into a (i) (ii) spin-out its resources properties by way of a court-approved plan of arrangement in Ontario; and acquire 100% of the issued and outstanding ordinary shares of Kneat Solutions Limited by way of a concurrent scheme of arrangement in Ireland. Pursuant to the plan of arrangement with the Company, Fortune Bay shareholders will receive one new common share of Fortune Bay (each a New Fortune Bay Share ) and one and one half of a common share (a Spinco Share ) of a newly formed resource exploration company ( Spinco ) in exchange for each three common shares of Fortune Bay held by them. Upon closing of the plan of arrangement with Fortune Bay, the shareholders of Kneat Solutions Limited will hold 68.7% of the issued and outstanding New Fortune Bay Shares (the New Group ). In addition to acquiring all the issued and outstanding shares of Kneat Solutions Limited, Fortune Bay will retain net 8.2 million Canadian dollars, which will be used to fund the operations of the New Group going forward. On 21 March 2016, Kneat and Fortune Bay entered into a Series A Secured Debenture agreement (the Debenture ). The Debenture has a fair value of 1,000,000, on interest rate of 7.25% per annum and a maturity date of 1 July, In the event the plan of arrangement is completed prior to 1 July, 2016, the Debenture will be become an intercompany loan between Fortune Bay and Kneat. In addition, the required fortune Bay net cash balance of $8.2 million due on closing will be reduced by the amount of the Debenture plus all accrued interest. Subsequent to December 31, 2015 no share options were granted and 3,421 share options were forfeited. In addition, no common shares were issued. There were no other events after the reporting date which necessitate disclosure in these consolidated financial statements. 22. Off balance sheet arrangements The Group was not party to off balance sheet arrangements for the year ended 31 December 2015 and Approval of the consolidated financial statements The consolidated financial statements were approved by the Board of Directors and authorised for issue on 9 May

190 Kneat Solutions Limited Audited non-statutory consolidated financial statements For the year ended 31 December 2014 These audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ( IFRS ) are for the purposes of the Transaction as detailed at note 21 of these audited consolidated financial statements. Audited financial statements for the year ended 31 December 2014, prepared in accordance with Irish Generally Accepted Accounting Principles ( Irish GAAP ) were approved by the Board of Directors on 21 September 2015.

191 CONTENTS Page General information 2 Directors responsibilities statement 3 Independent auditors report 4 Consolidated statement of comprehensive income 5 Consolidated statement of financial position 6 Consolidated statement of changes in equity 7 Consolidated statement of cash flows 8 Notes to the consolidated financial statements 9 1

192 GENERAL INFORMATION Directors Executive: Brian Ahearne (Irish) Kevin Fitzgerald (Irish) Edmund Ryan (Irish) Non-Executive: Paul V. Breen (Irish) James Osborne (Irish) (appointed on 25 August 2014) Eric McGrath (Irish) (appointed on 22 August 2014) Ian Ainsworth (Canadian) (appointed on June ) Company Secretary Brian Ahearne Registered office Unit No 7 Castletroy Park Business Centre Castletroy Limerick Ireland Company number Independent auditors Solicitors Primary Bank Deloitte* Chartered Accountants and Statutory Audit Firm Deloitte and Touche House Charlotte's Quay Limerick Ireland Mason Hayes & Curran South Bank House Barrow Street Dublin 4 Ireland Bank of Ireland 125 O Connell Street Limerick Ireland * On February 10, 2016 the Company executed a transaction agreement with Fortune Bay Corp. ( Fortune Bay ) whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a wellfunded, publicly traded software company. Audited financial statements for the years ended 31 December 2015, 2014 and 2013 are being prepared in accordance with IFRS (the IFRS audited financial statements ). These IFRS audited financial statements have been prepared for inclusion in Fortune Bay s management information circular and Kneat s Irish Scheme of Arrangement Circular. See note 21 for further detail. The IFRS audited financial statements are being audited by Deloitte. Twohig & Co., an Irish Registered Auditor have audited the financial statements for the years ended 31 December 2014 and 2013, prepared in accordance with Irish GAAP. 2

193 KNEAT SOLUTIONS LIMITED DIRECTORS RESPONSIBILITIES STATEMENT DIRECTORS RESPONSIBILITIES STATEMENT The Directors are responsible for the preparation of financial statements which give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standard Board (IASB) ( applicable accounting standards ) In preparing those financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether the financial statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for ensuring that the company keeps or causes to be kept adequate accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standard Board (IASB). They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company s website. KNEAT SOLUTIONS LIMITED INDEPENDENT AUDITORS REPORT 3

194

195 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December Notes REVENUE 4 200,080 - Cost of sales 5 (235,260) (99,334) Gross loss (35,180) (99,334) OPERATING EXPENSES Administrative expenses 5 (752,179) (556,117) Operating loss (787,359) (655,451) Interest payable and similar charges 7 (17,765) (16,831) Loss on ordinary activities before taxation (805,124) (672,282) Income taxes- corporation tax Total comprehensive loss for the year (805,124) (672,282) Loss per share basic and diluted (1.23) (1.15) Weighted average number of common shares outstanding (note 9) 656, ,722 All income and expenses arose solely from continuing operations. There were no recognised gains or losses other than those dealt with in the consolidated statement of comprehensive income. The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 5

196 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2014 Notes 31 December December 2013 ASSETS Non-current assets Property, plant, equipment and leasehold improvements ,231 63,186 Intangible assets , ,335 Accounts receivable , ,126 Current assets Cash and cash equivalents 13 12, ,890 Accounts receivable , ,293 Total assets 1,582,239 1,333,830 EQUITY AND LIABILITIES Capital and reserves Issued share capital , ,571 Share premium 17 5,556,559 5,012,762 Share based payment reserve , ,427 Retained (deficit) (6,100,652) (5,295,528) Total equity 371, ,232 LIABILITIES Non-current liabilities Cumulative redeemable convertible preference shares , ,773 Accounts payable and deferred income ,985 - Current liabilities Directors current account ,596 91,794 Accounts payable and deferred income ,570 86,031 Total liabilities 1,210, ,598 Total equity and liabilities 1,582,239 1,333,830 The consolidated financial statements set out on pages 5 to 32 were approved by the Board of Directors on 9 May 2016 and signed on its behalf by: Brian Ahearne Brian Ahearne, Director Kevin Fitzgerald Kevin Fitzgerald, Director The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 6

197 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2014 Issued share capital ordinary shares Issued share capital A ordinary shares Share premium (note 17) Share based payment reserve* Retained (deficit) Total Total equity at 1 January , ,706 3,515, ,835 (4,623,246) (442,616) Shares issued 59,168 50,267 1,497, ,606,538 Recognition of share based payments ,592-53,592 Loss for the year (672,282) (672,282) Total equity at 31 December , ,973 5,012, ,427 (5,295,528) 545,232 Shares issued 13,093 26, , ,577 Recognition of share based payments ,714-47,714 Loss for the year (805,124) (805,124) Total equity at 31 December , ,660 5,556, ,141 (6,100,652) 371,399 *The share based payment reserve represents the fair value of the share options granted less the fair value of share options that are exercised, cancelled or forfeited The accompanying notes on pages 9 to 32 form an integral part of these financial statements. 7

198 KNEAT SOLUTIONS LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2014 Notes 31 December 31 December Loss on ordinary activities before taxation (805,124) (672,282) Adjustments to reconcile loss on ordinary activities before taxation to net cash used in operating activities: Adjustments for non-cash items: Depreciation of property, plant and equipment 11 13,486 7,749 Recognition of share based payments 17 28,625 34,371 Interest expense on cumulative redeemable convertible preference shares 15,916 15,916 Amortisation of intangible assets ,260 99,333 (Increase)/decrease in non-current assets 14 (76,631) 156,990 Increase in non-current liabilities 16 10,985 - Changes in working capital: Increase in accounts receivable 14 (59,286) (225,156) Increase/(decrease) in accounts payable ,539 (67,156) Increase/(decrease) in Directors current account ,802 (5,546) Net cash used in operating activities (351,428) (655,781) Investing activities Capitalised development cost 12 (679,626) (496,669) Capitalised share option expense 19,089 19,222 Payments to acquire tangible fixed assets 11 (58,531) (40,109) Net cash used in investing activities (719,068) (517,556) Financing activities Proceeds from issue of ordinary shares ,577 1,606,538 Net cash provided by financing activities 583,577 1,606,538 Net (decrease)/increase in cash and cash equivalents (486,919) 433,201 Cash and cash equivalents at the beginning of the year 499,890 66,689 Cash and cash equivalents at the end of the year 12, ,890 The accompanying notes on pages 9 to 32 form an integral part of these consolidated financial statements. 8

199 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Nature of business Kneat Solutions Limited (the Company ) is a computer software development company. The principal activity of the Company is to develop and market a software application for modelling regulated data intensive processes for for Pharmaceutical, Biotech and Medical Device manufacturers. The Company was incorporated in 2006 with registration number , in Ireland and its registered office is Unit 7, Castletroy Park Business Centre, Castletroy, Limerick. Kneat Solutions Inc. (the Subsidiary ) is a wholly owned subsidiary of the Company, incorporated in 2014 in the United States of America with registered office in Morristown, Pennsylvania, the United States of America. The consolidated financial statements as at and for the year ended 31 December 2014 comprise the Company and the Subsidiary (collectively the Group ). The comparative figures as at and for the year ended 31 December 2013 comprise the Company only. 2. Basis of preparation (a) Going concern The consolidated financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group has the resources necessary to continue in business for the foreseeable future. In making this assessment the Directors have considered a wide range of information relating to present and future conditions. The Company has developed a software application for modelling regulated data intensive processes for Pharmaceutical, Biotech and Medical Device manufacturers. The Directors of the Company can demonstrate that the software application reached technical feasibility in January The software application generated its first revenues in 2014 and continued to generate revenues in Revenues grew significantly from 2014 to The Group has been negotiating contracts with new customers and the negotiations are at an advanced stage. As a result, the Directors are confident that sales revenues will increase significantly in The Company established the Subsidiary in The Subsidiary generates revenues in the United States of America. The Group is financed through the provision of funds raised through a business expansion scheme, private shareholder capital and a current account facility from the Group's Directors. In 2015 further funds of 1,782,913 were provided to the Group. In addition, there is no maturity date and no interest charged on the Directors loan accounts. On February 10, 2016 the Company executed a transaction agreement with Fortune Bay whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a wellfunded, publicly traded software company. (See note 21 for further details). The arrangement will provide the funding necessary to continue developing new features of the software application and to increase revenues. As a result, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the audited consolidated financial statements. 9

200 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Basis of preparation (continued) (b) Critical accounting judgements and estimates The preparation of the financial statements in conformity with IFRS requires Directors and key management to make judgements and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results could differ from these estimates. Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical accounting judgements and estimates in applying accounting policies that have the most significant impact on the amounts recognised in the consolidated financial statements are as follows: Where the Directors and key management determine that an intangible asset has been internally generated by the Group, the value of the intangible asset has been derived by establishing the current cost associated with generating this asset based on direct costs and reasonable allocations of indirect costs. For the software application, the useful economic life represents the Directors estimate of the expected term over which the Group will receive benefits from the software application. See note 12 for further detail. The fair value of the share options granted by the Company is estimated by the Directors based on historical data including the share options exercise price, price per share at the granting date established by the Directors referring to the funding round immediately preceding the grant date, volatility of underlying share, number of share options being exercised, the estimated period of time that the Directors expect the employees to hold their share options and dividend yield. See note 17 for further detail. The Group made a loss for the year. The Directors consider the financial statements are prepared on a going concern basis. See note 2(b) for further detail. 3. Accounting policies (a) Statement of compliance The Group has adopted International Financial Reporting Standards ( IFRS ) for the first time for the year ended 31 December In accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards ( IFRS 1 ) the date of transition of the Group to IFRS is 1 January The consolidated financial statements have been prepared in accordance with IFRS and interpretations issued by the International Accounting Standards Board ( IASB ). The Group has consistently applied the accounting policies used throughout all periods presented as if these policies had always been in effect. On February 10, 2016 the Company executed a transaction agreement with Fortune Bay Corp. ( Fortune Bay ) whereby the Company and Fortune Bay will complete a scheme of arrangement which will result in a wellfunded, publicly traded software company. Audited financial statements for the years ended 31 December 2015, 2014 and 2013 are being prepared in accordance with IFRS (the IFRS audited financial statements ). These financial statements have been prepared for inclusion in Fortune Bay s management information circular and Kneat s Irish Scheme of Arrangement Circular. Refer to note 21 for further details. The IFRS audited financial statements are being audited by Deloitte. Twohig & Co., an Irish Registered Auditor have audited the financial statements for the years ended 31 December 2014 and 2013, prepared in accordance with Irish GAAP. 10

201 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (b) Basis of consolidation A subsidiary is an entity controlled by the Company. The Company controls an entity when it is exposed to, or has rights to returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the Subsidiary are included in the consolidated financial statements from 15 March 2014, the date that control commenced. Upon the loss of control, the Company derecognises the assets and liabilities of a subsidiary, any non-controlling interests and the other components of equity related to a subsidiary. Any resulting gain or loss is recognised in the consolidated statement of comprehensive income. Material balances and transactions between the Company and its subsidiary, and any unrealised gains arising from these transactions, are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Kneat Solutions Inc. is a wholly owned subsidiary of the Company, incorporated in March 2014 in the United States of America with registered office in Morristown, Pennsylvania, United States of America. The Company holds one ordinary share in the Subsidiary of $1. The Company has not entered into any guarantee in relation to the Subsidiary. (c) Functional currency The consolidated financial statements are presented in the Company s functional currency, the Euro ( EUR or ) and rounded to the nearest, reflecting the fact that the Company trades from the Republic of Ireland, the Company s share capital is issued in the Republic of Ireland and the costs are primarily in. (d) Revenue Under International Accounting Standard 18, Revenue ( IAS 18 ), revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The Group is involved in development and marketing of a software application for modelling regulated data intensive processes for Pharmaceutical, Biotech and Medical Device manufacturers. Revenue from the services rendered is measured at the fair value of the consideration received or receivable and is recognised in the consolidated statement of comprehensive income in proportion to the stage of completion of the service at the reporting date. Revenue in respect of each line of service is recognised as follows: Revenue from software licensing is recognised upon delivery to the customer where there are no significant obligations of the Group remaining following delivery and the customer has accepted the software application. Revenue from annual servicing/maintenance fees is recognised over the period to which the servicing/maintenance contract relates. Revenue from pre-sale/installation services is recognised in the period the pre-sale/installation service is performed. (e) Expenses All expenses other than finance cost are recognised in the consolidated statement of comprehensive income on an accruals basis. 11

202 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (f) Taxes Current income tax-corporation tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date in Ireland and the United States of America. The Company recognises interest and penalties, if any, related to uncertain tax positions in income tax expense. Value added tax Revenue and expenses are recognised net of the amount of value added tax, except when the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authorities, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. The net amount of value added tax recoverable from, or payable to, the taxation authorities is included as part of accounts receivable or accounts payable in the consolidated statement of financial position. Deferred tax Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the reporting date. Provision is made at the rates expected to apply when the temporary differences reverse. Temporary differences are differences between the Groups s taxable profits and its results as stated in the consolidated financial statements that arise from the inclusion of gains and losses in taxable profits in periods different from those in which they are recognised in the consolidated financial statements. A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted. Deferred tax is measured at the tax rates that are expected to apply in the years in which the temporary differences are expected to reverse based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. Research and development tax credits Tax credits for research and development are recognised at their fair value based on amounts recoverable from the tax authorities in current and future years. A credit is recognised in the consolidated statement of comprehensive income against the related expense. (g) Leasing Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives are recognised as a reduction of the total lease expense, over the term of the lease. (h) Foreign currency translation The consolidated financial statements are presented in. Monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the spot rate at the reporting date. All differences are recognised in the consolidated statement of comprehensive income. Non-monetary items measured at historical cost are translated into the functional currency at the historical exchange rate that existed on the transaction date. Non-monetary items carried at fair value, if any, are translated at the spot rate of the date the fair value was determined. All exchange differences are recognised in the consolidated statement of comprehensive income. 12

203 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (i) Property, plant, equipment and leasehold improvements Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an asset comprises the purchase price and any directly attributable costs of bringing the asset to the working condition and location of its intended use. Subsequent costs are included as part of the asset s carrying amount, or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Leasehold improvements are stated at cost and are depreciated over the shorter of the useful life of the improvement or the remaining lease term. All other costs, such as repairs and maintenance, are charged to the consolidated statement of comprehensive income during the period in which they are incurred. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation is calculated using the following annual rate: Property, plant and equipment % Rate 12.5% per annum The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the consolidated statement of comprehensive income. (j) Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments, with maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to insignificant changes in value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. (k) Financial liabilities and equity issued by the Company Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions: (i) Financial instruments include no contractual obligations on the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party; (ii) Where the instrument will or may be settled in the Company s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company s own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial asset for a fixed number of its own equity instruments. As all shares issues are in Company's functional currency, to the extent that the above definition is not met, the proceeds of issue of shares are classified as financial liabilities. Ordinary shares and A ordinary shares are classified as equity. Ordinary shares issued by the Company are initially measured at nominal value with the excess consideration received recorded in a share premium. Cumulative redeemable convertible preference shares are classified as financial liabilities. 13

204 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (l) Classification, recognition and measurement of financial assets and liabilities Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured initially at fair value (transaction price) net of transaction costs that are directly attributable to the acquisition of these financial assets. Subsequent to initial recognition, loans and receivables are measured at amortised cost. Accounts receivable are classified as loans and receivables. The Group derecognises loans and receivables when the contractual rights to the cash flows from the loans and receivables expire or it transfers loans and receivables and the transfer qualifies for de-recognition. Financial liabilities are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Directors loans, cumulative redeemable convertible preference shares and accounts payable are classified as financial liabilities. The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire. (m) Intangible assets According to International Accounting Standard 38, Intangible Assets ( IAS 38 ), an intangible asset is an identifiable non-monetary asset without physical substance. Research and development Expenditure on research activities undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in the consolidated statement of comprehensive income as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if the Group can demonstrate that it meets all of the following criteria: The technical feasibility of completing the intangible asset so that it will be available for use or sale; Intention to complete the intangible asset and use or sell it; Ability to use or sell the intangible asset; The intangible asset will generate probable future economic benefits; The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and The ability to measure reliably the expenditure attributable to the intangible asset during its development. The expenditure capitalised in respect of intangible assets includes the cost of direct labour and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use. Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses. Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the consolidated statement of comprehensive income as incurred. 14

205 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (m) Intangible assets (continued) Research and development (continued) Intangible assets are amortised based on the cost of an asset less its residual value. Intangible assets have finite useful lives. Amortisation is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful economic life of intangible assets, from the date that the asset is available for use, based on the following annual rate: % Rate Software application 20% Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (n) Impairment At each reporting date, the Group reviews the carrying amount of its applicable assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists the recoverable amount is estimated in order to determine the extent of the impairment loss and the carrying amount of the asset is reduced to its recoverable amount, as calculated. An impairment loss is recognised immediately in the consolidated statement of comprehensive income. An impairment loss recognised in a prior year is reversed if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that it does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Impairment reversals are recognised immediately in the consolidated statement of comprehensive income. (o) Employee benefits Share-based payments The Company operates equity settled share based remuneration plans for the remuneration of a number of key employees. All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Share based payments are recognised as an expense in the consolidated statement of comprehensive income with a corresponding credit to retained earnings in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. Upon exercise of share options, the proceeds received up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. 15

206 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (o) Employee benefits (continued) Defined contribution plans The Group operates a defined contribution pension plan for employees. A defined contribution plan is a postemployment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense through the consolidated statement of comprehensive income as incurred. Short-term benefits Liabilities for employee benefits for wages, social insurance costs and annual leave entitlements represent present obligations resulting from employees services provided up to the reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at the reporting date. (p) Standards, amendments and interpretations effective in the current period There are a number of new or amended standards, amendments and interpretations with effect from 1 January 2014 to 31 December 2014 that have an impact on the consolidated financial statements of the Group. The Group has adopted such standards. (r) Standards, interpretations and amendments to published standards that are not yet effective IFRS 9, Financial Instruments ( IFRS 9 ) IFRS 9, issued on 24 July 2014 is the IASB s replacement of IAS 39 Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting of financial instruments. IFRS 9 is mandatorily effective for periods beginning on or after 1 January 2018 with early adoption permitted. The Directors do not anticipate that the adoption of IFRS 9 will have significant impact on the consolidated financial statements of the Group. IFRS 15, Revenue from contracts with customers ( IFRS 15 ) IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. It will supersede the following revenue Standards and Interpretations upon its effective date: IAS 18 Revenue; IAS 11 Construction Contracts; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for the Construction of Real Estate; IFRIC 18 Transfers of Assets from Customers; and SIC 31 Revenue-Barter Transactions Involving Advertising Services. IFRS 15 will cover revenue arising from contracts with customers. Under IFRS 15, a customer of an entity is a party that has contracted with the entity to obtain goods or services that are an output of the entity s ordinary activities in exchange for consideration. 16

207 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (r) Standards, interpretations and amendments to published standards that are not yet effective (continued) IFRS 15, Revenue from contracts with customers ( IFRS 15 ) (continued) IFRS 15 has a single model to deal with revenue from contracts with customers. Its core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 is mandatorily effective for periods beginning on or after 1 January 2018 with early adoption permitted. The Directors are currently assessing the impact of IFRS 15 on the consolidated financial statements of the Group. IFRS 16, Leases ( IFRS16 ) IFRS 16 was issued on January 13, 2016 and replaces the current guidance in IAS 17, Leases ( IAS 17 ). IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16 s approach to lessor accounting substantially unchanged from IAS 17. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted. The Directors are currently assessing the impact of IFRS 16 the consolidated financial statements of the Group. IAS 12, Income taxes ( IAS 12 ) The IASB published final amendments to IAS 12 on January 19, The purpose of these changes is to clarify when a deferred tax asset should be recognised for unrealised losses. The amendments are effective for annual periods beginning on or after January 1, 2017, with early adoption permitted. The Directors are currently assessing the impact of IAS 12 on the Company s financial statements. IAS 7, Statement of cash flows ( IAS 7 ) The IASB published final amendments to IAS 7 on January 29, The amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity s financing activities. The amendments come with the objective that entities shall provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendments are effective for annual periods beginning on or after January 1, 2017, with early adoption permitted. The Directors are currently assessing the impact of IAS 7 on the Company s financial statements. 17

208 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Accounting policies (continued) (r) Standards, interpretations and amendments to published standards that are not yet effective (continued) Amendments to IAS 1 Presentation of Financial Statements ( IAS 1 ) Disclosure Initiative The amendments were a response to comments that there were difficulties in applying the concept of materiality in practice as the wording of some of the requirements in IAS 1 had in some cases been read to prevent the use of judgement. Certain key highlights in the amendments are as follows: An entity should not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. An entity need not provide a specific disclosure required by an IFRS if the information resulting from that disclosure is not material. In the other comprehensive income section of a statement of profit or loss and other comprehensive income, the amendments require separate disclosures for the following items: the share of other comprehensive income of associates and joint ventures accounted for using the equity method that will not be reclassified subsequently to profit or loss; and the share of other comprehensive income of associates and joint ventures accounted for using the equity method that will be reclassified subsequently to profit or Joss. The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2016 with earlier application permitted. Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: a) when the intangible asset is expressed as a measure of revenue; or b) when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after 1 January 2016 with earlier application permitted. Annual improvements to IFRSs cycle Annual improvements to IFRSs cycle includes a number of amendments to the following four standards: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - IFRS 7 Financial Instruments: Disclosures IAS 19 Employee Benefits IAS 34 Interim Financial Reporting The amendments are effective for annual periods beginning on or after 1 January 2016, but can be applied earlier. The Directors are currently assessing the impact of all of the above amendments on the Group s financial statements. KNE 18

209 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Revenue The Group has recorded revenue of 200,080 for the year ended 31 December 2014 (2013 Nil). The Group has one revenue stream from sales and services of the software application. The Group operates in two geographical locations: the Republic of Ireland and the USA. 5. Expenses Operating loss is stated after the following: Included in cost of sales Amortisation of intangible assets 235,260 99,334 Included in administrative costs: Other administrative cost 229, ,934 Employees salaries and wages 221,252 92,901 Consultancy fees 138, ,923 Directors salaries 107, ,528 Software development cost 90,894 35,925 Social insurance costs 83,771 41,326 Rent and rates 44,288 33,070 Professional fees 34,826 15,988 Cost of share options 28,625 34,371 Depreciation of property plant and equipment 13,486 7,749 Defined contribution pension cost 5, Audit fees audit of financial statements prepared in accordance with Irish GAAP 4,682 4,662 R&D tax credit (250,031) (135,035) A percentage of Directors salaries directly attributable to preparing the intangible asset for its intended use amounting to 57,018 has been capitalised as a part of the cost of an intangible asset for the year ended 31 December 2014 (2013; 63,728). The average monthly number of employees (including the Directors) for the year ended 31 December 2014 was 19 (2013: 12). Defined contribution pension scheme The Group makes contributions to the defined contribution pension scheme of certain employees. The pension charge for the year amounted to 5,340 (2013: 4,080) and is recognised within administrative expenses. A percentage of employees defined contribution scheme payments directly attributable to preparing the intangible asset for its intended use amounting to Nil has been capitalised as a part of the cost of intangible asset for the year ended 31 December 2014 (2013: 3,305). 6. Directors emoluments Remuneration and other emoluments 164, ,256 K 19

210 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Finance cost Dividends/interest on the cumulative redeemable convertible preference shares 15,916 15,916 Interest on overdue taxation 1, Loan interest payable ,765 16,831 The dividends/interest on the cumulative redeemable convertible preference shares is calculated annually in arrears at a rate of 3.00% (2013: 3.00%) per annum. 8. Income tax The reconciliation between the total tax charge for the year and the standard rate of corporation tax in Ireland applied to the loss for the year is as follows: Loss before tax (805,124) (672,282) Loss multiplied by the applicable tax rate of 12.5% (100,641) (84,035) Effect of Fixed asset depreciation 1, Amortisation of intangible asset 29,407 12,417 Capital allowances (12,009) (5,263) Revenue penalties Adjusted loss (81,390) (75,912) Losses carried forward 81,390 75,912 Total tax charge for the year - - The Group has gross operating losses carried forward as at 31 December 2014 of 6,089,998 (31 December 2013: 5,438,885). This represents accumulated losses for tax purposes of approximately 761,250 at 31 December 2014 (2013: 679,861). These can be set off against the Group s future trading profits. 9. Loss per share The calculation of the basic loss per share is based on the net loss for the year of 805,124 (2013: loss 672,282) divided by the weighted average number of shares in issue during the year of 656,550 (2013: 582,722). This results in a loss per share of 1.23 (2013: 1.15). The impact of the share options and cumulative redeemable convertible preference shares is anti-dilutive on the basic loss per share in 2014 and LIMITED 20

211 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Operating lease arrangement The Company leases its offices under an operating lease agreement dated 11 July 2014, which is also the date of the commencement of the lease. The operating lease is subject to termination clauses at the expiration of the fifth year and the tenth year of the lease. The lease term is twenty five years with a reduced rent period of 18 months from the date of the commencement of the lease. The lease expense is recognised evenly over the lease term. Lease incentives relate to the reimbursement of the fit out cost from the lessor and to the reduced rent period. A reduction of the total lease expense of 2,085 was recognised for the year ended 31 December 2014 in relation to the reimbursement of the fit out cost from the lessor (2013: Nil). The Company s commitments under the operating lease, in the form of non-cancellable future lease payments are not reflected as a liability on its consolidated statement of financial position. The total of future minimum lease payments under non-cancellable operating leases is as follows; No later than one year 24,600 - Later than one year and not later than five years 200,000 - Later than five years Property, plant, equipment and leasehold improvements Property, plant equipment Leasehold improvements Total Cost At 1 January ,196 59,196 Additions in the year 40,109-40,109 At 31 December ,305-99,305 Additions in the year 14, , ,531 At 31 December , , ,836 Depreciation At 1 January ,370-28,370 Depreciation charge for the year 7,749-7,749 At 31 December ,119-36,119 Depreciation charge for the year 13,486-13,486 At 31 December ,605-49,605 Carrying amounts At 31 December ,186-63,186 At 31 December , , ,231 21

212 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Intangible assets Software application Total Cost At 1 January Development cost capitalised during the year 496, ,668 At 31 December , ,668 Development cost capitalised during the year 679, ,626 At 31 December ,176,294 1,176,294 Amortisation At 1 January Amortisation charge for the year (99,333) (99,333) At 31 December 2013 (99,333) (99,333) Amortisation charge for the year (235,260) (235,260) At 31 December 2014 (334,593) (334,593) Carrying amounts At 31 December , ,335 At 31 December , ,701 The basis by which amortisation is calculated is outlined in note 3(m). Amortisation is recognised through the consolidated statement of comprehensive income in cost of sales. 13. Cash and cash equivalents At 31 December 2014, cash and cash equivalents amount to 12,971 (31 December 2013: 499,890), which is held at Bank of Ireland. As at 31 December 2014 and 2013, no restrictions in the use of cash and cash equivalents exist. 14. Accounts receivable As at 31 December 2014 As at 31 December 2013 Current R&D tax credit 173, ,641 Unpaid share capital 26,993 49,995 Other debtors 29,426 20,329 Trade debtors 52,548 - VAT receivable 9,041 26,906 Prepayments 4,785 3, , ,293 Non-current R&D tax credit 212, , , ,126 The Directors and key management consider the carrying amounts of accounts receivable recognised in the consolidated statement of financial position to be a reasonable approximation of their fair value. 22

213 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Directors current account Directors current account Company controlled by Kevin Brian Edmund Eric McGrath Fitzgerald Ahearne Ryan At 31 December ,113 61,681 At 31 December ,000 20,502 51,981 52,113 The loan from the company controlled by Eric McGrath is repayable in May There is no maturity date on the other loans. There is no interest charged on the loans, except for the loan from Kevin Fitzgerald. The interest charged on the loan from Kevin Fitzgerald is disclosed in note Accounts payable and deferred income 31 December December 2013 Current Accruals 110,405 33,621 Social insurance cost payable 94,613 23,162 Other payables 29,152 29,248 Lease incentives- deferred income 4, ,570 86,031 Non-current Lease incentives- deferred income 120, ,985 - The Directors and key management consider the carrying amounts of accounts payable recognised in the consolidated statement of financial position to be a reasonable approximation of their fair value. 17. Capital The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimization of the debt and equity balance. The Group s overall strategy remains unchanged from The capital of the Company is as follows: 31 December December 2013 Authorised Voting ordinary shares of EUR 1 each 1,300, ,000 A ordinary shares of EUR 1 each 800, ,000 Allotted equity Voting ordinary shares of EUR 1 each - fully paid 498, ,598 Voting ordinary shares of EUR 1 each - unpaid 1,840 - A ordinary shares of EUR 1 each fully paid 180, ,565 A ordinary shares of EUR 1 each unpaid - 3,408 Share premium 5,556,559* 5,012,762* * 25,153 of share premium remains unpaid as at 31 December 2014 (2013: 46,587) The share premium represents the share purchase price in excess of the nominal 1 per share. 23

214 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Equity capital Holders of the ordinary shares are entitled to attend and vote at general meetings of the Company. Holders of A ordinary shares are not entitled to vote at the general meetings of the Company for a period of five years from the date of allotment of such A ordinary shares. Movement in ordinary shares for the year ended 31 December 2014 was as follows: Share class Shares at 01 January 2014 Shares issued Shares redeemed Shares at 31 December 2014 Ordinary shares 487,598 13, ,691 A ordinary shares 153,973 26, ,660 Movement in ordinary shares for the year ended 31 December 2013 was as follows: Share class Shares at 01 January 2013 Shares issued Shares redeemed Shares at 31 December 2013 Ordinary shares 428,430 59, ,598 A ordinary shares 103,706 50, ,973 Cumulative redeemable convertible preference shares 31 December December 2013 Authorised 900,000 of non-voting, cumulative redeemable convertible preference shares of EUR 1 each, consisting of 300,000 A preference shares, 300,000 A convertible shares and 300,000 convertible shares 900, ,000 Allotted and fully paid Non-voting, cumulative redeemable convertible preference shares of EUR 1 each 532, ,000 The cumulative redeemable convertible preference shares do not carry any voting rights. The holder is entitled to a fixed cumulative preferential dividend at a rate of 8.00% per annum on the amount paid up (including share premium) on cumulative redeemable convertible preference shares. The dividends/interest on the cumulative redeemable convertible preference shares is calculated annually in arrears on each anniversary of the first allotment of cumulative redeemable convertible preference shares and will only be paid to the holder in the event of cumulative redeemable convertible preference shares being redeemed. If the Company incurs research and development expenditure validated by the holder of cumulative redeemable convertible preference shares up to the amount of paid up preference share capital, the rate of the dividend will be reduced to 3.00%. The Company incurred research and development expenditure validated by the holder of cumulative redeemable convertible preference shares and avails of the reduced dividend/interest rate of 3%. If an investment in the Company takes place and places a valuation of the Company above a certain threshold of the amount of allotted and fully paid up cumulative redeemable convertible preference share capital within five years of the first allotment of the cumulative redeemable convertible preference shares, the holder of cumulative redeemable convertible preference shares has the option to convert cumulative redeemable convertible preference shares to the new shares in the Company, defined as the shares allotted to the investor for their investment in the Company. The option lapses after sixty days from notification of the holder of cumulative redeemable convertible preference shares by the Company about the investment. Since the option is not exercisable at the discretion of the holder, but only on the occurrence of an uncertain future event it is not separated as equity. An uncertain future event has to occur for the option holder to have discretion. 24

215 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Cumulative redeemable convertible preference shares (continued) The cumulative redeemable convertible preference shares are redeemable on the fifth anniversary of the date of allotment (the redemption date ). The redemption price is equal to the aggregate amount paid up plus interest. Should the Company be unable to be pay the redemption price on the redemption date, the Company will redeem the cumulative redeemable convertible preference shares as soon as the Company is capable of doing so. There was no movement in the number in cumulative redeemable convertible preference shares for the years ended 31 December 2014 and At 31 December 2014, preference dividends/interest on the cumulative redeemable convertible preference shares amount to 94,689 (31 December 2013: 78,773). Dividends/interest on the cumulative redeemable convertible preference shares charged for the year is disclosed in note 7. Share options The Company has adopted an employee share option scheme in order to incentivise key management and staff. Between the years 2011 and 2015 the Company granted share options to its management and employees, according to the Rules of the Share Options scheme, approved by the Directors of the Company on 3 March a) Rules governing the share options granted by the Company Share options vest over a four year period, at a rate of 25% of the aggregate number of share options issued on the anniversary of the date of awarding the share options. The vesting period is the time that an employee must wait in order to be able to exercise their share options. A share option may not be exercised more than ten years after the date of the granting of the share option and any share option not exercised by that time shall lapse immediately. A percentage of the share options may be exercised within 180 days of the employee leaving the Company. b) Estimate of the fair value of the share options granted by the Company The fair value of options granted to 31 December 2014 and to 31 December 2013 was determined using the Black-Scholes valuation model. Significant inputs into the valuation models were as follows: the share option exercise price; the price per share at the date of awarding the share option established in reference to the funding round immediately preceding the grant date; the risk free interest rate; the estimated period of time that the Directors and key management expected the employees to hold the share options; volatility of the share options; the dividend yield of the shares. 25

216 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Share options (continued) c) The fair value of the share options granted by the Company The movement on share options and their weighted average exercise price are as follows: Number of options Weighted average exercise price At 1 January , Granted 9, Forfeited (1,313) At 31 December , Granted 2, Forfeited (2,439) At 31 December , The following are the weighted average assumptions used in calculating the value of the share options granted during the years ended 31 December 2014 and Weighted average share price Exercise price Expected volatility 49.25% 49.25% Expected life of the share option 6.5 years 6.5 years Expected dividend per share - - The risk free interest rate 0.41% 1.29% The Company estimates the expected volatility of the share options by using data for several unrelated public companies within the same industry as the Company that are considered to be comparable and for which historical information was available. The amount charged to the statement of comprehensive income in respect of these share options for the year ended 31 December 2014 is 28,625 (2013: 34,371). A percentage of share options expense directly attributable to preparing the intangible asset for its intended use amounting to 19,089 has been capitalised as a part of the cost of the intangible asset for the year ended 31 December 2014 (2013: 19,222). K NEAT S 26

217 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Capital (continued) Share options (continued) c) The fair value of the share options granted by the Company (continued) No options were exercised for the year ended 31 December 2014 (2013: Nil). At 31 December 2014, the Company had the following share options outstanding*: Date of grant Exercise price Number of share options outstanding Number of share options exercisable Fair Value 31 December February ,973 6, February ,179 5, November ,425 2, June ,658 2, December , July ,749 1, October , December At 31 December 2013, the Company had the following share options outstanding*: Date of grant Exercise price Number of share options outstanding Number of share options exercisable 25 February ,481 5, February ,179 3, November ,425 1, June ,180 1, December , July ,749 - *The vesting schedule for the stock options is over a four year period whereby 25% of the options vest on the first anniversary of the grant date, 25% vest on the second anniversary of the grant date, 25% vest on the third anniversary of the grant date and 25% vest on the fourth anniversary of the grant date. 18. Risk management a) Market risk Market risk embodies the potential for both losses and gains and includes currency risk and interest rate risk. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk exposure arises from the Group entering into transactions which are denominated in currencies other than its functional currency. 27

218 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Risk management (continued) a) Market risk (continued) Currency risk (continued) The Group is exposed to currency risk as at 31 December 2014, through the Subsidiary, whose functional currency is US dollar ( USD ). The Group is exposed to the risk that the exchange rate of its functional currency, relative to the USD may change in a manner that can have adverse effect on the value of that portion of the Group s assets or liabilities denominated in USD. It is not the policy of the Group to hedge its currency exposure through the use of derivative instruments. The Group s exposure to foreign currency risk is as follows: 31 December December 2013 United States Dollar ( USD ) 52,796 - At 31 December 2014, had the strengthened by 5% in relation to USD, with all other variables held constant, the net assets of the Group would have decreased by 2,639. Weakening of the in relation to USD, with all other variables held constant would have equal but opposite effect. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances, credit card borrowings and overdue taxation included within accounts payable on the consolidated statement of financial position. The Company holds cumulative redeemable convertible preference shares with a fixed dividend/interest rate. These are privately issued, with no secondary market. They are measured at amortised cost and bear a fixed dividend/interest rate and as a result the Group is not exposed to the cash flow interest rate risk on cumulative redeemable convertible preference shares. b) Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. At 31 December 2014 and 31 December 2013 the Group s financial assets exposed to credit risk amounted to the following: 31 December December 2013 Accounts receivable 509, ,419 Cash and cash equivalents 12, ,890 During the years ended 31 December 2014 and 31 December 2013, the Group did not hold any financial assets that were past due or impaired. Trade debtors of 52,548 are included in accounts receivable as at 31 December 2014 (2013: Nil). Trade debtors are monitored on a regular basis in order to minimise material ageing and to ensure adequate collection. Cash balances are held with the payment bank, Bank of Ireland which is a reputable institution and the Group ensures that there are no indicators that would challenge the credit worthiness. The long-term credit rating, as determined by Standard & Poor s of Bank of Ireland is BBB- as at the date the financial statements were approved by the Board of Directors and authorised for issue. 28

219 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Risk management (continued) c) Liquidity risk Liquidity risk is the risk that the entity will encounter difficulty in meeting obligations associated with its financial liabilities. The Directors and key management monitor liquidity regularly through the preparation and review of cash flow forecasts and budgets. The Group went through a number of funding rounds up to the date of approval of these consolidated financial statements. The following table shows the contractual, undiscounted cash flows of the Group s financial liabilities at 31 December 2014: All amounts stated in Less than 1 month 1-3 months 3 months to 1 year More than 1 year No stated maturity Financial liabilities Accounts payable 238, ,985 - Directors current account , ,596 Cumulative redeemable convertible preference shares ,689 - The following table shows the contractual, undiscounted cash flows of the Group s financial liabilities at 31 December 2013: All amounts stated in Less than 1 month 1-3 months 3 months to 1 year More than 1 year No stated maturity Financial liabilities Accounts payable 86, Directors current account ,794 Cumulative redeemable convertible preference shares , Liabilities not carried at fair value but for which fair value is disclosed The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in these financial statements approximate their fair values. Fair value hierarchy as at 31 December All amounts stated in Total Level 1 Level 2 Level 3 Financial liabilities Financial liabilities held at amortised cost Cumulative redeemable convertible preference shares 626, ,689 - Total 626, ,689 - K 29

220 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Liabilities not carried at fair value but for which fair value is disclosed (continued) Fair value hierarchy as at 31 December All amounts stated in Total Level 1 Level 2 Level 3 Financial liabilities Financial liabilities held at amortised cost Cumulative redeemable convertible preference shares 610, ,773 - Total 610, , Related parties Related party transactions are transfers of resources, services or obligations between related parties and the Group, regardless of whether a price has been charged. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions or is part of key management of the Group. The following are details on the related parties of the Group and transactions with the related parties. The Directors of the Company The Directors consider the key management are Brian Ahearne, Kevin Fitzgerald, Edmund Ryan, Paul V. Breen, James Osborne, Eric McGrath and Ian Ainsworth, each of whom are the Directors of the Company. Compensation awarded to key management personnel is summarised as follows: Short term employee benefits 164, ,256 Share based compensation 13,548 19, , ,001 Paul V. Breen held 10,594 shares options issued by the Company. These have a fair value 93,528 as at 31 December 2014 (2013: 93,528). No other Directors held shares options issued by the Company at the reporting date. The Directors interests in the shares of the Company as at 31 December 2014 were as follows: 31 December 2014 Ordinary shares Brian Ahearne 117,036 Kevin Fitzgerald 117,036 Edmund Ryan 117,036 A Ordinary shares James Osborne 10,225 Paul V. Breen 6,523 Eric McGrath 3,425 An entity controlled by Eric McGrath holds a further 44,467 of the shares of the Company. 30

221 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Related parties (continued) The Directors of the Company (continued) The Directors' interests in the shares of the Company as at 31 December 2013 were as follows: 31 December 2013 Ordinary shares Brian Ahearne 117,036 Kevin Fitzgerald 117,036 Edmund Ryan 117,036 A Ordinary shares Paul V. Breen 6,523 James Osborne, Eric McGrath and Ian Ainsworth were appointed as Directors in The following table presents transactions with the Directors for the years ended and as at 31 December 2014 and Directors current account Company controlled by Eric McGrath Kevin Fitzgerald Brian Ahearne Edmund Ryan At 1 January ,113 67,227 Advances from Directors Repayments to Directors (5,546) At 31 December ,113 61,681 Advances from Directors 100,000 20,502 21,868 - Repayments to Directors (9,568) At 31 December ,000 20,502 51,981 52,113 The Subsidiary The Company holds 100% of the ownership interests in the Subsidiary, Kneat Solutions Inc. with registered office in Morristown, Pennsylvania, the United States of America. The principal activity of the Subsidiary is to sell a software application developed by the Company for modelling regulated data intensive processes for for Pharmaceutical, Biotech and Medical Device manufacturers. The Subsidiary is entitled to a management fee from the Company amounting to five percent of the value of software application license and license maintenance sales of the Subsidiary. The sales revenue recorded by the Subsidiary amounted to 201,185 for the year ended 31 December 2014 (2013: Nil). The sales to and purchases from the Subsidiary are made on terms equivalent to those that prevail in arm s length transactions. The amounts outstanding relate to management fees and amount to 4,426 as at 31 December 2014 (2013: Nil). Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. 31

222 KNEAT SOLUTIONS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December Events after the reporting date On February 10, 2016, Kneat Solutions Limited and Fortune Bay Corp. transaction agreement pursuant to which Fortune Bay will: ( Fortune Bay ) entered into a (i) (ii) spin-out its resources properties by way of a court-approved plan of arrangement in Ontario; and acquire 100% of the issued and outstanding ordinary shares of Kneat Solutions Limited by way of a concurrent scheme of arrangement in Ireland. Pursuant to the plan of arrangement with the Company, Fortune Bay shareholders will receive one new common share of Fortune Bay (each a New Fortune Bay Share ) and one and one half of a common share (a Spinco Share ) of a newly formed resource exploration company ( Spinco ) in exchange for each three common shares of Fortune Bay held by them. Upon closing of the plan of arrangement with Fortune Bay, the shareholders of Kneat Solutions Limited will hold 68.7% of the issued and outstanding New Fortune Bay Shares. (the New Group ) In addition to acquiring all the issued and outstanding shares of Kneat Solutions Limited, Fortune Bay will retain net 8.2 million Canadian dollars, which will be used to fund the operations of the New Group going forward. On 21 March 2016, Kneat and Fortune Bay entered into a Series A Secured Debenture agreement (the Debenture ). The Debenture has a fair value of 1,000,000, on interest rate of 7.25% per annum and a maturity date of 1 July, In the event the plan of arrangement is completed prior to 1 July, 2016, the Debenture will be become an intercompany loan between Fortune Bay and Kneat. In addition, the required Fortune Bay net cash balance of $8.2 million due on closing will be reduced by the amount of the Debenture plus all accrued interest. Subsequent to December 31, 2014 no share options were granted and 1,708 share options were forfeited. In addition, 112,903 common shares were issued for prices ranging from $14.67 to $16.16 per common share. There were no other events after the reporting date which necessitate disclosure in these financial statements. 22. Off balance sheet arrangements The Group was not party to off balance sheet arrangements for the year ended 31 December 2014 and Approval of the consolidated financial statements The consolidated financial statements were approved by the Board of Directors and authorised for issue on 9 May

223 SCHEDULE 2 MANAGEMENT DISCUSSION & ANALYSIS OF KNEAT SOLUTIONS LIMITED FOR THE FISCAL YEARS ENDED DECEMBER 31, 2015 AND

224 Kneat Solutions Limited Years ended December 31, 2015 and December 31, 2014 MANAGEMENT'S DISCUSSION AND ANALYSIS This Management's Discussion and Analysis ("MD& A") provides a review of the performance of Kneat Solutions Limited ("Kneat ) and should be read in conjunction with the audited consolidated financial statements of Kneat (as contained in Schedule 2 to this Appendix F) for the years ended December 31, 2015 and December 31, 2014which have been prepared in accordance with International Financial Reporting Standards ( IFRS ). The information presented in this MD&A is as of May 13, The reporting currency for Kneat is the Euro. All of the financial information presented herein is expressed in Euro, unless otherwise stated. United States dollars are indicated by the symbol "US$". Canadian dollars are indicated by the symbol CAD$. Kneat reports its financial position, results of operations, and cash flows in accordance with International Financial Reporting Standards ("IFRS"). This MD&A contains "forward-looking statements" that are subject to risk factors set out in a cautionary note contained herein. The reader is cautioned not to place undue reliance on forward-looking statements. COMPANY OVERVIEW On February 10, 2016, Fortune, Kneat and Canada Limited announced that they had signed the Transaction Agreement, whereby Fortune will: (i) spin-out its Fortune Mineral Properties by way of the Plan of Arrangement; and (ii) acquire 100% of the issued and outstanding Kneat Shares by way of a concurrent Scheme of Arrangement in Ireland. See "The Transaction The Arrangement" and "The Transaction The Merger" in the Circular. This MD&A and the consolidated financial statements for the years ending December 31, 2015 and December 31, 2014 have been prepared for inclusion in Fortune s Circular. Kneat is a privately owned company operating from its head office in Limerick, Ireland. Kneat designs, develops and supplies software for data and document management within regulated environments. Kneat s current product is Kneat Gx, a configurable, commercial, off the shelf application focused on validation lifecycle management and testing within the life sciences industry (i.e., Biotech, Pharmaceutical and Medical Device manufacturing). Complete and comprehensively documented validation of processes, products, equipment and software is a significant and impactful regulatory requirement in the life sciences industry. The Kneat Gx application provides a compliant e-solution that enables life science companies to become efficient and compliant with an automated process that has traditionally been manual, in-efficient and 100% paperbased. Every manufacturing process, every piece of equipment and every computer system involved in the manufacture of pharmaceutical, biotechnology and medical device products must be validated in accordance with cgmp regulations. Validation necessitates extensive signed and time stamped documentary evidence that all aspects of these systems are designed and tested to ensure that they will repeatedly produce products to the approved specifications. This documentation is subject to audit by global regulatory authorities such as the United States of America Food and Drug Administration and the European Medicines Agency. Traditionally validation and cgmp testing has been a manual paper intensive activity. Test documents must be developed, printed, approved, executed, post approved and filed away ready for regulatory audit in the future. Everything is done on paper using wet ink to record, apply proof signature and date, etc. It is a data and document minefield that leaves healthcare companies susceptible to delays, high costs and non-compliance. Non-compliance can lead to regulatory fines, recalls, threats to patient safety and delays to market. Non-compliance can cost companies billions of dollars in penalties, lost revenues and remediation. The solution that Kneat Gx provides to its customers is a complex one that has taken a dedicated professional team of industry experts nine years of intense research and development to overcome, consuming over 220,000 man hours, costing in excess of 9.5 million and delivering 700,000 lines of cutting edge technology. Kneat s customers cite Kneat Gx s innovation, ease of use, its central and dynamic data management, its configurability and its electronic records and signatures capabilities as the key differentiators that set it apart in the market. In addition, Kneat s team of developers, training manuals and customer support is considered best in class by its customers. Kneat has secured several blue chip customers to date, and all of these companies are expanding or planning to expand Kneat across their global organizations in the near to long term. Kneat possesses a best in class quality management system and is

225 certified to ISO In addition, it adheres to all applicable life science regulations such as all current cgmps, GAMP5, International Conference on Harmonization ICH Q8, Q9 and Q10, EU Annex 11, FDA CFR Title 21 Part 11 governing Electronic Records and Electronic Signatures. Adhering to these regulations and guidelines is a mandatory requirement in order to supply to this highly regulated market. Potential customers must perform extensive audits to verify compliance prior to purchasing Kneat s products. HISTORY Financial year ended December 31, 2013 Throughout the financial year ended December 31, 2013, Kneat raised in excess of 1.6 million through the issuance of Kneat Ordinary Shares and Kneat A Ordinary Shares. Funds were used in ongoing development of the Kneat Gx product and ongoing research. Costs of approximately 0.5 million were incurred and capitalized specifically to further develop the Kneat Gx platform. Financial year ended December 31, 2014 In order to increase its profile within the industry and gain additional expertise, James Osborne, Eric McGrath and Ian Ainsworth were appointed as non-executive directors of Kneat in As Kneat progressed significantly with customers in the United States, a presence in the United States was required. Thus, Kneat Solutions, Inc., a 100% wholly-owned subsidiary of Kneat, was incorporated in Pennsylvania, United States of America. Kneat raised in excess of 0.58 million through the issuance of Kneat Ordinary Shares and Kneat A Ordinary Shares. These funds were used to further develop the Kneat Gx platform, extend marketing and sales efforts and service newly acquired customers. Costs of approximately 0.7 million were incurred and capitalized specifically to further develop the Kneat Gx platform. The financial year ended December 31, 2014 was the first year in which Kneat was able to execute contracts with customers and recognize revenue. Kneat secured two multi-national biotech and diagnostics customers and recognized their first revenue from operations totalling approximately 0.2 million. Financial year ended December 31, 2015 Kneat raised in excess of 1.78 million through the issuance of Kneat Ordinary and Kneat A Ordinary Shares. These funds were used to further develop the Kneat Gx platform, extend sales reach throughout Europe and the United States of America and service current and newly acquired customers. Costs of approximately 0.7 million were incurred and capitalized specifically to further develop the Kneat Gx platform. Three additional multi-national customers were secured through the execution of license, maintenance and service agreements. Revenue totalling approximately 0.7 million was recognized. Recent Developments On February 9, 2016, Kneat signed the Transaction Agreement with Fortune and Canada Limited, whereby Fortune will: (i) spin-out its Fortune Mineral Properties by way of the Plan of Arrangement; and (ii) acquire 100% of the issued and outstanding Kneat Shares by way of a concurrent Scheme of Arrangement in Ireland. See "The Transaction The Arrangement" and "The Transaction The Merger" in the Circular. On March 21, 2016 Kneat issued a secured redeemable debenture (the " Debenture") to Fortune in the principal amount of 1,000,000 (the "Principal Sum") maturing on July 1, 2016 (the "Maturity Date") and bearing interest at a rate of 7.25% per annum. As general and continuing security for the due payment of the Debenture by Kneat to Fortune, Kneat has granted a first charge over all the property of Kneat, constituting a lien on all of the present and future property of Kneat. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between Fortune and Kneat. In addition, the required Fortune Cash Balance (as defined in the Transaction Agreement) will be reduced by the amount of the Principal Sum plus all accrued interest. Page 2

226 SELECTED ANNUAL INFORMATION Expressed in thousands of Euros and prepared in accordance with IFRS: Net loss and comprehensive loss for the year Total assets 2,806 1,582 1,334 Total liabilities 1,325 1, Cash dividends per common share N/A N/A N/A Kneat expects to record losses until such time as it invests in additional staffing for sales and marketing staff, further develops the Kneat Gx platform and secures additional customer contracts. Kneat estimates that the funding received on completion of the Arrangement will provide Kneat with the ability to make the investment in staffing and further development of the Kneat Gx platform in order to execute the growth strategy required to produce net income within the next two to five years. RESULTS OF OPERATIONS Year ended December 31, 2015 compared to the year ended December 31, 2014 During the year ended December 31, 2015, Kneat recorded a net loss before income taxes of 0.7 million, approximately 0.1 million lower than the net loss before income taxes incurred during the year ended December 31, The decrease in the net loss was primarily due to an increase in gross margin of 0.3 million offset by an increase in administrative costs as described below. Revenues increased by 0.5 million due to the acquisition of three new customers during the fiscal 2015 year compared to two customers in The revenue from the acquisition of new customers was partially offset by an increase in cost of sales (amortization of the intangible as set) of 0.2 million. The amortization of intangible assets of 0.3 million increased over 2014 due to additions to the intangible asset made during 2015 which increased the carrying value of the intangible asset. Overall administrative expenses of 1 million increased by 0.3 million due primarily to increases in employees salaries and wages of 95,000, and an increase in professional fees of 170,000. The increase in employees salaries and wages over the year ended December 31, 2014 due to the hiring of customer account managers to communicate and service customers on a regular basis. Professional fees increased by 170,000 primarily due to the ongoing Transaction with Fortune. Other items impacting the net change in administrative expenses are due to the following items. Consultancy fees of 87,000 were down from 139,000 from 2014 due to less consultants being required as full time staff were brought on board. The amount of Directors salaries included in the statement of loss increased by 22,000 due to the focus of certain directors being on sales in 2015 rather than product development. Social insurance costs increased by 15,000 due to an increase in workforce in 2015 over Audit fees increased by 35,000 primarily due to the conversion from Irish generally accepted accounting policies to IFRS. Year ended December 31, 2014 compared to the year ended December 31, 2013 During the year ended December 31, 2014, Kneat recorded a net loss before income taxes of 0.8 million, approximately 0.1 million higher than the net loss before income taxes incurred during the year ended December 31, The increase in the net loss was primarily due to an increase in administrative costs of 0.2 million, as described below, offset by an increase in gross margin of 0.1 million. Revenues increased by 0.2 million due to the acquisition of the first two customers during the fiscal 2014 year compared to no customers in The revenue from the acquisition of new customers was partially offset by an increase in cost of sales (amortization of the intangible asset) of 0.1 million. The amortization of intangible assets of 0.2 million increased over 2013 due to additions to the intangible asset made during 2014 which increased the carrying value of the intangible asset. Overall administrative expenses of 0.8 million increased by 0.2 million due primarily to increases in employees salaries and wages of 128,000, and an increase in other administrative costs of 99,000. The increase in employees salaries and wages over the year ended December 31, 2013 due to the hiring of key employees to drive the business forward and secure customers, including customer account managers to communicate and service customers on a regular basis. The increase in other administrative costs was primarily due to the ongoing costs of operating in a larger facility, travel costs to visit customer locations and training of staff. Page 3

227 Other items impacting the net change in administrative expenses are due to the following items. Consultancy fees of 139,000 were down from 193,000 from 2013 due to less consultants being required as full time staff were brought on board. In addition, there was an increase in costs associated with consulting fees being capitalized to the intangible asset in 2014 based on the nature of the work being performed by the consultants. The amount of Directors salaries included in the statement of loss increased by 6,000 due to the focus of certain directors being more towards sales and business development in 2014 rather than product development. Social insurance costs increased by 43,000 due to an increase in workforce in 2014 over Professional fees increased by 19,000 primarily due to increased legal and tax consultancy costs. LIQUIDITY AND CAPITAL RESOURCES Kneat s liquidity depends on existing cash reserves, supplemented as necessary by asset dispositions, equity and/or debt financings. As of December 31, 2015, Kneat had cash and cash equivalents on-hand of 702,000, compared to 13,000 as at December 31, Kneat s long term debt relates to the cumulative redeemable convertible preferred shares held by Enterprise Ireland. The cumulative redeemable convertible preferred shares are redeemable on the fifth anniversary date of the allotment. During the year ended December 31, 2015 and December 31, 2014 Kneat used cash of 349,000 and 351,000 respectively to fund operating activities. In addition, Kneat raised funds through financing activities of 1,783,000 and 584,000 for the years ended December 31, 2015 and December 31, 2014 respectively. Investing activities focused mainly on development of the intangible and tangible assets resulting in net cash outflow from investing activities of 745,000 and 719,000 for the years ended December 31, 2015 and December 31, 2014 respectively. Kneat s business to date has been the development of the Kneat Gx platform which has generated limited revenues to date. Kneat has historically relied primarily on funding through the issuance of common and preferred shares. Refer to Note 2 in the consolidated financial statements of Kneat for further details surrounding the ability of Kneat to continue as a going concern. COMMITMENTS AND CONTINGENCIES In the normal course of business, Kneat enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining contractual maturities of the financial liabilities. The amounts included in this table may not result in an actual obligation of Kneat as the requirement to settle certain of these amounts is contingent on the occurrence of certain events that may or may not transpire: Payments due by period as of December 31, 2015 Within 1 year 2-3 years 4-5 years Over 5 years Total Accounts payable and accrued liabilities 388, , ,817 Directors current account 171, ,094 Cumulative redeemable convertible preferred shares - 642, , , , ,325,473 OFF-BALANCE SHEET ARRANGEMENTS Kneat has no off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market, or credit risk to Kneat. OUTSTANDING SHARE INFORMATION The authorized share capital of Kneat consists of 1,300,000 Kneat Ordinary Shares, 800,000 Kneat A Ordinary Shares, 300,000 Kneat Convertible Shares, 300,000 Kneat A Convertible Shares and 300,000 Kneat A Preference Shares. As of April 30, 2016, 578,174 Kneat Ordinary Shares, 216,080 Kneat A Ordinary Shares, 232,000 Kneat Convertible Shares and 300,000 Kneat A Convertible Shares were issued and outstanding. Page 4

228 Enterprise Ireland has agreed to exchange its Kneat Shares in Kneat, comprising 232,000 Kneat Convertible Shares and 300,000 Kneat A Convertible Shares, for the EI Loan, payable to Enterprise Ireland on the third anniversary of the Merger Effective Date. As of April 30, 2016, a total of 30,558 Kneat incentive stock options were issued and outstanding. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an exercise price of $0.90 will be granted by Fortune to former holders of the Kneat options and other individuals as the Kneat Board deems appropriate. See "Appendix G Information Concerning New Fortune Options to Purchase Securities". PROPOSED TRANSACTIONS As outlined in the Company Overview section of this MD&A, Kneat announced the signing of a definitive agreement with Fortune and Canada Limited on February 10, This transaction is subject to the approvals of the TSX and shareholders of Fortune and Kneat. RELATED PARTY TRANSACTIONS During the year ended December 31, 2015, Kneat issued 2,727 shares valued at 40,000 (2014 nil) in lieu of cash payments. Further transactions with related parties are outlined in Note 20 to the audited financial statements for the year ended December 31, FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Market Risk Market risk embodies the potential for both losses and gains and includes currency risk and interest rate risk. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk exposure arises from Kneat entering into transactions which are denominated in currencies other than its functional currency. Kneat is exposed to currency risk through its subsidiary, Kneat Solutions Inc., whose functional currency is US dollar. Kneat is exposed to the risk that the exchange rate of its functional currency, relative to the US dollar may change in a manner that can have adverse effect on the value of that portion of Kneat s assets or liabilities denominated in US dollar. It is not the policy of Kneat to hedge its currency exposure through the use of derivative instruments. Kneat s exposure to foreign currency risk is at December 31, 2015 is 107,000 ( ,000). Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances, credit card borrowings and overdue taxation included within accounts payable on the consolidated statement of financial position. Kneat holds cumulative redeemable convertible preference shares with a fixed dividend/interest rate. These are privately issued, with no secondary market. They are measured at amortised cost and bear a fixed dividend/interest rate and as a result Kneat is not exposed to the cash flow interest rate risk on cumulative redeemable convertible preference shares. Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with Kneat. The carrying amounts of financial assets best represent the maximum credit risk exposure at the Page 5

229 reporting date. At December 31, 2015 and December 31, 2014 Kneat s financial assets exposed to credit risk amounted to the following: December 31, 2015 December 31, 2014 Cash and cash equivalents 702,000 13,000 Accounts receivable 675, ,000 During the years ended December 31, 2015 and December 31, 2014, Kneat did not hold any financial assets that were past due or impaired. Trade debtors of 152,036 are included in accounts receivable as at December 31, 2015 ( ,548). Trade debtors are monitored on a regular basis in order to minimise material ageing and to ensure adequate collection. Cash balances are held with the payment bank, Bank of Ireland which is a reputable institution and Kneat ensures that there are no indicators that would challenge the credit worthiness. The long-term credit rating, as determined by Standard & Poor s of Bank of Ireland is BBB- as at the date the consolidated financial statements were approved by the Board of Directors and authorised for issue. RISK FACTORS Risk factors related to Kneat are outlined in this Appendix F Information Concerning Kneat - Risk Factors. CRITICAL ACCOUNTING POLICIES The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Kneat s significant accounting policies are disclosed in Note 3 to the December 31, 2015 consolidated financial statements. Kneat has identified certain accounting policies that it believes are most critical in understanding the judgments that are involved in producing the consolidated financial statements and the estimates made that could impact results of the operations, which are discussed below. Intangible assets Research and development Expenditure on research activities undertaken with the prospect of gaining new technical knowledge and understanding, is recognised in the consolidated statement of comprehensive income as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if Kneat can demonstrate that it meets all of the following criteria: The technical feasibility of completing the intangible asset so that it will be available for use or sale; Intention to complete the intangible asset and use or sell it; Ability to use or sell the intangible asset; The intangible asset will generate probable future economic benefits; The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and The ability to measure reliably the expenditure attributable to the intangible asset during its development. The expenditure capitalised in respect of intangible assets includes the cost of direct labour and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use. Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses. Subsequent expenditure on capitalised intangible assets Page 6

230 is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the consolidated statement of comprehensive income as incurred. Intangible assets are amortised based on the cost of an asset less its residual value. Intangible assets have finite useful lives. Amortisation is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful economic life of intangible assets, from the date that the asset is available for use, based on a rate of 20%. Share-based payments Kneat operates equity settled share based remuneration plans for the remuneration of a number of key employees. All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Share based payments are recognised as an expense in the consolidated statement of comprehensive income with a corresponding credit to retained earnings in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. Upon exercise of share options, the proceeds received up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium. Going Concern The consolidated financial statements are prepared on a going concern basis, as the Directors are satisfied that Kneat has the resources necessary to continue in business for the foreseeable future. In making this assessment the Directors have considered a wide range of information relating to present and future conditions. As a result of the ongoing Transaction and the ability of the Directors to raise equity financing to date, the Directors have a reasonable expectation that Kneat has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they have adopted the going concern basis in preparing the audited consolidated financial statements. SIGNIFICANT ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of the consolidated financial statements requires that management make estimates and judgments about future events that affect the amounts reported in the consolidated financial statements and related notes to the combined carve-out financial statements. Actual results may differ from those estimates. Estimates and judgments are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates are accounted for prospectively. The significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of Kneat s assets and liabilities are outlined in Note 2 to the December 31, 2015 audited financial statements. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION This MD&A contains "forward-looking information", as such term is defined in applicable Canadian securities legislation. Forward-looking information is necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. All statements other than statements which are reporting results as well as statements of historical fact set forth or incorporated herein by reference, are forward looking information that may involve a number of known and unknown risks, uncertainties and other factors, many of which are beyond Kneat s ability to control or predict. Forward-looking information can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue," or the negative of such terms, or other comparable terminology. This information includes, but is not limited to comments regarding: the completion of the transaction with Fortune; the development plans for the Kneat Gx platform; liquidity to support operations; the ability to secure additional customers and additional revenues; the risk of competitors entering the market; the ability to obtain financing to fund future expenditure and capital requirements; and the impact of adoption of new accounting standards. Although Kneat believes that the plans, intentions and expectations reflected in this forward-looking information are reasonable, Kneat cannot be certain that these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking information Page 7

231 contained in this report. Disclosure of important factors that could cause actual results to differ materially from Kneat s plans, intentions or expectations is included in this report under the heading "Risk Factors". Forward-looking information inherently involves risks and uncertainties that could cause actual results to differ materially from the forward-looking information. Factors that could cause or contribute to such differences include, but are not limited to unexpected changes in business and economic conditions, including the global financial and capital markets; changes in interest and currency exchange rates; changes in operating costs and revenues; political or economic instability, either globally or in the countries in which Kneat operates; local and community impacts and issues; labour disputes; environmental costs and risks; competitive factors; availability of external financing at reasonable rates or at all; and the factors discussed in this MD&A under the heading "Risk Factors". Many of these factors are beyond Kneat s ability to control or predict. These factors are not intended to represent a complete list of the general or specific factors that may affect Kneat. Kneat may note additional factors elsewhere in this MD&A. All forward-looking statements and information speak only as of the date made. All subsequent written and oral forward-looking statements attributable to Kneat, or persons acting on Kneat s behalf, are expressly qualified in their entirety by these cautionary statements. Readers are cautioned not to put undue reliance on forward-looking information due to the inherent uncertainty therein. Kneat disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Page 8

232 APPENDIX G INFORMATION CONCERNING NEW FORTUNE. G-1

233 APPENDIX G INFORMATION CONCERNING NEW FORTUNE TABLE OF CONTENTS CORPORATE STRUCTURE... G-2 Name and Incorporation... G-2 Intercorporate Relationships... G-2 NARRATIVE DESCRIPTION OF THE BUSINESS... G-2 Stated Business Objectives... G-2 Milestones... G-3 DESCRIPTION OF SECURITIES... G-3 New Fortune Shares... G-3 New Fortune Options... G-3 New Fortune Warrants... G-4 New Fortune Deferred Share Units... G-4 PRO FORMA CAPITALIZATION... G-4 Pro Forma Consolidated Capitalization... G-4 Fully Diluted Share Capital... G-4 AVAILABLE FUNDS AND PRINCIPAL PURPOSES... G-5 Funds Available... G-5 Dividends... G-6 PRINCIPAL SECURITYHOLDERS... G-6 DIRECTORS, OFFICERS AND PROMOTERS... G-6 Name, Municipality of Residence, Occupation and Security Holdings... G-6 Management... G-7 Promoter Consideration... G-9 Cease Trade Orders... G-9 Penalties or Sanctions... G-9 Personal Bankruptcies... G-9 Conflicts of Interest... G-10 Other Reporting Issuer Experience... G-10 EXECUTIVE COMPENSATION... G-10 Compensation Discussion and Analysis... G-11 INDEBTEDNESS OF DIRECTORS AND OFFICERS... G-13 INVESTOR RELATIONS ARRANGEMENTS... G-13 OPTIONS TO PURCHASE SECURITIES... G-13 Options to Purchase Securities... G-13 Stock Option Plan... G-14 ESCROWED SECURITIES... G-16 AUDITOR, TRANSFER AGENT AND REGISTRAR... G-17 SCHEDULE 1 UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF NEW FORTUNE... 1 SCHEDULE 2 FORTUNE AMENDED STOCK OPTION PLAN... 1 G-1

234 The following describes the proposed business of New Fortune upon completion of the Transaction and should be read together with the financial statements of Fortune Bay Corp. ("Fortune") available on SEDAR at the unaudited pro forma financial statements of New Fortune attached as Schedule 1 to this Appendix G and the more detailed information contained elsewhere in the management information circular of Fortune dated May 13, 2016, to which this Appendix E is attached (the "Circular"). The information contained in this Appendix G, unless otherwise indicated, is given as of April 30, Except where the context otherwise requires, all information contained in this Appendix G is made on the basis that the Transaction has been completed as described in the Circular. Capitalized terms used in this Appendix G and not defined herein have the meaning ascribed to such terms in the "Glossary of Terms" or elsewhere in the Circular. Unless otherwise indicated herein, references to "$" are to Canadian dollars, references to "US$" are to United States dollars and references to " " are to the European Euro. See "Currency and Exchange Rates" in the Circular. See also "Cautionary Note Regarding Forward-Looking Statements and Risks" in the Circular. CORPORATE STRUCTURE Name and Incorporation Upon completion of the Transaction, Fortune expects to change its name to kneat.com, inc. or such other name as may be approved by Kneat in its sole discretion. New Fortune will continue to be a corporation existing under the CBCA. The head office of New Fortune will be at Kneat's current head office, located at Unit 7, Castletroy Park Business Centre, Castletroy, Limerick, Ireland. The registered office of New Fortune will be located at Fortune's current head and registered office at Suite 2001, 1969 Upper Water Street, Halifax, Nova Scotia, B3J 3R7. Intercorporate Relationships Following completion of the Transaction, New Fortune will have one wholly-owned subsidiary, Kneat Solutions, Inc., which is currently, a 100% wholly-owned subsidiary of Kneat, incorporated in 2014 in Pennsylvania, United States of America. NARRATIVE DESCRIPTION OF THE BUSINESS Stated Business Objectives Following the completion of the Transaction, the Resulting Issuer will continue the business of Kneat. Fortune and Kneat intend that the Resulting Issuer will use its financial resources for the following business objectives: development of new features and functionality based on customer feedback; product advancements to enhance the user experience; development and deployment of the multi-tenant SaaS model to small and medium size customers; securing contracts with key customer targets; and expansion of the operational management team in order to reach these and other key future objectives. For information on the business of New Fortune, see "Narrative Description of the Business" in "Appendix F Information Concerning Kneat" to the Circular. There is no assurance that the Resulting Issuer will be successful in meeting the objectives described above. See "Appendix F Information Concerning Kneat Risk Factors" for information relating to the risks associated with the business of Kneat, which are expected to be the risk associated with the Resulting Issuer upon completion of the Transaction. G-2

235 Milestones In order to achieve the key objectives outlined above, the following milestones and related timelines are expected to be accomplished by the New Fortune: Key Milestone Timeline Anticipated cost New Fortune expects to hire approximately fourteen code developers and eight quality control engineers in In addition, twelve code developers and six quality control engineers are expected to be hired throughout New Fortune expects to acquire a minimum of nine new customers in 2016, while further expanding their reach within their current customer base. In 2017, New Fortune expects to further expand the customer base through acquiring customers with the SaaS model. New Fortune expects to expand the office footprint to 8,000 square feet in order to house the new staff that is expected to be hired. Throughout 2016 and 2017, management expects to focus on hiring these key individuals in order to ensure there is adequate man hours available to develop the new features and functionality as well as the SaaS delivery model. Sales managers are to be hired starting in the second quarter of 2016 and throughout Negotiations on the new premises are in progress. The cost for hiring these individuals in 2016 and 2017 is expected to be approximately 2,200,000 through to the end of fiscal year The salary costs for sales and marketing managers associated with acquiring the new customers are anticipated to be approximately 1,500,000 through to the end of fiscal year The additional annual lease costs is anticipated to be 85,000 per annum. DESCRIPTION OF SECURITIES New Fortune Shares New Fortune will be authorized to issue an unlimited number of New Fortune Shares (which will replace the Fortune Shares). All issued and outstanding New Fortune Shares will be fully paid and non-assessable common shares without par value. Each holder of record of New Fortune Shares will be entitled to one vote for each New Fortune Share so held on all matters requiring a vote of shareholders, including the election of directors. The holders of New Fortune Shares will be entitled to dividends on a pro rata basis, if and when as declared by the board of directors. There will be no preferences, conversion rights, pre-emptive rights, subscription rights or restrictions on transfers attached to the New Fortune Shares. In the event of liquidation, dissolution, or winding up of New Fortune, the holders of New Fortune Shares will be entitled to participate in the assets of New Fortune available for distribution after satisfaction of the claims of creditors. New Fortune Options There are currently 2,000,000 Fortune Options outstanding. Upon completion of the Transaction, the Fortune Options will be consolidated on a one-for-three basis (1:3) resulting in a total of 666,667 New Fortune Options at an average exercise price of $0.90. In addition, there are currently 30,558 Kneat Options issued and outstanding. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat Options will be cancelled and an aggregate of up to 1,456,479 New Fortune Options at an estimated exercise price of $0.90 will be granted by Fortune to former holders of the Kneat Options and other individuals as determined by the New Fortune Board. New Fortune intends to implement the Fortune Amended Stock Option Plan upon completion of the Transaction, subject to receipt of the necessary Fortune Shareholder approval and approval of the TSXV. At the Meeting, Fortune Shareholders will be asked, among other things, to consider, and if thought advisable, pass an ordinary resolution approving the Fortune Amended Stock Option Plan, as more particularly described under the heading "Approval of Fortune Amended Stock Option Plan" in the Circular. For a summary of the Fortune Amended Stock Option Plan, see "Options to Purchase Securities Stock Option Plan" in this Appendix G. G-3

236 New Fortune Warrants There are currently 803,572 Fortune Warrants outstanding. Upon completion of the Transaction, the Fortune Warrants will be consolidated on a one-for-three basis (1:3) resulting in a total of 267,857 New Fortune Warrants at an exercise price of $0.90. New Fortune Deferred Share Units Currently, Fortune has the deferred share unit plan (the "DSUP"), which was approved by the Fortune Shareholders on June 23, There are currently no DSUs issued and outstanding. For details regarding the DSUP, please see "Appendix E Information Concerning Fortune and Annual Meeting Matters Security Based Compensation Arrangements Deferred Share Unit Plan". At the Meeting, in connection with the anticipated lisitng on the TSXV, Fortune Shareholders will be asked to approve the DSUP and the reservation of 2,000,000 Fortune Shares for issuance thereunder. See "Other Matters to be Considered at the Meeting Approval of the DSUP". Subject to receipt of a disinterested Fortune Shareholders' approval of the DSUP at the Meeting, New Fortunes intends to continue to implement the DSUP and and to grant deferred share units ("DSUs") thereunder. PRO FORMA CAPITALIZATION Pro Forma Consolidated Capitalization The following table sets forth the pro forma share capital of the Resulting Issuer as at December 31, 2015 on a consolidated basis, based on the unaudited pro forma financial statements of New Fortune attached to this Appendix G as Schedule 1, after giving effect to the Transaction. For purposes of preparing the pro forma consolidated capitalization, amounts recorded in in the financial statements of Kneat were translated into $ at a rate of 1.00 to $1.5126, which was the exchange rate in effect at December 31, 2015: Designation of Security Amount Authorized or to be Authorized Amount Outstanding as of December 31, 2015 after giving effect to the Transaction New Fortune Shares Unlimited $8,858,765 39,563,636 (1)(2)(3) Deficit N/A $11,256,014 Notes: (1) In addition, (i) up to 2,123,146 New Fortune Shares will be reserved for issuance pursuant to the exercise of the New Fortune Options (See "Options to Purchase Securities" in this Appendix G); (iv) up to 267,857 New Fortune Shares will be reserved for issuance pursuant to the exercise of the New Fortune Warrants currently issued and outstanding; and (v) up to 2,000,000 New Fortune Share are issuable under the DSUP (for details regarding the DSUP, please see "Appendix E Information Concerning Fortune and Annual Meeting Matters Security Based Compensation Arrangements Deferred Share Unit Plan". At the Meeting, in connection with the anticipated listing of the New Fortune on the TSXV, Fortune Shareholders will be asked to approve the DSUP - see "Other Matters to be Considered at the Meeting Approval of the DSUP"). (2) 17,048,662 New Fortune Shares will be held in escrow after the completion of the Transaction (See "Escrowed Securities" in this Appendix G). (3) This amount includes the gross proceeds of $2,300,000 that were raised in a private placement completed on March 24, 2016, pursuant to which Fortune issued 7,665,549 (being 2,555,183 New Fortune Shares on post-transaction) Fortune Shares at an issue price of $0.30 (being $0.90 on post-transaction basis) per Fortune Share (See "Appendix E Information Concerning Fortune and Annual Meeting Matters General Development of the Business History"). Fully Diluted Share Capital The following table states the diluted share capital of the Resulting Issuer upon completion of the Transaction. The table above should be read in conjunction with the unaudited pro forma consolidated financial statements and the accompanying notes thereto attached as Schedule 1 to this Appendix G for a description of the assumptions made in connection with the information set out in the above table. Category of Securities Number of Securities Total Number of New Fortune Shares to be Issued and Outstanding following completion of the Transaction on a Fully Diluted Basis New Fortune Shares issuable to Fortune Shareholders in 12,385,515 (1) 29.52% G-4

237 connection with the Arrangement New Fortune Shares issuable to Kneat Shareholders in connection with the Transaction 27,178,121 (2) 64.78% Total New Fortune Shares of the Resulting Issuer (non diluted): 39,563, % New Fortune Shares reserved for issuance upon exercise of the New Fortune Options New Fortune Shares reserved for issuance upon exercise of the New Fortune Warrants 2,123, % 267, % Total New Fortune Shares of the Resulting Issuer (fully diluted): 41,954, % Notes: (1) This number includes: (i) 2,555,183 New Fortune Shares issuable to Fortune Shareholders, being persons who participated in the March 24, 2016 private placement, in connection with the Arrangement (see "Appendix "E" Information Concerning Fortune and Annual Meeting Matters General Development of the Business History"); (ii) 440,833 New Fortune Shares issuable to certain executives, Fortune Board members and non-executive employees of Fortune immediately prior to closing of the Transaction, in connection with the Arrangement (see "Other Matters to be Considered at the Meeting Approval of the Compensaiton Shares"); and (iii) 113,333 New Fortune Shares issuable to a finder immediately prior to closing of the Transaction, in connection with the Arrangement. (2) Certain of these New Fortune Shares will be subject to escrow restrictions upon the completion of the Transaction (see "Escrowed Securities" in this Appendix G). AVAILABLE FUNDS AND PRINCIPAL PURPOSES Funds Available As at April 30, 2016, Fortune had estimated working capital of $9,200,000 and Kneat had estimated working negative working capital of $150,000. It is estimated that upon completion of the Transaction, New Fortune will have $7,400,000 in working capital. The following table sets out the estimated available funds after giving effect to the Transaction and the proposed principal uses for those funds: Expenditure Increase in salaries and wages, recruitment costs and commissions due to hiring of key employees including sales staff, CFO, account managers and program developers over the twelve month period following the Transaction Amount (as at April 30, 2016) $3,000,000 Expansion of office space and infrastructure improvements $370,000 Marketing and distribution (non-labour) $200,000 Research and development (non-labour) $345,000 Estimated amount payable under the EIIS Proposal (1) $670,000 General and Administrative $400,000 Unallocated Working Capital (2) $2,415,000 Note: (1) For details regarding the EIIS Proposal, please see in the Circular "The Transaction The Merger The Effect of the Merger". The $670,000 ( 448,000) included above is the maximum estimated expenditure. (2) It is intended that unallocated working capital will be used for the purposes of funding the continued marketing and expansion of the Resulting Issuer's operation and for general working capital purposes. The above uses of available funds should be considered as estimates only. Notwithstanding the proposed uses of available funds as discussed above, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. It is difficult at this time to definitively project the total funds necessary to effect the planned undertakings of the Resulting Issuer. For these reasons, management considers it to be in the best interests G-5

238 of the Resulting Issuer and its shareholders to permit management a reasonable degree of flexibility as to how the Resulting Issuer's funds are employed among the above uses or for other purposes, as the need may arise. Dividends On completion of the Transaction, Fortune and Kneat anticipate that New Fortune will retain all of its future earnings, if any, for use in the development and expansion of its business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of the board of New Fortune (the "New Fortune Board"). PRINCIPAL SECURITYHOLDERS To the knowledge of Fortune and Kneat, after completion of the Transaction, no person or company will beneficially own, directly or indirectly, or exercise control or direction over, more than 10% of the issued and outstanding New Fortune Shares, other than as disclosed below. Name of Shareholder & Municipality of Residence Number of New Fortune Shares Held Percentage of Outstanding New Fortune Shares BEEK Investments Ltd. (1) Republic of Ireland 13,535, % (2) Note: (1) BEEK Investments Ltd ("BEEK") is owned by Brian Ahearne, Kevin Fitzgerald, Edmund Ryan and McGrath s Pharmacy Ltd. The directors of BEEK are Brian Ahearne, Kevin Fitzgerald, Edmund Ryan and Eric McGrath. See "Directors, Officers and Promoters" below. (2) On a fully diluted basis, BEEK's percentage of New Fortune Shares would be reduced to 32.36%. DIRECTORS, OFFICERS AND PROMOTERS Name, Municipality of Residence, Occupation and Security Holdings The following table sets forth information with respect to the expected directors and executive officers of New Fortune, including their province or state and country or residence, their expected position(s) with New Fortune, their principal occupation and the anticipated number of New Fortune Shares e beneficially owned, directly or indirectly, or over which control or direction is exercised, by such person or the person's associates or affiliates, assuming completion of the Transaction. Name, Municipality of Residence and Position to be Held Director/Officer Since Principal Occupation for Past Five Years Number of New Fortune Shares Percentage of New Fortune Shares Edmund Ryan (5) Cork, Republic of Ireland President, Chief Executive Officer and Director Kevin Fitzgerald (5) Co. Clare, Republic of Ireland Director of Research & Development Brian Ahearne (5) Co. Clare, Republic of Ireland Director of Quality February 4, 2004/February 4, 2004 February 4, 2004/February 4, 2004 February 4, 2004/February 4, 2004 CEO & Sales Director, Kneat 4,004, % R&D Director, Kneat 4,004, % Quality Director, Kneat 4,004, % Sarah Oliver Halifax, Nova Scotia, Canada Chief Financial Officer and Corporate Secretary November 10, 2014 CFO, Fortune; Former Senior Manager, PricewaterhouseCoopers LLP 75, % Paul Breen (3) November 20, CEO and Co-founder, BrePco 223, % G-6

239 Dublin, Republic of Ireland Director 2007 Biopharma Ltd.; Chairman, Kneat James Osborne (2) (3) Dublin, Republic of Ireland Director August 25, 2014 Managing Partner, A&L Goodbody 655, % Ian Ainsworth (2) Toronto, Ontario, Canada Director June 26, 2014 Investment manager, Cedar Lane Investments; previously, director, MacKenzie Investments Ltd. 455, % Wade K. Dawe (2)(4) Halifax, Nova Scotia, Canada Director January 14, 2014/January 14, 2014 Chairman and CEO, Fortune of the Company; former Chairman and CEO, Brigus Gold Corp. 2,103, % Total: 15,527, % Notes: (1) The information as to New Fortune Shares beneficially owned or over which control or direction is exercised, not being within the knowledge of Fortune or Kneat, has been furnished by the respective expected directors and executive officers individually and assumes completion of the Transaction. (2) Proposed member of the Audit Committee. (3) Proposed member of the Nominations and Compensation Committee. (4) Mr. Dawe will hold: 833 New Fortune Shares indirectly through BC Ltd., 546,167 New Fortune Shares indirectly through Brigus Capital Inc.,727,926 New Fortune Shares indirectly through Kelligrew Inc., and 8,333 New Fortune Shares indirectly through Wade K. Dawe Inc., each of which is a company of which he is the controlling shareholder. (5) Mr. Ryan, Mr. Ahearne and Mr. Fitzgerald hold their shares indirectly through BEEK. Management The following are summaries of the proposed directors and principal management of the Resulting Issuer, including their respective proposed positions with the Resulting Issuer and relevant work and educational background. Edmund Ryan, 52 President, Chief Executive Officer and Director Mr. Ryan is a mechanical engineer with a diploma in sales and marketing. He has 14 years of experience in design, production and project management within pharmaceutical manufacturing and eight years of experience in regulated IT development and sales to Life Sciences. Mr. Ryan has managed multidisciplinary pharmaceutical projects on behalf of blue-chip companies. He also headed Irish sales for multinational manufacturers of capital and consumable pharmaceutical equipment. Mr. Ryan holds a Bachelor of Engineering (Mechanical Engineering) from the University of Limerick and a post graduate diploma in International Sales and Marketing from the Dublin Institute Technology. It is expected that Mr. Ryan will commit 100% of his time in connection with the Resulting Issuer. It has not been determined yet whether Mr. Ryan will be an independent contractor to or an employee of the Resulting Issuer. Kevin Fitzgerald, 46 Director of Research and Development Mr. Fitzgerald is currently the Director of Research and Development at Kneat. He is an electronic engineer with nine years of experience in design and project management within the pharmaceutical manufacturing industry and has ten years of experience in research and development of regulatory IT products for the life sciences industry. Mr. Fitzgerald obtained his Bachelor of Engineering (Electronic Engineering) from the University of Limerick and a Bachelor of Science (Electronic Engineering) from the Dublin Institute of Technology. Mr. Fitzgerald will commit 100% of his time in connection with the Resulting Issuer. It has not been determined yet whether Mr. Fitzgerald will be an independent contractor to or an employee of the Resulting Issuer. Brian Ahearne, 47 Director of Quality G-7

240 Mr. Ahearne is a mechanical engineer with a master's degree in software development. He has 21 years of experience developing software applications, implementing and maintaining IT Quality Management Systems. Ten of these years were involved in developing software for the Life Sciences Industry. Mr. Ahearne also held lecturing roles at the University of Limerick. It is expected that Mr. Ahearne will commit 100% of his time in connection with the Resulting Issuer. It has not been determined yet whether Mr. Ahearne will be an independent contractor to or an employee of the Resulting Issuer. Sarah Oliver, 32 Chief Financial Officer and Corporate Secretary Ms. Oliver has been the CFO of Fortune since November Prior thereto, she was a senior manager at PricewaterhouseCoopers LLP. Ms Oliver is a Chartered Professional Accountant and a member of the Institute of Chartered Accountants of Nova Scotia. Ms. Oliver obtained her Bachelor of Commerce Degree from Dalhousie University. It is expected that Ms. Oliver will commit approximately 95% of her time in connection with the Resulting Issuer. It has not been determined yet whether Ms. Oliver will be an independent contractor to or an employee of the Resulting Issuer. Paul Breen, 59 Director Mr. Breen is a scientist with a diploma in finance. He has more than 30 years of experience in the pharmaceutical industry. Mr. Breen started his career in pharmaceutical sales and marketing before moving into pharmaceutical operations. During his career he has headed up sales, marketing and operations for a number of multinational pharmaceutical companies. Mr. Breen is the CEO and co-founder of BrePco Biopharma Ltd., a private healthcare company based in Ireland aimed at developing products for the unique needs of pediatric or other vulnerable patient populations. He holds a Bachelor of Science from the University College Dublin. Mr. Breen will not commit fulltime for the Resulting Issuer, however, he will devote such time as is required to effectively satisfy his duties as a director of the Resulting Issuer. James Osborne, 67 Director Mr. Osborne is a lawyer and prominent Irish businessman. He spent 12 years as the managing partner of A&L Goodbody. He opened and headed A&L Goodbody's office in New York. Mr. Osborne contributed to the flotation of Ryanair in London, New York and Dublin. Mr. Osborne sits on the board of Ryanair Holdings plc. Mr. Osborne will not commit fulltime for the Resulting Issuer, however, he will devote such time as is required to effectively satisfy his duties as a director of the Resulting Issuer. Ian Ainsworth, 65 Director Mr. Ainsworth has more than 30 years of experience building and managing large investment teams, operating in both public and private markets in Europe and North America. He has managed large funds on behalf of private and institutional clients with a keen interest in healthcare and information technology. As managing director and Chief Investment Officer of one of Canada's leading mutual fund companies, he won several awards for investment performance. Mr. Ainsworth has a Master of Business Administration in Finance and is a Chartered Financial Analyst. Mr. Ainsworth will not commit fulltime for the Resulting Issuer, however, he will devote such time as is required to effectively satisfy his duties as a director of the Resulting Issuer. Wade K. Dawe, 46 Director G-8

241 Mr. Dawe is currently the Chairman and Chief Executive Officer of Fortune. He has been an entrepreneur in Canadian mining and venture capital industries since 1994 and has consistently demonstrated strong results for shareholders through strategic planning, quality acquisitions and partnerships, and by retaining and developing industry respected senior management and directors. He is a director and Chairman of Stockport Exploration Inc., and serves on the board of directors of Immunovaccine Inc. and Metallum Resources Inc. He was previously the Chairman and Chief Executive Officer of Brigus Gold Corp. Mr. Dawe has a bachelor of commerce degree from Memorial University of Newfoundland, where he currently serves on the Advisory Board to the Faculty of Business Administration. Mr. Dawe will not commit fulltime for the Resulting Issuer, however, he will devote such time as is required to effectively satisfy his duties as a director of the Resulting Issuer. Promoter Consideration Each of Paul Breen, Edmund Ryan, Kevin Fitzgerald and Wade K. Dawe may be considered to be promoters of the Resulting Issuer as they took the initiative in organizing the business of Kneat and Fortune, respectively. Upon completion of the Transaction, 223,208 New Fortune Shares, 4,004,803 New Fortune Shares, 4,004,803 New Fortune Shares and 2,103,704 New Fortune Shares will be beneficially owned, directly or indirectly, or over which control or direction will be exercised, by Mr. Breen, Mr. Ryan, Mr. Fitzgerald and Mr. Dawe, respectively. Included above, is 833,333 Fortune Shares that Fortune will issue to Mr. Dawe in connection with the change of control payments that he is entitled to receive pursuant to the terms of his employment contract with Fortune. See, in the Circular "The Transaction The Arrangement Interests of Certain Persons in the Transaction". Cease Trade Orders The following information has been furnished by the proposed directors or executive officers. No proposed director is, or, within the ten years before the date of this Circular has been, a director, chief executive officer or chief financial officer of any issuer that: (a) (b) while such person was acting in that capacity, was the subject of a cease trade or similar order, or an order that denied the relevant company access to any exemptions under securities legislation, for a period of more than 30 consecutive days (an "Order"); or was subject to an Order that was issued, after such person ceased to be a director, chief executive officer or chief financial officer, and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. Penalties or Sanctions The following information has been furnished by the proposed directors or executive officers. No proposed director or executive officer of New Fortune, or a shareholder holding a sufficient number of securities of New Fortune to affect materially the control of New Fortune, has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. Personal Bankruptcies No proposed director or executive officer of New Fortune, or a shareholder holding a sufficient number of securities of New Fortune to affect materially the control of New Fortune: (a) is, as at the date of the Circular, or has been within the 10 years before the date of the Circular, a director or executive officer of any company (including Fortune) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, state the fact; or G-9

242 (b) has, within the 10 years before the date of the Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. Conflicts of Interest To the knowledge of Fortune and Kneat, and other than disclosed herein, upon completion of the Transaction, there will be no known conflicts of interest among New Fortune and its proposed directors, officers or other members of management as a result of their outside business interests except that certain directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to New Fortune and their duties as a director or officer of such other companies. The proposed directors of New Fortune will be required by law to act honestly and in good faith with a view to the best interests of New Fortune and to disclose any interests that they may have in any material contract or material transaction. If a conflict of interest arises at a meeting of the New Fortune Board, any director in a conflict is required to disclose his or her interest and abstain from voting on such matter. The expected directors and officers of New Fortune are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest in respect of New Fortune and are required to comply with such laws in respect of any directors' and officers' conflicts of interest or in respect of any breaches of duty by any of its directors or officers. Other Reporting Issuer Experience The following table sets out the proposed directors, officers and promoter of the Resulting Issuer that are, or have been within the last five years, directors, officers or promoters of other reporting issuers: Other Reporting Issuer Experience Name Reporting Issuer Name of Trading Market Position From To Wade Dawe Sarah Oliver Fortune Bay Corp. TSX Chairman and CEO March 2014 Present Brigus Gold Corp. (formerly Linear Gold Corp) TSX Chairman and CEO June 2010 March 2014 NWest EnergyCorp. TSXV Director January 2008 June 2013 Metallum Resources Inc. TSXV Director August 2013 Present ImmunoVaccine Inc. TSX Director October 2007 April 2014 Stockport Exploration Inc. (formerly Linear Metals Corporation) September 2014 Present TSX Chairman and Director November 2004 Present Fortune Bay Corp. TSX CFO November 2014 Present EXECUTIVE COMPENSATION The statement of executive compensation contained in this section relates only to the proposed executive compensation of the Resulting Issuer assuming completion of the Transaction, and should be read and interpreted as though the Transaction has been completed. For information relating to the executive compensation practices of Fortune for periods prior to the date of this Circular, see "Appendix E Information Concerning Fortune and Annual Meeting Matters Executive Compensation". For information relating to the executive compensation G-10

243 practices of Kneat for periods prior to the date of this Circular, see "Appendix F Information Concerning Kneat Executive Compensation". Compensation Discussion and Analysis Overview The Resulting Issuer's approach to executive compensation will be to provide suitable compensation for executives that is internally equitable, externally competitive and reflects individual achievement. New Fortune will attempt to maintain compensation arrangements that will attract and retain highly qualified individuals who are able and capable of carrying out the objectives of the Resulting Issuer. Given the stage of development of New Fortune, New Fortune's compensation arrangements for the Named Executive Officers, in addition to salary, is expected to include compensation in the form of bonuses and, over a longer term, benefits arising from the grant of New Fortune Options. In addition, it is expected that the New Fortune will continue to implement the DSUP, which was approved by the Fortune Shareholders on June 23, 2015, and grant DSUs thereunder (for a summary of the DSUP, please see "Appendix E Information Concerning Fortune and Annual Meeting Matters Security Based Compensation Arrangements Deferred Share Unit Plan"). This policy may be re-evaluated in the future to instead emphasize increased base salaries and cash bonuses with a reduced reliance on option awards and DSUs, depending upon the future development of the Resulting Issuer, and other factors, which may be considered relevant by the New Fortune Board from time to time. The Nominations and Compensation Committee of the New Fortune Board is expected to consist of two directors appointed to review the compensation of the New Fortune's officers and to make recommendations to the New Fortune Board regarding base salary, bonuses, stock option awards, DSUs and other benefits of Named Executive Officers, as well as negotiating services and employment agreements on behalf of the Resulting Issuer. The Resulting Issuer's executive compensation program will be designed to recognize the fundamental value added to the New Fortune by having a motivated and committed management team whose short, medium and long-term objectives are aligned with those of shareholders of the New Fortune. In determining executive compensation, the Nominations and Compensation Committee will consider the relatively small size of the Resulting Issuer, the financial resources of the New Fortune and the size of the executive team. The Nominations and Compensation Committee will rely on general discussion and informal comparisons to similar technology companies, while giving consideration to the experience, qualifications and performance of the executive, in determining executive compensation. The Resulting Issuer's executive compensation is expected to be comprised of three primary components: 1. base salary; 2. a short-term incentive plan, which includes the potential for cash bonuses; and 3. a long-term incentive plan, which consists of grants of New Fortune Options and DSUs. The base salary of each executive will be reviewed and evaluated by the New Fortune's Nominations and Compensation Committee annually based on the philosophy, objectives and criteria outlined above. A short-term incentive award, if any, in the form of a cash bonus, could be awarded to an executive each year, as determined by the Nominations and Compensation Committee, based on the philosophy, objectives and criteria outlined above, with some use of formal objectives. With respect to long-term incentives, each year an executive could be awarded New Fortune Options and DSUs. The amount of the long-term incentive will be determined by the Nominations and Compensation Committee and recommended to the New Fortune Board, based on the philosophy, objectives and criteria outlined above, taking into account previous stock option and DSUs grants. The Nominations and Compensation Committee will have discretion in determining both short-term incentive awards and the grant of stock options and DSUs. G-11

244 Summary Compensation Table On completion of the Transaction, the Resulting Issuer will have four NEOs, whose names and positions to be held are set out in the summary compensation table below. The following table is a summary of the NEOs anticipated compensation for the 12 month period following completion of the Transaction: Name and Principal Position Salary ( ) Sharebased awards ( ) Option -based awards ( ) (1) Non Equity incentive plan compensation ( ) Annual incentive plans Long term incentive plans Pension value ( ) (2) All other compensation ( ) Total compensation ( ) Edmund Ryan President and CEO Kevin Fitzgerald Director of Research & Development Brian Adhearne Director of Quality 115,000 Nil 8,172 N/A N/A Nil N/A 123, ,000 Nil 8,172 N/A N/A Nil N/A 108, ,000 Nil 8,172 N/A N/A Nil N/A 108,172 Sarah Oliver CFO 100,000 Nil Nil N/A N/A Nil N/A 100,000 Note: (1) This column reflects the estimated grate date fair value of the New Fortune Options to be granted that will be recognized as compensation by New Fortune for financial reporting purposes, as determined in accordance with IFRS. The estimated fair value of New Fortune Options is calculated using the Black-Scholes pricing model. The Black-Scholes valuation model values the option-based awards granted at an average fair value of $0.37 per New Fortune Option based on the following assumptions: a 4.5 year expected term, 49.25% volatility, risk-free interest rate of 0.59% per annum and a dividend rate of 0%. (2) The Resulting Issuer will have a defined contribution pension plan. Kneat operates a defined contribution pension plan for employees. The NEOs are currently negotiating the terms of the defined contribution pension plan. See "Appendix F Information Concerning Kneat Executive Compensation". Pension Plan Benefits Defined Benefits Plans The Resulting Issuer will not have a defined benefits pension plan. Defined Contribution Plans The Resulting Issuer will have a defined contribution plan. Kneat operates a defined contribution pension plan for employees. The NEOs are currently negotiating the terms of the defined contribution plan. See "Appendix F Information Concerning Kneat Executive Compensation". Deferred Compensation Plans The Resulting Issuer will not have a deferred compensation plan. Termination and Change of Control Benefits G-12

245 There are no existing employment and/or consulting agreements with any of the proposed NEOs. Upon completion of the Transaction, the New Fortune is expected to enter into an employment and/or consulting agreements with the NEOs on terms acceptable to the Resulting Issuer. Such agreements may provide for payments to an NEO at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Resulting Issuer or a change in an NEOs responsibilities. Directors' and Officers' Liability Insurance and Indemnification Agreements The Resulting Issuer is expected to carry a directors' and officers' liability insurance policy that will cover corporate indemnification of directors and officers and individual directors and officers in certain circumstances. In addition, upon completion of the Transaction, the Resulting Issuer will enter into indemnification agreements with each of its directors and executive officers for liabilities and costs in respect of any action or suit against them in connection with the execution of their duties, subject to customary limitations prescribed by applicable law. Consistent with standard practice in similar transactions, in order to ensure that the directors and officers of Fortune do not lose or forfeit their protection under liability insurance policies maintained by Fortune, the Transaction Agreement provides for the maintenance of such protection for six (6) years. See in the Circular, "The Transaction The Arrangement Transaction Agreement Insurance and Indemnification". Director Compensation Compensation is anticipated to be paid to directors who are not executive officers for their services as directors of approximately 10,000 per annum per director. In addition, directors will be eligible to receive grants of stock options and DSUs from time to time. INDEBTEDNESS OF DIRECTORS AND OFFICERS No individual who: (a) is a director or officer of Fortune or Kneat or is proposed to be a director or officer of the Resulting Issuer; (b) at any time during the most recently completed financial year of Fortune or Kneat was, a director or officer of Fortune or Kneat; or (c) is an associate of any of the foregoing, is either: (a) indebted to Fortune or Kneat or a subsidiary of either Fortune or Kneat; or (b) indebted to another entity with such indebtedness being the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by Fortune or Kneat as at the day of the Circular. INVESTOR RELATIONS ARRANGEMENTS Following the completion of the Transaction, the Resulting Issuer may enter into an agreement with a person or firm to provide corporate communications and investor relations services for the Resulting Issuer or its securities. No agreement has been concluded with any person or firm with respect to the provision of such services or to engage in any other activities for the purposes of stabilizing the market for the New Fortune Shares. OPTIONS TO PURCHASE SECURITIES Options to Purchase Securities The following table sets forth the particulars of the New Fortune Options that will be outstanding upon the completion of the Transaction: Group Number of New Fortune Options Exercise Price Grant Date Market Value on Date of Grant/Closing Expiry Date Officers of the Resulting Issuer (4) (1) 266,668 (3) $ ,667 (January 2, 2015) 200,001 (immediately upon completion of the Transaction) $ ,667 (January 2, 2020) 200,001(five years from the date of grant) G-13

246 Directors of the Resulting Issuer who are not also officers of the Resulting Issuer (4) (2) 695,829 (3) $ ,000 (March 18, 2014) and 33,333 (November 10, 2015) 462,496 (immediately upon completion of the Transaction) $0.30 (March 18, 2014) and $0.28 (November 10, 2015) $0.90 (estimated) 200,000(March 18, 2019) and 33,333 (November 10, 2020) 462,496 (five years from the date of grant) Officers and past officers of Fortune (2) (4) 200,000 (3) $0.90 (33,333 New Fortune Options) and $0.945 (166,667 New Fortune Options) 33,333 (August 11, 2014) and 166,667 (January 2, 2015) $0.315 (August 11, 2014) and $0.30 (January 2, 2015) 33,333 (August 11, 2019) and 166,667 (November 18, 2016) All other employees of the Resulting Issuer (10) 793,982 $0.90 Immediately upon completion of the Transaction $0.90 (estimated) Five years from the date of grant Directors and past directors Fortune who are not also officers of Fortune (4) (5) 133,333 (3) $ ,000 (March 18, 2014) and 33,333 (November 10, 2015) $0.30 (March 18, 2014) and $0.28 (November 10, 2015) 100,000 (March 18, 2019) and 33,333 (November 10, 2020) All other employees and past employees of Fortune (1) 33,334 (3) $0.90 March 18, 2014 $0.30 (March 18, 2014) March 18, 2019 Notes: (1) Comprised of Sarah Oliver, the proposed CFO, Edmund Ryan, the proposed CEO, Kevin Fitzgerald a proposed NEO and Brian Ahearne a proposed NEO. (2) Comprised of Wade K. Dawe, Ian Ainsworth, Paul Breen and James Osborne. (3) Upon completion of the Transaction, the Fortune Options will be consolidated on a one-for-three basis (1:3) and be exercisable at $0.90 per New Fortune Option (in the case of Rob Randall, the exercise price will be $0.945, as the closing price of the Fortune Shares on the date of grant was $0.315). (4) Comprised of Rob Randall, the former CFO of Fortune, and Brent MacKinnon, the former President and COO of Fortune. (5) Comprised of Derrick Gill, Michael Gross, Darren Nantes and David Peat. Pursuant to the terms of the Transaction Agreement, prior to closing of the Transaction, the Kneat Options will be cancelled and an aggregate of up to 1,456,479 Fortune Options at an estimated exercise price of $0.90 will be granted by Fortune to former holders of the Kneat Options and other individuals as determined by the New Fortune Board. Stock Option Plan If approved at the Meeting, it is expected that the Resulting Issuer will maintain the Fortune Amended Stock Option Plan (see in the Circular, "Other Matters To Be Considered At The Meeting Approval of the Fortune Amended Stock Option Plan"). The following information is intended to be a brief description of the Fortune Amended Stock Option Plan and is qualified in its entirety by the full text of the Fortune Amended Stock Option Plan, which is attached to this Appendix G as Schedule 2. The principal features of the Fortune Amended Stock Option Plan are as follows: 1. The Fortune Amended Stock Option Plan is administered by the New Fortune Board which shall, without limitation, subject to the approval of the TSXV, have full and final authority in its discretion, but subject to the express provisions of the Fortune Amended Stock Option Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Fortune Amended Stock Option Plan. G-14

247 2. Options may be granted under the Fortune Amended Stock Option Plan to Directors, Employees, Consultants and Management Company Employees (as those terms are defined in Policy 4.4 Incentive Stock Options of the TSXV) of New Fortune and any of its subsidiaries. 3. The aggregate number of New Fortune Shares (the "Optioned Shares") that may be issuable pursuant to options granted under the Fortune Amended Stock Option Plan cannot exceed 10% of the number of issued New Fortune Shares at the time of the granting of options under the Fortune Amended Stock Option Plan. 4. No more than 5% of the issued New Fortune Shares, calculated at the date the option is granted, may be granted to any one optionee in any 12 month period. 5. No more than 10% of the issued New Fortune Shares, calculated at the date the option is granted, may be granted to Insiders in any 12 month period. 6. No more than 2% of the issued New Fortune Shares, calculated at the date the option is granted, may be granted to any one consultant in any 12 month period. 7. No more than an aggregate of 2% of the issued New Fortune Shares, calculated at the date the option is granted, may be granted to all consultants and employees conducting "Investor Relations Activities" (as that term is defined in Policy 1.1 Interpretation of the TSXV ("Policy 1.1")) in any 12-month period. 8. The exercise price to each optionee for each Optioned Share shall be determined by the New Fortune Board but cannot, in any event, be less than the "Discounted Market Price" of the New Fortune Shares as traded on the TSXV (as that term is defined in Policy 1.1), or such other price as may be agreed to by New Fortune and accepted by the TSXV; provided that the exercise price for each Optioned Share in respect of options granted within 90 days of a "Distribution" by a "Prospectus" (as those terms are defined in Policy 1.1) shall not be less than the greater of the Discounted Market Price and the price per New Fortune Share paid by public investors for listed New Fortune Shares under the Distribution. 9. In the event New Fortune wishes to reduce the exercise price of any options held by Insiders at the time of the proposed reduction, the approval of the disinterested shareholders of New Fortune will be required prior to the exercise of any such options at the reduced exercise price. 10. The options may be exercisable for a period of up to five years. 11. The options are non-transferable or assignable, except in certain circumstances. The options can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the Fortune Amended Stock Option Plan or within a period of not more than 90 days (30 days for providers of Investor Relations Activities) after ceasing to be an eligible optionee or, if the optionee dies, within one year from the date of the optionee's death. 12. An optionee who is a consultant conducting Investor Relations Activities who is granted an option under the Fortune Amended Stock Option Plan will become vested with the right to exercise one-quarter (1/4) of the option upon the conclusion of every three (3) months subsequent to the date of the grant of the option, such that that optionee will be vested with the right to exercise one hundred percent (100%) of his or her option upon the conclusion of 12 months from the date of the grant of the option (by way of example, in the event that optionee did not exercise one-quarter (1/4) of his option at the conclusion of three (3) months from the date of the grant of the option, he or she would be entitled to exercise one-half (1/2) of his or her option upon the conclusion of six (6) months from the date of the grant of the option). 13. In the event of a stock dividend, subdivision, redivision, consolidation, share reclassification (other than pursuant to the Fortune Amended Stock Option Plan), amalgamation, merger, corporate arrangement, reorganization, liquidation or the like of or by New Fortune, the New Fortune Board may make such adjustment, if any, of the number of Optioned Shares, or of the exercise price, or both, as it shall deem appropriate to give proper effect to such event. G-15

248 14. If an optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of New Fortune or of any of its subsidiaries as a result of having been dismissed from any such position for cause, all unexercised option rights of that optionee under the Fortune Amended Stock Option Plan shall immediately become terminated and shall lapse. 15. If an optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of New Fortune or any of its subsidiaries for any reason other than as a result of having been dismissed for cause or as a result of the optionee's death, such optionee shall have the right for a period of 90 days (or until the normal expiry date of the option rights of such optionee if earlier) from the date of ceasing to be either a Director, Employee, Consultant or Management Company Employee to exercise the option under the Fortune Amended Stock Plan. 16. If an optionee engaged in providing Investor Relations Activities to New Fortune ceases to be employed in providing such Investor Relations Activities, such optionee shall have the right for a period of 30 days (or until the normal expiry date of the option rights of such optionee if earlier) from the date of ceasing to provide such Investor Relations Activities to exercise the option under the Fortune Amended Stock Plan. 17. In the event of the death of any optionee, the legal representatives of the deceased optionee shall have the right for a period of one year (or until the normal expiry date of the option rights of such optionee if earlier) from the date of death of the deceased optionee to exercise the deceased optionee's options. 18. Subject to the acceptance of the TSXV, the New Fortune Board may from time to time amend or revise the terms of the Fortune Amended Stock Option Plan or may discontinue the Fortune Amended Stock Option Plan at any time, provided that no such action may in any manner adversely affect the rights under any options earlier granted to an optionee under the Fortune Amended Stock Option Plan without the consent of that optionee. 19. Upon exercise of an option, the optionee shall pay to New Fortune amounts necessary to satisfy applicable withholding tax requirements or shall otherwise make arrangements satisfactory to New Fortune for such requirements. ESCROWED SECURITIES To the best knowledge of the management of Fortune and Kneat, as of the date of the Circular, the following table discloses the names and municipalities of residence of the securityholders, the number of securities currently held in escrow and the number of securities of the Resulting Issuer anticipated to be held in escrow upon completion of the Arrangement, and the percentage that those numbers represent of the outstanding securities. Prior to Giving Effect to the Transaction After Giving Effect to the Transaction Name of Municipality of Residence of Security holder Designation of Class Number of Securities held in Escrow Percentage of Class Number of Securities to be held in Escrow Percentage of Class (1) Beek Investments Ltd. (2) Republic of Ireland Ian Ainsworth, Toronto, Ontario James Osborne, Dublin, Republic of Ireland New Fortune Shares New Fortune Shares New Fortune Shares Nil N/A 13,535, % Nil N/A 455, % Nil N/A 655, % G-16

249 Paul Breen Dublin, Republic of Ireland Wade K. Dawe (3) Halifax, Nova Scotia Sarah Oliver Halifax, Nova Scotia New Fortune Shares New Fortune Shares New Fortune Warrants New Fortune Shares Nil N/A 223, % Nil N/A 2,103, % Nil N/A 238, % Nil N/A 75, % Total New Fortune Shares: 17,048, % Total New Fortune Warrants: 238, % Notes: (1) Non-diluted. (2) The directors of BEEK are Brian Ahearne, Kevin Fitzgerald, Edmund Ryan and Eric McGrath. See "Directors, Officers and Promoters" above. (3) Mr. Dawe will hold: 833 New Fortune Shares indirectly through BC Ltd., 546,167 New Fortune Shares indirectly through Brigus Capital Inc.,727,926 New Fortune Shares indirectly through Kelligrew Inc., and 8,333 New Fortune Shares indirectly through Wade K. Dawe Inc., each of which is a company of which he is the controlling shareholder. The Resulting Issuer securities placed in Tier 1 Surplus Escrow will be held in escrow by Computershare, which will release them as follows: Percentage Release Date (1) 10% At the Time of TSXV Bulletin 20% 6 Months from TSXV Bulletin 30% 12 Months from TSXV Bulletin 40% 18 Months from TSXV Bulletin AUDITOR, TRANSFER AGENT AND REGISTRAR The auditor of New Fortune will be PricewaterhouseCoopers LLP, Chartered Accountants, located at 1600 Lower Water Street, Suite 400, Halifax, Nova Scotia, B3J 3P6, Canada. The registrar and transfer agent of New Fortune will be Computershare at its offices in the City of Toronto located at 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, being the current registrar and transfer agent of Fortune. G-17

250 SCHEDULE 1 UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF NEW FORTUNE 1

251 Fortune Bay Corp. Pro Forma Consolidated Financial Statements (Unaudited) December 31, 2015 (expressed in Canadian dollars)

252 Fortune Bay Corp. Pro Forma Consolidated Statement of Financial Position (Unaudited) As at December 31, 2015 (expressed in Canadian dollars) Assets Fortune Bay Corp. $ Kneat Solutions Limited $ (note 7) Notes Pro Forma Adjustments $ Pro Forma Consolidated $ Current asset Cash 7,532,032 1,062,092 5(iii) (98,750) 9,512,092 5(v) (30,000) 5(vi) 2,278,517 5(i) (1,231,799) Accounts receivable 179, ,547 5(i) (179,865) 632,547 Prepaid expense and deposits 36,275 5(i) (36,275) Investments 242,490 5(i) (242,490) 7,990,662 1,694, ,338 10,144,639 Other long-term assets 37, ,089 5(i) (37,742) 389,089 Intangible assets 1,738,667 1,738,667 Property and equipment 188, ,563 5(i) (188,742) 422,563 Exploration and evaluation assets 14,511,153 5(i) (14,511,153) 22,728,299 4,244,958 (14,278,299) 12,694,958

253 Fortune Bay Corp. Pro Forma Consolidated Statement of Financial Position continued (Unaudited) As at December 31, 2015 (expressed in Canadian dollars) Liabilities and Equity Fortune Bay Corp. $ Kneat Solutions Limited $ (note 7) Notes Pro Forma Adjustments $ Pro Forma Consolidated $ Current liabilities Account payable and accrued liabilities 589, ,339 5(v) (30,000) 988,339 5(iv) 400,000 5(i) (559,959) Due to Kneat directors 258, , , ,136 (189,959) 1,247,136 Preferred shares 971, ,939 Other non-current payables 185, ,835 Equity 589,959 2,004,910 (189,959) 2,404,910 Share capital 5,539,842 5(iii) 396,750 8,858,765 5(vi) 2,278,517 5(vii) 102,000 5(ii) (8,317,109) 5(viii) 8,858,765 Warrants (notes 4 and 5) 99,135 5(ii) (99,135) 26,000 5(ix) 26,000 Contributed surplus 9,882,434 12,544,297 5(ii) (9,882,434) 12,661,297 5(xi) 117,000 Accumulated income (deficit) 6,616,929 (10,304,249) 5(vii) (102,000) (11,256,014) 5(iii) (495,500) 5(iv) (150,000) 5(ii) (6,019,429) 5(viii) (801,765) 22,138,340 2,240,048 (14,088,340) 10,290,048 22,728,299 4,244,958 (14,278,299) 12,694,958

254 Fortune Bay Corp. Pro Forma Consolidated Statement of Loss and Comprehensive Loss (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) Fortune Bay Corp. $ Kneat Solutions Limited $ Notes Pro Forma Adjustments $ Pro Forma Consolidated $ Revenue 986, ,443 Cost of sales (526,202) (526,202) Gross margin 460, ,241 Operating expenses Office, travel and promotion 206, ,390 5(i) (19,306) 551,314 Depreciation 8,314 34,015 5(i) (7,478) 34,851 Marketing 14,029 14,029 Regulatory fees 121, ,316 Professional fees 228, ,942 5(i) (38,362) 810,030 5(iv) 150,000 Management service fees 105,000 5(i) (52,500) 52,500 Salaries and benefits 965, ,888 5(i) (44,157) 2,196,865 5(iii) 495,500 Research and development costs 133, ,238 Research and development tax credits (366,399) (366,399) Professional fees associated with abandoned transaction 160, ,940 Share-based compensation 273,281 27, ,437 Foreign exchange loss 3,788 5(i) (2,825) 963 Loss from operations (2,086,982) (981,989) (480,872) (3,549,843)

255 Fortune Bay Corp. Pro Forma Consolidated Statement of Income continued (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) Fortune Bay Corp. $ Kneat Solutions Limited $ Notes Pro-Forma Adjustments $ Pro Forma Consolidated $ Other income (expenses) Interest 76,144 (27,308) 5(i) (252) 48,584 Listing expense 5(viii) (801,765) (801,765) Finder s fee 5(vii) (102,000) (102,000) Loss on sale and write-down of available-for-sale investments (194,490) 5(i) 194,490 Loss before income taxes (2,205,328) (1,009,297) (1,190,399) (4,405,024) Income tax recovery 27,215 27,215 Net loss for the year (2,178,113) (1,009,297) (1,190,399) (4,377,809) Other comprehensive loss Net unrealized loss on availablefor-sale investments (216,000) 5(i) 216,000 Unrealized loss on available-forsale investments reclassified 5(i) to net loss 156,000 (156,000) Comprehensive loss for the year (2,238,113) (1,009,297) (1,130,399) (4,377,809) Basic and Diluted loss per share (note 8) (0.08) (0.11)

256 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 1 Basis of presentation The accompanying unaudited pro-forma consolidated financial statements have been compiled for the purposes of inclusion in the management information circular of Fortune Bay Corp. ( Fortune Bay or the Company ) dated May 13, 2016 (the Management Information Circular ), which gives effect to a plan of arrangement (the Arrangement ) of Fortune Bay under the Canada Business Corporations Act (the CBCA ), in accordance with the terms of the arrangement agreement dated February 9, 2016 among Fortune Bay, Kneat Solutions Limited ( Kneat ) and Canada Limited, which was incorporated under the CBCA on February 4, 2016 as a wholly-owned subsidiary of Fortune Bay. These unaudited pro forma consolidated financial statements are derived from the financial statements of Fortune Bay and Kneat, together with other information available to Fortune Bay. Prior to the Arrangement, Fortune Bay s exploration projects in Canada and Mexico, as well as certain other assets of Fortune Bay, (collectively, the Exploration Properties Business of Fortune Bay Corp. or the Exploration Properties Business ) will be transferred to Canada Limited (the Reorganization ). The Fortune Bay shareholders will own 100% of the issued and outstanding shares of Canada Limited on the closing of the Arrangement. These unaudited pro forma consolidated financial statements include: An unaudited pro forma consolidated statement of financial position as at December 31, 2015, which has been prepared from the audited statement of financial position of Fortune Bay as at December 31, 2015 and the audited consolidated statement of financial position of Kneat as at December 31, 2015 and gives effect to the assumptions and adjustments as described in notes 3, 4 and 5 as if the transaction occurred on December 31, An unaudited pro forma consolidated statement of loss and comprehensive loss for the year ended December 31, 2015 which has been prepared from the audited statement of loss and comprehensive loss for the year ended December 31, 2015 of Fortune Bay and the audited consolidated statement of loss and comprehensive loss of Kneat for the year ended December 31, 2015 and gives effect to the assumptions and adjustments as described in notes 3, 4 and 5 as if the transaction occurred on January 1, These unaudited pro forma consolidated financial statements are not necessarily indicative of the financial position and financial results of Fortune Bay that would have occurred if the transaction and assumptions described therein had taken place on the dates indicated or which may be obtained in the future. They should be read in conjunction with the historical financial statements referred to above. No adjustments have been made to reflect potential cost savings that may occur subsequent to completion of the Arrangement. Fortune Bay and Kneat prepare their financial statements under International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board. (1)

257 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 2 Reorganization Prior to the effective time, Fortune Bay shall effect the Reorganization pursuant to the Arrangement, such that Canada Limited will acquire the Exploration Properties Business of Fortune Bay Corp., and also includes any further reorganization. In accordance with the Arrangement, commencing at the effective time, the following principal steps shall occur and shall be deemed to occur without any further act or formality, but in the order and with the timing set out in the Arrangement: (a) (b) Fortune Bay shall effect a reorganization of its capital as follows: (i) the redesignation of all the Fortune Bay Shares as Class A Shares; (ii) the creation of the New Fortune Bay Shares; and (iii) the transfer by every Fortune Bay Shareholder of all outstanding Fortune Bay Shares to Fortune Bay in exchange for one New Fortune Bay Share and one and one-half Canada Limited Share for every three Fortune Bay Shares, with the result that the aggregate paid-up capital of the New Fortune Bay Shares shall be equal to the aggregate paid-up capital of the Fortune Bay Shares, reduced by the aggregate value of the Canada shares; The transfer by Kneat Securityholders to Fortune Bay of all of the outstanding Kneat Shares in exchange for the issuance by Fortune Bay to, or at the direction of, the Kneat Securityholders of their respective prorata portions of an aggregate number of New Fortune Bay Shares representing approximately 68.7% of the issued and outstanding New Fortune Bay Shares, as of immediately following the effective time; and (c) Fortune Bay will then change its name to some other name as agreed to by the Kneat Board of Directors. As a consequence of the Arrangement, the securityholders of Kneat will acquire control over the combined entity. Fortune Bay, after its reorganization, does not meet the definition of a business, therefore the transaction is outside the scope of IFRS 3 Business Combinations. The transaction will therefore be accounted for under IFRS 2 Share-based payments. Under this basis of accounting, the consolidated entity is considered to be a continuation of Kneat, with the net identifiable assets of Fortune Bay deemed to have been acquired by Kneat. Certain Kneat shareholders took part in an employment and investment incentive scheme ( EIIS ) under Part 16 of the Taxes Consolidation Act 1997, pursuant to which they availed of income tax relief on their investment in Kneat. The Arrangement may trigger a claw back of this relief from these shareholders. Only those Kneat Securityholders who have held their EIIS shares for less than three years up to the Effective Time should be affected by this claw back. Fortune Bay and Kneat may formulate a proposal whereby Fortune Bay would make a payment to these shareholders. This payment would be equivalent to or less than the amount of the tax relief as a result of the Arrangement. Any payment to any shareholder pursuant to this proposal would only be made after Fortune Bay and Kneat have been provided with satisfactory documentary evidence of the loss of tax relief. The estimated maximum cost that may be incurred, should a proposal be formulated, is 438,000. As there is no firm commitment, this has not been reflected as a pro forma adjustment. (2)

258 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 2 Reorganization (continued) It is of the opinion of Fortune Bay s management that these pro forma consolidated financial statements include all adjustments necessary for the fair presentation of the transaction described. These pro forma consolidated financial statements are not intended to reflect the results of operations or the financial position of Fortune Bay that would have actually resulted had the transaction been effected when indicated in note 1, and are not necessarily indicative of the results of operations that may be obtained in the future. The transaction has been unanimously approved by the Board of Directors of both Fortune Bay and Kneat. Completion of the transaction is expected to occur in or about June 23, 2016 and is conditional upon, among other things, receipt of all required court, stock exchange and shareholder approvals, including the shareholders of both Fortune Bay and Kneat. 3 Spin-out of the Exploration Property Business of Fortune Bay Corp. The accompanying unaudited pro forma consolidated financial statements of Fortune Bay give effect to the proposed spin-out of Fortune Bay s assets and liabilities, other than $8.45 million in cash and $250,000 in liabilities that shall be retained by Fortune Bay, in exchange for common shares of Canada Limited to be issued to Fortune Bay. Fortune Bay will receive 18,578,273 shares of Canada Limited and will distribute all 18,578,273 shares of the Canada Limited to its shareholders. The assets and liabilities to be transferred to Canada Limited include the accounts of Fortune Bay s wholly owned subsidiaries as noted below which hold the rights, titles and obligations including the Goldfields Project located in Canada and the Ixhuatán Project located in Mexico. Subsidiary Principal Activity Country of Incorporation Brigus Gold ULC Administrative services Canada Canada Inc. Exploration Canada Linear Gold Holdings Corp. Holding company Canada Linear Gold Mexico, S. A. de C. V. Exploration Mexico Linear Gold Mineraçao Ltd. Exploration Brazil Servicios Ixhuatán, S. A. de C. V. Exploration Mexico 4 Pro forma assumptions The unaudited pro forma consolidated financial statements were prepared based on the following assumptions: (i) (ii) Canada Limited's acquisition of the Exploration Properties Business of Fortune Bay Corp. from Fortune Bay occurred on the dates indicated in note 1. Fortune Bay completed a private placement for gross proceeds of approximately $2,299,665 at a price of $0.30 per share on March 24, The Arrangement requires Fortune Bay to have net $8.2 million in cash on closing, thus the private placement was required in order to complete the Arrangement. (3)

259 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 5 Pro forma adjustments The following pro forma adjustments have been made to reflect the plan of arrangement described in note 2 as if it occurred on the dates indicated in note 1: (i) Immediately prior to the Arrangement, Fortune Bay will undertake a reorganization to transfer all assets and liabilities held by Fortune Bay to Canada Limited, other than $8,450,000 in cash and $250,000 in liabilities that shall be retained in Fortune Bay. The ending pro forma cash balance is adjusted down by $1,231,799 as this represents the excess Fortune Bay cash on hand, above the $8,450,000 retained cash, at December 31, This cash is therefore transferred to SpinCo. The Fortune Bay accounts receivable of $179,865, prepaid expenses of $36,275, investments of $242,490, reclamation deposition of $37,742, property and equipment of $188,742 and exploration and evaluation assets of $14,511,153 are not being retained by Fortune Bay and therefore will be transferred to SpinCo. Fortune Bay will retain only $250,000 of liabilities and any excess liabilities will be transferred to SpinCo for settlement. At December 31, 2015 the amount of Fortune Bay liabilities in excess of $250,000 would be $559,959. The statement of loss has been adjusted for the expense directly attributable to the Exploration Business of Canada Limited for the year ended December 31, (ii) After giving effect to the share transactions described in note 2, and the pro forma adjustments to occur prior to the Arrangement (namely pro forma adjustments 5(iii), 5(vi), and 5(vii)) Fortune Bay s share capital balance, accumulated income and contributed surplus are eliminated to reflect the capital transaction. (iii) The Arrangement triggers a change in control provision in the employment contracts of the Chief Executive Officer and Chief Financial Officer. In order to settle these change in control provisions, Fortune Bay will issue a total of 1,050,000 common shares at an estimated value of $0.30 per share and make total cash payments of $65,000 to these individuals. In addition, (i) severance payments of $33,750 and the issuance of 112,500 common shares, at an estimated value of $0.30 per share, will be issued to a non-executive employee of Fortune Bay; and (ii) Fortune Bay will issue 160,000 common shares, at an estimated value of $0.30 per share, to members of the Board of Directors in consideration for the services provided for serving on the special committee of Fortune Bay that was created by the Board of Directors in connection with the Arrangement. (iv) The legal and accounting fees related to the Arrangement and estimated to be incurred subsequent to December 31, 2015 attributable to Fortune Bay and Kneat are $400,000 ($250,000 related to Fortune Bay and $150,000 related to Kneat). These fees are to be expensed through net loss and have resulted in a pro forma adjustment to the statement of loss. The $250,000 in legal fees related to Fortune Bay are classified in the listing fee expense pro forma adjustment outlined in note 5 (viii). (4)

260 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 5 Pro forma adjustments (continued) (v) Deferred salary as at December 31, 2015 of $30,000 due to the Chief Executive Officer will be paid by Fortune Bay prior to the transfer of assets and liabilities to Canada Limited. These costs have been accrued at December 31, 2015 in the Fortune Bay statement of loss and comprehensive loss. (vi) Fortune Bay completed a private placement on March 18, 2016 whereby 7,665,549 common shares were issued at a price of $0.30, resulting in gross proceeds of approximately $2,299,665. Total costs associated with the private placement were $21,148. (vii) Fortune Bay will issue 340,000 shares valued at approximately $102,000, as finders fees prior to the Arrangement. These fees are to be expensed through net loss and have resulted in a pro forma adjustment to the statement of loss and comprehensive loss. (viii) Under IFRS 2, the capital transaction is measured at the fair value of the shares deemed to have been issued by Kneat such that the Fortune Bay shareholders held 31.3% of Kneat. The fair value of the deemed shares of Kneat issued to Fortune Bay shareholders is based on the fair value of Kneat prior to the Arrangement and is estimated to be $8,858,765 and has been allocated as follows: $ Pro forma net assets of Fortune Bay after the above pro forma adjustments ($8,450,000 of cash less $250,000 of liabilities) 8,200,000 Fair value of 31.3% of the equity of the combined entity based on the estimated fair value of Kneat at $19,444,000 (8,858,765) Fair value of warrants (note 5 (ix)) (26,000) Fair value of options (note 5 (xi)) (117,000) Listing fees (801,765) The listing fees are to be expensed through net loss and have resulted in a pro forma adjustment to the statement of loss and comprehensive loss. (ix) The estimated value of the 267,857 outstanding warrants upon completion of the Arrangement is $26,000 based on the Black-Scholes valuation model. Key assumptions used in the valuation include volatility of 50%, exercise price of $0.90 per warrant, share price of $0.71, expected term of 1.3 years and risk-free rate of 0.62%. (x) The pro forma statement of financial position of Kneat as at December 31, 2015, including equity, has been translated at the rates prevailing at the date of the pro forma consolidated statement of financial position. The pro forma statement of loss and comprehensive loss of Kneat for the year ended December 31, 2015 has been translated at the average rate for the year. Refer to note 7 for further details. (5)

261 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 5 Pro forma adjustments (continued) (xi) The estimated value of the 666,667 outstanding options upon completion of the Arrangement is $117,000 based on the Black-Scholes valuation model. Key weighted average assumptions used in the valuation include volatility of 50%, exercise price of $0.90 per option, share price of $0.71, expected term of 2.9 years and risk-free rate of 0.62%. (xii) On March 21, 2016 Kneat issued a secured debenture (the Debenture ) to Fortune Bay in the principal amount of 1,000,000 (the Principal Sum ) maturing on July 1, 2016 (the Maturity Date ) and bearing interest at a rate of 7.25% per annum. In the event the Transaction is completed prior to the Maturity Date, it is expected that the Principal Sum will become an intercompany loan between Fortune Bay and Kneat. In addition, the required Fortune Bay cash balance (as defined in the Transaction Agreement) will be reduced by the amount of the Principal Sum plus all accrued interest. Overall there would be no impact on the consolidated pro forma financial statements as a result of the Debenture, therefore the Debenture has not resulted in pro forma adjustments to the consolidated pro forma statement of financial position and consolidated pro forma statement of loss and comprehensive loss. 6 Pro forma share capital Authorized An unlimited number of common shares without par value. Issued Number of shares Share capital $ Fortune Bay balance - December 31, ,828,496 5,539,842 Common shares issued pursuant to the private placement (note 5 (vi)) 7,665,549 2,299,665 Share issuance costs related to the private placement (note 5 (vi)) (21,148) Common shares issued pursuant to compensation arrangements (note 5 (iii)) 1,322, ,750 Common shares issued pursuant to finders fee (note 5 (vii)) 340, ,000 Share consolidation (note 2 a) (24,771,030) Common shares issued to Kneat in connection with the Arrangement (note 2 b) 27,178,121 Elimination of Fortune Bay share capital on Arrangement (note 5 (ii)) (8,317,109) Fair value of deemed shares issued by Kneat (note 5 (viii)) 8,858,765 Pro forma consolidated balance - December 31, ,563,636 8,858,765 (6)

262 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 7 Translation of statement of financial position and statement of loss and comprehensive loss The pro forma statement of financial position of Kneat as at December 31, 2015, including equity, has been translated at the rates prevailing at the date of the pro forma consolidated statement of financial position. Statement of Financial Position at December 31, 2015: Kneat Solutions Limited Exchange rate Kneat Solutions Limited $ Assets Current asset Cash 702, ,062,092 Accounts receivable 418, ,547 1,120,348 1,694,639 Other long-term assets 257, ,089 Intangible assets 1,149, ,738,667 Property and equipment 279, ,563 Liabilities and Equity 2,806,398 4,244,958 Current liabilities Account payable and accrued liabilities 388, ,339 Due to Kneat directors 171, , , ,136 Preferred shares 642, ,939 Other non-current payables 122, ,835 1,325,473 2,004,910 Equity Contributed surplus 8,293, ,544,297 Accumulated deficit (6,812,276) (10,304,249) 1,480,925 2,240,048 2,806,398 4,244,958 (7)

263 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 7 Translation of statement of financial position and statement of loss and comprehensive loss (continued) The pro forma statement of loss and comprehensive loss of Kneat for the year ended December 31, 2015 has been translated at the average rate for the year. Statement of Loss and Comprehensive Loss for the year ended December 31, 2015: Kneat Solutions Limited Exchange rate Kneat Solutions Limited $ Revenue 695, ,443 Cost of sales 371, ,202 Gross margin 324, ,241 Operating expenses Office, travel and promotion 256, ,390 Depreciation 23, ,015 Professional fees 331, ,942 Salaries and benefits 549, ,888 Share-based compensation 19, ,156 Research and development costs 93, ,238 Research and development tax credits (258,337) (366,399) Loss from operations (692,370) (981,989) Other expenses Interest (19,254) (27,308) Loss and comprehensive loss for the year (711,624) (1,009,297) (8)

264 Fortune Bay Corp. Notes to Pro Forma Consolidated Financial Statements (Unaudited) For the year ended December 31, 2015 (expressed in Canadian dollars) 8 Pro forma basic and diluted loss per share The pro forma basic and diluted loss per share for the year ended December 31, 2015 is based on the number of outstanding common shares after giving effect to the shares to be issued as consideration for the Arrangement, as follows: December 31, 2015 $ Pro forma number of common shares outstanding (note 6) 39,563,636 Pro forma net loss for the year (4,377,809) Pro forma basic and diluted loss per share (0.11) (9)

265 SCHEDULE 2 FORTUNE AMENDED STOCK OPTION PLAN KNEAT.COM, INC. (formerly, Fortune Bay Corp.) (the "Company") STOCK OPTION PLAN (as amended and restated June 15, 2016) ARTICLE 1- PURPOSE OF THE PLAN The purpose of the stock option plan (the "Plan") is to assist the Company in attracting, retaining and motivating "Directors", "Employees", "Consultants" or "Management Company Employees" of the Company (as those terms are defined in Policy 4.4 Incentive Stock Options of the TSX Venture Exchange (the "TSXV")) and any of its subsidiaries and to closely align the personal interests of such Directors, Employees, Consultants and Management Company Employees with those of the shareholders by providing them with the opportunity, through options, to acquire common shares in the capital of the Company (the "shares"). ARTICLE 2 IMPLEMENTATION The Plan and the grant and exercise of any options under the Plan are subject to compliance with the applicable requirements of each stock exchange ("exchanges") on which the shares are listed at the time of the grant of any options under the Plan and of any governmental authority or regulatory body to which the Company is subject. ARTICLE 3 ADMINISTRATION The Plan shall be administered by the board of directors of the Company (the "Board of Directors") which shall, without limitation, subject to the approval of the exchanges, have full and final authority in its discretion, but subject to the express provisions of the Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Board of Directors may delegate any or all of its authority with respect to the administration of the Plan and any or all of the rights, powers and discretion with respect to the Plan granted to it hereunder to such committee of directors, as well as the Board of Directors, shall be entitled to exercise any or all of such authority, rights, powers and discretion with respect to the Plan. When used hereafter in the Plan, "Board of Directors" shall be deemed to include a committee of directors acting on behalf of the Board of Directors. ARTICLE 4 - SHARES ISSUABLE UNDER THE PLAN 4.1 Options granted and shares issuable under the Plan are subject to the requirements of the TSXV. These requirements currently include but are not limited to: (a) (b) (c) (d) the aggregate number of shares ("Optioned Shares") that may be issuable pursuant to options granted under the Plan will not exceed 10% of the number of issued shares of the Company at the time of the granting of options under the Plan; no more than 5% of the issued shares of the Company, calculated at the date the option is granted, may be granted to any one Optionee (as hereinafter defined) in any 12 month period; no more than 10% of the issued shares of the Company, calculated at the date the option is granted, may be granted to Insiders (as that term is defined in Policy 1.1 Interpretation of the TSXV ("Policy 1.1")) in any 12 month period; no more than 2% of the issued shares of the Company, calculated at the date the option is granted, may be granted to any one Consultant in any 12 month period; and 1

266 (e) no more than an aggregate of 2% of the issued shares of the Company, calculated at the date the option is granted, may be granted to all Consultants and Employees conducting "Investor Relations Activities" (as that term is defined in Policy 1.1) in any 12-month period. ARTICLE 5 ELIGIBILITY 5.1 General Options may be granted under the Plan to Directors, Employees, Consultants and Management Company Employees of the Company and any of its subsidiaries (collectively the "Optionees" and individually an "Optionee"). Subject to the provisions of the Plan, the total number of Optioned Shares to be made available under the Plan and to each Optionee, the time or times and price or prices at which options shall be granted, the time or times at which such options are exercisable, and any conditions or restrictions on the exercise of options, shall be in the full and final discretion of the Board of Directors. 5.2 Options Granted to Employees, Consultants or Management Company Employees The Company represents that, in the event it wishes to grant options under the Plan to Employees, Consultants or Management Company Employees, it will only grant such options to Optionees who are bona fide Employees, Consultants or Management Company Employees, as the case may be. 6.1 Exercise price ARTICLE 6 TERMS AND CONDITIONS (a) (b) (c) Subject to Subsection 6.1(c), the exercise price to each Optionee for each Optioned Share shall be determined by the Board of Directors but shall not, in any event, be less than the "Discounted Market Price" of the shares as traded on the TSXV (as that term is defined in Policy 1.1), or such other price as may be agreed to by the Company and accepted by the TSXV; provided that the exercise price for each Optioned Share in respect of options granted within 90 days of a "Distribution" by a "Prospectus" (as those terms are defined in Policy 1.1) shall not be less than the greater of the Discounted Market Price and the price per share paid by public investors for listed shares of the Company under the Distribution. Subject to Subsection 6.1(c), the exercise price will normally be based on the closing market price the day prior to the grant. If there were no transactions on the precedent day, the price of the most recent trade will be used provided it remains at or between the precedent day's closing bid and ask prices, otherwise the average of the average of the bid and ask prices will be utilized. If the shares are not listed on the TSXV or any other exchange at the time of the option grant, the exercise price to each Optionee for each Optioned Share shall be determined by the Board of Directors. 6.2 Reduction in the Exercise Price of Options Granted to Insiders In the event the Company wishes to reduce the exercise price of any options held by "Insiders" (as that term is defined in Policy 1.1) of the Company at the time of the proposed reduction, the approval of the disinterested shareholders of the Company will be required prior to the exercise of any such options at the reduced exercise price. 6.3 Option Agreement All options shall be granted under the Plan by means of an agreement (the "Option Agreement") between the Company and each Optionee in the form attached hereto as Schedule "A" or such other form as may be approved by the Board of Directors, such approval to be conclusively evidenced by the execution of the Option Agreement by any one director or officer of the Company, or otherwise as determined by the Board of Directors. 6.4 Length of Grant 2

267 Subject to sections 6.10, 6.11, 6.12, 6.13 and 6.14 all options granted under the Plan shall expire not later than that date which is five (5) years from the date such options were granted. 6.5 Non-Assignability of Options (a) (b) An option granted under the Plan shall not be transferable or assignable (whether absolutely or by way of mortgage, pledge or other charge) by an Optionee other than by will or other testamentary instrument or the laws of succession and may be exercisable during the lifetime of the Optionee only by such Optionee. An option granted under the Plan shall not be used as an offset against the short selling of the shares nor in any other manner to assist in or facilitate the short selling of the shares. This clause does not preclude the sale of the shares and exercise of options within the normal settlement period. 6.6 Vesting Schedule for Options Granted to Consultants Conducting Investor Relations Activities An Optionee who is a Consultant conducting Investor Relations Activities who is granted an option under the Plan will become vested with the right to exercise one-quarter (1/4) of the option upon the conclusion of every three (3) months subsequent to the date of the grant of the option, such that that Optionee will be vested with the right to exercise one hundred percent (100%) of his or her option upon the conclusion of 12 months from the date of the grant of the option (by way of example, in the event that Optionee did not exercise one-quarter (1/4) of his option at the conclusion of three (3) months from the date of the grant of the option, he or she would be entitled to exercise one-half (1/2) of his or her option upon the conclusion of six (6) months from the date of the grant of the option). 6.7 Right to Postpone Exercise Each Optionee, upon becoming entitled to exercise the option in respect of any Optioned Shares in accordance with the Option Agreement, shall thereafter be entitled to exercise the option to purchase such Optioned Shares at any time prior to the expiration or other termination of the Option Agreement or the option rights granted thereunder in accordance with such agreement. 6.8 Exercise and Payment (a) (b) (c) Any option granted under the Plan may be exercised by an Optionee or, if applicable, the legal representatives of an Optionee, giving notice to the Company specifying the number of shares in respect of which such option is being exercised, accompanied by payment (by cash or certified cheque payable to the Company) of the entire exercise price (determined in accordance with the Option Agreement) for the number of shares specified in the notice. Upon any such exercise of an option by an Optionee, the Company shall cause the transfer agent and registrar of shares of the Company to promptly deliver to such Optionee or the legal representatives of such Optionee, as the case may be, a share certificate in the name of such Optionee or the legal representatives of such Optionee, as the case may be, representing the number of shares specified in the notice. Notwithstanding the subsection 6.8(a), no option shall be exercisable unless the Company shall be satisfied that the issuance of shares upon exercise thereof, will be in compliance with the applicable laws of all jurisdictions where the Company is a reporting issuer. In the event that an option is exercised within four (4) months following the date it is granted, the shares issued shall be legend with a four (4) month hold period from the date the option was granted. The wording of the legend shall be the following: "Without prior written approval of the TSX Venture Exchange and compliance with all applicable securities legislation, the securities represented by this certificate may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until (date inserted)." 3

268 6.9 Rights of Optionees The Optionees shall have no rights whatsoever as shareholders in respect of any of the Optioned Shares (including, without limitation, voting rights or any right to receive dividends, warrants or rights under any rights offering) other that Optioned Shares in respect of which Optionees have exercised their option to purchase and which have been issued by the Company Third Party Offer If at any time when an option granted under the Plan remains unexercised with respect to any shares, and offer to purchase all of the shares of the Company is made by a third party, the Company may upon giving each Optionee written notice to that effect, require the acceleration of the time for the exercise of the option rights granted under the Plan and of the time for the fulfillment of any conditions or restrictions on such exercise Alterations in Shares In the event of a stock dividend, subdivision, redivision, consolidation, share reclassification (other than pursuant to the Plan), amalgamation, merger, corporate arrangement, reorganization, liquidation or the like of or by the Company, the Board of Directors may make such adjustment, if any, of the number of Optioned Shares, or of the exercise price, or both, as it shall deem appropriate to give proper effect to such event. If as a result of a proposed merger, amalgamation or other corporate arrangement or reorganization, the exchange or replacement of shares in the Company for those in another corporation is imminent, the Board of Directors may, in a fair and equitable manner, determine the manner in which all unexercised option rights granted under the Plan shall be treated including, for example, requiring the acceleration of the time for the exercise of such rights by the Optionees and of the time for the fulfillment of any conditions or restrictions on such exercise. All determinations of the Board of Directors under this section 6.11 shall be full and final Termination for Cause Subject to section 6.13, if an Optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of the Company or of any of its subsidiaries as a result of having been dismissed from any such position for cause, all unexercised option rights of that Optionee under the Plan shall immediately become terminated and shall lapse, notwithstanding the original term of the option granted to such Optionee under the Plan Termination Other Than For Cause (a) (b) Subject to Subsection 6.13(b), if an Optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of the Company or any of its subsidiaries for any reason other than as a result of having been dismissed for cause as provided in Section 6.12 or as a result of the Optionee's death, such Optionee shall have the right for a period of 90 days (or until the normal expiry date of the option rights of such Optionee if earlier) from the date of ceasing to be either a Director, Employee, Consultant or Management Company Employee to exercise the option under the Plan with respect to all Optioned Shares of such Optionee to the extent they were exercisable on the date of ceasing to be either a Director, Employee, Consultant or Management Company Employee. Upon the expiration of such 90-day period all unexercised option rights of that Optionee shall immediately become terminated and shall lapse notwithstanding the original term of option granted to such Optionee under the Plan. If an Optionee engaged in providing Investor Relations Activities to the Company ceases to be employed in providing such Investor Relations Activities, such Optionee shall have the right for a period of 30 days (or until the normal expiry date of the option rights of such Optionee if earlier) from the date of ceasing to provide such Investor Relations Activities to exercise the option under the Plan with respect to all Optioned Shares of such Optionee to the extent they were exercisable on the date of ceasing to provide such Investor Relations Activities. Upon the expiration of such 30-day period all unexercised option rights of that Optionee shall immediately become terminated and shall lapse notwithstanding the original term of the option granted to such Optionee under the Plan. 4

269 6.14 Deceased Optionee In the event of the death of any Optionee, the legal representatives of the deceased Optionee shall have the right for a period of one year (or until the normal expiry date of the option rights of such Optionee if earlier) from the date of death of the deceased Optionee to exercise the deceased Optionee's option with respect to all of the Optioned Shares of the deceased Optionee to the extent they were exercisable on the date of death. Upon the expiration of such period all unexercised option rights of the deceased Optionee shall immediately become terminated and shall lapse notwithstanding the original term of the option granted to the deceased Optionee under the Plan. ARTICLE 7- AMENDMENT AND DISCONTINUANCE OF PLAN Subject to the acceptance of the exchanges, the Board of Directors may from time to time amend or revise the terms of the Plan or may discontinue the Plan at any time, provided that no such action may in any manner adversely affect the rights under any options earlier granted to an Optionee under the Plan without the consent of that Optionee. ARTICLE 8 - NO FURTHER RIGHTS Nothing contained in the Plan nor in any option granted hereunder shall give any Optionee or any other person any interest or title in or to any shares of the Company or any rights as a shareholder of the Company or any other legal or equitable right against the Company whatsoever other than as set forth in the Plan and pursuant to the exercise of any option, nor shall it confer upon the Optionees any right to continue as a Director, Employee or Consultant of the Company or of any of its subsidiaries. ARTICLE 9 - COMPLIANCE WITH LAWS The obligations of the Company to sell shares and deliver share certificates under the Plan are subject to such compliance by the Company and the Optionees as the Company deems necessary or advisable with all applicable corporate and securities laws, rules and regulations. ARTICLE 10 PRIOR PLAN 10.1 The Plan shall entirely replace and supersede any prior stock option plans of the Company enacted by the Board of Director or its predecessor companies. ARTICLE 11 WITHHOLDING TAX REQUIREMENTS Upon exercise of an option, the Optionee shall, upon notification of the amount due and prior to or concurrently with the delivery of the certificates representing the Shares, pay to the Company amounts necessary to satisfy applicable withholding tax requirements or shall otherwise make arrangements satisfactory to the Company for such requirements. In order to implement this provision, the Company or any related corporation shall have the right to retain and withhold from any payment of cash or Shares under this Plan the amount of taxes required to be withheld or otherwise deducted and paid with respect to such payment. At its discretion, the Company may require an Optionee receiving Shares to reimburse the Company for any such taxes required to be withheld by the Company and withhold any distribution to the Optionee in whole or in part until the Company is so reimbursed. In lieu thereof, the Company shall have the right to withhold from any cash amount due or to become due from the Company to the Optionee an amount equal to such taxes. The Company may also retain and withhold or the Optionee may elect, subject to approval by the Company at its sole discretion, to have the Company retain and withhold a number of Shares having a market value not less than the amount of such taxes required to be withheld by the Company to reimburse the Company for any such taxes and cancel (in whole or in part) any such Shares so withheld. 5

270 APPENDIX H INFORMATION CONCERNING SPINCO H-1

271 APPENDIX H INFORMATION CONCERNING SPINCO TABLE OF CONTENTS CORPORATE STRUCTURE... H-3 Intercorporate Relationships... H-3 GENERAL DEVELOPMENT OF SPINCO BUSINESS... H-4 Business of SpinCo... H-4 THE GOLDFIELDS PROJECT... H-5 General... H-5 Property Description and Location... H-8 Accessibility, Climate, Local Resources, Infrastructure and Physiography... H-12 History... H-13 Geological Setting and Mineralization... H-17 Mineralization... H-21 Deposit Types... H-23 Exploration... H-24 Drilling... H-28 Sample Preparation, Analysis and Security... H-28 Data Verification... H-31 Mineral Processing and Metallurgical Testing... H-32 Mineral Resource Estimates... H-38 Mineral Reserve Estimates... H-38 Adjacent Properties... H-39 Other Relevant Data and Information... H-39 Interpretation and Conclusions... H-39 Recommendations... H-41 OTHER PROPERTIES... H-43 Ixhuatán Project, Mexico... H-43 Huizopa Project, Mexico... H-46 FINANCINGS... H-46 AVAILABLE FUNDS AND PRINCIPAL PURPOSES... H-46 Available Funds... H-46 Principal Purposes... H-47 BUSINESS OBJECTIVES AND MILESTONES... H-47 DIVIDENDS AND OTHER DISTRIBUTIONS... H-47 SELECTED FINANCIAL INFORMATION... H-47 Financial Statements... H-47 Selected Unaudited Pro Forma Financial Information... H-48 MANAGEMENT'S DISCUSSION AND ANALYSIS... H-48 DISCLOSURE OF OUTSTANDING SECURITY DATA ON FULLY DILUTED BASIS... H-48 DESCRIPTION OF SECURITIES TO BE LISTED... H-49 SpinCo Shares... H-49 Stock Options... H-49 SpinCo Warrants... H-49 CONSOLIDATED CAPITALIZATION... H-49 OPTIONS TO PURCHASE SECURITIES OF SPINCO... H-50 Stock Option Plan... H-50 PRIOR SALES... H-52 ESCROWED SECURITIES AND SECURITIES SUBJECT TO RESTRICTION ON TRANSFER... H-52 PRINCIPAL SECURITYHOLDERS... H-52 DIRECTORS AND EXECUTIVE OFFICERS... H-52 Name, Occupation and Security Holdings... H-52 Cease Trade Orders... H-54 Bankruptcies... H-54 H-1

272 Penalties or Sanctions... H-54 Conflicts of Interest... H-55 EXECUTIVE COMPENSATION... H-55 Compensation Discussion and Analysis... H-55 Named Executive Officer Compensation... H-56 Named Executive Officer Consulting Agreements... H-56 Termination and Change of Control Benefits... H-57 Option-Based Awards... H-57 Director Compensation... H-57 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS... H-57 AUDIT COMMITTEE AND CORPORATE GOVERNANCE... H-57 Audit Committee... H-57 Corporate Governance... H-59 RISK FACTORS... H-61 PROMOTERS... H-69 LEGAL PROCEEDINGS AND REGULATORY ACTIONS... H-69 Legal Proceedings... H-69 Regulatory Actions... H-69 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS... H-69 AUDITORS, TRANSFER AGENTS AND REGISTRARS... H-70 Auditor... H-70 Registrar and Transfer Agents... H-70 MATERIAL CONTRACTS... H-70 INTEREST OF EXPERTS... H-70 OTHER MATERIAL FACTS... H-71 FINANCIAL STATEMENTS DISCLOSURE... H-71 SCHEDULE 1 AUDITED FINANCIAL STATEMENTS OF CANADA LIMITED FROM INCORPORATION TO MARCH 15, SCHEDULE 2 AUDITED COMBINED CARVE-OUT FINANCIAL STATEMENTS OF THE EXPLORATION PROPERTIES BUSINESS OF CANADA LIMITED FOR THE YEARS ENDED DECEMBER 31, 2014 AND SCHEDULE 3 MANAGEMENT DISCUSSION & ANALYSIS OF CANADA LIMITED FOR THE PERIOD OF INCORPORATION ON FEBRUARY 4, 2016 TO MARCH 15, SCHEDULE 4 MANAGEMENT DISCUSSION & ANALYSIS OF THE EXPLORATION PROPERTIES OF CANADA LIMITED FOR THE YEARS ENDED DECEMBER 31, 2014 AND SCHEDULE 5 UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF CANADA LIMITED... 1 SCHEDULE 6 CHARTER OF THE AUDIT COMMITTEE OF CANADA LIMITED... 1 SCHEDULE 7 CODE OF BUSINESS CONDUCT AND ETHICS... 1 H-2

273 The following is a summary of Canada Limited ("SpinCo"), its business and operations, which should be read together with the more detailed information and financial data and statements contained elsewhere in the management information circular of Fortune Bay Corp. dated May 13, 2016, to which this Appendix H is attached (the "Circular"). The information contained in this Appendix H, unless otherwise indicated, is given as of April 30, All capitalized terms used in this Appendix H and not defined herein have the meaning ascribed to such terms in the "Glossary of Terms" or elsewhere in the Circular. Unless otherwise indicated herein, references to "$", "Cdn$" or "Canadian dollars" are to Canadian dollars. See "Currency and Exchange Rates" in the Circular. See also in the Circular "Cautionary Note Regarding Forward-Looking Statements and Risks". CORPORATE STRUCTURE Canada Limited was incorporated pursuant to the CBCA on February 4, SpinCo is not currently a reporting issuer and the SpinCo Shares are not listed or quoted for trading on any stock exchange. Upon completion of the Transaction, SpinCo expects that it will be a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. Application has been made for the listing of the SpinCo Shares on the TSXV. The TSXV has conditionally accepted the Transaction subject to Fortune fulfilling all of the requirements of the TSXV on or before August 10, There can be no assurance as to if, or when, the SpinCo Shares will be listed or traded on the TSXV or any other stock exchange. As part of the Arrangement, SpinCo will change its name to "Fortune Bay Corp." SpinCo's head office is located at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7. SpinCo's registered office is located at 77 King Street West TD Centre North Tower, P.O. Box 95, Suite 3000, Toronto, Ontario, M5K 1G8. Intercorporate Relationships As of the date of this Circular, SpinCo does not have any subsidiaries. On completion of the Arrangement, the subsidiaries controlled by SpinCo, the jurisdictions of incorporation of those subsidiaries and the percentage of voting securities held, directly or indirectly, by SpinCo, will be as follows: H-3

274 Canada Limited (to be renamed Fortune Bay Corp.) (Canada) 100% Brigus Gold ULC (Canada) (Halifax office) 99.99% 100% Canada Inc. (Canada) (Goldfields) 100% Linear Gold Holdings Corp. (Canada) % Linear Gold Mexico, S.A. de C.V. (Mexico) (Ixhuatán) % % Linear Gold Mineracao Ltda. (Brazil) 99.8% 0.2% Servicios Ixhuatán S.A. de C.V. (Mexico) GENERAL DEVELOPMENT OF SPINCO BUSINESS Business of SpinCo SpinCo was incorporated to acquire, hold and operate the existing business of Fortune. To that end, SpinCo will acquire prior to the Arrangement Effective Time from Fortune the following mineral claims, property and other interests: 1. All investments including marketable securities owned by Fortune. 2. All accounts receivable due to Fortune. 3. Prepaid expenses related to Fortune. 4. Reclamation deposit in the name of Fortune. 5. Property and equipment owned by Fortune as included in Fortune's December 31, 2015 audited financial statements. 6. Exploration and evaluation assets owned by Fortune as included in Fortune's December 31, 2015 audited financial statements, including the Goldfields deposit in Saskatchewan (the "Goldfields Project"), Alberta, Ixhuatan deposit in Mexico and the Huizopa net smelter royalty in Mexico. H-4

275 7. All subsidiaries of Fortune and any assets in the name of, or otherwise held or owned by, such subsidiaries. For greater certainty, the SpinCo Assets do not include (i) $8,450,000 in cash; and (ii) all minute books of Fortune and copies of all books, ledgers, files, lists, reports, operating records, correspondence, and other data and information, including all data and information stored on computer-related or other electronic media, relating to taxes of Fortune or which may reasonably be required by Fortune after the Arrangement Effective Time in connection with Returns, for audit purposes or in connection with required public disclosure pursuant to applicable Securities Laws or stock exchange rules. The SpinCo Liabilities do not include $250,000 liabilities that shall be retained by Fortune. Of the Fortune Mineral Properties, management of SpinCo considers the Goldfields Project to be its material property for the purposes of NI Upon completion of the Transaction, SpinCo's primary business focus will be the acquisition, exploration and, as warranted, development of precious and base metals prospects, including further exploration of the Goldfields Project. See in this Appendix H, "The Goldfields Project". Upon completion of the Transaction, Fortune Shareholders will own 100% of SpinCo, and SpinCo will have three of the same directors as Fortune's current directors and the same management and staff as Fortune's current management and staff. See in the Circular, "The Transaction The Arrangement". See in this Appendix H, "Management's Discussion and Analysis", "Description of Securities to be Listed SpinCo Shares", "Consolidated Capitalization" and "Promoters". THE GOLDFIELDS PROJECT General The information in this Appendix H with respect to the Goldfields Project located on the north shore of Lake Athabasca in the province of Saskatchewan, Canada is extracted from a technical report with an effective date of March 19, 2016 and dated May 9, 2016 pertaining to the Goldfields Project (the "Goldfields Report") that was commissioned by and prepared for SpinCo by Mercator Geological Services Limited ("Mercator") in compliance with NI The Goldfields Project contains a total of 36 land dispositions that are currently held by Canada Limited, a wholly owned subsidiary of Fortune. The primary metal of exploration interest is gold but significant occurrences of uranium are also present on the Goldfields Project. The surface area covered by the mineral exploration dispositions totals 22,126 hectares (ha). Under terms of engagement with SpinCo, Mercator was assigned the responsibility of carrying out a site visit, completing initial field evaluation of selected exploration target areas and preparation of a technical report in accordance with NI Terms of engagement were established through discussions held between representatives of Mercator and SpinCo. The site visit served to fulfil requirements set out under NI and also provided an opportunity to develop and ground-truth a property-scale geological framework that can be used to categorize and contextualize the many mineral occurrences and/or deposits on the Goldfields Project. The Goldfields Report also includes results of metallurgical testing carried out by SGS Mineral Services of Lakefield, Ontario on core samples from the past producing Box Mine and Athona gold deposits. This metallurgical work was overseen and managed by Mr. Andrew Doolittle, P. Eng., of Saskatoon-based March Consulting Associates Ltd. ("March"). The Qualified Person ("QP") responsible for sections 4, 5, 6, 9, 10, 16 and 17, and portions of sections 1, 18 and 19 of the Goldfields Report, is Mr. Stewart Yule, P. Geo., of Mercator. The QP responsible for sections 2, 3, 7, 8, 11, 12, 14, and 15, and portions of sections 1, 18 and 19 of the Goldfields Report, is Mr. Tony Barresi, P. Geo., of Mercator. Mr. Andrew Doolittle, P. Eng., of March is responsible for section 13 and portions of sections 1 and 18 of the Goldfields Report that are related to metallurgical testwork. A copy of the entire Goldfields Report may be inspected by Fortune Shareholders at the registered office of Fortune at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7 during H-5

276 normal business hours prior to the Meeting. It can also be accessed under Fortune's profile on SEDAR at Following completion of the Transaction, the Goldfields Report will be filed electronically with regulators by SpinCo and will be available for public viewing under SpinCo's profile on SEDAR at The following table presents abbreviations and factors that have been used in the Goldfields Report and are included in this Appendix H. Abbreviation Source Company Names Casmyn Casmyn Engineering Cominco Consolidated Mining and Smelting of Canada Ltd. GLR Greater Lenora Resources Corp. Kasner Kasner Group of Companies Lakefield Lakefield Research Ltd. Mary Ellen Mary Ellen Resources Ltd. ODM Overburden Drilling Management Ltd. RJK RJK Mineral Corp. Swider Richard C. Swider Consulting Engineers Ltd. Wardrop Wardrop Engineering Inc. Minerals/Elements/Chemicals cpy Chalcopyrite gl Galena hbl Hornblende K-fld K-feldspar plag Plagioclase Feldspar py Pyrite qz Quartz sph Sphalerite Ag Silver As Arsenic Au Gold Bi Bismuth Co Cobalt Cu Copper Fe Iron K Potassium Mg Magnesium NaCN Sodium Cyanide Ni Nickel H-6

277 Abbreviation Source Pb Lead Pd Palladium PGE Platinum Group Elements Pt Platinum REE Rare Earth Elements Th Thorium U Uranium U3O8 Zn Units of Measure k Triuranium Octoxide Zinc thousand " inch µm micrometre C Celsius cm centimetre CPS Counts per second ft foot g gram ( troy oz) Ga billion ha hectare kg kilogram km kilometre lbs pounds m metre Ma million mg milligram ml millilitre mm millimetre oz troy ounce (31.04 g) Oz/T to g/t 1 oz/t = g/t ppb parts per billion ppm parts per million st short ton (2000 lb or kg) st/d short ton per day t tonne (1000 kg or lb) % percent / per H-7

278 Abbreviation Source degree symbol 1VD asl ca DC/IP DEM et al. GIS GPS GSC ICP-AES ICP-AES MARS NAD No. OK ON Ontario SK SMAD SMDI SRTM UTM VTEM First Vertical Derivative Above sea level circa Direct Current Induced Polarization Digital Elevation Model and the others Geographic Information System Global Positioning System Geological Survey of Canada Inductively Coupled Plasma Atomic Absorption Spectrometry Inductively Coupled Plasma Atomic Emission Spectrometry Mineral Administration Registry Saskatchewan North American Datum number Ordinary Kriging Ontario Ontario Research Foundation Saskatchewan Saskatchewan Mineral Assessment Database Saskatchewan Mineral Deposit Index Shuttle Radar Topography Mission Universal Transverse Mercator Versatile Time Domain Electromagnetic Property Description and Location General The Goldfields Project is located 13 km south-southeast of the town of Uranium City, Saskatchewan and centered at approximately 59 27' North Latitude and, ' West Longitude (Figure 4.1 below). The Goldfields Project is approximately 850 km north of Saskatoon and 60 km south from the border with the Northwest Territories. Mineral Disposition Tabulation At the effective date of the Goldfields Report, the Goldfields Project consisted of 36 contiguous mineral dispositions, in which Canada Inc., a wholly-owned subsidiary of Fortune holds a 100 percent interest. These mineral dispositions cover a total surface area of 22,126 ha and define an area that measures approximately 25 km by 19 km in maximum east-west and north-south dimensions, respectively. The following table presents details of the 36 mineral dispositions and Figure 4.2 below shows the disposition outlines and locations. The five central dispositions that contain the Box Mine and Athona deposit plus 14 additional dispositions are in good standing until respective expiry dates that occur between the years 2023 and additional dispositions H-8

279 require exploration expenditures of approximately $140,000 to remain in good standing past their current expiry dates that occur in the 2016 through 2018 period. Disposition Owner Hectares NTS Sheet Effective Date Goodstanding Date CBS Canada Inc N08 19/10/ /01/2018 CBS Canada Inc N07 01/10/ /12/2023 CBS Canada Inc N07 27/07/ /10/2024 CBS Canada Inc N07 27/07/ /10/2023 CBS Canada Inc N07, 08 21/12/ /10/2023 CBS Canada Inc N07 27/07/ /10/2023 CBS Canada Inc N07, 08 29/05/ /08/2018 CBS Canada Inc N08 23/02/ /05/2018 CBS Canada Inc N08 26/11/ /02/2018 CBS Canada Inc N08 26/11/ /02/2018 ML Canada Inc N08 01/08/ /10/2023 ML Canada Inc N08 01/08/ /10/2023 ML Canada Inc N08 01/08/ /10/2023 ML Canada Inc N07 22/07/ /10/2036 ML Canada Inc N08 23/08/ /11/2034 S Canada Inc N07 08/08/ /11/2023 S Canada Inc N07 08/08/ /11/2024 S Canada Inc N07 24/09/ /12/2023 S Canada Inc N07 24/09/ /11/2023 S Canada Inc N07 16/11/ /02/2028 S Canada Inc N07, 08, 09, 10 05/05/ /08/2016 S Canada Inc N09, 10 05/05/ /08/2016 S Canada Inc N08 05/05/ /08/2016 S Canada Inc N08 12/02/ /05/2017 S Canada Inc N08 12/02/ /05/2017 S Canada Inc N08 12/02/ /05/2017 S Canada Inc N08 12/02/ /05/2017 S Canada Inc N08 12/02/ /05/2017 S Canada Inc N07 27/10/ /01/2027 S Canada Inc N07 04/04/ /07/2032 S Canada Inc N07, 08 22/02/ /05/2028 S Canada Inc N08 10/08/ /11/2025 S Canada Inc N07, 10 20/10/ /01/2017 S Canada Inc N07 30/06/ /09/2017 H-9

280 S Canada Inc N08 05/05/ /08/2016 S Canada Inc N10 05/05/ /08/2016 Total: *Note: Claim reductions that were under application at the effective date of the Goldfields Report are shown in Figure 4.2 in the Goldfields Report. When instituted, these will result in extensions of corresponding "good standing" dates due to automatic re-allocation of total associated assessment work credits. H-10

281 Mineral Disposition System in Saskatchewan Mineral dispositions in Saskatchewan are issued under the Crown Minerals Act (the "Act") and are regulated under the Saskatchewan Mineral Tenure Registry Regulations, revised in 2012 (C-50.2 Reg 27) and amended in 2013 (SR70, 2013). A mineral disposition can be registered under a permit, claim or lease, and includes the rights pursuant to each disposition type outlined by the Act's regulations. An individual registered, or a comparably registered corporation, with MARS on-line claim staking system can acquire mineral exploration dispositions in the province. A registered user may designate another person to act as an agent to conduct specific transactions on the registered user's behalf. Mineral disposition claims are issued for a period of one year and can be renewed through application, payment of prescribed renewal fees and demonstration that required yearly assessment work has been performed. In Saskatchewan, mineral disposition claims (Prefixes S- and CBS-) grant the holder the exclusive right to explore for Crown minerals but not to mine them. However, a claim in good standing can be converted to a lease (Prefixes ML- and Q-) upon application. Leases have a term of 10 years and are renewable. A lease grants the holder the exclusive right to explore, mine, work, recover, procure, remove, carry away and dispose of any Crown minerals that are subject to the regulations within the leased lands. Under Saskatchewan's Mineral Tenure Registry Regulations, annual expenditures of $15.00 per hectare are required from the second to the tenth year after the first year of staking a claim to retain each disposition with a minimum of $ per claim per assessment work period. After 10 years, this rate increases to $25.00 per H-11

282 hectare annually and all subsequent assessment work periods with a minimum of $ per claim per work period. Permits Required For Recommended Future Exploration Authorization permits for timber removal, road construction, storage of fuel or camp material are required for most exploration programs and are obtained through the Saskatchewan Ministry of Environment. At the effective date of the Goldfields Report, no authorization permits had been obtained by SpinCo for exploration work on the Goldfields Project. Environmental Considerations The Goldfields Project contains at least six mineral deposits or occurrences that reached significant underground exploration stages and three that reached the stage of mine development and production. The Box mine gold production period spanned from 1939 to The Nicholson Uranium Mine was in production from 1955 to 1956 and from 1958 to The Lorado Uranium Mill operated from 1957 to During the course of these activities, substantial modifications to the natural landscapes were made to accommodate site infrastructure for mining and milling purposes. During the 2015 site visit, the Lorado mill site reclamation work within the Goldfields Project area was in progress and is currently scheduled to be completed in the summer of At the effective date of the Goldfields Report, there were no environmental issues known to SpinCo that would materially impact its ability to carry out recommended mineral exploration and assessment programs in the project area. Availability of Land for Potential Future Site Development The Goldfields Project area includes both brownfield and wilderness land owned by the province of Saskatchewan (the "Crown land"). In Mercator's opinion, the extensive amount of undeveloped land present in this area should be sufficient to support future site developments. However, no agreements to secure land access for future development have been established to date by SpinCo. Other Significant Factors or Risks Mercator is not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform work on the Goldfields Project. Accessibility, Climate, Local Resources, Infrastructure and Physiography Accessibility The Goldfields Project is located 13 km south-southeast of the town of Uranium City in Northern Saskatchewan. Flights from Saskatoon to Uranium City are available three days per week during summer months and two days per week during winter months. Several charter aircraft companies operate in the area. The Goldfields Project can be accessed by four-wheel drive vehicle from Uranium City via a 25 km long drive south on Highway 962. Depending on road conditions, the drive takes approximately one hour. During the winter, the Goldfields Project is most readily accessed by snowmobile or helicopter. The Goldfields Project lies along the north shore of Lake Athabasca, Canada's 8th largest lake, and boat access is possible during the summer field season. An ice road over Lake Athabasca is maintained from Stony Rapids to Uranium City and is typically open for six weeks during February and March. A secondary road network on the Goldfields Project was developed during historic mining activities, as was the former town of Goldfields, a gold mining settlement established in the 1930's. The secondary road network provides limited walking access to the main showings on the Goldfields Project. H-12

283 Climate and Physiography The Goldfields Project is located in the Goldfields area on the north shore of Lake Athabasca and surrounds the Beaverlodge Lake area, immediately south of Uranium City, in Northwestern Saskatchewan. The topographic relief consists of moderately high hills and steep ridges, the highest being Beaverlodge Mountain at m above sea level (asl), which projects dramatically above surrounding lakes and bays of Lake Athabasca, which has a surface elevation of 213 m asl. Elongated ridges and valleys trend NE-SW and reflect the orientation of regional folding of Precambrian-shield rocks that underlie much of the Goldfields Project. The Goldfields Project is located in the Taiga Shield Ecozone and experiences a subarctic climate with average daily temperatures between 11 C and 16 C in mid-summer and -8 C to -32 C in mid-winter. The temperature range is in large part due to the continental effect and cold winters typical of northern latitudes. The average annual precipitation as rainfall reported from Environment Canada is mm with the largest amounts recorded from May to October. The lakes in the region generally freeze by late October and may remain frozen until late May. Wind chill factors are significant in the winter and can reach "feel-like" readings below -40 C. The Goldfields area typically receives moderate to heavy winter snowfalls with more than 2 metres in total seasonal accumulation. Resources and Infrastructure Uranium City currently has a population of less than 100 permanent residents. There are few local resources available in Uranium City, although gasoline, diesel and aviation fuel are available from a bulk fuel provider at the local airport. Most supplies come from Stony Rapids or are flown in from southern Saskatchewan. Stony Rapids is located 150 km east of Uranium City and is the logistics/business hub for northern Saskatchewan. Government administrative offices, banks, hospital facilities, hotels charter transportation services and food stores are present in the community. Electrical power for Uranium City and the region is supplied from the Charlotte River hydroelectric station operated by SaskPower, Saskatchewan's provincial power authority. The Fredette River water treatment plant provides municipal water for the community of Uranium City. The very low population of the Uranium City area could not substantively support a new mine development project in the area. However, Saskatchewan's existing mining industry workforce that is largely focused on uranium, potash and gold operations would provide a skilled worker pool to support any future mine development on the Goldfields Project. Operational Period for Exploration Activities It would be most cost effective to carry out exploration activities recommended in the Goldfields Report during the late May through mid-november snowless period. Access to most property areas is most readily available during this period and weather conditions are most favorable. Programs requiring boat or float plane access should not be planned for the spring breakup or fall freeze-up periods. Drilling and geophysical surveying programs should be avoided during these times as well and could in some cases be advantaged by completion during the winter period when access is available over frozen lakes and swamps. Higher costs are common for winter programs due to the harsh operating environment that is present in this region during that period of the year. History Ownership The Goldfields Project takes its name from the former village of Goldfields, a gold mining settlement established in the 1930's. The Box Mine gold operation was operated by Cominco from 1939 until 1942, when it closed due to work force shortages brought about by World War II. In 1987, Lenora Exploration Ltd. and Mary Ellen jointly optioned the Box and Athona gold deposits and commenced work to evaluate them as open pit operations. Mary Ellen, Lenora Exploration Ltd. and AXR Resources Ltd. merged in December of 1988 to form Greater Lenora H-13

284 Resources Corp., which later became known as GLR. Between 1987 and 1989, GLR, RJK and Uranium City Resources Inc. operated under the umbrella company known as the Kasner, a Canadian junior mining sector company focusing on projects from Ontario to British Columbia. In May of 2009, Linear Gold Corp. acquired the Box and Athona properties through its subsidiary Canada Inc., which still holds the mineral land dispositions covering the project area. In June of 2010, a merger between Linear Gold Corp. and Apollo Gold Corp. formed Brigus Gold Inc. In December of 2013, Fortune was created from a merger between Brigus Gold Inc. and Primero Gold Canada Inc. and assumed ownership of Canada Inc. At the effective date of the Goldfields Report, all Goldfields Project land dispositions were held by Canada Inc. and were scheduled for spin-out to SpinCo pursuant to the Plan of Arrangement. Mining History of the Box Mine The earliest reported geological work in northern Saskatchewan commenced in 1880, when the Geological Survey of Canada conducted a topographic survey along the Saskatchewan River to Reindeer Lake and then northwards to Lake Athabasca. During 1882 to 1883, J.B. Tyrrell surveyed many of the waterways and recorded the presence of noritic rocks on the north shore of Pine Channel at the east end of Lake Athabasca. In August 1934, gold was discovered by Tom Box and Gus Nyman on the east shore of Vic Lake, adjacent to the now historic Box Mine. Cominco acquired the discovery by staking claims Vic 1 to 17 and subsequently carried out surface and underground exploration work. There are conflicting reports concerning the number of diamond drill holes completed and the total meterage drilled during this early exploration period. Bench concentrate testing on a sample grading 2.35 oz/st (80.56 g/t) Au and 0.35 oz/st (12.0 g/t) Ag showed a recovery of 99.2 %. In July 1935, the No. 1 shaft, inclined at 42 to the southeast, was sunk to a depth of 76 m in the footwall close to the granite and amphibolite contact. In September of that year, the No. 2 shaft, a three compartment production shaft collared 390 m northeast of the No. 1 shaft, was sunk at an inclination of 45 to the southeast. Three levels were developed, these being at 30 m, 91 m and 152 m measured down dip. Drifts were driven near the footwall contact of the deposit and horizontal diamond drill holes were cored across the ore body from the 91 m level to intersect the main set of gold bearing quartz veins. Crosscuts were driven at each shaft station across the ore body and along certain underground drill holes to check analytical results. In 1936, development work continued on the three levels with plans for a 100 st/d mill at the Box Mine. The decision was made to mine the entire body and stope development was initiated. Development continued from the No. 1 and No. 2 shafts on the 91 m level. In June of 1937, the decision was made to increase the Box Mine to a 1,000 st/d cyanide mill operation, as well as to begin construction of a hydro-electric power plant. It was during this development period that the town of Goldfields, SK was incorporated. In July of 1938, Box mine stope development indicated a lower grade of ore than anticipated. It was decided to carry out an extensive underground drilling program designed to intersect at right angles the main gold bearing quartz stringers. A total of 1,870 m of drilling was completed and ore reserves were recalculated to total less than one-half the original estimate. The new gold grade was approximately oz/st (4.73 g/t) Au. An agreement was made between Cominco and Athona Mines whereby the Box mine milling facility would process ore from the neighbouring Athona gold deposit, 2 km to the east, and provisions were made for a 3,000 st/d capacity. By early 1939, Cominco completed 3,578 m of drifting and cross cutting as well as 8,967 m of drilling within the Box mine ore body. The Box mine gold deposit was classified as a large tonnage, low grade deposit. On June 27th, 1939 the first ore through the mill was processed at a rate of 500 st/d (453.6 t/d). The first gold brick, worth approximately $30,000, was poured in August of At the same time, the Box mill reached a capacity of 1,000 st/d (907.2 t/d). Underground mining methods took advantage of the ore geometry and deposit size to develop large stopes through block caving; Comino reported gold recoveries at 92 %. By August of 1940, the mill production had reached approximately 1,200 st/d (1,088.6 t/d). H-14

285 In June of 1942, the Box mine was closed due to a work force shortage with the onset of World War II. Estimated reserves at the time of shut down were given as 2.28 million tons (2.07 million tonnes) at a gold grade of oz/st (1.714 g/t). This reserve estimate is historical in nature and was not prepared in accordance with NI and the CIM Standards. A Qualified Person has not completed sufficient work to classify these as current reserves, and SpinCo is not considering them to be current reserves. From 1939 to 1942, the Box mine processed approximately 1.29 million tons (1.17 million tonnes) of ore having a calculated gold grade of oz/st (1.64 g/t) Au, recovering 65,066 ounces (2,023,826 grams) of gold and 62,205 ounces (1,934,837 grams) of silver. Mining History of the Athona Deposit The Athona gold deposit is located approximately 0.6 km southeast of Neiman Bay of Lake Athabasca, about 1.4 km south of the former town site of Goldfields and 2 km east of the Box mine. Following the discovery of gold at the adjacent Box mine, the Lucky-Willy group of 14 claims at Athona were staked in the fall of 1934 and spring of 1935 for Great Bear Lake Mines Ltd., which subsequently changed its name to Athona Mines Ltd. Work between 1935 and 1938 consisted of extensive trenching and diamond drilling with a total of 7,345 m of exploration core drilling completed that located several zones of mineralization. A 1938 annual report indicates that the probable ore reserve in the Main Zone was 1,340,000 tons (1,215,628 tonnes) at oz/st (3.325 g/t) Au (uncut) or oz/st (2.948 g/t) Au (cut). The total ore (including probable) was 3,485,000 tons (3,161,539) at oz/st (2.948 g/t) Au (uncut) or oz/st (2.742 g/t) Au (cut). It was estimated that approximately 2,500,000 tons (2,267,962 tonnes) of ore were amenable to open pit mining based on a 1,500 st/d (1,360.8 t/d) operation. The 1939 annual report indicated the ore reserves in the Main Zone as probable ore: 1,185,000 tons (1,075,014 tonnes) at oz/st (2.948 g/t) Au and in the East Zone as 30,000 tons (27,215 tonnes) of probable ore at 0.26 oz/st (8.913 g/t) Au and 50,000 tons (45,359 tonnes) of possible ore at 0.17 oz/st (5.828 g/t) Au. Mercator notes that the 1938 and 1939 estimates are historical in nature and were not prepared in accordance with NI and the CIM Standards. A Qualified Person has not completed sufficient to classify these as current reserves, and SpinCo is not considering them to be current reserves. Operations at the Athona deposit were discontinued in June The reasons given for cessation of operations were that, although sufficient development work had been done to bring the mine into production, no arrangements had been made with Cominco for treatment of ore on a custom basis, and no satisfactory source of power was available for operation of a mill. Additional Previous Work in the Box Mine and Athona Deposit Areas Although the Box mine and Athona deposit are the most significant in terms of development and exploration activities in the Goldfields area, other showings were being discovered and actively staked during the same period. Please see the Goldfields Report for a brief summary of exploration work carried out regionally in the Goldfields area using excerpts from technical reports by Jensen (2005a), Nadeau (1997) and the SMDI. During 2011, Brigus retained March to complete a resource estimate in accordance with NI for the Goldfields Project to support a new pre-feasibility study. March reported resource estimates for the Box mine, based on an OK interpolation deposit model. The estimate reflects a 0.5 g/t Au cut-off grade and includes measured resources of 858,000 tonnes at 2.05 g/t Au, indicated resources of 12,966,000 tonnes at 1.63 g/t Au and inferred resources of 3,158,000 tonnes at 1.74 g/t Au. The OK resource estimates for Box were estimated for a range of gold cut off grades (COGs) from g/t Au to 4.0 g/t Au. The March NI technical report outlined combined proven and probable reserves for the Box mine and Athona deposit, at a 0.5g/t Au cutoff value, to total 22,333,045 tonnes at an average grade of g/t Au (1,020,000 troy ounces of contained gold). Mercator notes that this combined reserve estimate is historical in nature. A Qualified Person has not determined what additional work is required to make this reserve current and SpinCo is not considering it as a current reserve. H-15

286 It was concluded in the 2011 pre-feasibility study that the Goldfields Project had progressed to the point of defined resources and reserves. The capital and operating costs determined for 2011 were found to provide acceptable project economics. Mercator notes that this reserve estimate is now historical in nature and a Qualified Person has not determined what additional work is required to make this reserve current. SpinCo is not considering it as a current reserve. Please see the Goldfields Report for a summary of the exploration history of the Frontier Lake area, Golden Pond/Adrianne Showing area, Fish Hook Bay area, Nicholson Bay area, Triangle Showing area, Quartzite Ridge and Crackingstone areas and Keddy Bay area. History of Metallurgical Testing on the Box and Athona Deposits Metallurgical test work for the Box Mine ore was originally conducted by Cominco, who also operated a mill onsite from 1939 to 1942 to process ore. Whole ore cyanidation with 24 hour retention and Merrill-Crowe precipitation was employed on ore ground to 55 % -200 mesh. Gold recovery was reported as between 94% and 98%. In 1980, Pyx Exploration Ltd. carried out a heap leaching test on 1.5 tons (1.36 tonnes) of mineralization from the Athona site. Results of the leaching tests indicated that the Athona ore was not amenable to heap leaching with approximately 20 % recovery; however, the flotation recoveries were in the range of 92 to 97 % gold recovery by grinding to approximately -65 mesh. In 1987, bulk sampling programs were initiated at both the Box mine and the Athona deposit to obtain representative samples for metallurgical testing. The test program was conducted on seven trench samples, 5,643 lbs, (2,559.7 kg) of Box mine material and twenty samples 15,168 lbs, (6,880.2 kg) of Athona deposit material. The two samples were found to be similar in all matters investigated and all conclusions drawn from the test work apply to both the Box and Athona materials. The gold content determined by bulk cyanidation of 500 kg lots was oz/t (1.78 g/t) Au for the Box samples and oz/t (1.82 g/t) Au for the Athona samples. All samples were described as difficult to assay due to the nugget effect, or presence of free gold. Gravity separation at -48 mesh recovered only 25 to 30% of the contained free gold, probably due to insufficient liberation at the screen size tested. The 1988 OFR report found that flotation of sample material ground to 80 % -200 mesh resulted in concentrates grading 0.72 oz/t (24.68 g/t) Au for the Athona sample, with a gold recovery of 90.7%. Flotation of the Box sample resulted in a concentrate grading oz/t (36.2 g/t) Au, with a recovery of 91.9% of the gold contained in the sample. Furthermore, OFR found that flotation concentrate cyanidation resulted in gold recoveries of 97.6% for the Athona concentrate and 96.1% for the Box concentrate. Also in 1988, a bulk sampling study was conducted to determine the concentration and mode of occurrence for gold in the tailings from the Box mine, as well as to resolve a oz/ton (0.62 g/t) Au difference between the historic mine grade and the historic mill grade. The gold in the sampled tailings was found by ODM in Nepean, ON to occur half in pyrite and half in fine visible gold grains with very little coarse gold present. The average gold value was considerably less than the oz/ton (0.62 g/t) Au cutting factor but it was higher than the oz/ton (0.14 g/t) Au figure reported for the 1939 mill discharge. Since mill recovery normally improves with time, the 1939 figures may have been too low. In 1988, Casmyn was retained by RJK to perform a detailed historic literature search to identify all operating parameters, constraints and problems associated with the Box milling operation. Based on the results of the mill simulation test program, Casmyn concluded that the overall gold recovery in the Box mill between 1939 and 1942 was in the region of 75.0%, at the maximum, rather that the reported level of 93% recovery. During the 1988 exploration program, 64 bulk leach tests were performed on Box ore samples indicating an optimum leach residence time of 77 hours resulting in an average gold recovery of 93.1%. The optimum leach time for the Athona ore was 59 hours with an average gold recovery of 92.3%. Results from the 1988 Casmyn leach tests confirmed that the Goldfields ore is amenable to cyanidation and that most of the gold is in a recoverable form. In 1990, Casmyn was retained by RJK to complete a bulk cyanidation test program for the Goldfields Project. The purpose of the cyanide-leach test program was to compare results obtained from fire assay methods and to H-16

287 ascertain if cyanide leaching could overcome the nugget effect encountered in previous sampling programs. An average gold extraction of approximately 90% was achieved. In 1990, Ortech International Corp. ("Ortech") of Mississauga, ON completed an audit of the Casmyn leach test program. The Casmyn data showed moisture contents ranging between 0.1 and 0.4 % by weight, which may not be significant enough to impact the overall leach performance derived from the calculated head assay. The second recommendation was to collect the slurry sample at 3 different depths within the leach vessel, rather than from three points along the bottom circumference of the vessel. The recommendations were implemented by Casmyn and Ortech concluded that the 1990 leach test program met industry standards. In 1994, in an effort to further determine the amount of gold in the tailings from the Box mill, a drilling program was completed to sample the entire thickness of the Vic Lake tailings. The findings indicated that gold was not passing from the mill into the tailings and the difference between calculated mill head grade and calculated mine production head grade was due to other factors. Between 1994 and 1995, Swider was retained by GLR to design and supervise a series of metallurgical test programs conducted at Lakefield in Ontario. Lakefield concluded that the best analytical technique to use would be one that analyses the entire sample as received, such as the total metallics method proposed by TSL Laboratories in Saskatoon. Also in 1994, Swider supervised a Kilborn pebble forming test conducted on bulk sample material from the Box mine and Athona deposit. The objective of the Kilborn test was to determine if pieces of rock from the Box and Athona samples would make suitable pebbles for secondary grinding, and to compare the hardness of these materials with others of known hardness. Both the Box and Athona ores were determined to be very hard and ideal pebbles for grinding. In 2001, GLR retained Gekko Systems Ltd. ("Gekko") to investigate the amenability of Box and Athona mineralization samples to gravity concentration utilizing an Inline Pressure Jig. The Box and Athona samples were progressively ground and tabled to produce a number of concentrate and tails samples. All samples were analysed to determine the yield, recovery and yield grade curves for gold and sulphur. The outcomes were determined to be suitable for a 90% gold recovery with a yield of up to 20%. Gravity was effective in producing a concentrate from the Box sample containing 68% of the gold and 58% of the sulphur in 2.5% of the mass at a grade of 42 g/t Au and 5.68% S. Gravity was effective in producing a concentrate from the Athona sample containing 75.8% of the gold and 74% of the sulphur in 2.3% of the mass at a grade of 75.4 g/t Au and 6.11% S. Geological Setting and Mineralization Regional Geology The Goldfields Project lies within the Churchill Structural Province of the Canadian Shield in a sequence of Archean paragneiss, meta-sedimentary, and meta-volcanic rocks and associated mafic to felsic intrusions that comprise the Rae province. The limits of the Rae province/craton are defined by the Taltson-Thelon tectonic zone to the northwest, and the Snowbird tectonic zone to the southeast and it is overlain by the younger Athabasca Basin to the south (see Figure 7.1 below). The Rae craton occupies the northern shore of Lake Athabasca where it is divided into seven domains. From west to east these are the Nolan, Ena, Zemlak, Beaverlodge, Train, Tantato and Dodge domains (see Figure 7.1 below). The rocks within these domains were strongly affected by metamorphism and intruded by syn-orogenic granite during the Hudsonian Orogeny ca Ma. The rocks are typically isoclinally folded along northeasterly-trending axes, although some broad open folds are also present. Younger overlying rocks of the Athabasca Formation to the south are mainly flat lying. Faults and associated mylonite zones in basement rock typically trend east, northeast or northwest. Within the Beaverlodge Domain (see Figures 7.1, 7.2 below), which includes the Goldfields Project, the Rae province comprises ca. 3.0 Ga. basement granite that is unconformably overlain by the Murmac Bay Group. The Murmac Bay Group comprises sequences of metamorphosed sedimentary rock including marble/meta-dolostone, H-17

288 quartzite, meta-greywacke, psammite and metapelite, as well as metabasite/amphibolite with extrusive and intrusive basaltic/gabbroic to komatiitic protoliths (see Figure 7.2 below ). The basement granite and Murmac Bay Group were deformed and metamorphosed to upper/middle amphibolite facies prior to intrusion of a ca Ga suite of coarse-grained granites, including the Gunnar, Macintosh Bay, Cameron and Stephens Lake granites. Abundant gabbroic sills and leucocratic pink granites also intrude the Murmac Bay Group but their timing remains more enigmatic. A set of younger mafic intrusions and rare associated granitic pegmatite intrusions form locally cross-cutting dikes and are thought to be derived from partial melting during the Paleoproterozoic Trans-Hudson Orogen. The Murmac Bay Group is unconformably overlain by the Martin Group, which is composed of 1.82 Ga red bed sedimentary rock and interbedded basalt flows. Unlike the Murmac Bay Group, the Martin Group is not strongly metamorphosed or deformed, although it forms broad open folds about the same northeast-trending axis as the Murmac Bay Group. To the south of Lake Athabasca, the Murmac Bay Group is overlain by flat-lying ca to 1.50 Ga Athabasca Group sedimentary rocks (see Figure 7.1 below). H-18

289 H-19

290 H-20

291 Local Geology Bedrock geology on the Goldfields Project comprises the Murmac Bay Group (ca Ga) and unconformably overlying Martin Group (ca Ga). The Murmac Bay Group is found predominantly in the southern half of the property and is separated from the Martin Group, which occupies the northern half of the property, by a deformed unconformity. The Murmac Bay Group lies unconformably on circa 3.0 Ga Elliot Bay granite which is exposed on the eastern side of the Crackingstone Peninsula. Here, metamorphosed saprolite and basal conglomerate lie directly on a paleosurface developed at the contact with the Elliot Bay Granite. Higher in the stratigraphy the Murmac Bay Group comprises quartzite, meta-graywacke, metapelite and lesser amounts of metamorphosed carbonates, iron-stone and mafic volcanics. The metamorphic rocks have been variably deformed and metamorphosed during multiple tectono-thermal events including the Ga Taltson orogeny, Ga amphibolite-facies metamorphism associated with deformation in the Snowbird Tectonic Zone, and a regionally extensive lower-temperature metamorphic overprint at 1.8 Ga associated with the Trans-Hudson orogeny. A middle-amphibolite facies peak metamorphic assemblage is apparent in mafic lithologies, which have abundant hornblende porphyroblasts; however, retrograde chlorite after hornblende is common. The Murmac Bay Group is intruded by 2326 ±15 Ma Mackintosh Bay granite, 2321±3 Ma Gunnar granite, 2999±7 Ma Cornwall Bay granite and a number of smaller granite bodies (e.g., the Box mine granite) that are either undated or have poorly constrained ages. Penecontemporaneous gabbro and ultramafic dikes, sills and stocks also intruded the Murmac Bay Group. The strata are folded about steep-dipping NE-SW trending axial planes. Along the Crackingstone Peninsula the folding is isoclinal but in the eastern portion of the property some folds are broad and open. In the approximate middle of the Goldfields Project, a distinct angular unconformity truncates the SW-NE trend of Murmac Bay Group strata. The unconformity is broadly folded about a NE-SW axis. The Martin Group, which overlies the unconformity, is composed mainly of red-bed conglomerate, sandstone and shale with some intercalated mafic volcanic flows. The Martin Group lacks the strong metamorphic and deformation features that characterize the Murmac Bay Group. Gold showings and deposits (see Figure 6.1 Exploration History in the Goldfields Report) are hosted exclusively in the Murmac Bay Group; however, uranium showings are present in both groups and are especially prevalent near the unconformity that separates them. Mineralization Box Mine and Athona Deposit Gold Mineralization Characteristics The Box and Athona mines exploited gold rich deposits that have similar mineralization characteristics. Mineralization at the Box Mine is hosted within granite and granitized metasedimentary country rock. Mineralization at the Athona mine is hosted entirely within granite. At both deposits gold is associated with quartz veining, an average of 1% pyrite, traces of chalcopyrite, and rare sphalerite and galena. The gold occurs as free gold, or as inclusions in, or coatings on, pyrite, or less commonly other sulfides. Gold at the Athona deposit is also found in association with chloritic selvages to quartz veins. The Box deposit is hosted mainly within a granitoid sill that strikes 048 and dips 35 to the SE. The sill and associated mineralization has a strike length of approximately 610m and an average width of 36m, but can be as thick as 53m. The Athona deposit is hosted in a 030 striking and shallow dipping sill-like granitoid body that is overlain and underlain by unaltered and unmineralizaed concordant bodies of gabbroic amphibolite. Mineralization is contained within two discrete zones of veining (Main Zone and East Zone). The Main Zone is 25m thick by 122m long and consists of steeply NW dipping en échelon narrow quartz veins. The East Zone, which has significantly less strike length than the Main Zone, contains similarly oriented mineralization within the H, K and L veins/vein-sets. A number of other locations on the Goldfields Project, including the Frontier Lake, Golden Pond, Gauthier, Melma and Greenlee showings (see Figure 6.1 in the Goldfields Report) have similar styles of gold mineralization to the Box and Athona deposits. Lorado and Nicholson Bay Mines Uranium Mineralization Characteristics The Lorado and Nicholson Bay mines exploited uranium rich polymetallic deposits on the Goldfields Project. The Lorado mine exploited nested zones of mineralization on the limbs of a NE trending, gently plunging, syncline at H-21

292 the contact between graphitic schist and quartzite. Mineralization was contained in a series of up to 60 m by 15 m zones with dense concentrations of pitchblende, pyrite, chalcopyrite, and minor bornite, chalcocite and hematite. At Nicholson Bay four main and two subsidiary mineralized zones are defined. They consist of NW striking and 45 to 90 NE dipping 2.5 cm to 1.8 m thick sections of sheared meta-sedimentary rock with quartz-carbonate veining and iron-carbonate alteration. The mineralized zones have strike lengths up to 55 m. Mineralization consists of a wide variety of sulfides including bornite, chalcocite, niccolite, cobalt-nickel arsenides, chalcopyrite, pyrite, galena, sphalerite, pitchblende, thucolite, and hisingerite, contained within calcite-dolomite-quartz-chlorite veins, soft fault-gouge, and wallrock. In addition to uranium, the Nicholson Bay zones contain copper, lead, silver, gold, cobalt, nickel, vanadium, platinum and palladium. A number of other location on the Goldfields Project, including the Fishhook Bay and Gill showings have similar styles of uranium rich polymetallic mineralization to the Lorado and Nicholson Bay showings. Orogenic or Intrusion/Porphyry Style Gold Discussion It is proposed in the Goldfields Report that intrusion or porphyry style gold mineralization should be considered the dominant style of gold mineralization that is represented at the Box mine, Athona deposit, Frontier Lake adit, Vic Lake adit and the Golden Pond occurrence. Mineralization in these areas has previously been classified as being representative of either orogenic, mesothermal and/or structurally controlled styles. Based on review of existing literature and results of 2015 field and petrographic studies, it is proposed that these deposits be reclassified as intrusion-related because each of them contains stockwork quartz veining and silica±k-feldspar alteration within and directly adjacent to granite intrusion(s). Unlike typical orogenic gold deposits where gold bearing quartz veins are millions of years younger than their passive hosts, the mine-granites on the Goldfields Project appear to be genetically related to the gold-bearing veining. The granites and country rock in contact zones are the exclusive hosts of the veining/mineralization, and the veining has associated high-temperature (potassic) alteration which likely results from late-stage hydrothermal fluids derived from the granite melt. In this regard, the deposits appear to most closely conform to a gold-rich porphyry model. The mineralized granites show a high degree of metasomatism/alteration. Their texture is often composed of amorphous pods of feldspar and quartz, sometimes weakly aligned in an incipient foliation. In some locations (e.g., at the Frontier adit and south of the Box mine) it is unclear if precious metal mineralization is hosted in strongly silicified country rock, or altered granite. In these locations the rock resembles pink quartzite or quartzrich aplite with sucrosic quartz and minor amounts of pink groundmass/k-feldspar. The timing relationship of granite-emplacement, quartz veining and mineralization to deformation is not entirely clear. Previous workers have suggested that the mine granites postdate one deformation event and predate a second deformation event. The granite-country-rock contacts both follow and appear to crosscut the NE-SW regional tectonic fabric and on an outcrop scale the contacts are highly irregular with both foliation parallel and crosscutting boundaries. The contact pattern suggests that at the time of intrusion a pre-existing foliation sometimes formed a path of least resistance for the intruding magma. Syn-emplacement quartz veining also utilized the preexisting foliation forming Type I quartz veins. The development of foliation within the granite itself, and the presence of veined granite "clasts" in strongly foliated/sheared meta-greywacke country rock near intrusive contacts, indicates that a second deformation event postdates, and therefore affected, the granites. A competing hypothesis is that the granites are syn-tectonic and were emplaced during the second regional deformation event. This hypothesis is preferable as it most easily explains the single orientation of the foliation within the granites as well as the one that appears to have been pre-existing at the time of emplacement. It is likely that the mine granites intruded into low-pressure zones during regional S2 deformation. Multi-Element Skarn Two skarn showings were observed on the northern end of the Athona peninsula: one at the Triangle showing, and another at the location of Terrane Geoscience Target #6. At the latter, limestone interbedded with meta-graywacke is in contact with a narrow sill of amphibolite. The outcrop has been blasted to remove what is presumed to have been skarn mineralization. Rock adjacent to the historical blasting contains calc-silicate pods that include epidotecalcite-quartz and traces of pyrite. At the Triangle showing, a large outcrop that has been completely uncovered and cleaned off is composed of tan coloured dolostone (in places indistinguishable from limestone) that appears to be interbedded with, as well as filling large irregular voids within, laminated fine to coarsely crystalline talc + H-22

293 quartz rock. A high density of quartz veins cut through both lithologies. They range in orientation from /60-90, and in places contain approximately 1% pyrite and trace bornite, malachite, chalcopyrite, galena and possibly black sphalerite. No intrusive rocks outcrop at the showing but granite outcrops just 150 m to the southeast of the showing. Historical drilling intersected granite at approximately 35 m depth beneath the surface showing. Multi-Element Beaverlodge Lake Style A regional variety of multi-element (e.g., U, Cu, Au, Co, Ni, Pt, and Pd) mineral occurrences termed "Beaverlodge Lake style" are present on the Goldfields Project. The only example of this variety of mineralization observed during the 2015 Mercator site visit was near the Gil Saskatchewan mineral inventory location. Here, a recessive, up to 1 m wide foliation parallel replacement and shear zone within amphibolite is composed of coarse, pink, bladed calcite, fine quartz, remnant wall-rock and abundant, fine-grained, steely coloured pitchblende with disseminated blebs of chalcopyrite and minor disseminated pyrite. The zone may also contain cobalt bloom (erythrite; though this was not definitively identified in the field). The mineralized zone is mostly covered by overburden but outcrops in two locations 120 m apart along strike. Uranium (pitchblende) bearing quartz veins run parallel to the zone for an additional 100 m. This type of replacement/vein mineral occurrence could be of economic interest if high gold and or platinum group element levels are present. Therefore, it should be the subject of more focused study and prospecting. Unconformity Uranium Unconformity style uranium mineralization was encountered in fractured granites that lie beneath the unconformity that separates the Murmac Group from the Martin Group. This style of mineralization is especially prominent in granites encountered during a 2015 Mercator geological traverse that began on the SW side of Keddy Bay. Here, scintillometer readings up to 13,000 CPS were recorded in the vicinity of cracks and recessive zones in granite. While the cracks and recessive zones were typically under cover, in a few instances pitchblende and/or yellow uranium oxide were visible as fracture coatings. The density of radioactive fractures and the intensity of the radiation increases northwards towards the unconformity where some of the fractures have reddish oxidized margins, likely indicating that they were open to the paleo-surface (unconformity) and subject to paleoweathering. A parallel geological traverse conducted roughly 2 km to the west was almost entirely within metasedimentary rock. This sequence did not present significant indications of uranium mineralization, except at the farthest southern point, where total count scintillometer readings up to 2,350 CPS were returned from a faulted area. These may indicate presence of bedrock uranium mineralization, possibly related to nearby granites. Deposit Types Uranium and Polymetallic Deposits A number of known deposits and showings on the Goldfields Project are classified by the Saskatchewan Geological Survey as a specific type of unconformity uranium or uranium-rich polymetallic deposit locally termed Beaverlodge-Type after Beaverlodge Lake, which is in part surrounded by the Goldfields Project. Sixteen deposits that conform to the Beaverlodge model were mined between 1953 and 1982 including the Ace-Fay-Verna and Gunnar mines, as well as the Nicholson Bay and Lorado mines which are on the Goldfields Project. The Box and Athona Gold Deposits and Similar Deposits The Box and Athona deposits are similar to orogenic gold deposits in some aspects but differ in a number of significant ways. Most notably, mineralized stockwork quartz veining is not limited to, or even concentrated at, the contact between the host granite bodies and lower competency host-rock. In fact, both deposits are contained almost entirely within granite stocks and mineralization, alteration and veining diminishes rapidly outboard of the intrusive contact. This indicates that magmatic-hydrothermal fluids derived from the granite melts were the causative mineralizing fluids, and therefore the veining is roughly coeval with the emplacement of the granite. The mineralizing fluids likely had moderate to high salinity and evolved to low ph as indicated by the presence of plagioclase feldspar in mineralized quartz veins and sericite alteration in vein selvages. The mineralized granites exhibit moderate to strong K-feldspar alteration that is overprinted by weak to moderate sericite alteration. Adjacent altered rocks have lower temperature albite-rich alteration assemblages and these grade rapidly outwards H-23

294 into regionally extensive metamorphic rock with retrograde chlorite that may conceal a propylitic alteration halo. This alteration zonation is typical of gold-rich porphyry style deposits where mineralization is often contained within a high-temperature (potassic) zone closely associated with the causative intrusion which can be overprinted by lower temperature and lower ph (sericite) alteration resulting from fluid evolution and thermal collapse of the magmatic-hydrothermal system. The high oxygen fugacity of the Box and Athona intrusions, which is interpreted based on the presence of primary magnetite and abundant hematite, favours the dissolution and transport of gold in magmatic fluids, giving rise to an effective mineralizing system. Unlike other non- or poorly-mineralized granites and gneiss in the Goldfields area, the Box and Athona granites have porphyritic textures. The two stage magmatic cooling/quenching represented by the porphyry texture is intimately tied to the processes that forms mineralized stockwork veining in porphyry deposits. Exploration The only current exploration completed by SpinCo was the exploration program conducted by Mercator in 2015 and this work has been divided into five parts for reporting purposes: 1) a structural and geophysical lineament study to delineate structural controls on mineralization and to identify new exploration targets; 2) a rock geochemical sampling program; 3) a scintillometer survey; 4) geological observations and 5) a petrographic study designed to characterize barren versus mineralized granites and determine alteration mineralogy and paragenesis near known mineral deposits. Structural and Geophysical Lineament Study Introduction A lineament analysis, data compilation and desktop study of available public data and reports for the Goldfields Project was completed by Terrane Geoscience Inc.("Terrane") under contract to Mercator. The objective of this work was to generate target areas for pending ground follow-up. Emphasis was placed on gold targets but top-tier uranium targets were also identified. A lineament interpretation was carried out on the 1VD aeromagnetics and 1VD SRTM DEM data. In general, both the aeromagnetic and DEM reflect the mapped underling bedrock geology. Bedrock highs delineated by the DEM commonly trace the overall foliation trend while bedrock depressions commonly contain recessively-weathered faults. The aeromagnetic data set effectively delineates lithological boundaries with strong magnetic contrast. Controls on Gold Mineralization Review of information pertaining to historic gold deposits such as those at the Athona and Box mines, plus various mineral occurrences, provided definition of several common themes. Gold Targeting Ninety-seven gold target locations were selected for prospecting follow-up and semi-quantitatively ranked for priority or prospectivity. All targets and associated location coordinates are tabulated in the Goldfields Report, in Appendix 1 and Figure 9.6 in the Goldfields Report presents locations. The four ranking tiers that were applied to these targets by Terrane are defined in the Goldfields Report in Table 9.1. Uranium Targeting While not the main focus of this work, several prospective uranium targets were identified. A major NE-SW trending uraniferous fault/conductor system is located in the SW quadrant of the property. Six Tier 1 targets were identified at the intersection of the conductor system with cross-faults (aeromagnetic lows, which break/offset the conductor trend). Tier 2 uranium targets were also identified along this conductor trend and along known N-S striking, post-athabasca, uraniferous faults on the east side of the Goldfields Project. H-24

295 Discussion and Recommendations by Terrane Terrane concluded that the main large-scale structural controls on location of gold mineralization on the Goldfields Project are zones of competency contrast at granite - mafic gneiss contacts. The geometry of these in turn is considered to be controlled by the interference of F1 and F2 folds. F2 folds are relatively well defined, based on existing government mapping (GSC 1015A), as moderately NE- or SW-plunging synform-antiform pairs with steeply-inclined axial planes. In contrast, the geometry of F1 folds is not well or consistently documented. The orientation of F1 fold hinges may play an important role in defining the plunge direction of mineralized zones. It was concluded that detailed structural and lithologic mapping in and around key priority rated target areas is fully warranted. Rock Geochemical Sampling Mercator staff collected 13 rock samples during 2015 Goldfields Project site visit. These are identified in the table below and were collected from outcrops, mineral occurrences or mine dumps that contain representative veining and/or mineralization of interest. Analytical results for gold, silver, copper, lead and zinc are also included in the table below. The samples are "grab" in nature and were collected to either confirm anomalous metal levels previously reported or to enhance understanding of mineralization styles present on the property. They do not have associated sample length parameters. Location coordinates for all samples are included in Appendix 1 of the Goldfields Report and Figure 9.7 therein presents locations. Samples were sent to ALS Global, an independent, fully accredited, international analytical services firm, for preparation and analysis, details of which are presented in section 11 of the Goldfields Report. Sample Number Area Au Ag Cu Pb Zn ppm ppm ppm ppm ppm Triangle North of Box Mine Box Mine Box Mine Box Mine Frontier Adit < Quartzite Ridge < Keddy Bay Keddy Bay < Keddy Bay < Athona 2.11 < Athona Athona < Notes: *ppm denotes parts per million. Scintillometer Survey A ground scintillometer survey was conducted during Mercator's 2015 mapping, sampling, and prospecting program carried out on the Goldfields Project. The purpose of this survey was to establish a baseline dataset of gamma radiation emitted from bedrock located both proximally and distally to the main gold occurrences such as the Box mine and Athona deposit, and at other areas of interest. Gamma radiation was measured with a portable hand-held, RS-121 Super-SCINT scintiallometer. Survey measurements were recorded in counts per second (CPS) of gamma radiation. A total of 235 measurements were taken and survey station locations were recorded with a H-25

296 hand-held GPS using UTM NAD83 Zone 12 coordinates. Radiation readings taken at ground level were recorded at each outcrop mapping station or approximately every 200 m during each field traverse A survey station was also recorded at each location where the scintillometer indicated radiation in excess of 1,000 CPS. Scintillometer Survey Results The 235 scintillometer readings ranged from 40 counts per second ("CPS") to 59,000 CPS with a mean of 1,171 CPS and median of 200 CPS. The data distribution is skewed due to selective sampling of highly radioactive material. Background radiation is lowest in amphibolite and metasedimentary rock that typically show 100 to 200 CPS readings. Background radiation in granite has a higher range, roughly up to 300 CPS, presumably as a result of increased radiation from the decay of potassium in K-feldspar. In the vicinity of the Box and Athona mines and around Golden Pond, where the rocks are affected by K-feldspar alteration/flooding, background radiation is in the 400 to 600 CPS range. Anomalous radiation readings between 600 and 10,000 CPS were encountered in localized settings, such as recessive fractures cutting granite, and/or associated with a set of late quartz veins. Anomalous radiation is especially common within granite near the unconformity surface that separates the Murmac Bay Group from the Martin Group. Areas with high levels of radiation, up to 13,000 CPS, are present in recessive zones in the footwall of the unconformity and in some of these locations indications of pitchblende and/or yellow uranium oxide were visible. At the Gil showing, survey locations 200 m apart registered between 59,000 and 51,633 CPS within a possibly continuous zone of recessive rock that measures about 1 metre in thickness and is composed primarily of quartz and carbonate with local indications of pitchblende and minor sulphide hosted by amphibolite. Geological Traversing Eight geological traverses were conducted on the Goldfields Project by Mercator staff during the 2015 site visit and the area surrounding the Box and Athona mines was of primary interest. The traverses were designed to facilitate geological observations at these past producing mines as well as at selected Saskatchewan mineral file inventory occurrences and certain exploration targets generated in 2015 by Terrane. Work in 2015 was limited to areas within approximately 4 km of currently accessible four-wheel-drive roads. A large portion of the Goldfields Project, which is only accessible via boat, helicopter or floatplane, was not inspected in any manner during the 2015 site visit. Please refer to the Goldfields Report for the findings of the geological traverses. Mineralization Intrusion/Porphyry Style Gold Unlike typical orogenic gold deposits where gold bearing quartz veins are millions of years younger than their passive hosts, the mine-granites on the Goldfields Project appear to be genetically related to the veining. The granites and country rock in contact zones are the exclusive hosts of the veining/mineralization, and the veining has associated high-temperature (potassic) alteration which likely results from late-stage hydrothermal fluids derived from the granite melt. In this regard, the deposits appear to most closely conform to a gold-rich porphyry model. The mineralized granites show a high degree of metasomatism/alteration. The timing-relationship of graniteemplacement, quartz veining and mineralization to deformation is not entirely clear. A competing hypothesis is that the granites are syn-tectonic and were emplaced during the second regional deformation event. The latter hypothesis is preferred, as it most easily explains the similarity of foliation orientation within the granite with that which appears to have been pre-existing at the time of emplacement. It is likely that the mine granites intruded into low-pressure zones during regional S2 deformation. Petrography Introduction Eleven samples from the Goldfields Project were selected by Mercator in 2015 for petrographic analysis. The petrographic study was conducted using thin-sections with cover-slips that were observed using a research-grade H-26

297 petrographic polarizing microscope. The thin-section off-cuts were also etched with hydrofluoric acid and stained using cobalt nitrate to better determine K-feldspar concentrations and distribution. The purpose of the study was to more fully describe the rocks associated with the Box and Athona mines and to compare them with other granites or orthogneisses found on the property. Characterization of metasomatic/hydrothermal alteration was a specific objective of the petrographic study in order to support the reinterpretation of the Box/Athona deposit-type to an intrusion related model. Petrographic descriptions prepared by Dr. Barresi for each of the samples are included in Appendix 3 of the Goldfields Report. Discussion of 2015 Petrographic Study Results Box and Athona Granites The Box and Athona granites are texturally and mineralogical similar. The associated intrusions are notably porphyritic, unlike the granites in surrounding country rock, and they fall within the syeno-granite classification on the Streckeisen diagram. Both the Box and Athona granites contain perthite phenocrysts which are rare to absent in other granite/orthogneiss observed on the property. The presence of perthite in the "mine granites" is an enigma because perthite formation is typically considered to be a result of unmixing of K and Na components in alkali feldspar during slow cooling, but the porphyritic texture of the rock indicates that it underwent rapid cooling/quenching. The main variations between samples of the Box and Athona granites are in the proportions of groundmass to phenocrysts. Alteration Samples from the Box and Athona granites show weak to intense K-feldspar alteration, which ranges from minor or patchy replacement of groundmass and plagioclase phenocryst to K-feldspar, to complete replacement of all groundmass and plagioclase by K-feldspar. In some samples, K-feldspar alteration of plagioclase is accompanied by myrmekite formation. The "mine granites" have also been affected by silicification in the form of dense veining, myrmekite formation, groundmass replacement, and in a few locations silica rims form over embayed feldspar crystals. Sericite stringers and sericite replacement of feldspar are part of a late quartz-sericite alteration overprint that affects primary and secondary K-feldspar in the Box and Athona granites. Two samples of granite collected distant from the Box and Athona mines have no (10813), or very little (10805) potassic alteration. Tiny K-feldspar stringers present in sample may indicate proximity to a buried or nearby, but currently unidentified, Box-like intrusion. Strong sericite alteration in sample 10813, from Quartzite Ridge, is texturally unique because it forms straight edged veins that contain shattered fragments of wall-rock. While this alteration is not as high temperature as the potassic alteration at the Box and Athona mines, it represents a vigorous hydrothermal system, the extent and origin of which may be significant to future mineral exploration. Staining of the rock sample from the Frontier adit (10809) shows a surprising amount of K-feldspar, much more than was estimated during initial petrographic observation. Most of the K-feldspar in the sample is contained in the matrix component, which appears, based on staining, to be composed almost entirely of K-feldspar. It seems highly unlikely that the primary mineralogy of the matrix would be entirely K-feldspar when the coarse fraction is mainly quartz, so it appears that the sample has been strongly affected by K-feldspar alteration in the form of nearcomplete replacement of the rock matrix. This suggests that the deposit type at the Frontier showing might be similar to those at the Box and Athona mines, which are believed to be related to high-temperature fluids derived from local intrusions. Future exploration of the Frontier adit area should focus on identification of the causativeintrusion and include mapping of alteration facies. One of the main macroscopic features of the Box and Athona granites, contact rock and granites regionally, which makes them interesting from an exploration point of view, is that they are pink to red in colour and appear to have abundant K-feldspar alteration. Petrography, etching, and staining of these granites shows that much of the pink to red colouring is a result of hematite staining. Plagioclase, K-feldspar, and even quartz are stained to various pink and red colours making them very difficult to distinguish. Notably, the least pink or red rocks (e.g. sample 981) H-27

298 contain biotite, while hematite stained rocks tend to contain chlorite. This suggests that free iron released during the biotite chlorite reaction may be responsible for at least some hematite staining. Unfortunately, etching and staining of rock slabs is necessary in order to clearly identify secondary K-feldspar in granites on the Goldfields Project. Deformation The amount of strain recorded in the observed samples is variable. The Box and Athona granites, as well as the meta-wacke from the Frontier adit and granite from Quartzite Ridge, show minimal amounts of deformation. However, a subtle foliation is present in the Box granite and all of the thin sectioned samples have quartz with weak to moderate undulose extinction. The remaining samples collected from host rock near the Box and Athona intrusions are strongly deformed and consist mainly of phyllosilicate domains interspersed with domains of finegrained recrystallized quartz and broken fragments of feldspar. Remnant coarse-grained domains in these samples indicate that the protolith was likely a medium-grained equigranular granite. The greatest amount of strain is recorded in sample 981, which was collected from the edge of the Box granite. Although this sample has a strong metasomatic overprint, in places there are remnant clasts of highly strained, possibly mylonitic, quartz. This suggests that emplacement of the Box granite may have been in part related to reactivation of a significant, preexisting structure. Deposit Model Previous workers have indicated that the Box and Athona gold deposits closely conform to an orogenic and/or structural and/or mesothermal deposit model. Petrographic observations presented in the Goldfields report support the interpretation that the Box and Athona deposits may be more appropriately classified as reflecting an intrusionrelated or porphyry deposit model. By this model, the mineralization would be directly related, both genetically, and spatially/temporally with the intrusion, or crystallization, of the associated granites. Drilling SpinCo has not carried out any drilling on the Goldfields Project. However, numerous drilling programs have been carried out through the history of the Goldfields Project and these are summarized in the Goldfields Report in section 6.0 and in this Appendix H under the heading "History" above. Mercator received certain drilling data sets for the Goldfields Project and these appear to be functional. However, none of these has been validated by Mercator for the Goldfields Report purposes. Sample Preparation, Analysis and Security Introduction A total of 13 rock samples were taken over the eight day 2015 field program and site visit (please refer to the table below). The samples were collected from outcrops or mine-dumps that contained representative veining and/or mineralization from particular showings or areas of interest on the Goldfields Project. The samples are grab in nature and were collected to enhance the understanding of mineralization styles but are not representative of grades over any particular length. Sample Number *UTM Easting (m) *UTM Northing (m) Sample Type Lithology Grab Quartz Vein Grab Granite Grab Granite Grab Granite Grab Granite Mine Dump Meta-Wacke H-28

299 Grab Quartz Vein Grab Quartz Vein Grab Granite Grab Quartz Vein Mine Dump Granite Grab Granite Grab Granite * Note: UTM Zone 12 coordination, NAD 83 datum Sample Preparation and Methods With the exception of two samples noted in the table above that were collected from adit dumps, all samples were collected from bedrock. At each sample site the sample was photographed and greater than five representative fragments of bedrock were removed using a steel hammer and placed in a polyurethane bag that was then sealed with a zip-tie. The coordinates of each sample location were obtained with a hand-held GPS and recorded in UTM NAD83 Zone 12 coordination. The samples were bundled in rice sacks and transported via airplane back to the Mercator office in Nova Scotia as personal baggage of the authors. At Mercator, a coarse blank sample and a certified reference material sample were blindly inserted into the sample sequence to monitor quality control. The samples were then placed in sealed 20 litre plastic buckets and transported via registered mail to an ALS Global preparation laboratory in Sudbury, ON; the prepared sample splits were then shipped by ALS Global to the company's analytical laboratory in Vancouver, BC for analysis. ALS Global is an independent, commercial firm accredited by the Standards Council of Canada (SCC) and the Canadian Association for Laboratory Accreditation (CALA) and is also ISO 9001 and ISO/IEC certified. Hand specimen examples of each sample were retained at Mercator offices to support the petrographic program discussed previously. Analytical Methods At the preparation lab the samples were weighed, dried and finely crushed to better than 70% passing a 2 mm screen. A split of up to 250 g was taken and pulverized to better than 85% passing a 75 micron screen. Gold, platinum and palladium concentrations were determined by inductively coupled plasma atomic emission spectrometry (ICP-AES) after fire assay pre-concentration. For this technique, the sample was first fused with a mixture of lead oxide, sodium carbonate and borax, silica, inquarted with 6 mg of gold-free silver and then cupelled to yield a precious metal bead. The bead was digested for 2 minutes at high power by microwave in dilute nitric acid. The solution was cooled and hydrochloric acid was added. The solution was digested for an additional 2 minutes at half power by microwave. The digested solution was then cooled, diluted to 4 ml with 2% hydrochloric acid, homogenized and then analyzed. Samples with greater than 10 ppm Au were retested using atomic absorption spectroscopy against matrix-matched standards. Gold concentrations that were over limit by this method (>100 ppm) were retested again by the following gravimetric method: "A prepared sample is fused with a mixture of lead oxide, sodium carbonate, borax, silica and other reagents in order to produce a lead button. The lead button containing the precious metals is cupelled to remove the lead. The remaining gold and silver bead is parted in dilute nitric acid, annealed and weighed as gold." An additional suite of thirty-three elements (including Ag, Cu, Pb, Zn, U, and Ni) were determined by ICP-AES and a four-acid digestion technique. For these analyses a 0.25 g sample was digested with perchloric, nitric, hydrofluoric and hydrochloric acids. The residue was topped up with dilute hydrochloric acid and the resulting solution was analyzed. The results were corrected for spectral and inter-element interferences. Over limit Ag (>100 ppm) and Zn (>10,000 ppm) samples were retested using atomic absorption spectrometry. Quality Assurance and Control Quality control samples inserted by Mercator included a non-certified coarse blank comprised of Nova Scotia Goldenville Formation quartzite and one sample of certified reference material CDN-SE-2 that was obtained from CDN Resource Laboratories in Langley, BC. Low gold, silver, copper and zinc values obtained for the blank (see H-29

300 Sample in the table below) indicate that down-stream contamination during sample preparation has not significantly affected these samples. Analytical results for gold, silver, copper and zinc in sample (Table 10.2 in the Goldfields Report) fall within certified "between-lab" 2σ error for CDN-SE-2. The percentage difference between the lab results and the certified values for gold, silver, copper and zinc are <1%, and for gold are < 5%. The higher % difference for gold is a result of the low concentration of Au in the standard (0.232 ppm) and therefore small variations in its measured values (e.g., 0.01 ppm) can represent a larger proportional difference. Results for Mercator quality control samples and internal quality control results provided by ALS Global indicate that geochemical data from that laboratory presented in this report are robust and appropriate for mineral exploration use. The samples are grab samples and are intended to give a general idea of the tenor of mineralization but are not representative of grades extended over any specific length or width. Sample Number Area Au Ag Cu Pb Zn ppm ppm ppm ppm ppm Triangle North of Box Mine Box Mine Box Mine Box Mine Frontier Adit < Quartzite Ridge < Keddy Bay Keddy Bay < Keddy Bay < Athona 2.11 < Athona Athona < Mercator Quality Control Data Blank **CDN-SE **CDN-SE-2 Cert. Values **CDN-SE-2 2σ error % diff. Std. vs. Cert. Value Notes: *ppm denotes parts per million; **CDN-SE-2 is a certified reference material sample. Review of the 2015 sampling program data showed highlights to be as follows: The highest grade sample (10804) is from a quartz vein collected from outcrop at the Triangle showing. The sample grades ppm Au and 140 ppm Ag and contains 0.08% Cu, Pb% and 0. 2% Zn. This is consistent with the observed mineralogy: pyrite + bornite + chalcopyrite + sphalerite + malachite in quartz. Samples (10806, and 10808) from the vicinity of the Box mine have gold concentrations ranging from to 37.1 ppm. Copper, lead and zinc concentrations in the Box mine area samples are low, all being less than 100 ppm. Silver concentrations for the same samples range from 1 to 9.7 ppm. H-30

301 Samples (10814, and 10801) from the vicinity of the Athona mine have gold concentrations ranging from ppm. Two of the three samples returned lead and zinc values between 619 and 2005 ppm and the remaining sample returned lead and zinc values of less than 35 ppm. Silver concentrations are lower than in the Box mine area, with two samples returning values of <0.5 ppm Ag and one sample with 3 ppm Ag. A sample from the Frontier adit dump (10809) returned an elevated gold value of ppm but no other elements of interest show anomalous levels. The gold result does not reflect the presence of visible gold that was identified in the hand sample. This suggests that a coarse gold "nugget effect" should be considered when assessing past or future geochemical results from this location. Reconnaissance samples from Keddy Bay ( ), Quartzite Ridge (10810) and the area between the Box mine and Triangle showing (10805) have insignificant to weakly anomalous results for gold, silver and copper. The anomalous results 0.18 ppm Au; 0.6 ppm Ag; 0.015% Cu assign to a >1m thick quartz vein (sample 10811) collected from granite host rock in the Keddy Bay area. No anomalous uranium results were returned from 2015 samples but this reflects the focus of sampling on potentially gold-bearing lithologies. Mercator is of the opinion that the sample preparation, analysis and security methods used by Mercator staff and staff of ALS Global are consistent with industry standards and suitable for the purpose of better understanding mineralization styles present on the Goldfields Project. Data Verification Review and Validation of Project Data Sets All available historic exploration data from SpinCo's "data room" was made available to Mercator through digital data stored on an external hard drive and in some instances included the supporting hard copy documents. These historical records first had to be sorted by property then by type of exploration work completed including; ground and airborne geophysical surveys, geological and geochemical surveys, topographic surveys and sampling and drilling program reports. Additional historic digital data, when available, was acquired online from the SMAD and the SMDI. Historic data with location co-ordinates was combined with acquired digital files from online government sources, which included datasets for geology, geochemistry and mineral occurrences. Both sources of data were then compiled into a GIS based comprehensive digital base map. The digital base map was then used for target evaluation and validation of known mineral occurrences and infrastructure during the 2015 site visit on the Goldfields Project. Site Visit by Mercator Summary A site visit to the property was conducted by Mercator staff, Stewart Yule (P.Geo.) and Mr. Tony Barresi (P. Geo.), between September 23 and October 1, The main purpose of the 2015 site visit was to develop and ground-truth a property-scale geological framework for future exploration and to verify to the extent possible historic reporting of anomalous precious metal levels at certain documented mineral occurrences and deposits. Site Visit Data Validation and Sampling by Mercator As described previously, eight field traverses were conducted on the Goldfields Project. The area surrounding the Box Mine and Athona deposit was of primary interest. Traverses were designed to facilitate observations at the past producing mine areas as well as at Saskatchewan mineral file inventory occurrences and to validate historic reports of anomalous metal levels, descriptions of lithology, mineralization, alteration, structure and evidence of previous work in such areas. Field work was limited to areas within approximately 4 km of currently accessible four-wheel-drive vehicle roads. As a result, a large portion of the property, which is only accessible via boat, helicopter or floatplane, was not observed during the site visit due to time constraints. Based on observations made during the 2015 site visit, analysis of grab samples and results of the scintillometer survey, Mercator has determined that, to the extent reviewed during the site visit, ample evidence exists of H-31

302 previous exploration programs carried out on the Goldfields Project and that anomalous historically reported occurrence of both precious metals and uranium were typically confirmed by Mercator through sampling and analysis of materials from associated field locations. Mineral Processing and Metallurgical Testing The metallurgical test work scope completed in 2015 was developed based on the recommendations of the document "NI Technical Report, Pre-feasibility Study, Brigus Gold Corp. Goldfields Project, Saskatchewan, Canada" Effective Date: October 6, 2011 and prepared by March in cooperation with Wardrop, DMA and EHA. The metallurgical test plan was discussed with SGS Minerals Services Lakefield ("SGS") and a scope of work was developed based on the available test material. Tests were conducted by SGS with reliance on their standards and procedures. Samples tested were historical drill core (slabbed half-core) and originated from a 2011 drilling program. The material for metallurgical composite tests came from drill holes B and B for Box, and from A11-215, A11-216, and A for Athona. Variability material was studied from the high grade intervals of B and B for Box. The core material selected was to provide a reasonable representation of each deposit for composites, and some variability material that would contain greater amounts of gold and related minerals. The material tested does not relate specifically to a geo-statistical model or mine plan. The sample material was received by SGS, in two shipments and held at their facilities in Lakefield, Ontario until the present test work. The material was stored there within two crates at ambient condition from 2011 to 2015, in rice bags as received. The crates and bags showed minor signs of condensation as would be expected from ambient storage. Due to the age of the material, sample condition was discussed with the gold team at SGS. An initial pair of flotation tests was conducted for the dual purpose of assessing sample condition and reagent dosage. These preliminary flotation tests resulted in rougher gold recoveries of 94.7% and 92.9%, and with tailings that contained 0.03 and 0.04 g/tonne Au. Sulfide recovery to tailings was below detection limit. This level of flotation recovery was not unusual based on review of historical testing, and did not show evidence of depressed recovery. The samples were therefore considered to be valid for testing and test work was recommended to proceed as planned. The metallurgical testing by SGS was conducted in two phases following sample preparation. PHASE 1 Phase 1 - Head Characterization Representative sub-samples of the Box and Athona composites were submitted for chemical analysis. Gold assay was done on samples by the SGS screen metallics method. Representative samples of each composite were also submitted for ICP-OES scan, Whole Rock Analysis ("WRA"), and sulfur/sulfide test protocols. The results are summarized in the following table. ICP Scan Sample WRA Sample g/t Box Athona % Box Athona Au SiO Ag <2 <2 Al2O As <30 <30 Fe2O Ba MgO Be <2 <2 CaO Bi <20 <20 Na2O Cd <2 <2 K2O Co <4 <4 TiO H-32

303 Cu P2O <0.01 Li <5 <5 MnO < Mo <5 <5 Cr2O Ni <20 <20 V2O5 <0.01 <0.01 Pb <60 <60 LOI Sb <10 <10 Sample Se <30 <30 % Box Athona Sn <20 <20 S Sr S = Tl <30 <30 U <20 <20 Y Zn Phase 1 - Grindability Testing The current testing included an SMC test, Standard Bond Rod Mill Grindability Test, Standard Bond Ball Mill Grindability Test and Standard Bond Abrasion Test for each of the Box and Athona composites. This provides a coherent set of results that augment historical work where these parameters were tested individually on different material. Values obtained relate specifically to the sampled material, and allow estimates of energy requirement, wear rates, and sizing of crushing and grinding equipment if this material were processed. The results show that the material is amenable to SAG milling. The results reflect the average behavior due to composite sampling, and variation should be considered in their interpretation and use for design. The ball mill work indices are quite normal for granites and are classified as medium for Box, and moderately hard for Athona. Both composites are classified as hard with respect to impact breakage. Both composites are classified as very abrasive. These results are consistent with historical reports. Results are summarized in the following tables. Sample Name A b A x b Hardness Percentile t (1) DWI (kwh/m3) Mia (kwh/t) Mih (kwh/t) Mic (kwh/t) SCSE (kwh/t) Relative Density Athona Box The t value reported as part of the SMC procedure is an estimate Sample Name Mesh of Grind F80 (m m) P80 (m m) Gram per Revolution Work Index (kwh/t) Hardness Percentile Athona 14 10, Box 14 9, Sample Name Mesh of Grind F80 (mm) P80 (mm) Gram per Revolution Work Index (kwh/t) Hardness Percentile Athona 80 2, Box 80 2, H-33

304 Sample Name AI (g) Percentile of Abrasivity Athona Box Phase 1 - Metallurgical Testing Historical studies and operation featured a variety of flowsheet configurations including whole rock cyanidation, gravity recovery, and flotation preceded by gravity recovery. These studies also explored a relatively wide range of grinds. Phase 1 of the current testing provides the first known basis through which these processing methods may be directly compared on the same material and at similar grind size. Phase 1 - Gravity Recovery Testing Gravity recovery was done on samples of the ground material in each size, and for each composite. The samples were passed through a Knelson MD-3 gravity concentrator, and the Knelson concentrate was then passed over a Mozley laboratory separator. Gravity recovery in Phase 1 ranged from 15.0% to 46.9% for Box composite, and from 40.9% to 60.2% for Athona composite. The significance of these findings is that they support the use of gravity recovery in the flowsheet. The sensitivity of the Phase 1 tests is not sufficient to identify an optimal grind, but rather suggests that gravity recovery is relatively insensitive to grind size and that there is evidence of coarse gravity recoverable gold in the composites. Phase 1 - Cyanidation Testing Kinetic cyanide leach tests were completed on samples of both gravity tails and virgin material for each composite and grind size. The findings of the cyanide testing were: The tests showed final leach recoveries ranging from 94% to 98% for Box composite, and 92% to 98% for Athona composite, and were quite comparable to those obtained in the parallel flotation testing The initial rate at which gold is leached is higher for virgin material than for gravity tails because there is free gold readily available The test results were relatively insensitive to grind size by comparison of tailings, though the best recoveries were seen at the finest grinds. Phase 1 - Flotation Testing Flotation tests were completed on samples of both gravity tails and virgin material for each composite and grind size. The findings of the flotation tests were: The tests showed that the sample gold values are floated quite readily, and that a large upgrading ratio is achieved in the rougher stage alone. Rougher recovery of gold in virgin material was 96.6% to 98% within mass pulls of 2.36% to 3.63% for Box composite; likewise 90.1% to 95.8% recovery in 2.55% to 2.72% mass for Athona composite. The test results showed gold and sulfur recovery were relatively insensitive to grind size. Comparison of rougher tailings did not show a metallurgical difference between inclusion of gravity recovery and direct flotation on virgin material. Tailings are equivalent based on detection limits. H-34

305 Comparison of rougher tailings with the parallel cyanidation tailings did not show a metallurgical difference between performances of flotation versus cyanidation. Tailings are equivalent based on detection limits. The SGS report recommends gravity recovery be included in the flowsheet based on operational considerations such as maintaining consistent feed to flotation. Phase 1 - Flotation Optimization Testing Based on the above flotation findings, optimization was conducted. Samples were prepared and pre-treated by gravity recovery and then kinetic rougher tests were done with rougher cells only. The test results for Box show that greater than 97% of the gold in the gravity tailing was recovered into a rougher concentrate of less than 3% of the weight. The test results for Athona show that greater than 95% of the gold in the gravity tailing was recovered into a rougher concentrate of less than 3% of the weight. Comparing the different grinds in successive trials for each composite shows there is minimal benefit to grinding to the finer size. There is only a difference between the two grind sizes during the first two minutes of flotation (<1% mass) and the difference is minimal thereafter. Phase 1 - Interpretation of Results The test report shows that the sample is amenable to SAG milling. The test report recommends Gravity recovery be included in the flowsheet for Phase 2 testing and ultimately in the operational flowsheet. Both composites are amenable to gravity separation and incorporating it will potentially stabilize feed and limit recovery losses downstream, further it will make metallurgical balancing and accounting more accurate. The test report concludes that the Box and Athona composite samples are amenable to both flotation and cyanidation. Comparison of recovery and tails between cyanidation and flotation shows similar results for both methods. Flotation concentrate must be subsequently leached with some small additional loss, thus from a purely metallurgical perspective, cyanidation has a slight advantage in terms of recovery. Given the age and storage of the sample material, potential oxidation, if present, would be expected to reduce flotation recoveries and increase cyanidation recoveries seen in results. Flotation tests showed that greater than 90% of sulfide minerals were recovered to the concentrate leaving waste rock tailings with less than 0.03% sulfur. The test report recommends that Phase 2 of the testing be conducted using a simplified flotation circuit with only rougher-scavenger configuration. The results of the whole rock tests and gravity tests for Box and Athona are in the following tables. Overall recovery and extraction of gold including gold recovered to the gravity circuit has been used. Summary of Box Test Results - Overall Gold Recovery: Sample Process Process comparison Flotation % Cyanidation % Whole rock test at P80 of 275 µm Rougher recovery/extraction Gravity tailing test at P80 of 275 µm Rougher recovery/extraction Whole rock test at P80 of 168 µm Rougher recovery/extraction Gravity tailing test at P80 of 168 µm Rougher recovery/extraction Whole rock test at P80 of 80 µm Rougher recovery/extraction Gravity tailing test at P80 of 80 µm Rougher recovery/extraction H-35

306 Summary of Athona Test Results - Overall Gold Recovery Sample Process Process Comparison Flotation % Cyanidation % Whole rock test at P80 of 265 µm Rougher recovery/extraction Gravity tailing test at P80 of 265 µm Rougher recovery/extraction Whole rock test at P80 of 168 µm Rougher recovery/extraction Gravity tailing test at P80 of 168 µm Rougher recovery/extraction Whole rock test at P80 of 76 µm Rougher recovery/extraction Gravity tailing test at P80 of 76 µm Rougher recovery/extraction PHASE 2 Phase 2 - Metallurgical Testing The second phase of metallurgical testing involved grinding to target of 150 micron, gravity recovery and open circuit rougher flotation of gravity tails on larger bulk samples of the Box and Athona composites. By processing larger samples, sufficient flotation concentrate and tailings were generated to investigate the downstream processes of concentrate leaching, gold recovery and solid liquid separation from cyanide solutions. Phase 2 Variability Testing Three samples of Box drill core with expected higher grade and higher sulfide (Variability Samples) were processed in Phase 2 to examine the responses of gold and sulfide recovery. The testing indicated that these samples responded similarly to the composite materials tested in terms of recovery and tailings sulfur grade. Phase 2 - Bulk Flotation Testing Box Testing The results of the Box bulk flotation tests gave recovery performance similar to tests in Phase 1 and flotation optimization. The test report concludes that it is possible to achieve a 92.5% gold recovery to a rougher flotation concentrate of less than 3% mass. Overall, including the gravity concentrate, this equates to 97% recovery. The recovery of sulfide minerals was also similar, the tailings grades were consistently low. Comparisons of flotation results are shown in the tables below. Note that for BF-2 (Athona), and for BF-3 (Box) flotation was done in larger cells and flotation time was extended by 100%. Comparison of Box Gravity Tailing Flotation Results Phase Test Mass of Feed, kg Vol of Flot Cell*, L Grind size P80, µm Mass Recovery % Au Recovery, % Flot Flot + grav Tailing grade g/t Au % S Phase 1 F Phase 2 F H-36

307 Phase 2 BF-1 48** Phase 2 BF-3 50*** * Rougher stage, ** 12 x 4 kg tests in a 7 L cell, *** 5 X 10 kg tests in a 28 L cell Athona Testing The result of the Athona bulk flotation test varied from the previous tests. In bulk flotation, 75% of the gold was recovered to a rougher flotation concentrate of 2.3% mass. Overall, including the gravity concentrate, this equates to 81% recovery. The recovery of sulfide minerals was similar to the previous test work; the tailing grade was consistently low. This low gold recovery may be an anomalous result particularly as the sulfide recovery was similar to the smaller scale tests. Alternatively, in scaling up from a 7 liter to a 28 liter flotation cell, the flotation time was extended by 100%; this may not have been long enough. The tailings from BF-2 were submitted for sizeby-size analysis of gold content. The coarsest fraction (+150 micron) contained 40% of the gold in the tailings which suggests that the gold might be liberated at finer grind size. Comparison of Athona Gravity Tailing Flotation Results Phase Test Mass of Feed, kg Vol of Flot Cell*, L Grind size P80, µm Mass Recovery % Au Recovery, % Flot Flot + grav g/t Au Tailing grade % S Phase 1 F Phase 2 F Phase 2 BF-2 20** * Rougher stage, ** 2 x 10 kg tests in a 28 L cell Phase 2 - Cyanide Leach of Flotation Concentrate The tests show that both Box and Athona composite flotation concentrates are amenable to cyanide leaching. Testing indicates extraction of 98% of the gold in 48 hours. Sodium Cyanide consumptions were typical for leaching concentrate; 2.4 kg/tonne to 5.4 kg/tonne. This consumption is high compared to direct leaching of virgin material on a kilogram per kilogram basis, but is on a relatively small (less than 3%) mass fraction so overall use is comparable to direct cyanidation. Cyanide consumption was higher for the more finely ground concentrates (p80 of 20 micron and 27 micron) than for the coarser regrind size (p80 40 micron). *CN Test No. Sample Description Feed Size P80, µm Reagent Addition kg/t of CN Feed Reagent Consumption kg/t of CN Feed % Au Extraction Residue grade Au, g/t Calc Head Grade Au, g/t NaCN CaO NaCN CaO 8 h 24 h 48 h 72 h 13 Box Rougher Conc BF Box Rougher Conc BF Box Rougher Conc BF Athona Rougher Conc BF *Note: This table has been simplified for clarity from that appearing in the Technical report. Please see the Technical Report, for 1, 2, 4 and 12 hour testing results. H-37

308 Phase 2 - Gold Recovery Gold recovery was investigated by two methods, carbon adsorption and Merrill-Crowe (zinc cementation). Within the limitations of the material and tests conducted, it would seem that carbon adsorption is the preferred route from a metallurgical standpoint, although the material is amenable to both. Merrill-Crowe is metallurgically appropriate when extraction is complicated by the presence of significant silver. In this case, silver content is not high and carbon adsorption showed greater recovery of gold. This makes choice of technology the potential object for economic trade-off study. The single Merrill-Crowe test recovered 97% of the gold with barren solution assay of 0.15 mg/l Au. It can be concluded, based on the leach kinetics that carbon-in-pulp (CIP) is the preferred option for carbon absorption rather than carbon-in-leach (CIL). The carbon modeling indicated that a gold adsorption efficiency of 99.9% is achievable and the gold in the barren solution would be mg/l assuming conditions as tested. Modelling with the sample material provided, indicated that a 7 stage CIP circuit (at a carbon concentration of 50g/L) would be the optimum design for the gold recovery portion of the milling circuit. Phase 2 - Solid-Liquid Separation Testing Solid-liquid separation test work was investigated in Phase 2 to provide information for estimating sizing and evaluation of process flowsheet equipment. Interpretation of these results must take into account the limitation that they are representative of the material tested, and appropriate caution and judgement must be used to ensure suitability to any use. It has been shown in the previous sections that the flotation process effectively concentrates gold and sulfide mineral values into a small mass fraction of the original milled material, typically 3% or less. This material is subsequently reground and leached to produce samples of leached residue, thus requiring large quantities of material to generate the required samples. A limited scope of work was performed on leached flotation concentrate for Box and Athona composites. This included scoping level static settling tests and tests on vacuum-filtered settled material. The tests suggest potential flocculent treatment and resulted in a slightly cloudy overflow at 24 hrs. Two vacuum-filtration cake thicknesses were investigated for each of the Box and Athona composite leach residues. The throughput was better for Box composite than for Athona, and for both composites, the thin cake had better throughput with slightly higher residual moisture. Further work with larger samples is recommended to establish specific design criteria and sizing. Particle size analysis was conducted on all raw samples. The determinations were performed using a combination of gravimetric sieve analysis and laser-diffraction analysis. Dry specific gravities were also determined. Full dynamic thickener testing and rheology were completed for Box composite flotation tailings. During the dynamic settling test, the sample displayed average yield stress below 10 Pa, which is generally predictive of operation-friendly behavior. A potential for operational instability was identified by a significant increase in yield stress after thirty minutes of extended settling time as for example might occur if a thickener were shut down without draining, or underflow pump failed. Design provisions are recommended to protect the rake and empty the sludge bed prior to shut down. The critical solids density of the Box composite bulk rougher flotation tailing was found to be 69% w/w. The pulp exhibits pseudoplastic shear-thinning behavior which is favorable to operation. Mineral Resource Estimates SpinCo has not carried out any mineral resource estimation programs on the Goldfields Project. Historical mineral resource estimates exist for the Box and Athona deposits and these are discussed in the Goldfields Report and above in the section entitled "History". Mineral Reserve Estimates SpinCo has not carried out any mineral reserve estimation programs on the properties that are the subject of this technical report. Historical mineral reserves exist for the Box and Athona deposits and these are discussed in the Goldfields Report and above in the section entitled "History". H-38

309 Adjacent Properties Mercator is not aware of any adjacent properties as defined by NI that are pertinent to the content, conclusions and recommendations of the Goldfields Report. Other Relevant Data and Information Mercator is not aware of any other relevant data or information that is pertinent to the content of the Goldfields Report. Interpretation and Conclusions Summary of Gold Exploration Potential Preliminary results of compilation work completed in 2015 by Mercator, in combination with 2015 site visit results, show that greenfields exploration potential is also present on the Goldfields Project in areas external to the Box and Athona deposits. Examples of known mineral occurrences, at which significant gold grades have been returned include the Triangle, previously mentioned Frontier Lake, Nicholson Bay, Fish Hook Bay, Golden Pond areas, as well as the Gil, Triangle and Quartzite Ridge occurrence areas. The Triangle area returned a high grade gold value (177.5 g/t Au) for a grab sample collected by Mercator staff during the 2015 site visit. These areas first require desktop compilation of historic exploration results with this followed by prospect level geological mapping and sampling assessments. Wider ranging greenfields programs will require detailed literature reviews for known showings, analysis of historic drilling, sampling and geophysical survey results where available, and follow-up by possible geophysical surveys and surface trenching investigations in the most prospective areas. Such programs should result in definition of targets for drill testing. A property-wide reconnaissance mapping and bedrock sampling program that includes assessment of prioritized exploration targets generated by Terrane in 2015 and described in this report is also required. Presumably, completion of such work programs would result in definition of additional drilling targets. All future exploration programs will benefit from access to a property-wide digital compilation of the most up to date airborne and ground geophysical survey results as well as results of both government and industry geochemistry program data sets. Expansion of the project's drilling databases to include all historic drilling carried out at locations such as the Frontier Adit and the various exploration targets tested in the past would substantially improve the technical dataset available for property assessment and exploration planning. Such digital compilation work is fully warranted and should be completed to support planning of future project exploration programs. Significance of Granitic Intrusions and Porphyry Gold Model Most of the significant known gold showings on the Goldfields Project are related to stockwork quartz veining within and along the contacts of granite intrusions. The intrusions are often small stocks that intrude larger granite bodies, and the stock and host can have very similar appearances. Approximately one half of the Goldfields Project is underlain by granite, most of which has some degree of metasomatic alteration and quartz veining. While much of the granite is probably not of economic significance, stocks of similar size to those that host the Box and Athona deposits could easily be concealed within larger granite bodies because they have similar mineralogy, texture and appearance. As a result of the 2015 work program, it has been concluded that the granite-hosted gold mineralization on the Goldfields Project most closely conforms to a gold-rich porphyry model. This helps to define new exploration criteria and work to date on application of this model indicates that the following five field criteria are useful in identifying the most prospective granites with respect to gold potential: They contain increased proportions of quartz veining relative to surrounding rock (>5%/vol.). The granite-hosted veins have trace to 5% pyrite which may form as clots in the veins. Small proportions (<1%/vol.) of copper, lead, zinc and molybdenum bearing sulphides are present in granite-hosted veins. The "mine granites" tend to have a higher degree of alteration, especially silica+k-feldspar alteration, which often results in a bright pink to red colour; in addition they are typically less foliated than the granites that they intrude. In at least some cases, the Box mine being an example, it appears that mineralization is hosted within discrete small stocks that can be delineated via detailed geological mapping. H-39

310 In order to best explore the granites on the Goldfields Project, a thorough literature review should first be conducted to identify and prioritize known showings relative to host intrusion characteristics. All existing geochemical data should be scrutinized in order to best determine which granites have potential to host gold deposits of potential economic interest. Areas with either i) interesting historical results, or ii) prospective granites that have no historical work, should be systematically mapped and sampled to determine potential for mineralization. Exploration Significance of 2015 Sampling Program Results Geochemical results from the 13 samples collected on the Goldfields Project in 2015 by Mercator show a number of features that are significant to interpretation of alteration styles and deposit types on the Goldfields Project. These are important to the process of future exploration because they help to define spatial aspects of greatest gold mineralization potential. The following significant results were identified through study of the 2015 geochemical program results: The high-grade gold result from the Triangle showing (177 ppm Au in sample 10804) is the highest grade sample collected from that area. Although historical drilling by GLR Resources in 2006 near the sample site returned insignificant gold values, identification of high-grade gold in the 2015 sample warrants revisiting the showing to map the surface expression of the sampled zone and to better determine its potential. Gold bearing granites near the Box mine, Athona deposit, and at the Frontier adit have much higher concentrations of potassium ( % K) than non-mineralized granite from north of the Box mine (0.97% K) and in the Keddy Bay area (0.98% K). This is consistent with the observation that mineralized granites have been affected by intense K-feldspar±biotite alteration. The sample from the Frontier adit (10809) has the highest concentration of potassium (5.02% K) indicating that it is probably not simply "quartzite" as previous workers have suggested. The high potassium concentration indicates either a granitic protolith or that secondary potassic enrichment has taken place at the expense of sodium and/or calcium in albite or plagioclase feldspar (sodium and calcium concentrations total < 0.2%). Levels of elements that best characterize rock forming minerals (e.g., potassium, sodium, magnesium and phosphate), as well as metals of economic or exploration interest such as gold, silver, copper, barium, lead, and arsenic are similar in samples collected from the Box and Athona mines, but differ in comparison with the sample from the Frontier adit (10809). The latter contains higher concentrations of barium, potassium and phosphate and lower concentrations of sodium. This may be a result of higher intensity alteration, or may indicate that the Frontier adit exploited a different style of mineralization than that present at the Box and Athona mines. Sulphur and iron concentrations are relatively low for mineralized samples collected from the Box and Athona granites (sulphur ranges between 0.13 and 1.43%) and this supports the observation that low sulphide levels characterize most rocks, even those with highest gold concentrations. However, good correlation exists between increasing sulphur concentration and increasing gold levels, indicating that a subtle increase in overall sulphide content may be a positive indicator for presence of gold. Elevated concentrations of bismuth and tungsten, which are typical of "orogenic" Au deposits, are not present at the Box and Athona deposits. However, the high-grade gold sample from the Triangle showing contains 1140 ppm Bi, suggesting that it may more closely conform to that deposit model. Uranium and Polymetallic Exploration Potential The Goldfields Project contains two past producing uranium mines, the Lorado Mine and Nicholson Mine, in addition to the various gold deposits and prospects referred to above. In addition, there are numerous other historic uranium-polymetallic showings on the property. These are generally classified for current report purposes as being representative of Beaverlodge Lake type vein mineralization. Evidence of unconformity related uranium mineralization is also present locally on the property. In addition, the 2015 scintillometer survey identified a number of previously unidentified or undocumented areas emitting high levels of gamma radiation. This indicates that despite the long exploration history of the area, grassroots style uranium prospecting and mapping may still be productive. Future uranium exploration should initially focus on 1) areas near the past producing mines and known H-40

311 showings and 2) targeted reconnaissance exploration areas defined through analysis of digitally compiled geological, geochemical and geophysical datasets. The latter may include the targets defined in section 8.1 of this report. Reconnaissance exploration focused on the unconformity that separates the Murmac Bay Group from the Martin Group, and on areas below the unconformity that have indications of structural permeability and/or oxidation/reduction fronts is also appropriate. At the present time, uranium and associated polymetallic exploration potential is considered secondary in importance to that defined for gold on the property. However, it is important to increase understanding of the distribution of such mineralization. To this end, future field programs should universally include systematic collection of radiation level readings for bedrock, drill core and overburden. This will facilitate discovery of new uranium prospects that may be present in the areas being assessed Metallurgical Assessment Program In 2015, a metallurgical test work program was carried out by SGS Minerals Services Lakefield (SGS). Tests were conducted in a detailed two phase investigation. In Phase 1, grindability was examined, and it was concluded that Box Mine and Athona composite sample materials were amenable to SAG milling. Phase 1 also examined gold recovery processes in parallel. Gravity recovery was studied and is recommended for inclusion in the design flowsheet. Box and Athona composites were amenable to either flotation or cyanidation with similar recovery. Phase 2 testing was conducted with a simplified flotation flowsheet and cyanidation of concentrate based on the findings of Phase 1. Flotation optimization testwork showed it was possible to get 95% or better gold recovery into 3% mass using rougher flotation of gravity tailings without cleaner flotation stages. This was confirmed for Box composite sample in Phase 2 bulk flotation. For Athona the Phase 2 bulk flotation gave lower than expected recovery (75% Au recovery in 2.3% mass, 81% combined Au recovery including gravity concentrate compared with two prior tests at similar conditions. Examination of these bulk flotation tailings suggested that grinding finer (than p80 of 160 micron) might have increased recovery. Phase 2 confirmed that the flotation concentrates were amenable to cyanidation with 98% recovery at test conditions. Gold recovery from the leach solution was investigated using carbon and zinc cementation (Merrill- Crowe) methods. For carbon recovery, a CIP (carbon-in-pulp) circuit is recommended rather than CIL (carbon-inleach). The predicted recovery by CIP (99.9%) is higher than the experimental recovery for Merrill-Crowe (97%). The leach residues and flotation tailings were also studied for solid-liquid separation design information. Additional metallurgical testing is required to finalize flow sheet design parameters and this will be required to support any future project feasibility study. However, the current level of testing is considered sufficient to support any re-casting of pre-feasibility level assessment in the near term. It is recognized that terms of reference for a future re-casting of the pre-feasibility study could require completion of additional specific testing to meet project requirements. Recommendations Summary The following recommendations for future exploration of the Goldfields Project arise from the conclusions presented above. In summary, additional core drilling to extend the extents of mineralization in the Box mine and Athona deposit area is warranted and, if successful, will require completion of an updated mineral resource estimate for these deposits. Completion of detailed re-assessments of the Frontier Adit, Gil, Golden Pond and Triangle gold occurrences to is also recommended to define geophysical survey and drilling strategies that will most effectively assess their economic potential. A similar detailed review approach is recommended for the past producing Lorado and Nicholson Bay uranium deposits as well for the surrounding areas and propsects that show promise for Beaverlodge Lake style polymetallic occurrences. Significant greenfields potential for discovery of new gold and uranium-polymetallic deposits is present on the Goldfields Project, as exemplified by results of targeting work completed in 2015 by Terrane. Systematic follow-up of such targets, with gold potential being highest in priority, is recommended and should begin with geological mapping, prospecting and geochemical surveying. Consideration should also be given to extending VTEM airborne geophysical survey coverage to include the full property extent. Resulting new data could be merged with that from the existing survey and be re-processed to provide the basis for H-41

312 a new, property-wide structural analysis and targeting effort supported by digitally available government and industry geochemistry datasets. This new analysis should result in refinement of greenfields exploration target priorities. With respect to metallurgical testing, no further work is currently recommended. Further testing may be needed to support final flow sheet design and equipment selection, if a decision is taken to either proceed to a more advanced level of study or change from the process concept in the report, March (2011, 2014). Proposed Budget A two phase approach to future property exploration is proposed, based on conclusions presented in section 18 and recommendations summarized above. Phase I consists of preparation of revised and updated digital property datasets, detailed desktop studies to generate new exploration targets in both brownfields and greenfields positions, and detailed review and assessment of the existing resource and reserve models for the Box mine and Athona deposits. An initial field program to carry out ground based assessments of targets identified in the previously mentioned work programs is also included, as is a program of drill core re-assessment for areas adjacent to the existing Box mine and Athona resource models or in relation to significant historic occurrences, such as the Gil prospect or Frontier Adit, that have been identified as showing well defined potential for additional drilling. It is also recommended that Phase I include a technical review of the main assumptions and parameters that were used to define the pre-feasibility study, March (2011, 2014) to determine what modifications, if any, should be considered if a decision to re-visit this detailed level of assessment is taken in the near-term. Phase I concludes with analysis and reporting of results generated by the programs noted. The estimated budget for Phase I programs is presented the table below in and totals $235,000. Recommended Phase II programs are more substantial than Phase I and are based on the assumption that Phase I results are positive. Completion of core drilling of deposit extension opportunities identified at the Box mine and Athona deposits is included, as is comprehensive field follow up that includes an allowance for core drilling of the main non-resource prospect areas as well as prioritized new greenfields target areas. Extension of VTEM airborne survey coverage to include currently non-surveyed areas is also included and should be carried out early in the work schedule so that results can be used to enhance Phase II target assessments. No additional detailed engineering or metallurgical programs are included in this budget phase but an allowance has been included for updating of existing mineral resource estimates subsequent to completion of deposit extension drilling identified in Phase I desk top studies. An increment of engineering review is included in the resource update program to support definition of open pit and underground development possibilities that should be registered in the resource deposit models. An estimated budget for the recommended Phase II programs is presented in the table below and totals $2,275,000. Proposed Phase I Budget Estimate Item Number Program Component Estimated Cost ($) 1. Digital data compilation and interpretation all aspects 70, Box mine and Athona deposit resource extension drill program planning that includes review and re-logging of historic drill core Detailed field evaluation of known prospects and new target areas that includes the following components: Detailed geological mapping and sampling plus review of historic drill core sections for mineralization present at the Box, Athona, Nicholson Bay, Fish Hook Bay and Golden Pond areas; this will establish better understanding of deposit characteristics that can subsequently be applied in both deposit extension and exploration target evaluations - estimated cost inclusive of travel and support is $50,000; 30, ,000 H-42

313 Preliminary geological mapping, prospecting, sampling and soil geochemical surveying, where warranted, to assess new exploration target areas defined to date or during work completed under above item estimated cost inclusive of travel and support is $50, Review and updating of economic parameters to support Phase II recasting of mineral resource estimates 15, Administration and support 20,000 Total Phase I 235,000 Proposed Phase II Budget Estimate Item Number Program Component Estimated Cost ($) 1 Box mine and Athona deposit extension drilling (2,500m) 750,000 2 New prospect evaluation drilling (2,500m) 750,000 3 Expansion of VTEM coverage 250, Continued greenfields target follow-up geophysical, geochemical and geological surveying Updating of Box mine and Athona mineral resource estimates plus associated reporting and project evaluation after completion of resource extension drilling in (1) above 250,000 75,000 6 Administration 200,000 Total Phase II 2,275,000 Ixhuatán Project, Mexico General OTHER PROPERTIES The following information has been prepared by management of Fortune based on historical data. There is presently not current NI technical report on the Ixhuatán Project. Fortune has not verified or updated this exploration information. In September 2010, Brigus Gold Corp. ("Brigus") reduced its property concessions from owing 100% of the mineral rights on four contiguous exploration concessions covering 98,044 hectares down to one concession (Rio Negro) covering 4,176 hectares representing the Ixhuatán Project in northern Chiapas State, Mexico. The Rio Negro concession covers all of the mineralized occurrences discovered by Linear Gold Corp., a predecessor company to Brigus ("Linear") in the region. The majority of the surface rights to the Ixhuatán concessions are controlled by various ejidos (government created local farm communities) and private owners. An agreement was signed with the local community holding surface rights to the Campamento gold-silver deposit as well as significant other surface lands within the concession. The Ixhuatán Project is located immediately southwest of the Santa Fe mine owned by Minera Frisco. The Ixhuatán Project is accessible by unimproved roads running 5 km east of the town of Rayon, Chiapas. Rayon is situated two hours south of Villahermosa, Tabasco, on an all season federal highway. Access within the Ixhuatán Project is difficult and attained primarily through trails and small dirt roads. H-43

314 The area is one of dense tropical vegetation, covered by thick soils, rugged topography with incised rivers making travel difficult. Maximum elevation in the general area is 2,470 m above sea level. All required environmental permits for the Ixhuatán Project have been acquired and to date, all the conditions of grant have been adhered to. Under terms of the environmental drilling permit, any significant disruption to the land surface caused by drilling activities must be reclaimed. The Santa Fe/La Victoria gold deposits are located to the immediate east-northeast of the Ixhuatán Project. Property boundaries are common. Physiographically the area is underlain by the Chiapas Northern Range and Chiapas Highlands geological sub-provinces. The original discovery was made during the later stages of the nineteenth century and over the years Mexican, British and French mining companies have carried out limited mining activity in the area. The Santa Fe deposits have been mined since the beginning of the 20th century by a number of companies, both foreign and domestic, and although no historical production records exist, it is assumed that the richest surface ore shoots were exploited. The La Victoria deposits were discovered more recently and records suggests exploitation from 1966 to 1970 by Minera Corzo, S.A. who commenced operation in 1966 but soon ceased as a result of the company's poor economic situation. History The Ixhuatán Project was acquired by Linear in 2003, following completion of a stream sediment geochemical orientation study carried out in the northern part of Chiapas state by Mount Isa Mines ("MIM"). The study covered an area in the general proximity of the Santa Fe poly-metallic deposits, a former gold, silver and copper producer. Pursuant to an option agreement signed on October 22, 2007 ("Kinross Option Agreement"), Kinross Gold Corporation ("Kinross") became the operator of the Ixhuatán Project and had the right to earn up to a 70% interest in Ixhuatán by incurring exploration expenditures of US$15 million over a 24-month period and making cash payments of up to US$115 million to Linear. In December 2009, Kinross notified Linear that the option would not be exercised. Pursuant to the terms of the Kinross Option Agreement, Kinross paid Linear US$3.4 million, representing the difference between the minimum required expenditures and the actual expenditures incurred by Kinross during the option period. Accordingly, Brigus became the holder of a 100% interest in the Ixhuatán Project. In 2011, Brigus signed an option agreement (the "Cangold Option Agreement") with Cangold Limited ("Cangold"), whereby Cangold was to acquire a 75% interest in the Ixhuatán Project. Pursuant to the terms of the Cangold Option Agreement, Cangold paid Brigus Cdn$1.0 million and issued 6.0 million Cangold shares, which were subject to an escrow agreement, such that 10% of the shares were released on October 14, 2011 with the remainder to be released from escrow on a pre-determined basis. Cangold was also required to pay Brigus $1.0 million and issue 6.0 million Cangold shares 12 months after the Cangold Option Agreement was signed, and pay an additional $3.0 million and issue 4.0 million Cangold shares within 24 months of signing the Cangold Option Agreement. To exercise its option, Cangold was required to pay an additional $5 million and issue 4.0 million Cangold shares as well as complete an independent third-party feasibility study on the Campamento Deposit within 36 months of the signing of the Cangold Option Agreement. Following the exercise of the purchase option, Cangold and Brigus would hold 75% and 25% interests, respectively, and would be responsible for their pro-rata costs in jointly developing the Ixhuatán Project. Brigus would retain a 2% Net Smelter Return royalty over the Ixhuatán Project and upon commencement of commercial production will receive a payment of $5.00 per ounce of gold in the Proven and Probable category included in the feasibility study. On September 10, 2012, Cangold provided notice to Brigus that they were terminating the Cangold Option Agreement. Cangold is no longer obligated to make any further payments to Brigus. Brigus retained the $1.0 million deposit and 6.0 million shares received in the fourth quarter of 2011 when the option was signed. H-44

315 On March 5, 2014, the Ixhuatán Project was one of the assets that was spun out to Fortune pursuant to the arrangement involving Fortune, Brigus and Primero Mining Corp. (the "Brigus Arrangement"). Geology As defined by Consejo de Recursos Minerales of Mexico ("CRM"), the Ixhuatán - Santa Fe region is underlain by folded sedimentary units intruded by Tertiary intrusives of possible economic interest included within the Chiapas Fold and Fault Belt. A volcanic/plutonic igneous complex crosscuts the deformed underlying sedimentary basement. Geological mapping by Linear in the south-central portion of the Ixhuatán Project has outlined a volcanic/plutonic complex of andesitic to syenitic porphyritic intrusive rocks, lahars, tuffs and volcaniclastic breccias of Pliocene age developed in and on a sequence of Eocene-Pliocene aged carbonates, siltstones and sandstones. The volcanic sequence is intruded by Tertiary age syenites, diorites and granodiorites. Mineralization appears to be related to hydrothermal alteration associated with multiple phases of the younger intrusive activity. Exploration and Drilling Linear followed by exploration work by Kinross, completed extensive stream sediment, soil, and rock sampling programs over the Ixhuatán Project. Approximately 1,950 stream sediment samples, 7,895 soil samples and 7,258 rock samples have been collected. The detailed surface sampling has outlined gold and copper anomalies over an area of 4 by 5 kilometres, associated with the volcanic/plutonic complex that trends northeast southwest through the area. Detailed soil sampling has identified numerous gold and copper soil anomalous areas in excess of 400 x 400 m in area. All of the anomalies, including the Campamento, Cerro la Mina, San Isidro, Caracol (formerly Northern), Laguna Grande, Western, Laguna Chica, Central, and Cacate areas display the alteration and mineralization characteristics typical of porphyry intrusive related districts. Follow-up surface exploration by Kinross from October 2007 to December 2009 included geological mapping and rock sampling focusing mainly on the known anomalies. An in-fill 482 sample, soil geochemical survey (Caracol Road), covering the area between the Cerro la Mina and Caracol anomalies has defined an elongate cluster of anomalous gold values centered on the Central Zone and extending 200 m to the south as well as a gold anomaly to the north. In addition, soil geochemical surveys were conducted in an area to the south and the east of San Isidro. Linear initiated a drilling program in early 2004, and this drilling program continued without interruption, with approximately 89,707 m of drilling in 342 drill holes being completed through to the end of September No drilling or exploration work has been conducted at Ixhuatán since December Early-stage drilling by Linear focused on the San Isidro (drill holes IX-01-04, 06), Buenos Aires (drill hole IX-05), Cerro la Mina (drill hole IX-07) and Central (drill hole IX-08) anomalies before making the first significant gold discovery at the Campamento Zone with drill hole IX-09. Drilling subsequently focused on the Campamento Zone and has extended to the Cerro la Mina, Caracol, Laguna Grande and Laguna Chica areas. Kinross focused on defining the Cerro la Mina anomaly and the north-northwest structure, as well as, testing the Laguna Chica, San Isidro, Central and Caracol anomalies. All core samples were split in half using a saw, hydraulic splitter or manually with samples taken at continuous two metre intervals. Samples and embedded internal and commercial standards are shipped by air freight to the ALS Chemex labs in Guadalajara, Mexico where gold is analyzed by 30 or 50 gram digestion with a fire assay-aa finish, with samples greater than 10 gptby gravimetric finish. Silver and base metals were analyzed by Induction Coupled Plasma spectrometry ("ICP"). Check analyses were performed on both pulps and bulk reject material at ALS Chemex and BSI Inspectorate Labs of Reno, Nevada. Review of assays from internal standards and check assays verified the quality of the analytical results. H-45

316 Currently, management of SpinCo does not consider the Ixhuatán Project to be its material property for the purposes of NI Although SpinCo intends to continue to maintain the Ixhuatan Project in good standing, no funds have been allocated for the exploration of the property in the near future. Huizopa Project, Mexico The Huizopa Project is located in the Sierra Madres in Chihuahua, Mexico. On December 23, 2010, Brigus entered into an agreement (the "Huizopa Agreement") to sell 100% of Minera Sol de Oro and Minas de Argonautas (collectively, "MSO"), which include the Huizopa Project to Cormack Capital Group LLC ("Cormack"). The Huizopa Agreement provided Cormack with an option until December 31, 2011 to return the Huizopa Project to Brigus and retain a 20% carried interest in the Huizopa Project. Under the Huizopa Agreement, Brigus retained certain rights over the voting shares of Minera Sol de Oro and Minas de Argonauts until the end of the marketing period, which was identified as December 31, In December 2011, Brigus revised the terms of the Huizopa Agreement with Cormack. Based on the revised terms, Cormack was required to pay $3.0 million, payable in eight escalating annual installments of $0.05 million, $0.08 million, $0.1 million, $0.3 million, $0.4 million, $0.6 million, $0.7 million and $0.8 million (the "Annual Payments") commencing in June 2012 with the final installment due in June Cormack could also elect to pay up to 50% of the purchase price through the issuance of common shares in a publicly traded company listed on a recognized U.S. or Canadian national stock exchange. In addition, Brigus was entitled to receive a production bonus payment of $4.0 million within one year of the commencement of commercial production at the Huizopa Project. The revised terms extended the marketing period to June 15, On May 23, 2013, Brigus signed an amended and restated agreement with Cormack. Brigus agreed to waive all payments owing to Brigus under the agreement dated December 21, 2011 and transferred 100% of the issued share capital of Minera Sol de Oro and Minas de Argonautas, including the interest in the Huizopa Project to Cormack. Brigus retained a 2% NSR over future production from the Huizopa Project and a production bonus of $4.0 million payable over two years from the date commercial production commences. Cormack may reduce the NSR to 1% by making a $1.0 million payment to Brigus. Brigus is entitled to 20% of the proceeds of disposal of the Huizopa Project, if it is disposed of prior to reaching commercial production. On March 5, 2014, the Huizopa Project was one of the assets that was spun out to Fortune pursuant to the Brigus Arrangement. FINANCINGS On March 24, 2016, Fortune completed a non-brokered private placement financing for aggregate gross proceeds of $2,300,000, pursuant to which Fortune issued 7,665,549 Fortune Shares at an issue price of $0.30 per Fortune Share (being $0.90 on post-transaction basis, and the deemed price of the Transaction). Pursuant to the terms of the Arrangement, an aggregate of 3,832,775 SpinCo Shares will be issued to Fortune Shareholders who participated in the March 24, 2016 private placement. The proceeds of the private placement will be used in support of meeting the cash requirements to complete the Transaction. The TSXV has conditionally approved the listing of these SpinCo Shares. Listing is subject to SpinCo's fulfilling all of the requirements of the TSXV on or before August 10, AVAILABLE FUNDS AND PRINCIPAL PURPOSES Available Funds As at April 30, 2016, it is estimated that SpinCo has $525,000 in available working capital. Assuming completion of the Transaction before June 30, 2016, it is anticipated that SpinCo will have available working capital of approximately $500,000. H-46

317 Principal Purposes The following table summarizes expenditures anticipated to be incurred by SpinCo in order for SpinCo to achieve its business objectives (see in this Appendix "H", "Business Objectives and Milestones", which follows): Expenditure Amount (as at April 30, 2016) Project expenditures for Phase I of the Goldfields Project (1) $235,000 Project expenditures for the Ixhuatán Project $80,000 General and Administrative Expenses $185,000 Note: (1) For more information, see in this Appendix "H", "Goldfields Project Recommendations". (2) For more information, see in this Appendix "H", "Other Properties Ixhuatán Project, Mexico". The above uses of available funds should be considered as estimates only. Notwithstanding the proposed uses of available funds as discussed above, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. It is difficult at this time to definitively project the total funds necessary to effect the planned undertakings of SpinCo. For these reasons, management considers it to be in the best interests of SpinCo and its shareholders to permit management a reasonable degree of flexibility as to how SpinCo's funds are employed among the above uses or for other purposes, as the need may arise. BUSINESS OBJECTIVES AND MILESTONES With the funds available to it as described above under the heading "Available Funds and Principal Purposes", SpinCo intends to continue exploration of the Goldfields Project, to expand its portfolio of exploration properties as suitable opportunities are identified, or pursue other business opportunities, if the management of SpinCo determines that it is in the best interests of SpinCo to change SpinCo's primary business focus. DIVIDENDS AND OTHER DISTRIBUTIONS SpinCo has not paid any dividends on the SpinCo Shares since incorporation. SpinCo's management anticipates that SpinCo will retain all future earnings and other cash resources for the future operation and development of its business. SpinCo does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at the discretion of the SpinCo Board after taking into account many factors including SpinCo's operating results, financial condition and current and anticipated cash needs. SELECTED FINANCIAL INFORMATION Financial Statements Included as Schedule 1 to this Appendix H are audited financial statements of SpinCo for the period from incorporation on February 4, 2016 to March 15, 2016, comprised of a statement of financial position at March 15, 2016, statements of loss and comprehensive loss, changes in shareholder's equity, and cash flows for the period from incorporation to March 15, The financial statements of SpinCo were prepared in accordance with International Financial Reporting Standards. Upon completion of the Transaction, the SpinCo Assets will be transferred to SpinCo and will form the primary business of SpinCo. As a result, included as Schedule 2 to this Appendix H are the audited consolidated financial statements of the Exploration Properties Business of SpinCo for the financial years ended December 31, 2014 and 2015, comprised of a statement of loss and comprehensive loss, a statement of changes in equity and a statement of cash flows for the years ended December 31, 2014 and 2015, and a statement of financial position as at December 31, 2014 and 2015 and notes to such statements Included as Schedule 5 to this Appendix H are the unaudited pro forma consolidated financial statements of SpinCo in respect of SpinCo after giving effect to the Arrangement and the acquisition by SpinCo of the SpinCo H-47

318 Assets as at and for the year ended December 31, 2015, comprised of a pro forma consolidated statement of financial position, pro forma consolidated statement of loss and comprehensive loss, and notes to such statements. Selected Unaudited Pro Forma Financial Information The following table sets out selected unaudited pro forma consolidated financial information for SpinCo as at December 31, 2015 and for the year ended December 31, 2015 assuming the Arrangement occurred on December 31, 2015, all of which is qualified by the more detailed information contained in the unaudited pro forma consolidated financial statements of SpinCo as at and for the year December 31, 2015, included as Schedule 5 to this Appendix H. Selected Financial Information Canada Limited (as at Dec 31, 2015) The Exploration Properties Business of Fortune Bay Corp. (as Dec 31, 2015) Pro Forma Adjustment Pro forma The Exploration Properties Business of Fortune Bay Corp. Current Assets 1 411,048 1,357,764 1,768,813 Total Assets 1 15,146,734 1,359,715 16,506,450 Current Liabilities 12, , , ,110 Total Liabilities 12, , , ,110 Total Equity (12,549) 14,958, ,756 15,645,340 New Fortune Shares Issued and Outstanding 1-18,578,283 18,578,274 MANAGEMENT'S DISCUSSION AND ANALYSIS Included as Schedule 3 to this Appendix H is Management's Discussion and Analysis SpinCo for the period from incorporation on February 4, 2016 to March 15, It includes financial information from, and should be read in conjunction with, the audited consolidated financial statements of SpinCo for the period from incorporation on February 4, 2016 to March 15, 2016 and the notes thereto, which are attached as Schedule 1 to this Appendix H as well as the disclosure contained throughout this Appendix H and the Circular. Included as Schedule 4 to this Appendix H is Management's Discussion and Analysis Exploration Properties Business of SpinCo for the fiscal year ended December 31, 2014, and It includes financial information from, and should be read in conjunction with, the audited combined carve-out financial statements of the Exploration Properties Business of SpinCo for the fiscal year ended December 31, 2014, and 2015 and the notes thereto, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, which are attached as Schedule 2 to this Appendix H as well as the disclosure contained throughout this Appendix H and the Circular. DISCLOSURE OF OUTSTANDING SECURITY DATA ON FULLY DILUTED BASIS SpinCo's authorized share capital consists of an unlimited number of common shares without par value, of which one SpinCo Share (held by Fortune) is issued and outstanding as fully paid and non-assessable as of the date of the Circular. Assuming completion of the Arrangement and pursuant to its terms, approximately 18,578,274 SpinCo Shares will be issued and outstanding as fully paid and non-assessable on completion of the Arrangement, all of which will be held by the Fortune Shareholders. The calculation in this Appendix H of the approximate aggregate number of SpinCo Shares to be issued pursuant to the Arrangement assumes that there are no Dissent Shares. For further details with respect to the issuance of the SpinCo Shares pursuant to the Arrangement, see in the Circular, H-48

319 "The Transaction The Arrangement" and, in particular, "Principal Steps of the Arrangement", "Procedure for Exchange of Fortune Shares" and "Risks Associated with the Transaction". DESCRIPTION OF SECURITIES TO BE LISTED SpinCo Shares SpinCo Shares are not subject to any future call or assessment and do not have any pre-emptive, conversion or redemption rights, and all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the SpinCo Shares, all of which rank equally as to all benefits which might accrue to the holders of the SpinCo Shares. All holders of SpinCo Shares are entitled to receive a notice of any general meeting to be convened by SpinCo. At any general meeting of SpinCo, subject to the restrictions on joint registered owners of SpinCo Shares, every shareholder of SpinCo has one vote for each SpinCo Share of which he or she is the registered owner. Voting rights may be exercised in person or by proxy. The holders of SpinCo Shares are entitled to share pro rata in any: (i) dividends if, as and when declared by the SpinCo Board, and (ii) such assets of SpinCo as are distributable to shareholders upon liquidation of SpinCo. The aggregate SpinCo Shares outstanding upon completion of the Arrangement will be fully paid and non-assessable. Stock Options At the Meeting, Fortune Shareholders will be asked to approve the SpinCo Stock Option Plan. See "Other Matters to be Considered at the Meeting Approval of the SpinCo Stock Option Plan". The SpinCo Board does not intend to grant any incentive stock options until such time following listing of the SpinCo Shares on the TSXV that the trading price of the SpinCo Shares has stabilized such that a fair market value exercise price for options can be determined. SpinCo Warrants Upon completion of the Transaction, SpinCo will have a total of 401,786 SpinCo Warrants exercisable at $0.60 per SpinCo Shares expiring on April 1, 2017 (see "Appendix E Information Concerning Fortune and Annual Meeting Matters Fortune Warrants"). Listing of SpinCo Shares An application has been made to the TSXV for the listing of the SpinCo Shares on the TSXV. The TSXV has conditionally accepted the Transaction subject to Fortune fulfilling all of the requirements of the TSXV on or before August 10, There can be no assurances as to if, or when, the SpinCo Shares will be listed or traded on the TSXV, or any other stock exchange. As at the date of the Circular, there is no market through which the SpinCo Shares to be issued pursuant to the Arrangement may be sold and Fortune Shareholders may not be able to resell the SpinCo Shares to be distributed to them pursuant to the Arrangement. This may affect the pricing of the SpinCo Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the SpinCo Shares, and the extent of issuer regulation. See in this Appendix H, "Risk Factors". CONSOLIDATED CAPITALIZATION The following table sets out the share and loan capital of SpinCo. The table should be read in conjunction with the unaudited pro forma financial statements of SpinCo attached as Schedule 5 to this Appendix H, as well as with other disclosure contained in this Appendix H and in the Circular. See also in this Appendix H, "Description of Securities" and "Prior Sales". Authorized Outstanding as of April 30, 2016 Outstanding as of the date of the Circular Outstanding assuming completion of the Arrangement H-49

320 SpinCo Shares Unlimited 1 SpinCo Share 1 SpinCo Share 18,578,274 (1)(2) SpinCo Shares Long term debt N/A Nil Nil Nil Note: (1) This number includes: (i) 3,832,775 SpinCo Shares issuable to Fortune Shareholders, being persons who participated in the March 24, 2016 private placement, in connection with the Arrangement (see "Appendix "E" Information Concerning Fortune and Annual Meeting Matters General Development of the Business History"); (ii) 661,250 SpinCo Shares issuable to certain executives, Fortune Board members and non-executive employees of Fortune immediately prior to closing of the Transaction, in connection with the Arrangement; and (iii) 170,000 New Fortune Shares issuable to a finder immediately prior to closing of the Transaction, in connection with the Arrangement. (2) In addition, 401,786 SpinCo Shares are issuable upon exercise of the SpinCo Warrants (See in this Appendix H "Description of Securities to be Listed" above). OPTIONS TO PURCHASE SECURITIES OF SPINCO Stock Option Plan The SpinCo Board has adopted a stock option incentive plan (the "SpinCo Stock Option Plan") that will be implemented upon approval of the SpinCo Stock Option Plan by the Fortune Shareholders at the Meeting (see in the Circular, "Other Matters to be Considered at the Meeting Approval of the SpinCo Stock Option Plan") and acceptance by the TSXV in conjunction with the proposed listing of the SpinCo Shares on the TSXV. The SpinCo Stock Option Plan is a rolling stock option plan that sets the number of SpinCo Shares issuable under the SpinCo Stock Option Plan at a maximum of 10% of the SpinCo Shares issued and outstanding at the time of any grant under the SpinCo Stock Option Plan. The following information is intended to be a brief description of the SpinCo Stock Option Plan and is qualified in its entirety by the full text of the SpinCo Stock Option Plan, which is available for review up until the day preceding the Meeting at SpinCo's head office at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7, and will be available at the Meeting. Summary of the SpinCo Stock Option Plan The principal features of the SpinCo Stock Option Plan are as follows: 1. The SpinCo Stock Option Plan is administered by the SpinCo Board which shall, without limitation, subject to the approval of the TSXV, have full and final authority in its discretion, but subject to the express provisions of the SpinCo Stock Option Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the SpinCo Stock Option Plan. 2. Options may be granted under the SpinCo Stock Option Plan to Directors, Employees, Consultants and Management Company Employees (as those terms are defined in Policy 4.4 Incentive Stock Options of the TSXV) of SpinCo and any of its subsidiaries. 3. The aggregate number of SpinCo Shares (the "Optioned Shares") that may be issuable pursuant to options granted under the SpinCo Stock Option Plan cannot exceed 10% of the number of issued SpinCo Shares at the time of the granting of options under the SpinCo Stock Option Plan. 4. No more than 5% of the issued SpinCo Shares, calculated at the date the option is granted, may be granted to any one optionee in any 12 month period. 5. No more than 10% of the issued SpinCo Shares, calculated at the date the option is granted, may be granted to Insiders in any 12 month period. 6. No more than 2% of the issued SpinCo Shares, calculated at the date the option is granted, may be granted to any one consultant in any 12 month period. H-50

321 7. No more than an aggregate of 2% of the issued SpinCo Shares, calculated at the date the option is granted, may be granted to all consultants and employees conducting "Investor Relations Activities" (as that term is defined in Policy 1.1 Interpretation of the TSXV ("Policy 1.1")) in any 12-month period. 8. The exercise price to each optionee for each Optioned Share shall be determined by the SpinCo Board but cannot, in any event, be less than the "Discounted Market Price" of the SpinCo Shares as traded on the TSXV (as that term is defined in Policy 1.1), or such other price as may be agreed to by SpinCo and accepted by the TSXV; provided that the exercise price for each Optioned Share in respect of options granted within 90 days of a "Distribution" by a "Prospectus" (as those terms are defined in Policy 1.1) shall not be less than the greater of the Discounted Market Price and the price per SpinCo Share paid by public investors for listed SpinCo Shares under the Distribution. 9. In the event SpinCo wishes to reduce the exercise price of any options held by Insiders at the time of the proposed reduction, the approval of the disinterested shareholders of SpinCo will be required prior to the exercise of any such options at the reduced exercise price. 10. The options may be exercisable for a period of up to five years. 11. The options are non-transferable or assignable, except in certain circumstances. The options can only be exercised by the optionee as long as the optionee remains an eligible optionee pursuant to the SpinCo Stock Option Plan or within a period of not more than 90 days (30 days for providers of Investor Relations Activities) after ceasing to be an eligible optionee or, if the optionee dies, within one year from the date of the optionee's death. 12. An optionee who is a consultant conducting Investor Relations Activities who is granted an option under the SpinCo Stock Option Plan will become vested with the right to exercise one-quarter (1/4) of the option upon the conclusion of every three (3) months subsequent to the date of the grant of the option, such that that optionee will be vested with the right to exercise one hundred percent (100%) of his or her option upon the conclusion of 12 months from the date of the grant of the option (by way of example, in the event that optionee did not exercise one-quarter (1/4) of his option at the conclusion of three (3) months from the date of the grant of the option, he or she would be entitled to exercise one-half (1/2) of his or her option upon the conclusion of six (6) months from the date of the grant of the option). 13. In the event of a stock dividend, subdivision, redivision, consolidation, share reclassification (other than pursuant to the SpinCo Stock Option Plan), amalgamation, merger, corporate arrangement, reorganization, liquidation or the like of or by SpinCo, the SpinCo Board may make such adjustment, if any, of the number of Optioned Shares, or of the exercise price, or both, as it shall deem appropriate to give proper effect to such event. 14. If an optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of SpinCo or of any of its subsidiaries as a result of having been dismissed from any such position for cause, all unexercised option rights of that optionee under the SpinCo Stock Option Plan shall immediately become terminated and shall lapse. 15. If an optionee ceases to be either a Director, Employee, Consultant or Management Company Employee of SpinCo or any of its subsidiaries for any reason other than as a result of having been dismissed for cause or as a result of the optionee's death, such optionee shall have the right for a period of 90 days (or until the normal expiry date of the option rights of such optionee if earlier) from the date of ceasing to be either a Director, Employee, Consultant or Management Company Employee to exercise the option under the SpinCo Stock Option Plan. 16. If an optionee engaged in providing Investor Relations Activities to SpinCo ceases to be employed in providing such Investor Relations Activities, such optionee shall have the right for a period of 30 days (or until the normal expiry date of the option rights of such optionee if earlier) from the date of ceasing to provide such Investor Relations Activities to exercise the option under the SpinCo Stock Option Plan. H-51

322 17. In the event of the death of any optionee, the legal representatives of the deceased optionee shall have the right for a period of one year (or until the normal expiry date of the option rights of such optionee if earlier) from the date of death of the deceased optionee to exercise the deceased optionee's options. 18. Subject to the acceptance of the TSXV, the SpinCo Board may from time to time amend or revise the terms of the SpinCo Stock Option Plan or may discontinue the SpinCo Stock Option Plan at any time, provided that no such action may in any manner adversely affect the rights under any options earlier granted to an optionee under the SpinCo Stock Option Plan without the consent of that optionee. 19. Upon exercise of an option, the optionee shall pay to SpinCo amounts necessary to satisfy applicable withholding tax requirements or shall otherwise make arrangements satisfactory to SpinCo for such requirements. As of the date of the Circular, SpinCo has not granted any incentive stock options under the SpinCo Stock Option Plan, or otherwise, nor has it issued any other rights or securities to purchase SpinCo Shares. The SpinCo Board does not intend to grant any incentive stock options until such time following listing of the SpinCo Shares on the TSXV that the trading price of the SpinCo Shares on the TSXV has stabilized, such that a fair market value exercise price for options can be determined. PRIOR SALES During the 12 months prior to the date of the Circular, the following SpinCo Shares have been issued: Issue price per Date Number of SpinCo Shares SpinCo Share February 4, $1.00 See also in this Appendix H, "Description of Securities To Be Listed" and "Consolidated Capitalization". ESCROWED SECURITIES AND SECURITIES SUBJECT TO RESTRICTION ON TRANSFER To the knowledge of SpinCo, as of the date of the Circular, no securities of SpinCo are held in escrow, are subject to restriction on transfer or are anticipated to be held in escrow or be subject to restriction on transfer following the Arrangement Effective Date. PRINCIPAL SECURITYHOLDERS As of the date of the Circular, Fortune holds 100% of the issued SpinCo Shares, and following completion of the Arrangement, Fortune Shareholders will own 100% of the issued SpinCo Shares. Assuming completion of the Transaction, and to the knowledge of SpinCo's directors and officers, no person will beneficially own, directly or indirectly, or exercise control or direction over more than 10% of the then issued SpinCo Shares, except for Wade K. Dawe, proposed Chairman and CEO of SpinCo, who will hold, directly and indirectly through BC Ltd., Brigus Capital Inc., Kelligrew Inc. and Wade K. Dawe Inc. and will exercise control or direction over 2,806,168 SpinCo Shares, representing approximately 15.10% of the then issued and outstanding SpinCo Shares. For the additional assumptions used in calculating the foregoing SpinCo securityholdings, see in this Appendix H, "Description of Securities Distributed". DIRECTORS AND EXECUTIVE OFFICERS Name, Occupation and Security Holdings As at the date of this Circular, Wade K. Dawe, a director of Fortune, is the sole director of SpinCo. Immediately prior to the completion of the Transaction, Fortune, as the sole shareholder of SpinCo, will elect Derrick Gill and Michael Gross as directors, in order for the SpinCo Board to consist of three directors, as set out below. After H-52

323 completion of the Transaction, the directors of SpinCo will be elected annually at each annual general meeting of the SpinCo shareholders and will hold office until the next annual general meeting unless a director's office is earlier vacated in accordance with the Articles of SpinCo or such director becomes disqualified to serve as a director. As at the date of this Circular, the sole director of SpinCo holds no SpinCo Shares. As at the date of the Circular, the directors and executive officers of Fortune hold no SpinCo Shares. Assuming completion of the Transaction and based on the number of outstanding Fortune Shares beneficially owned, directly or indirectly, or over which control or direction is exercised by all of the directors and executive officers of SpinCo as a group at the date of the Circular, the number and percentage of SpinCo Shares that will be beneficially owned, directly or indirectly, or over which control or direction will be exercised by all of the directors and executive officers of SpinCo as a group will be approximately 3,298,453 or 17.75% of the then issued and outstanding SpinCo Shares. For the additional assumptions used in calculating the foregoing SpinCo securityholdings, see in this Appendix H, "Description of Securities Distributed". See in the Circular, "The Transaction The Arrangement Fortune Irrevocable Undertakings". The name, province or state and country of residence, position in office, and principal occupation of each of the directors and executive officers of SpinCo upon completion of the Transaction are as follows: Name and Residence Director and/or officer since Principal occupation for past five years (1) Number of SpinCo Shares Percentage of SpinCo Shares Wade K. Dawe (2) Halifax, Nova Scotia, Canada Chairman and Chief Executive Officer February 4, 2016, date of incorporation of SpinCo Chief Executive Officer of Fortune; Mining Executive; Former Chairman and Chief Executive Officer of Brigus Gold Corp; Chairman of Stockport Exploration Inc.; Director of Immunovaccine Inc. 2,806,168 (4) 15.10% Sarah Oliver Halifax, Nova Scotia, Canada CFO and Corporate Secretary To be appointed upon completion of the Transaction Chief Financial Officer of Fortune; Former Senior Manager at PricewaterhouseCoopers LLP; Member of the Institute of Chartered Accountants of Nova Scotia 113, % Derrick Gill (2)(3) Newfoundland, Canada Proposed Director To be elected upon completion of the Transaction Executive VP & Principal Consultant of Strategic Concepts Inc. since 1990; Executive VP & Director of Vale Inco Newfoundland Limited from 1995 to December 2009; Former director of Brigus Gold Corp. 28, % Michael Gross (2)(3) Nova Scotia, Canada Proposed Director To be elected upon completion of the Transaction Professor of Surgery at Dalhousie University since 1987; Independent consultant since 1987; Founder & Chairman of NWest Energy prior to 2008 and CEO of LNB Oil; Former Director of Brigus Gold Corp. 350,451 (5) 1.89% Total: 3,298, % Notes: (1) The information as to principal occupation has been furnished by each director and/or officer individually. (2) Proposed member of the Audit Committee. (3) Proposed member of the Nominations and Compensation Committee. (4) Mr. Dawe will hold: 1,250 SpinCo Shares indirectly through BC Ltd., SpinCo Shares indirectly through Brigus Capital Inc.,742,500 SpinCo Shares indirectly through Kelligrew Inc., and 12,500 SpinCo Shares indirectly through Wade K. Dawe Inc., each of which is a company of which he is the controlling shareholder. (5) Mr. Gross will hold 120,671 SpinCo Shares indirectly through mmp, a company of which he is the controlling shareholder. H-53

324 See in this Appendix H, "Audit Committee and Corporate Governance". Cease Trade Orders As at the date of the Circular, no current or proposed director or executive officer of SpinCo is, or within the ten years prior to the date of the Circular has been, a director, chief executive officer or chief financial officer of any company (including SpinCo), that while that person was acting in that capacity: (a) was subject to: (i) (ii) (iii) a cease trade order (including any management cease trade order which applied to directors or executive officers of a company, whether or not the person is named in the order), or an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days (an "Order"); or (b) was subject to an Order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. Bankruptcies To the knowledge of SpinCo, as at the date of the Circular no current or proposed director, executive officer, or shareholder holding a sufficient number of securities of SpinCo to affect materially the control of SpinCo is, or within the ten years prior to the date of the Circular has: (a) (b) been a director or executive officer of any company (including SpinCo) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. Penalties or Sanctions To the knowledge of SpinCo, as at the date of the Circular no current or proposed director, executive officer, or shareholder holding a sufficient number of securities of SpinCo to affect materially the control of SpinCo has been subject to: (a) (b) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. H-54

325 Conflicts of Interest Certain of the current and proposed directors and officers of SpinCo will not be devoting all of their time to the affairs of SpinCo. Certain of the current and proposed directors and officers of SpinCo are directors and officers of other companies, some of which are in the same business as SpinCo. The directors and officers of SpinCo are required by law to act in the best interests of SpinCo. They have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to SpinCo may result in a breach of their obligations to the other companies, and in certain circumstances this could expose SpinCo to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of SpinCo. Such conflicting legal obligations may expose SpinCo to liability to others and impair its ability to achieve its business objectives. EXECUTIVE COMPENSATION Compensation Discussion and Analysis SpinCo will not have a compensation program other than paying base salaries, incentive bonuses, and granting incentive stock options to the NEOs. SpinCo recognizes the need to provide a compensation package that will attract and retain qualified and experienced executives, as well as align the compensation level of each executive to that executive's level of responsibility. The three components of the compensation package will be included to enable SpinCo to meet different objectives. The objectives of base salary will be to recognize market pay, and acknowledge the competencies and skills of individuals. The objective of incentive bonuses (paid in the form of cash payments) will be to add a variable component of compensation to recognize corporate and individual performances for executive officers and employees. The objectives of stock option awards will be to reward achievement of long-term financial and operating performance and focus on key activities and achievements critical to the ongoing success of SpinCo. Implementation of the SpinCo Stock Option Plan will be the responsibility of SpinCo's Nominations and Compensation Committee. The compensation of the NEOs will be reviewed and recommended for the SpinCo Board's approval by the Nominations and Compensation Committee. Although the SpinCo Board has not formally evaluated the risks associated with SpinCo's proposed compensation policies and practices, the SpinCo Board has no reason to believe that any risks that arise from SpinCo's compensation policies and practices are reasonably likely to have a material impact on SpinCo. Upon completion of the Transaction, the members of the Nominations and Compensation Committee will be Dr. Michael Gross and Derrick Gill, all of whom are independent directors pursuant to applicable laws in Canada. The general objectives of SpinCo's compensation strategy will be to: (a) (b) (c) (d) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long-term shareholder value; align management's interests with the long term interests of shareholders; provide a compensation package that is commensurate with other comparable companies to enable SpinCo to attract and retain talent; and ensure that the total compensation package is designed in a manner that takes into account SpinCo's stage of development and its available financial resources. SpinCo's compensation packages will be designed to provide a blend of non-cash stock option compensation and a reasonable salary. In addition, extraordinary efforts which enhance shareholder value will be rewarded with cash bonuses. H-55

326 SpinCo will have no other forms of compensation other than the compensation program outlined above, although payments may be made from time to time to individuals or companies they control for the provision of consulting services. Such consulting services will be paid for by SpinCo at competitive industry rates for work of a similar nature by reputable arm's length services providers. Actual compensation will vary based on the performance of the executives relative to the achievement of goals and the price of SpinCo's Shares. Compensation Element Description Compensation Objectives Annual base salary (all NEOs) Salary is market-competitive, fixed level of compensation. Retain qualified leaders, motivate strong business performance. Incentive bonuses Discretionary cash payment. Reward individual performance in achieving corporate goals. Incentive stock option (all NEOs) Equity grants will be made in the form of stock options. The amount of grant will be dependent on individual and corporate performance. Reward long-term financial and operating performance and align interests of key employees with those of SpinCo shareholders. SpinCo will rely on the discretion and judgment of the SpinCo Board in establishing and amending contracts for all forms of compensation, including stock options to be granted to the CEO and the directors, and for reviewing the CEO's recommendations respecting compensation of the other officers of SpinCo, to ensure such arrangements reflect the responsibilities and risks associated with each position. There will be no formal process using objectives, criteria, or analysis, for determining compensation. When determining the compensation of its officers, the Nominations and Compensation Committee and the SpinCo Board will be guided by the general objectives of SpinCo's compensation strategy as set out above. Named Executive Officer Compensation As of the date of the Circular, Wade K. Dawe, the sole director of SpinCo, is SpinCo's sole NEO. Upon completion of the Transaction and the appointment of the SpinCo Board and management, as described under the section "Directors and Executive Officers" in this Appendix H, SpinCo's NEOs will be: (a) (b) Wade K. Dawe, proposed Chairman and CEO and current director of SpinCo; and Sarah Oliver, proposed CFO of SpinCo. Since incorporation and as at the date of the Circular, SpinCo's NEO has not been compensated by SpinCo for his services as such. SpinCo's NEO is also one of Fortune's NEO, and has been compensated for his services to date by Fortune. Concurrently with the completion of the Transaction, SpinCo will enter into employment and/or consulting agreements with its NEOs, pursuant to which the NEOs will provide management and administrative services to, and be compensated for those services by SpinCo, and which will provide for payments to the NEOs at, following, or in connection with any termination (whether voluntary, involuntary or constructive), resignation or retirement, or as a result of a change of control of SpinCo or a change in the NEOs responsibilities. Named Executive Officer Consulting Agreements It is proposed that SpinCo will enter into consulting and/or employment agreements with Mr. Dawe and Ms. Oliver, once appointed. Mr. Dawe's and Ms. Oliver's annual retainers will be determined after SpinCo is publically listed, once the time commitments of the various individuals have been determined, these amounts will be reviewed by the Nominations and Compensation Committee. H-56

327 Termination and Change of Control Benefits Under the terms of the proposed consulting and/or employment agreements with Mr. Dawe and Ms. Oliver, in the event of a termination of the respective agreements other than for cause, Mr. Dawe and Ms. Oliver will each be entitled to certain compensation by SpinCo based on the terms of their respective agreements to be entered into between SpinCo and the respective parties. The precise terms of such compensation payments will be determined upon completion of the Arrangement, once the time commitments of the various individuals are determined, and after these amounts are reviewed by the Nominations and Compensation Committee. Option-Based Awards An option based award will be in the form of an incentive stock option plan. The objective of the incentive stock option will be to reward NEOs, employees' and directors' individual performance at the discretion of the SpinCo Board upon the recommendation of the Nominations and Compensation Committee. The SpinCo Stock Option Plan will be administered by the Nominations and Compensation Committee. The process SpinCo will use to grant option based awards will be upon the recommendations of the Nominations and Compensation Committee. The role of the Nominations and Compensation Committee will be to recommend to the SpinCo Board the compensation of SpinCo's directors and NEOs which the Nominations and Compensation Committee feels is suitable. The SpinCo Board, as a result of a recommendation by the Nominations and Compensation Committee, does not intend to grant any incentive stock options until such time following listing of the SpinCo Shares on the TSXV that the trading price of the SpinCo Shares on the TSXV has stabilized, such that a fair market value exercise price for options can be determined. Director Compensation Since its incorporation, SpinCo has not paid its sole director a fee for acting as such, nor has it granted any options or share-based awards. Following completion of the Transaction and the appointment of the proposed directors, SpinCo does not intend to compensate its non-executive directors. However, directors will be entitled to be reimbursed for reasonable expenditures incurred in performing their duties as directors, and SpinCo may, from time to time, grant to its directors incentive stock options to purchase SpinCo Shares under the SpinCo Stock Option Plan. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS Since its incorporation and as of the date of the Circular, no director or officer of SpinCo, or any associate or affiliate of such person, is or ever has been indebted to SpinCo with respect to the purchase of securities or otherwise; nor has any such person's indebtedness to any other entity been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by SpinCo. Audit Committee Audit Committee Charter AUDIT COMMITTEE AND CORPORATE GOVERNANCE Immediately before completion of the Arrangement, the SpinCo Board will adopt an Audit Committee Charter which will be reviewed annually and sets out the role and oversight responsibilities of the SpinCo audit committee (the "Audit Committee"). The Audit Committee's primary purpose will be to assist the SpinCo Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control over financial reporting and accounting compliance, the audit process and processes for identifying, evaluating and monitoring the management of SpinCo's principal risks impacting financial reporting. The Audit Committee will also assist the SpinCo Board with the oversight of financial strategies and overall risk management. The Audit Committee Charter is attached as Schedule 6 to this Appendix H. H-57

328 Composition Upon completion of the Arrangement, the Audit Committee will consist of three directors, being Wade K. Dawe, Michael Gross and Derrick Gill. In accordance with NI , the majority of the Audit Committee will not be executive officers, employees or Control Persons (as defined by the rules and policies of the TSXV) of SpinCo, and all are "financially literate" as such term is defined in NI Relevant Education and Experience The following is a description of the education and experience of each proposed member of the Audit Committee that is, in addition to such member's general business experience, relevant to the performance of his responsibilities as a proposed member of the Audit Committee. Wade K. Dawe Mr. Dawe has been an entrepreneur in Canadian mining and venture capital industries since 1994 and has consistently demonstrated strong results for shareholders through strategic planning, quality acquisitions and partnerships, and by retaining and developing industry respected senior management and directors. He is a director and Chairman of Stockport Exploration Inc., and serves on the board of directors of Immunovaccine Inc. and Metallum Resources Inc. He was previously the Chairman and Chief Executive Officer of Brigus Gold Corp. Mr. Dawe has a bachelor of commerce degree from Memorial University of Newfoundland, where he currently serves on the Advisory Board to the Faculty of Business Administration. Dr. Michael Gross Dr. Gross has extensive capital markets experience, having served as either an executive or as a director with a number of venture stage companies. Dr. Gross was a founder and chairman of the board of NWest Energy Corp. prior to its successful initial public offering in A Professor of Orthopaedic surgery for over 20 years, he consults extensively in design and implantation techniques with the Orthopaedic manufacturing industry. Dr. Gross is also the founder of companies specializing in proprietary medical devices. He received his degree in medicine from the University of Newcastle Upon Tyne in England. He obtained a Fellowship in Surgery in London and a Canadian Fellowship in Orthopaedic Surgery in Dr. Gross has completed the Rotman Directorship program and is a member of the Institute of Directors. Mr. Derrick Gill Mr. Gill is co-founder and a director of Strategic Concepts and SCI Software, which provides strategic planning, financial modeling and business development consultation to major mining and oil and gas projects in Canada. Mr. Gill's 30-year career has included executive roles at Voisey's Bay Nickel, Diamond Fields Resources and Bristol Communications. Mr. Gill received his undergraduate degree in business administration from Memorial University. Audit Committee Oversight At no time since SpinCo's incorporation on February 4, 2016 have any recommendations by the Audit Committee respecting the appointment and/or compensation of SpinCo's external auditors not been adopted by the SpinCo Board. Reliance on Certain Exemptions Since its incorporation on February 4, 2016, SpinCo has not relied on exemptions in relation to "De Minimis Nonaudit Services" or any exemption provided by Part 8 of NI Pre-Approval Policies and Procedures The Audit Committee will adopt specific policies and procedures for the engagement of non-audit services as described under the heading "External Auditors" in SpinCo's Audit Committee Charter. H-58

329 External Auditor Service Fees Since SpinCo's incorporation on February 4, 2016, audit fees of $1,000 have been billed to SpinCo by its auditor, PricewaterhouseCoopers LLP, Chartered Accountants Exemption SpinCo is relying upon the exemption in section 6.1 of NI Corporate Governance National Instrument Disclosure of Corporate Governance Practices ("NI ") requires issuers to disclose the corporate governance practices that they have adopted according to guidance provided pursuant to National Policy Corporate Governance Guidelines ("NP "). The SpinCo Board believes that good corporate governance improves corporate performance and benefits all shareholders. The Canadian Securities Administrators (the "CSA") have adopted NP , which provides nonprescriptive guidelines on corporate governance practices for reporting issuers. In addition, the CSA have implemented NI , which prescribes certain disclosure by reporting issuers of their corporate governance practices. This section sets out SpinCo's approach to corporate governance and addresses SpinCo's compliance with NI Board of Directors Directors are considered to be "independent" if they have no direct or indirect material relationship with SpinCo. A "material relationship" is a relationship which could, in the view of the SpinCo Board, be reasonably expected to interfere with the exercise of a director's independent judgment. Upon to completion of the Transaction, the SpinCo Board will consist of three directors, of whom two will be independent. Messrs. Gross and Gill will be independent directors. Wade K. Dawe, who is the current sole director of SpinCo, will also be the Chairman and Chief Executive Officer of SpinCo. As an officer of SpinCo, Mr. Dawe will not be independent directors. Other Directorships Certain current and proposed directors of SpinCo are directors of other reporting issuers as described in the following table: Other Reporting Issuer Experience Name Reporting Issuer Name of Trading Market Position From To Wade Dawe Fortune Bay Corp. TSX Chairman and CEO March 2014 Present Brigus Gold Corp. (formerly Linear Gold Corp.) (predecessor company to Fortune Bay Corp.) TSX Chairman and CEO June 2010 March 2014 NWest EnergyCorp. TSXV Director January 2008 June 2013 Metallum Resources Inc. TSXV Director August 2013 Present ImmunoVaccine Inc. TSX Director October 2007 April 2014 September 2014 Present H-59

330 Stockport Exploration Inc. (formerly Linear Metals Corporation) TSX Chairman and Director November 2004 Present Michael Gross Fortune Bay Corp. TSX Director May 2014 Present Biosign Technologies Inc. TSXV CEO, Chairman and Director Brigus Gold Corp. (formerly Linear Gold Corp.) (predecessor company to Fortune Bay Corp.) Stockport Exploration Inc. (formerly Linear Metals Corporation) August 2013 Present TSX Director June 2010 March 2014 TSXV Director April, 2006 May 2011 Derrick Gill Fortune Bay Corp. TSX Director May 2014 Present Jet Metal Corp. (formerly Crosshair Energy) Brigus Gold Corp. (formerly Linear Gold Corp.) (predecessor company to Fortune Bay Corp.) TSXV Director May 2008 September 2013 TSX Director June 2010 March 2014 Orientation and Continuing Education Given that SpinCo was only recently incorporated, SpinCo has not yet established a formal orientation policy for new SpinCo Board members. However, the SpinCo Board will ensure that new directors are provided with access to the policies of the SpinCo Board and other relevant corporate and business information. Directors will also be kept informed as to matters impacting, or which may impact, SpinCo's operations through regular communications from management and reports and presentations given by management and employees at SpinCo Board meetings. The current and proposed directors of SpinCo, who are experienced in boardroom procedures and corporate governance and have a good understanding of SpinCo's business, will also be available to any new directors to provide information regarding SpinCo's business and to answer any questions new directors may have. Ethical Business Conduct The SpinCo Board will adopt a written Code of Business Conduct and Ethics (the "Code"), which is attached to this Appendix H as Schedule 7 and will be filed under SpinCo's profile on SEDAR at following completion of the Transaction. The purpose of the Code is, among other things, to: (a) promote the avoidance of conflicts of interest; (b) promote full, fair, accurate, timely and understandable disclosure; (c) promote compliance with laws and regulations applicable to SpinCo; (d) promote accountability for adherence to the Code; and (e) foster a culture of honesty and accountability. Moreover, pursuant to the Code, SpinCo personnel are encouraged to report violations of the Code in accordance with the procedures set forth in the Code and are afforded protection from retribution as a result of any such disclosure. In addition, the SpinCo Board has determined that the fiduciary obligations placed on directors pursuant to SpinCo Board governing statute and the common law restrictions, which limit the participation of directors in SpinCo Board decisions in which the director has an interest will be sufficient to ensure that the SpinCo Board operates independently of management and in the best interests of SpinCo. Nomination of Directors The SpinCo Board does not have a formal process for identifying new candidates for SpinCo Board nomination at this time. The SpinCo Board will consider its size each year when it considers the number of directors to H-60

331 recommend to the shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the SpinCo Board's duties effectively and to maintain a diversity of views and experience. Prior to their standing for election, new nominees to the SpinCo Board will be reviewed by the entire SpinCo Board. The Nominations and Compensation Committee will have the responsibility of making recommendations to the SpinCo Board with respect to the new nominees and for assessing directors on an on-going basis. Compensation Committee The Nominations and Compensation Committee will review and make recommendations to the SpinCo Board on the compensation packages for the CEO and other senior officers, as well as evaluating annually the performance of the CEO. The Nominations and Compensation Committee will meet at least annually to discuss compensation issues but will also meet from time to time as necessary. In addition, the SpinCo Board will review the adequacy and form of compensation for directors and officers on a regular basis. This review will be completed with reference to each individual corporate officer's performance, SpinCo overall performance and comparable compensation paid to similarly-situated directors and officers in comparable companies. Other Board Committees Other than the Audit Committee and the Nominations and Compensation Committee, it is not anticipated that SpinCo will have any additional board committees immediately following the completion of the Transaction. The SpinCo Board may, however, establish additional committees after the completion of the Transaction, depending on the needs of SpinCo. Assessment The SpinCo Board proposes to assess, at least annually, the effectiveness of the SpinCo Board as a whole, the committees of the SpinCo Board and the contribution of individual directors, including considering the appropriate size of the SpinCo Board. RISK FACTORS An investment in SpinCo Shares, as well as SpinCo's prospects is highly speculative due to the high-risk nature of its business and the present stage of its development. Shareholders of SpinCo may lose their entire investment. The risks described below are not the only ones facing SpinCo. Additional risks not currently known to SpinCo, or that SpinCo currently deems immaterial, may also impair SpinCo's operations. If any of the following risks actually occur, SpinCo's business, financial condition and operating results could be adversely affected. Fortune Shareholders should consult with their professional advisors to assess the Arrangement and their resulting investment in SpinCo. In evaluating SpinCo and its business, and whether to vote in favor of the Arrangement, Fortune Shareholders should carefully consider, in addition to the other information contained in the Circular and this Appendix H, the risk factors which follow, as well as the risks associated with the Arrangement (see in the Circular, "The Transaction The Arrangement Risks Associated with the Transaction"). Those risk factors may not be a definitive list of all risk factors associated with the Transaction, an investment in SpinCo or in connection with SpinCo's business and operations. Listing of SpinCo Shares The SpinCo Shares are not currently listed on any stock exchange. Although SpinCo has made an application for listing of the SpinCo Shares on the TSXV, there is no assurance when, or if, the SpinCo Shares will be listed on a stock exchange. Until the SpinCo Shares are listed on a stock exchange, shareholders of SpinCo may not be able to H-61

332 sell their SpinCo Shares. Even if a listing is obtained, ownership of SpinCo Shares will involve a high degree of risk. Qualification under the Tax Act for a Registered Plan If the SpinCo Shares are not listed on a designated stock exchange in Canada before the due date for SpinCo's first income tax return, or if SpinCo does not otherwise satisfy the conditions in the Tax Act to be a "public corporation", the SpinCo Shares will not be considered to be a qualified investment for a Registered Plan from their date of issue. Where a Registered Plan acquires a SpinCo Share in circumstances where the SpinCo Share is not a qualified investment under the Tax Act for the Registered Plan, adverse tax consequences may arise for the Registered Plan and the annuitant under the Registered Plan, including that the Registered Plan may become subject to penalty taxes, the annuitant of such Registered Plan may be deemed to have received income therefrom or be subject to a penalty tax or, in the case of a registered education savings plan, such plan may have its tax exempt status revoked. Limited Business History SpinCo has a short history of operations and has no history of earnings. The likelihood of success of SpinCo must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. SpinCo has limited financial resources and there is no assurance that funding over and above the initial cash subscription amount will be available to it when needed. There is also no assurance that SpinCo can generate revenues, operate profitably, or provide a return on investment, or that it will successfully implement its plans. Unknown Environmental Risks for Past Activities Exploration and mining operations incur risks of releases to soil, surface water and groundwater of metals, chemicals, fuels, liquids having acidic properties and other contaminants. In recent years, regulatory requirements and improved technology have significantly reduced those risks. However, those risks have not been eliminated, and the risk of environmental contamination from present and past exploration or mining activities exists for mining companies. Companies may be liable for environmental contamination and natural resource damages relating to properties that they currently own or operate or at which environmental contamination occurred while or before they owned or operated the properties. No assurance can be given that potential liabilities for such contamination or damages caused by past activities at the Fortune Mineral Properties do not exist. Indemnified Liability Risk Pursuant to the Transaction Agreement, SpinCo has covenanted and agreed to indemnify Fortune and Kneat from all losses suffered or incurred by as a result of or arising directly or indirectly out of or in connection with SpinCo Assets or SpinCo Liabilities. Any liability of Fortune for Tax cannot be determined for certain at this time because Fortune' tax liability will depend on the fair market value of the SpinCo Shares on the Arrangement Effective Date and other factors including, but not limited to, the other deductions or credits available to Fortune such as loss carry forwards in the taxation year of Fortune that includes the distribution of the SpinCo Shares. A successful indemnification claim made by Fortune or Kneat against SpinCo pursuant to the Transaction Agreement could have a material adverse effect on SpinCo. Acquisitions and Joint Ventures SpinCo will evaluate from time to time opportunities to acquire and joint venture mining assets and businesses. These acquisitions and joint ventures may be significant in size, may change the scale of SpinCo's business and may expose it to new geographic, political, operating, financial and geological risks. SpinCo's success in its acquisition and joint venture activities will depend on its ability to identify suitable acquisition and joint venture candidates and partners, acquire or joint venture them on acceptable terms and integrate their operations H-62

333 successfully with those of SpinCo. Any acquisitions or joint ventures would be accompanied by risks, such as the difficulty of assimilating the operations and personnel of any acquired companies; the potential disruption of SpinCo's ongoing business; the inability of management to maximize the financial and strategic position of SpinCo through the successful incorporation of acquired assets and businesses or joint ventures; additional expenses associated with amortization of acquired intangible assets; the maintenance of uniform standards, controls, procedures and policies; the impairment of relationships with employees, customers and contractors as a result of any integration of new management personnel; dilution of SpinCo's present shareholders or of its interests in its subsidiaries or assets as a result of the issuance of shares to pay for acquisitions or the decision to grant earning or other interests to a joint venture partner; and the potential unknown liabilities associated with acquired assets and businesses. There can be no assurance that SpinCo would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions or joint ventures. There may be no right for shareholders to evaluate the merits or risks of any future acquisition or joint venture undertaken except as required by applicable laws and regulations. Uncertainty of Mineral Resource Estimates Mineral resource figures are only estimates. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. While SpinCo believes that the mineral resource estimates included are established and reflect management's best estimates, the estimating of mineral resources is a subjective process and the accuracy of mineral resource estimates is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information. There is significant uncertainty in any mineral resource estimate and the actual deposits encountered and the economic viability of a deposit may differ materially from SpinCo's estimates. Estimated mineral resources may have to be re-estimated based on changes in gold prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral resource estimates. Mineral resources are not mineral reserves and there is no assurance that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Economics of Developing Mineral Properties Mineral exploration and development is speculative and involves a high degree of risk. While the discovery of an ore body may result in substantial rewards, few properties which are explored are commercially mineable and ultimately developed into producing mines. There is no assurance that the SpinCo's gold deposits are commercially mineable. Should any mineral resources and reserves exist, substantial expenditures will be required to confirm mineral reserves which are sufficient to commercially mine and to obtain the required environmental approvals and permitting required to commence commercial operations. The decision as to whether a property contains a commercial mineral deposit and should be brought into production will depend upon the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which involves significant expense. This decision will involve consideration and evaluation of several significant factors including, but not limited to: (a) costs of bringing a property into production, including exploration and development work, preparation of production feasibility studies and construction of production facilities; (b) availability and costs of financing; (c) ongoing costs of production; (d) gold prices, which are historically cyclical; (e) environmental compliance regulations and restraints (including potential environmental liabilities associated with historical exploration activities); and (f) political climate and/or governmental regulation and control. Development projects are also subject to the successful completion of engineering studies, issuance of necessary governmental permits, and availability of adequate financing. Development projects have no operating history upon which to base estimates of future cash flow. The ability to sell, and profit from the sale of any eventual mineral production from any property will be subject to the prevailing conditions in the minerals marketplace at the time of sale. The global minerals marketplace is subject to global economic activity and changing attitudes of consumers and other end-users' demand for mineral H-63

334 products. Many of these factors are beyond the control of a mining company and therefore represent a market risk which could impact the long term viability of the company and its operations. Factors Beyond the Control of SpinCo The potential profitability of mineral properties is dependent upon many factors beyond SpinCo's control. For instance, world prices of and markets for minerals are unpredictable, highly volatile, potentially subject to governmental fixing, pegging and/or controls and respond to changes in domestic, international, political, social and economic environments. Another factor is that rates of recovery of minerals from mined ore (assuming that such mineral deposits are known to exist) may vary from the rate experienced in tests and a reduction in the recovery rate will adversely affect profitability and, possibly, the economic viability of a property. Profitability also depends on the costs of operations, including costs of labour, equipment, electricity, environmental compliance or other production inputs. Such costs will fluctuate in ways SpinCo cannot predict and are beyond SpinCo's control, and such fluctuations will impact on profitability and may eliminate profitability altogether. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for development and other costs have become increasingly difficult, if not impossible, to project. These changes and events may materially affect the financial performance of SpinCo. Regulatory Requirements The current or future operations of SpinCo, including development activities and possible commencement of production on its properties, requires permits from various federal and local governmental authorities, and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with the applicable laws, regulations and permits. There can be no assurance that all permits, which SpinCo may require for the development and construction of mining facilities and conduct of mining operations, will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any mining project which SpinCo might undertake. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations. Amendments or changes to current laws, regulations government policies and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on SpinCo and cause increases in costs or require abandonment or delays in the development of new mining properties. The development of mines and related facilities is contingent upon governmental approvals that are complex and time consuming to obtain and which, depending upon the location of the project, involve multiple governmental agencies. The duration and success of such approvals are subject to many variables outside SpinCo's control. Any significant delays in obtaining or renewing such permits or licenses in the future could have a material adverse effect on SpinCo. Insurance SpinCo's business is capital intensive and subject to a number of risks and hazards, including environmental pollution, accidents or spills, industrial and transportation accidents, labour disputes, changes in the regulatory environment, natural phenomena (such as inclement weather conditions, earthquakes, pit wall failures and caveins) and encountering unusual or unexpected geological conditions. Many of the foregoing risks and hazards could H-64

335 result in damage to, or destruction of: SpinCo's mineral properties or future processing facilities, personal injury or death, environmental damage, delays in or interruption of or cessation of their exploration or development activities, delay in or inability to receive regulatory approvals to transport their gold concentrates, or costs, monetary losses and potential legal liability and adverse governmental action. SpinCo may be subject to liability or sustain loss for certain risks and hazards against which they do not or cannot insure or which it may reasonably elect not to insure because of the cost. This lack of insurance coverage could result in material economic harm to SpinCo. Environmental Risks and Hazards All phases of SpinCo's operations are subject to environmental regulation in the jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the general, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect SpinCo's operations. Environmental hazards may exist on the properties which are unknown to SpinCo at present and which have been caused by previous or existing owners or operators of the properties. Reclamation costs are uncertain and planned expenditures estimated by management may differ from the actual expenditures required. SpinCo is not insured against most environmental risks. Insurance against environmental risks (including potential liability for pollution and other hazards as a result of the disposal of waste products occurring from exploration and production) has not been generally available to companies within the industry. SpinCo will periodically evaluate the cost and coverage of the insurance against certain environmental risks that is available to determine if it would be appropriate to obtain such insurance. Without such insurance, and if SpinCo becomes subject to environmental liabilities, the payment of such liabilities would reduce or eliminate its available funds or could exceed the funds SpinCo has to pay such liabilities and result in bankruptcy. Should SpinCo be unable to fund fully the remedial cost of an environmental problem, SpinCo might be required to enter into interim compliance measures pending completion of the required remedy. Climate Change Legislations A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on SpinCo, its venture partners and its suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact SpinCo's ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, SpinCo cannot predict how legislation and regulation will affect its financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by SpinCo or other companies in SpinCo's industry could harm its reputation. The potential physical impacts of climate change on SpinCo's operations are highly uncertain, and would be particular to the geographic circumstances in areas in which SpinCo will operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of SpinCo's operations. Costs of Land Reclamation Risk It is difficult to determine the exact amounts which will be required to complete all land reclamation activities in connection with the properties in which SpinCo holds an interest. Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine. Accordingly, it may be necessary to revise planned expenditures and operating plans in order to H-65

336 fund reclamation activities. Such costs may have a material adverse impact upon the financial condition and results of operations of SpinCo. No Assurance of Title to Property There may be challenges to title to the mineral properties in which SpinCo holds a material interest. If there are title defects with respect to any properties, SpinCo might be required to compensate other persons or perhaps reduce its interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert management's time from ongoing exploration and development programs. Risk of Amendments to Laws Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on SpinCo and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties. Commodity Prices The price of the SpinCo Shares, SpinCo's financial results and exploration, development and mining activities may in the future be significantly adversely affected by declines in the price of gold or other minerals. The price of gold or other minerals fluctuates widely and is affected by numerous factors beyond SpinCo's control such as the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, the political and economic conditions of major mineral-producing countries throughout the world, and the cost of substitutes, inventory levels and carrying charges. Future serious price declines in the market value of gold or other minerals could cause continued development of and commercial production from SpinCo's properties to be impracticable. Depending on the price of gold and other minerals, cash flow from mining operations may not be sufficient and SpinCo could be forced to discontinue production and may lose its interest in, or may be forced to sell, some of its properties. Economic viability of future production from SpinCo's mining properties, if any, is dependent upon the prices of gold and other minerals. In addition to adversely affecting any reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed. Required Permits and Licences SpinCo's operations will require licenses and permits from various governmental authorities. SpinCo believes that upon completion of the Arrangement, it will hold all necessary licenses and permits under applicable laws and regulations and will be complying in all material respects with the terms of such licenses and permits. However, such licenses and permits are subject to change in various circumstances. There can be no guarantee that SpinCo will be able to obtain or maintain all necessary licenses and permits as are required to explore and develop its properties, commence construction or operation of mining facilities and properties under exploration or development or to maintain continued operations that economically justify the cost. Foreign Countries and Regulatory Requirements Upon completion of the Transaction, SpinCo will have investment in properties and projects located in foreign countries, including Mexico. The carrying values of these properties and SpinCo's ability to advance development plans or bring the projects to production may be adversely affected by whatever political instability and legal and economic uncertainty might exist in such countries. These risks may limit or disrupt SpinCo's projects, restrict the H-66

337 movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization, expropriation or other means without fair compensation. There can be no assurance that industries which are deemed of national or strategic importance in countries in which SpinCo has operations or assets, including mineral exploration, production and development, will not be nationalized. The risk exists that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect on SpinCo. There can be no assurance that SpinCo's assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body. In addition, in the event of a dispute arising from foreign operations, SpinCo may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. SpinCo also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for SpinCo to accurately predict such developments or changes in laws or policy or to the extent to which any such developments or changes may have a material adverse effect on SpinCo's operations. Acquisitions and Integration From time to time, it can be expected that SpinCo will examine opportunities to acquire additional exploration and/or mining assets and businesses. Any acquisition that SpinCo may choose to complete may be of a significant size, may change the scale of SpinCo's business and operations, and may expose SpinCo to new geographic, political, operating, financial and geological risks. SpinCo's success in its acquisition activities depends upon its ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of SpinCo. Any acquisitions would be accompanied by risks. In the event that SpinCo chooses to raise debt capital to finance any such acquisitions, SpinCo's leverage will be increased. If SpinCo chooses to use equity as consideration for such acquisitions, existing shareholders may suffer dilution. Alternatively, SpinCo may choose to finance any such acquisitions with its existing resources. There can be no assurance that SpinCo would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions. Operation in Highly Competitive Industry Upon completion of the Transaction, SpinCo will compete with other developmental resource companies, which have similar operations, and many competitors have operations, financial resources, and industry experience greater than SpinCo. SpinCo may encounter increasing competition from other mining companies in its efforts to acquire mineral properties and hire experienced resource industry professionals. Increased competition in its business could adversely affect its ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future. There is a limited supply of desirable mineral lands available for acquisition, claim staking or leasing in the areas where SpinCo may contemplate expanding its operations and conducting exploration activities. Many participants are engaged in the mining business, including large, established mining companies. Accordingly, there can be no assurance that SpinCo will be able to compete successfully for new mining properties. Competition for Recruitment and Retention of Qualified Personnel SpinCo will compete with other exploration companies, many of which have greater financial resources than SpinCo or are further in their development, for the recruitment and retention of qualified employees and other personnel. Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs and supplies. If SpinCo requires and is unsuccessful in acquiring additional personnel or other exploration resources, it will not be able to grow at the rate it desires or at all. Internal Controls H-67

338 Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. SpinCo has a very limited history of operations and has not made any assessment as to the effectiveness of its internal controls. Though SpinCo intends to put into place a system of internal controls appropriate for its size, and reflective of its level of operations, there are limited internal controls currently in place. Conflicts of Interest Some of the directors and officers of SpinCo are directors and officers of other companies, some of which are in the same business as SpinCo. Some of SpinCo's directors and officers will continue to pursue the acquisition, exploration and, if warranted, the development of mineral resource properties on their own behalf and on behalf of other companies, and situations may arise where they will be in direct competition with SpinCo. SpinCo's directors and officers are required by law to act in the best interests of SpinCo. They may have the same obligations to the other companies in respect of which they act as directors and officers. Discharge of their obligations to SpinCo may result in a breach of their obligations to the other companies and, in certain circumstances, this could expose SpinCo to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of SpinCo. Such conflicting legal obligations may expose SpinCo to liability to others and impair its ability to achieve its business objectives. Influence of Third Party Stakeholders The lands in which SpinCo holds an interest, or the exploration equipment and roads or other means of access which SpinCo intends to utilize in carrying out its work programs or general business mandates, may be subject to interests or claims by third party individuals, groups or companies. In the event that such third parties assert any claims, SpinCo's work programs may be delayed even if such claims are not meritorious. Such delays may result in significant financial loss and loss of opportunity for SpinCo. Fluctuation in Market Value of SpinCo Shares Assuming the SpinCo Shares are listed on an exchange, the market price of the SpinCo Shares, as a publicly traded stock, can be affected by many variables not directly related to the corporate performance of SpinCo, including the market in which it is traded, the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of SpinCo Shares in the future cannot be predicted. The lack of an active public market could have a material adverse effect on the price of SpinCo Shares. SpinCo does not currently intend to pay cash dividends SpinCo currently intends to retain future earnings to finance the operation, development and expansion of its business. SpinCo does not anticipate paying cash dividends on its common shares in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of SpinCo Board and will depend on SpinCo's financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that SpinCo Board considers relevant. Accordingly, investors will only see a return on their investment if the value of SpinCo's securities appreciates. Substantial Number of Authorized but Unissued SpinCo Shares SpinCo has an unlimited number of SpinCo Shares, which may be issued by the SpinCo Board without further action or approval of SpinCo's shareholders. While the SpinCo Board is required to fulfill its fiduciary obligations in connection with the issuance of such shares, SpinCo Shares may be issued in transactions with which not all shareholders agree, and the issuance of such shares will cause dilution to the ownership interests of SpinCo's shareholders. H-68

339 PROMOTERS Fortune took the initiative of founding and organizing SpinCo and its business and operations and, as such, may be considered to be the promoter of SpinCo for the purposes of applicable securities legislation. As at the date of the Circular, Fortune is the sole (100%) shareholder of SpinCo and will transfer the SpinCo Assets to SpinCo as contemplated by the terms of the Arrangement. See in this Appendix H, "General Development of SpinCo's Business", "The Goldfields Project" and "Prior Sales". See also in the Circular, "The Transaction The Arrangement Background to the Transaction", "The Transaction The Arrangement Reasons for the Transaction" and "Information Concerning Fortune". Assuming completion of the Arrangement in accordance with its terms, Fortune Shareholders will hold approximately 100% of the then issued and outstanding SpinCo Shares and Fortune will no longer hold any SpinCo Shares. See in this Appendix H, "Consolidated Capitalization" and see in the Circular, "The Transaction The Arrangement Principal Steps of the Arrangement". As of the date of this Circular and within the ten years prior to the date of this Circular, Fortune has not been subject to: (a) (b) (c) a cease trade order (including any management cease trade order which applied to directors or executive officers of a company, whether or not the person is named in the order); an order similar to a cease trade order; or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days; nor has Fortune been subject to: (a) (b) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision, nor has Fortune become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver manager or trustee appointed to hold its assets. LEGAL PROCEEDINGS AND REGULATORY ACTIONS Legal Proceedings Since incorporation, SpinCo has not been a party to, nor has any of its property been subject to, any legal proceedings and no such proceedings are known by SpinCo to be contemplated. Regulatory Actions SpinCo has not been subject to any penalties or sanctions imposed by a court or regulatory body and has not been party to any settlement agreement entered into before a court or regulatory body, relating to provincial or territorial securities legislation. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Since SpinCo's incorporation, no director, executive officer, or shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of the outstanding SpinCo Shares, or any known associate or affiliate H-69

340 of such person, has or has had any material interest, direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially affect SpinCo other than Fortune in connection with SpinCo's incorporation (see in this Appendix H, "Promoters"), the entering into the Transaction Agreement (see in the Circular, "The Transaction"), and the transfer of the SpinCo Assets to SpinCo in connection with the Arrangement (see in this Appendix H, "General Development of SpinCo's Business"). See also in this Appendix H, "Material Contracts" below. Certain of the directors and officers of Fortune will also be the directors and officers of SpinCo. See in the Circular under the heading "The Transaction The Arrangement", "Background to the Transaction", "Recommendation of the Special Committee and the Fortune Board", "Reasons for the Transaction" and "Fortune Irrevocable Undertakings". AUDITORS, TRANSFER AGENTS AND REGISTRARS Auditor The auditor of SpinCo is PricewaterhouseCoopers LLP, Summit Place, 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, Canada B3J 3P6. Registrar and Transfer Agents The registrar and transfer agent for the SpinCo Shares will be Computershare Investor Services, 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1. MATERIAL CONTRACTS Except for contracts made in the ordinary course of business, the following are the only material contracts entered into by SpinCo since its incorporation: 1. The Transaction Agreement described under "The Transaction The Arrangement The Transaction Agreement"; and 2. SpinCo Stock Option Plan. Copies of the above-noted material contracts may be inspected by Fortune Shareholders at SpinCo's head office located at 1969 Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7 during normal business hours prior to the Meeting, or at the Meeting. INTEREST OF EXPERTS The disclosure regarding the Goldfields Project, SpinCo's material property pursuant to NI , included in this Appendix H under the heading "The Goldfields Project" was extracted from the Goldfields Report and prepared for SpinCo by Mercator, in compliance with NI The Qualified Person responsible for sections 4, 5, 6, 9, 10, 16 and 17, and portions of sections 1, 18 and 19 of the Goldfields Report, is Mr. Stewart Yule, P. Geo., of Mercator. The QP responsible for sections 2, 3, 7, 8, 11, 12, 14, and 15, and portions of sections 1, 18 and 19 of the Goldfields Report, is Mr. Tony Barresi, P. Geo., of Mercator. Mr. Andrew Doolittle, P. Eng., of March is responsible for section 13 and portions of sections 1 and 18 of the Goldfields Report that are related to metallurgical testwork. Each of Messrs. Yule, Barresi and Doolittle is a "Qualified Person" and considered "independent" as both these terms are defined in NI None of the aforementioned persons nor any directors, officers, employees and partners, as applicable, of each of the aforementioned companies and partnerships, is currently expected to be elected, appointed or employed as a director, officer or employee of SpinCo, or any associate or affiliate of SpinCo, or has received or will receive as a result of the Arrangement a direct or indirect interest in a property of SpinCo, or any associate or affiliate thereof. The auditors of SpinCo and the Exploration Properties Business of SpinCo are PricewaterhouseCoopers LLP, Chartered Accountants, 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, B3J 3P6, Canada. H-70

341 PricewaterhouseCoopers LLP audited the financial statements of SpinCo for the period ended March 15, 2015 and audited the combined carve-out financial statements of the Exploration Properties Business of SpinCo for the years ended December 31, 2014 and 2015 and have confirmed that they are independent with respect to SpinCo within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Nova Scotia. A partner at the Irish member firm of the PricewaterhouseCoopers network of firms, holds less than 1% of Kneat Shares. OTHER MATERIAL FACTS There are no other material facts other than as disclosed herein. FINANCIAL STATEMENTS DISCLOSURE See in this Appendix H, "Selected Financial Statements" and Schedules 1, 2, 3 and 5. H-71

342 SCHEDULE 1 AUDITED FINANCIAL STATEMENTS OF CANADA LIMITED FROM INCORPORATION TO MARCH 15,

343 Canada Limited Financial Statements March 15, 2016 (expressed in Canadian dollars)

344 May 13, 2016 Independent Auditor s Report To the Shareholders of Canada Limited We have audited the accompanying financial statements of Canada Limited which comprise the statement of financial position as at March 15, 2016 and the statements of loss and comprehensive loss, changes in equity and cash flows for the period then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP Summit Place, 1601 Lower Water Street, Suite 400, Halifax, Nova Scotia, Canada B3J 3P6 T: , F: PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

345 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Canada Limited as at March 15, 2016 and their financial performance and their cash flows for the period then ended in accordance with International Financial Reporting Standards. Emphasis of matter Without qualifying our opinion, we draw attention to note 1 to the financial statements which describes matters and conditions that indicate the existence of material uncertainties that may cast significant doubt about Canada Limited s ability to continue as a going concern. (signed) PricewaterhouseCoopers LLP Chartered Accountants