GIVING CREDIT TO INNOVATION: THE QUANTIUS STORY - PowerPoint PPT Presentation

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GIVING CREDIT TO INNOVATION: THE QUANTIUS STORY

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  1. GIVING CREDIT TO INNOVATION: THE QUANTIUS STORY

  2. In 1975, 17% of the value of the S&P 500 could be attributed to intangible assets. By 1985, that number jumped to 32%. By 1995, it swelled to 68%. By 2015, 84% of the value of the S&P 500 could be attributed to intangible assets. 2 Source: Intangible Asset Market Value Study, Ocean Tomo, September 2017

  3. In 1975, a young man founded a company built on intangibles. Today, this is what he has to say… “It took time for the investment world to embrace companies built on intangible assets. In the early days, I felt like I was explaining something completely foreign to people. Our business plan involved a different way of looking at assets than investors were used to. They couldn’t imagine what returns we would generate over the long term.” - Bill Gates Source: https://www.gatesnotes.com/Books/Capitalism-Without-Capital 3

  4. He worked all over the world and wanted to build great Canadian companies… In 2015, we came together to take up Bill’s beef. 20+ years in Tech, Consulting and Strategy|Canadian Armed Forces (Afghanistan) | McKinsey She grew and operated tech companies and saw so much capital inefficiency… HASSAN KHANFounder & Chair 25+ years in Financial Leadership and Investing | Lucent | Lavalife | Nulogy| Creative Destruction Lab| Pique Ventures | Ontario Scale-Up Voucher Program | Grand Challenges Canada | CPA, CMA | MBA York University LALLY REMENTILLAPresident & CFO He started an asset-based lender and now wants to see companies grow… 15+ years in Credit Risk, Commercial Banking and Corporate Finance| Bank of Montreal | Sun Life Financial | Bridging Finance LEN KOFMANChief Credit Officer 4

  5. We looked at the Canadian market and this is what we found… 5

  6. THERE IS A LARGE MARKET FOR SME CREDIT AND IT IS SEVERELY UNDERSERVED CANADIAN LANDSCAPE1 LENDING SUPPLY QUANTIUS TARGET MARKET NUMBER OF COMPANIES SOURCE OF CAPITAL EQUITY PARTICIPATION ALL IN COST CAPITAL COMPANY SIZE ~80,000 Canadian SMEs are creditworthy, operating in knowledge-based sectors and face a shortage of efficient debt capital • EQUITY INVESTORS • LARGE • 2,000 • HIGHLY DILUTIVE • 25%+ • TYPICAL NON-BANK LENDERS ~10,000 of these 80,000 creditworthy and growing SMEs are rich in intellectual property and intangible assets • MEDIUM • 20,000 • DILUTIVE • 18-25% • CURRENT MARKET INEFFICIENCY • SMALL • 120,000 • NON-DILUTIVE • 11-17% ~40% of businesses cite lack of financing as the primary obstacle to growth • MICRO • 1,000,000 • BANKS • NON-DILUTIVE • 4-8% Note 1: Micro: <20 Full-time employees (“FTEs”), Small: 20-99 FTEs, Medium: 100-499 FTEs, Large: 499+ FTEs Note 2: BDC 2011 Survey on Financing and Growth of SMEs Sources: Industry Canada, Statistics Canada, Business Development Bank of Canada 6

  7. KNOWLEDGE-BASED SME’s WITH IP rights Outperform • Quantius uses big data technology to identify these IP-rich companies across sectors that include: • Health Technology & Medical Devices • Life Sciences and Biotech • Clean Technology • Agricultural Technology • High Technology • Telecommunications • Digital Media & Entertainment • Aerospace & Defence • Advanced Manufacturing In knowledge-based industries, SMEs owning intellectual property rights… 12% OF THE MARKET IS IP-RICH and have 6X generate as many 30% MORE REVENUE employees1 per employee1 7 Note 1. Compared to non-IP rich SMEs Source: Office of Harmonization for the Internal Market: Intellectual property rights and firm performance in Europe, June 2015; Industry Canada: Survey of SMEs

  8. Banks are still not lending to knowledge-based companies. They cannot get their heads around two things… 1. Complexity 2. Collateral 8

  9. And so, we put a solution together to grow IP-rich companies. In 2016, we launched A commercial finance company that attributes value to both tangible and intangible assets of innovative companies. 9

  10. THIS IS OUR SOLUTION: a SECURED CREDIT Solution THAT Fits the Market Need • Loan characteristics: • Term: 12-48 months • Target loan size: $2-$15M • Seniority: First or second • Security: Tangible assets + IP • Dilution: None • Borrower profile: • Revenue: $5-$50M+ • Normalized EBITDA: $1M+ • Demonstrated revenue growth • Heading towards profitability Provides secured term loans to creditworthy, innovative SMEs MAIN LOAN SOLUTION Managed by an expert credit team • Loan characteristics: • Same as main loan solution • Equity process 80% complete • Not to exceed 20% of loan portfolio • Borrower profile: • Revenue: Min. $1M TTM run rate • Normalized EBITDA: Max. 18 months to positive EBITDA Uses big data analytics to find best assets & insurance to lower loss rates VENTURE DEBT 10

  11. THIS IS HOW WE FILL THE GAP: NON-DILUTIVE GROWTH CAPITAL Quantius wins on speed, flexibility and catering to the needs of a variety of knowledge-based sectors 40% EARLY STAGE VENTURE CAPITAL ROYALTY FINANCE PRIVATE EQUITY PUBLIC MARKET 30% ALTERNATIVE LENDERS MEZZANINE FINANCE YEILD 20% 10% BANK FINANCE 0% $1.5M $3M $7.5M $15M $45M+ AMOUNT OF FINANCE SOUGHT 11

  12. The QUANTIUS EDGE: BIG DATA ANALYTICS OF INTANGIBLE ASSETS Quantius analyzes intangible asset values and quality IP BIG DATA ANALYTICS KNOWLEDGE-BASED SMEs tend to have more global markets & competition identifies and analyzes markets & competition through their IP and intangible assets IP BIG DATA ANALYTICS 12

  13. BORROWERS LOVE US: $150M LOAN DEMAND PIPELINE WITH NO MARKETING THE REFERRAL NETWORK GENERATES SUSTAINABLE DEAL FLOW OF 30-40 LEADS SOURCED MONTHLY EXAMPLES INITIAL QUALIFICATION • X-ray screening equipment and services company • Wearable device manufacturer for occupation health and safety • Industrial IoT provider of metric-based analytics and analytical capabilities to manufacturers 34 COMPANIES $96M DETAILED QUALIFICATION • Original design manufacturer for skin-related applications • Medical imaging innovator with licensor relationships with global medical device leaders • Cloud-based software provider for automotive service industry 8 COMPANIES $36M • Autonomous networking provider for data centre applications • Advanced crop protection compound manufacturer • Cloud-based automotive industry software platform • Follow-on opportunities in existing portfolio companies TERM SHEETS 7 COMPANIES $18M 13

  14. In 2014, the Intellectual Property Office of Singapore launched a S$100M IP financing scheme. In 2016, they announced the first loan under the program. In 2018, they closed the program, after having done only 3 loans . 14

  15. In 2018, members of the Quantius team got on an 8pm call with the IPOS to describe what we do. That night, this is what they had to say… “You guys (Quantius team) built a better model to finance IP. You’re further ahead than us. You lead the way.” - IPOS 15

  16. Be the change you wish to see in the world. Mahatma Gandhi 14

  17. So, let’s talk! 14

  18. CONTACT INFORMATION LALLY REMENTILLA PRESIDENT QUANTIUS INC. Tel: 416 272 8819 Email: lrementilla@quantius.ca  Web:   http://www.quantius.ca A-1 1 Yonge Street, Suite 1801, Toronto, ON, Canada, M5E 1W7

  19. APPENDICES: DISCLAIMER This document is being supplied to you solely for your information and may not be reproduced, further distributed or published in whole or in part by any other person. Neither this document nor any copy of it may be taken or transmitted into or distributed in any jurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of applicable securities law. No representation or warranty, express or implied, is made or given by or on behalf of Quantius Inc. (Quantius) or any of its directors, officers or employees as to the accuracy, completeness or fairness of the information or opinions contained in this document and no responsibility or liability is accepted by any person for such information or opinions. In furnishing this document, Quantius does not undertake or agree to any obligation to provide any person with access to any additional information or to update this document or to correct any inaccuracies in, or omissions from, this document that may become apparent. The information and opinions contained in this document are provided as at the date of this document. The contents of this document are not to be construed as legal, financial or tax advice. Each prospective investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice. This document is neither an offer nor an invitation to invest. Its sole purpose is to assist the reader to whom addressed to gauge the level of potential interest in Quantius and, as such, should be construed as nothing more. No reliance should be had on the information in this document by any person receiving this document with regard to any investment decisions made by such person. This document is confidential, and it may also be legally privileged. It may contain information that is exempt from disclosure. Additionally, it should not be construed as an invitation or inducement to engage in investment activity as the information contained herein should be considered insufficient for the purpose of forming the basis of prudent investment activity. If you are not the addressee or if you have received this document in error, please destroy it and notify the sender This document may contain “forward-looking information” which may include, but is not limited to, statements with respect to the future financial and operating performance of Quantius, its subsidiaries and affiliated companies. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Quantius and/or its subsidiaries and/or its affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; conclusions of economic evaluations and studies; delays in obtaining governmental approvals or financing. Although Quantius has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of the date hereof and Quantius has disclaimed any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. Should you wish to receive further information or material in relation to possible investment opportunities with Quantius, please contact Lally Rementilla at: Quantius Inc., 1 Yonge Street, Suite 1801, Toronto, Ontario, Canada M5E 1W7, lrementilla@quantius.ca. A-2