INTRODUCTION BASIS OF DISCUSSION AND ANALYSIS

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1 Management s Discussion and Analysis (Expressed in Canadian dollars) 360 VOX CORPORATION For the three months ended March 31, 2014 As at May 23, 2014 Management s Discussion & Analysis - Page 1 of 22

2 INTRODUCTION BASIS OF DISCUSSION AND ANALYSIS Management s Discussion and Analysis ( MD&A ) discusses the significant factors affecting the results of operations and financial position of 360 VOX Corporation (the Company ) for the three months ended March 31, 2014 and includes material information up to May 23, Financial data provided has been prepared in accordance with International Financial Reporting Standards (IFRS). All dollar references, unless otherwise stated, are in Canadian dollars. In accordance with its terms of reference, the Audit Committee of the Company s Board of Directors reviews the contents of the MD&A and recommends its approval to the Board of Directors. The Board of Directors approved this MD&A on May 23, Disclosure contained in this MD&A is current to that date, unless otherwise noted. This MD&A should be read in conjunction with the Company s condensed consolidated interim financial statements for the three months ended March 31, 2014 ( Financial Statements ) and the consolidated financial statements for the year ended December 31, FORWARD-LOOKING STATEMENTS This MD&A contains forward-looking statements and information within the meaning of applicable securities legislation. These forward-looking statements reflect management s current expectations, estimates, projections, beliefs and assumptions that were made using information currently available to management. In some cases, forward-looking statements can be identified by terminology such as may, will, expect, plan, anticipate, believe, intend, estimate, predict, forecast, outlook, potential, continue, should, likely, or the negative of these terms or other comparable terminology. In particular, forward-looking statements include statements regarding estimated costs at full build-out and the impact of political or economic instability. Such statements are based on assumptions that management believe are reasonable. These statements are not guarantees of future results and are subject to numerous risks and uncertainties, including the Company s decision on whether to proceed with its projects; the availability of capital to finance growth of its projects; adverse factors generally encountered in the real estate industry; the risks associated with world events, including war, terrorism, international conflicts, natural disasters and extreme weather conditions; general economic conditions, such as supply and demand changes for resort properties; competitive conditions in the resort industry; changes to permitting and entitlements; changes to government regulation; the impact of newly adopted accounting principles on the Company s accounting policies; currency fluctuations; and other risks and factors described from time to time in the documents filed by the Company with the security regulators in Canada. Although management believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve assumptions, known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. The Company undertakes no obligation to publicly revise or update any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are made as of the date hereof and are expressly qualified in their entirety by the cautionary statements in this MD&A. Management s Discussion & Analysis - Page 2 of 22

3 OBJECTIVES AND FINANCIAL HIGHLIGHTS OVERVIEW OF THE BUSINESS The Company is a publicly traded company, incorporated under the laws of Ontario and listed on the TSX Venture Exchange under the symbol VOX. The Company is engaged in four separate business lines, hospitality and asset management, sales and marketing, real estate developments and developments in Cuba. HOSPITALITY AND ASSET MANAGEMENT Through its wholly-owned subsidiaries 360 VOX Asset Management Inc., 360 VOX GP, and 360 VOX LLC, the Company manages hotel, resort, residential and commercial properties. TIMELINE On January 4, 2012, the Company incorporated 360 VOX Asset Management Inc., and entered into a five-year agreement to manage a portfolio of hotels owned by affiliates of Ivanhoe Cambridge. On February 20, 2013, May 9, 2013, and October 4, 2013, the Company received notice from the hotel owners, that the asset management agreement for the Hilton Toronto Downtown, Hilton Toronto Airport, and the Fairmont Chateau Laurier (referred to below) will be terminated effective April 21, 2013, July 7, 2013, and December 4, 2013, respectively, due to the sale of the hotels. On May 13, 2013, the Company acquired its hospitality division by entering into certain management contracts and brand rights (see recent developments). On May 31, 2013, the Company signed an agreement to manage the Seven Canyons Golf Club in Arizona. On September 24, 2013, the Company entered into an agreement to jointly manage the construction and operation of an urban resort in Vancouver, BC upon completion of the development expected in 2016 (see Real Estate Developments on page 6). On November 12, 2013, the Company entered into a strategic business relationship with LeoNovus Inc. ( LeoNovus ) to leverage LeoNovus products and services in the hospitality industry. On December 16, 2013, the Company entered into an operations agreement to manage the Clearpoint Resort upon completion of the development (see Real Estate Developments on page 6). RECENT DEVELOPMENTS Asset management On January 4, 2012, the Company, through a newly incorporated wholly-owned subsidiary, 360 VOX Asset Management Inc., entered into a five-year asset management agreement for a portfolio of hotels owned by affiliates of Ivanhoe Cambridge. The properties that were originally under management are the Fairmont Vancouver (Vancouver, B.C.), the Fairmont Empress (Victoria, B.C.), the Fairmont Royal York (Toronto, Ontario), the Fairmont Chateau Laurier (Ottawa, Ontario), the Fairmont Queen Elizabeth (Montreal, Quebec), the Fairmont Chateau Frontenac (Quebec city, Quebec), the Fairmont Olympic (Seattle, Washington), the Fairmont Washington (Washington, D.C.), the Fairmont Royal Pavilion (St. James, Barbados), the Hilton Airport (Toronto, Ontario), and the Hilton Downtown (Toronto, Ontario). Hospitality On May 13, 2013, the Company entered into a series of definitive agreements with members of Enchantment Group, pursuant to which, among other things, the Company: o Manages the Enchantment Resort, Mii amo and the Tides Inn for an initial term of 12 years; o acquired an exclusive license to use the trademarks Enchantment and Mii amo and related marks in connection with the operation, marketing and promotion of first class destination spa resorts; o will prepare a plan to re-develop the Tides Inn; and o acquired a conditional option to purchase an interest in the Tides Resort and Tides Inn ( the conditional options ). Management s Discussion & Analysis - Page 3 of 22

4 Consideration for the transactions included $1,033,270 of cash and 8,750,000 common shares of 360 VOX with a future obligation to issue additional common shares of 360 VOX valued at US$1,000,000 if the conditional option is not exercised and assume 50% of the Tides losses for a period of up to three years commencing on November 13, Technology partnership for hospitality market On November 12, 2013, the Company entered into a strategic business relationship with LeoNovus Inc. ( LeoNovus ) to leverage LeoNovus products and services in the hospitality industry. The LeoNovus product delivers a full suite of in-room infotainment and leverages LeoNovus proprietary Dark Core processing technologies to optimize an internal network for purposes of adding new revenue streams from cloud services. PERFORMANCE Hospitality and asset management Three months ended March March Segment revenue $ 1,708,233 $ 1,690,624 % of total company revenue 11% 12% Operating expenses (excluding amortization) (657,691) (547,408) % of segment revenue 39% 32% Reportable segment profit (EBITDA) 1,050,542 1,143,216 % of segment revenue 61% 68% * E (L) BITDA = Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization The asset management revenue decreased as two hotels were sold in the latter part of 2013 and the Company was not kept as the asset manager after the sale. The loss in revenue was offset by the revenue from the hospitality division which was acquired in May of Operating expenses did not change significantly for the asset management business and in 2014, operating expenses also include those of the hospitality division, explaining the increase in operating costs and the resulting reduction in EBITDA, period over period. SALES AND MARKETING Through its wholly-owned subsidiaries the Company operates Sotheby s International Realty Canada, Sotheby s International Realty Quebec, and Blueprint Global Marketing Ltd. The Company is in the business of listing, marketing and selling real estate, including, but not limited to sales and marketing of condominiums, attached and detached homes, condominium developments and resort properties, both in the residential resale market and stand-alone projects. Blueprint Global Marketing also markets real estate internationally, working with the Sotheby s International Realty network of franchised offices throughout the world to assist in the listing and selling of international developments. TIMELINE On November 15, 2012 the Company acquired the business related to Sotheby s International Realty Canada. In 2013, the Company entered into a number of exclusive listing and marketing agreements for large scale developments in Canada, comprising over 1,100 properties for sale. On September 6, 2013, the Company incorporated 1744 Global Services Inc. to provide wealth management services. On December 16, 2013, the Company entered into a cooperation agreement to act as the exclusive sales and marketing agent for the Clearpoint Resort (see Real Estate Developments on page 6). Management s Discussion & Analysis - Page 4 of 22

5 RECENT DEVELOPMENTS Sotheby s International Realty Canada On November 15, 2012, the Company acquired a group of real estate businesses in Canada known as Sotheby s International Realty Canada, Sotheby s International Realty Quebec, and Blueprint Global Marketing (collectively, the Sotheby s Entities ). Pursuant to the terms of a definitive share purchase agreement, the Company acquired the operating businesses of Sotheby s International Realty Canada, and owns Blueprint Global Marketing Ltd., Blueprint Real Estate Project Marketing India Private Limited and Blueprint Global Marketing Inc. Pursuant to the terms of the share purchase agreement, the sellers received as consideration: o $3,150,000 in cash, subject to certain working capital adjustments to be calculated as of March 31, 2013, a portion of which was placed in escrow at closing for working capital and indemnification purposes. The final working capital adjustment totalled $700,203 and was paid in July 2013; o million Class A common shares of the Company, which common shares are subject to a lock-up agreement for up to 12 months; and o after closing, $900,000 in cash and 10.5 million Class A common shares of the Company in the form of earn out payments based on the net earnings of Sotheby s International Realty Canada and Sotheby s International Realty Quebec meeting certain thresholds in fiscal 2013 and In connection with the closing of the transaction, the Company entered into employment and non-competition agreements with Ross McCredie and other senior management of the businesses acquired, and non-competition agreements with certain of the other sellers and their principals. Ross McCredie is the founder and President and Chief Executive Officer for the group of businesses, responsible for the overall strategic direction, sales management and coordination of the Sotheby's International Realty Canada, Sotheby s International Realty Quebec and Blueprint Global Marketing client service platforms. Pursuant to the terms of Ross McCredie's employment agreement, Ross has been appointed as Chief Operating Officer of the Company and has been appointed to the Board of Directors of the Company. At closing, the Company has undertaken to indemnify certain guarantors in respect of obligations under the franchise agreements of Sotheby s International Realty Canada and Quebec. Listing and marketing agreements During the period to November 25, 2013, the Company entered into a number of exclusive listing and marketing agreements to sell and market over 1,100 properties in Niagara On The Lake, Toronto and Quebec City. Wealth management services On September 6, 2013, the Company incorporated 1744 Global Services Inc. ( 1744 ) to provide wealth management services including real estate, financial services, insurance and tangible asset management. Management s Discussion & Analysis - Page 5 of 22

6 PERFORMANCE Three months ended Sales and marketing March March Segment revenue $ 11,413,773 $ 11,561,017 % of total company revenue 73% 83% Commission and other related agent costs (9,256,007) (7,739,255) % of segment revenue 81% 67% Operating expenses (excluding amortization and w rite-off) (2,730,056) (2,199,109) % of segment revenue 24% 19% Reportable segment (loss) profit (E (L) BITDA) (572,290) 1,622,653 % of segment revenue 5% -14% The make-up of sales and marketing revenue changed in 2014 as compared to In 2013, approximately $3.4 million in revenue was related to revenue earned from sales and marketing of large-scale development projects with the balance earned from real estate re-sales. The large scale development sales and marketing revenue does not have a corresponding commission cost as the commission is usually born directly by the developer. Hence, when comparing commission costs to revenue, it is important to remove the large scale development sales and marketing revenue from the calculation. In 2014, the revenue earned was mostly revenue earned from the resale business. Hence, the ratio of commission expense in 2014 is approximately 9%, while the ratio in 2013 is 10% (after removing the large scale development sales and marketing revenue). Operating expenses increased in 2014 as compared to the same period in 2013 due in large part to the following: 1. Operating expenses now include the costs of the wealth management business ($250,000) which was not in place in This business has not yet commenced earning revenue; 2. Growth initiatives in the real estate re-sale business has caused an increase in rental and other expenses as new offices are expanded or opened; and 3. A general increase in staffing costs. The overall segment loss as compared to income in 2013 is explained by the fact that no significant large-scale development project revenue was earned in 2014, which historically has had a significant higher profit margin than the real-estate resale business. The sales and marketing business in general is a cyclical business and is also dependent on market conditions. REAL ESTATE DEVELOPMENTS Through its wholly-owned subsidiaries, 360 VOX Developments Inc., 360 VOX (France) Inc., and 360 VOX (Croatia) Inc., the Company owns a 45% interest in Sotarbat 360, a French entity established for the development of a ski-in and ski-out resort in Edenarc 1800, and a 69.06% interest in Clearpoint Resort Limited, a development project in Croatia. In addition, through its wholly-owned subsidiary the Company has advanced funds to First Bay Resort Limited (Malta) to finance the development of a second project in Croatia. TIMELINE On July 3, 2012, the Company acquired the outstanding shares of 360 VOX (France) Inc. not owned by the Company for a consideration including 800,000 Class A common shares and 500,000 Class A common share purchase warrants. As a result of the transaction, the Company now has a direct 45% interest (previously 36% net interest) in Sotarbat 360 SA. On June 27, 2012 and October 19, 2012, the Company agreed to advance additional amounts to the Croatian resorts on the same terms as the financing announced on October 26, Management s Discussion & Analysis - Page 6 of 22

7 On November 5, 2012, the Company completed the purchase of an outstanding secured loan to Clearpoint Resort Limited from Mosaic Finance (Luxembourg) SARL. In May and June of 2013, the Company agreed to advance additional amounts to the Croatian resorts on the same terms as the previously announced financings. On September 19, 2013, the Company entered into an urban design and master planning agreement with Beijing Chief Orient Investment Management Co. Ltd. to provide envisioning services, master planning services and an economic analysis for a new community development in Miyun County, Beijing. On September 24, 2013, the Company, together with Paragon Development Ltd. and Dundee Corporation ( Dundee ) have signed certain agreements to design, develop and operate a ~$535 million world class urban resort adjacent to B.C. Place stadium in Vancouver. On December 16, 2013, the Company completed a transaction pursuant to which it converted the equivalent of 2,055,123 ($3,011,783) in loans owing by Clearpoint Resort Limited, into equity and subscribed for additional shares for 633,269 ($928,232) for an initial equity position of 65.15%. To the period ended May 23, 2014, the Company invested an additional 513,500 ($785,289) in Clearpoint Resort Limited bringing its interest in the entity to 69.06%. RECENT DEVELOPMENTS 360 VOX France On July 3, 2012, the Company acquired the outstanding shares of 360 VOX (France) Inc. not owned by the Company. Pursuant to the terms of the share purchase agreement, the consideration transferred as part of the acquisition was as follows: o 800,000 Class A common shares of the Company; o 500,000 Class A common share purchase warrants exercisable until the fifth anniversary of closing at $0.20 per share and vesting over a period of three years following closing. o In addition to the consideration transferred, the Company entered into a consulting agreement with the former owner of the outstanding shares and issued 100,000 share options to its principal. Croatian resort advances Pursuant to the terms of the loan agreements, the Company, through its wholly-owned subsidiary 360 VOX (Croatia) Inc., agreed to advance $2,038,979 to First Bay Resorts Limited (Malta) and $3,011,783 to Clearpoint Resort Limited (Malta) at Canadian prime plus 4% (together the Resort Companies). The loans are secured by Dalmi d.o.o. with a pledge of its assets and limited recourse guarantees from the shareholders of Dalmi d.o.o., who have pledged their shares. In connection with entering into the loan agreements, the Resort Companies and their subsidiaries, and Dalmi d.o.o. and its shareholders, have agreed to provide the Company access to information on the Resort Companies and their subsidiaries, assets and business and to exclusivity covenants in favour of the Company, including covenants not to solicit or provide information to any other person and to terminate any ongoing discussions with respect to any possible acquisition or strategic partnership involving the Resort Companies or their subsidiaries. In addition to the existing security and guarantees, a wholly-owned indirect subsidiary of First Bay Resorts Limited will guarantee the First Bay Resort Limited s obligations under the loan and grant a mortgage in favour of the Company over real property owned and property to be acquired using proceeds from the additional advances. The loan agreements include customary covenants and representations and warranties on the part of the Resort Companies. The advances together with the interest thereon are repayable 90 days following notice from the Company to the relevant borrower that it has determined not to proceed with any further investment in the Resort Companies, and the loans may be repaid in full or in part at any time by the borrower. If the Company decides to proceed, the principal amount of the loans will be converted into equity in the Resort Companies, on such Management s Discussion & Analysis - Page 7 of 22

8 terms as may be agreed between the Company and the Resort Companies in connection with any such investment. The loans are also repayable upon an event of default, which includes a cross default clause. On December 16, 2013, the Company completed a transaction in which it converted $3,011,783 in loans owing, representing the entire amount previously advanced to Clearpoint Resort Limited, into equity and subscribed for additional shares of 633,269 ($928,232). As a result of the transaction together with an additional investment of 513,500 ($785,289) subsequent to December 31, 2013, the Company now holds a 69.06% interest in Clearpoint Resort Limited. Miyun County, Beijing On September 26, 2013, the Company entered into an urban design and master planning agreement with Beijing Chief Orient Investment Management Co. Ltd. Under the terms of the definitive agreement, 360 VOX will, among other things, provide envisioning services, master planning services and economic analysis services for a new community development in Miyun County, Beijing. This community is expected to accommodate over 250,000 people living, working, studying and training. The initial services will include the creation of a vision for a Master Complex Development plan, and the preparation of a master plan for urban neighborhoods, a science and technology park, an assisted living project, an education park, a sports and recreational facility, commercial and residential areas, a hotel and meetings & conference facilities, tourism amenities and luxury real estate. Vancouver urban resort On September 24, 2013, the Company, Paragon Development Ltd. ( Paragon ) and Dundee have signed certain agreements to design, develop and operate a ~$535 million world-class urban resort adjacent to B.C. Place stadium. The new development will feature two luxury resort hotels, conference centre, restaurants, retail space and a new home for the existing Edgewater Casino consistent with the City of Vancouver s rezoning approval in the Fall of The resort is expected to open at the end of Dundee, the largest shareholder of the Company, will assist with financing, while the Company will be responsible for management, construction and development of the urban resort complex. Paragon will lend their gaming expertise and develop an optimal mix of amenities and services for the new complex. This new approximately 675,000 sq.ft. urban resort development will create an estimated 2,000 new and ongoing jobs associated with the operations of the hotels, conference center, restaurants, fitness center, spa and other facilities and services. Construction and development work will also create approximately 4,500 local jobs. Once opened, the new facility will generate an estimated $180M annually for the local economy. This will be supplemented by an estimated $87M in annual visitor spending generated outside the resort. The new multi-use urban resort will create an animated streetscape and vibrant outdoor gathering space for the community and visitors; and convenient connections between Yaletown, BC Place and downtown Vancouver through improved pedestrian walkways. This will be Western Canada s first and only urban resort with hotel, restaurant, lounge, casino and meeting space that is adjacent to a stadium B.C. Place. It will help create an urban entertainment centre for local residents and visitors, maximize event potential for the new B.C. Place stadium, and generate long-term economic benefits for the city and province through construction, hospitality and entertainment, tourism and conference opportunities. (Proposed Vancouver Urban Resort High Level Economic Impact Assessment, Deloitte, September 2013). The resort will be built on land belonging to B.C. Pavilion Corporation ( PavCo ). In March 2013, Paragon and PavCo signed a Master Development Agreement and proposed ground lease outlining the terms of the development, including a 70-year term and a $3 million annual lease rate based on the current scale and configuration of the project. Management s Discussion & Analysis - Page 8 of 22

9 EXISTING PROJECTS The following summarizes the Company s current major property under development and the estimated total construction costs (excluding financing costs) at full build-out of the property: Property Site area (m²) / (ft²) Development plan Estimated cost at full build-out Edenarc 1800, France 25,000 / 269,097 Ski-in and ski-out development in the ski area of Edenarc 1800 in the Savoy region of the French Alps and totalling $120 million (EUR 85 million) approximately 325 units. This resort will provide 4 star services and is adjacent to an 18-hole golf course. Average gross sales price to date on Phase 1 and Phase 2 of the project has been approximately EUR 5,000/m 2. Urban Resort, Vancouver, BC 62,710 / 675,000 The development will feature two luxury resort hotels, conference Centre, restaurants, retail space and a new home for the existing Edgewater Casino consistent with the City of Vancouver s rezoning approval in the Fall of The resort is expected to open at the end of $535 million Clearpoint Resort, Croatia PERFORMANCE 100,000 / 1,076,000 An eight-phased master planned 5-start resort, residential and marina development on the south Dalmation coast. The site will include 5-star 89 room boutique hotel, villas, town homes and apartments, as well as restaurant and retail offer, for an overall resort accommodation total of 314 units being rolled out over 5 years. $185 million (EUR 140 million) Real estate developments Three months ended March March Segment revenue $ 2,366,446 $ 673,855 % of total company revenue 15% 5% Operating expenses (excluding amortization and w rite-off) (1,833,282) (942,898) % of segment revenue 77% 140% Reportable segment profit (loss) (E (L) BITDA) 533,164 (269,043) % of segment revenue 23% 40% In addition to management fees earned from Edenarc 1800, real estate development revenue is largely driven by renovation projects on the Company s hotels under management. The revenue is higher this year due to increased spending on the renovation of the hotels, by the hotel owners. The Company earns a percentage of costs on the renovation projects. In addition, the Company also started earning revenue from the master planning agreement signed for the Miyun County development in China and for the development services provided to the urban resort development in Vancouver. These agreements were not in place in the first quarter of Operating expenses consist mostly of consulting costs that are sourced to complete the obligations of the various development agreements. The increase in expenses is in line with the increase in activity brought on by the new development agreements. DEVELOPMENTS IN CUBA The Company s wholly-owned subsidiary, Wilton Properties Ltd. ( Wilton ), has entered into a joint venture agreement with an agency of the Government of Cuba to develop a number of specific hotel properties in Cuba (the Development Agreement ). The Development Agreement Management s Discussion & Analysis - Page 9 of 22

10 provides for the construction of eleven hotels and real estate developments at four different sites and, at two of the proposed sites, the construction or acquisition and operation of other major tourist and recreational facilities. Pursuant to the Development Agreement, Wilton currently owns 60% of Vancuba Holdings S.A. ( Vancuba ), the ultimate joint venture company which is undertaking the activities covered by the Development Agreement. To date, Wilton and Vancuba, through their current 30% proportionate interest in Bellavista Resorts S.A. ( Bellavista ), have acquired land rights for one of the proposed sites pursuant to a long-term lease agreement with the Government of Cuba. Wilton s proportionate interest will increase up to 50% upon matching the Cuban Government investment. The lease term is for 50 years commencing upon the initial date of exploitation of the hotel project with a renewal option for a further 25 years. Under the terms of its joint venture agreements, once Wilton has invested development expenditures of $10,350,000, for the Monte Barreto project, to match the contribution made by its joint venture partner Gran Caribe, Wilton is responsible for 50% of any further costs of all its current projects in Cuba. Wilton, through its joint ventures Bellavista and Vancuba has invested $4,977,282 recognized as part of its 50% portion of the $10,350,000. The Company s total Cuban assets represent 8% of the Company s total assets. These assets currently do not generate any revenue. These assets will generate revenue upon the Company s ability to raise financing and receive the appropriate approvals from the Cuban government. TIMELINE On December 31, 2012, the Company recognized a provision for impairment of $6,469,594 for certain incremental costs related to Monte Barreto, due to delays in obtaining financing. The costs capitalized in the Company s joint ventures, Bellavista and Vancuba, related to this project are not impaired as the estimated fair value of these investments exceeds book value. EXISTING PROJECTS Monte Barreto Monte Barreto is the last significant piece of oceanfront property in Havana s prime Miramar business and trade district. The resort complex will represent one of the largest hotel projects under development in the Caribbean with a 716 all-suite luxury hotel, including retail and conference space designed to western codes and standards. The property is a 34,500 m2 area with an estimated total cost of $175 million. Jibacoa Jibacoa is an oceanfront destination resort that is 45 minutes away from two international airports and includes six hotels, 45-holes of golf and stand-alone villas. This sustainable development will also include a large marina with approximately 300 slips and commercial boutiques, restaurants and bars. The property is a 5,500,000 m2 area with an estimated total cost of $1 billion. Cayo Largo Cayo Largo is rated as one of the world s top diving sites with construction of an all-inclusive resort hotel and stand-alone villas, totalling approximately 400 units. This site possesses the necessary infrastructure required to support sustainable tourism development, including an international airport. The property is a 300,000 m2 area with an estimated total cost of $100 million. PERFORMANCE Three months ended Developments in Cuba March March Segment revenue $ - $ - % of total company revenue 0% 0% Operating expenses (excluding amortization and w rite-off) (244,197) (205,765) % of segment revenue n/a n/a Reportable segment loss (LBITDA) (244,197) (205,765) % of segment revenue n/a n/a The Company has been in the development business in Cuba for a number of years. The increase in operating expenses as compared to the same period in 2013 is due to costs incurred to assess new development opportunities. The Company has not yet earned revenue from its developments in Cuba. Management s Discussion & Analysis - Page 10 of 22

11 CORPORATE MATTERS TIMELINE On November 15, 2012, the Company s Board of Directors approved, subject to shareholder approval, a new Long Term Incentive Plan ( LTIP ) and the issuance of certain stock options and restricted and/or deferred stock units to certain officers of the Company. On April 26, 2013, the Company announced the closing of a private placement of convertible debentures. On May 13, 2013, the Company s Board of Directors approved the issuance of additional options to an officer of the Company. On August 28, 2013, the Company acquired the magazine International Architecture and Design from Global Luxury Publishing Group Inc. On September 26, 2013, the Company s shareholders approved the new LTIP, stock options and restricted stock units issued to certain officers of the Company as approved by the Board of Directors on November 15, In October 2013, management of the Company decided to change the presentation currency for the Company s financial statements from the United States dollars to Canadian dollars to better reflect the market the Company now operates in. As such, the Financial Statements are presented in Canadian dollars. On February 27, 2014, the Company announced the resignation of a director from the board of directors resulting in the cancellation of his 225,000 options. On May 12, 2014, the Company announced that Dundee is to acquire 100% of its outstanding shares not already owned by Dundee by way of plan of arrangement. RECENT DEVELOPMENTS LTIP On November 15, 2012, the Company's Board of Directors granted to certain directors, officers, and employees of the Company an aggregate of 6,250,000 options at an exercise price of CAD$0.20, to vest and become exercisable in approximately six semi-annual equal instalments from the grant date and having a 10-year term. In addition, the Company s Board of Directors granted to certain directors, officers, and employees of the Company: o an aggregate of 17,250,000 options at an exercise price of CAD$0.20, to vest if certain performance targets are successfully achieved and having a 10 year term, of which 11,500,000 options commenced vesting as the performance target of these options have been met; and o an aggregate of 4,300,000 restricted and/or deferred stock units, each of which shall represent the right to receive cash and/ or Class A common shares of the company (at the option of the Company) equal to the market price of one Class A common share at the time of settlement and to vest in accordance with a vesting schedule to be implemented by the Company. o The issuances were approved by the Company s shareholders on September 26, Convertible debentures On April 26, 2013, the Company closed its best efforts brokered private placement (the Offering ), which consisted of the issuance of 9,500 units of securities of the Company (each, a Unit ) at a price of $1,000 per Unit for aggregate gross proceeds of $9.5 million. Dundee Securities Ltd. (the Agent ) acted as agent on behalf of the Company to complete the Offering. Each Unit comprises a convertible unsecured debenture (the "Debenture") of the Company in the principal amount of $1,000 and 2,380 common share purchase warrants (each, a Warrant ). Each Warrant entitling the holder thereof to purchase one common share of the Company (a Warrant Share ) at an exercise price of $0.30 per Warrant Share for a period of 36 months from closing, subject to receipt of any prior required regulatory and shareholder approvals. The Debentures bear an interest rate of 7.5% per annum, payable semi-annually, and will mature and become payable on the date that is five years from the date of issuance (the "Maturity Date"). Subject to receipt of any prior required regulatory and shareholder approvals, the principal amount of the Debentures will be convertible on or before the Maturity Date (or the business day immediate preceding the date fixed for redemption, as described below), at the option of the holder, into common shares of the Company (each, a Share ) at a conversion rate of $0.21 per Share (the Conversion Price ), subject to adjustment upon the occurrence of certain events. Management s Discussion & Analysis - Page 11 of 22

12 In the event of a change of control transaction, the Company must either purchase the then outstanding Debentures or convert the Debentures into Shares at an adjusted Conversion Price. From and after the third anniversary of the date of issuance, the Debentures will be redeemable at the option of the Company, provided that the weighted average closing price of the Shares during the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given is not less than 130% of the Conversion Price. Subject to certain restrictions, the Company has the option to satisfy its obligation to repay the principal amount of the Debentures, in whole or in part, due at redemption or maturity in Shares. In connection with the Offering, the Agent received a cash commission equal to 5% of the gross proceeds raised under the Offering. The Debentures, Warrants and any Shares and Warrant Shares are subject to a hold period expiring four months and one day from the date the Units were issued. Dundee, who beneficially owns approximately 18% of the outstanding common shares of the Company, purchased 8,800 Units under the Offering. Options On May 13, 2013, the Company s Board of Directors granted an aggregate of 1,000,000 options to an officer of the Company at an exercise price of CAD$0.25 having a 3-year term, and to become exercisable in equal installments every six months from the date of grant. In addition, 500,000 options with the same exercise price, term and vesting conditions, will be granted to the officer by the Company if certain performance targets are met at the end of the fiscal year. Plan of arrangement On May 12, 2014 Dundee and the Company announced the entering into by the parties of an arrangement agreement ("Arrangement Agreement") pursuant to which Dundee will acquire all of the issued and outstanding Class A common shares (each a "360 VOX Share") of 360 VOX that it and its affiliates not already own pursuant to a plan of arrangement (the "Arrangement"). Dundee and its affiliates currently own 49,028, VOX Shares representing approximately 18% of the 271,482, VOX Shares currently outstanding. Under the Arrangement, 360 VOX shareholders will receive of a Class A subordinate voting share in the capital of Dundee (each whole share a "Dundee Share") for each 360 VOX Share held, representing an effective price per 360 VOX Share of $0.20 based on the 20-day volume weighted average trading price of the Dundee Shares for the period ended on May 9, 2014, the trading day preceding the entering into of the Arrangement Agreement. The transaction provides total consideration to 360 VOX shareholders (other than Dundee and its affiliates) of approximately $45.5 million and implies an equity value for 360 VOX of approximately $55.3 million. Approximately 2.8 million Dundee Shares (representing approximately 5.5% of the 50,387,648 outstanding Dundee Shares) are expected to be issued in connection with the completion of the Arrangement based on the 222,454, VOX Shares currently outstanding that are not owned by Dundee and its affiliates and an additional 5,250, VOX Shares that are expected to be issued by 360 VOX prior to the completion of the Arrangement to the sellers of the Sotheby's International Realty Canada, Sotheby's International Realty Quebec and Blueprint Global Marketing businesses in partial satisfaction of their earn-out in respect of The consideration represents a premium of 150% to the closing price of the 360 VOX Shares of $0.08 on May 9, 2014, and a premium of 122% to the 20-day volume weighted average trading price of the 360 VOX Shares of $0.09 for the period ending on the trading day preceding the entering into of the Arrangement Agreement. 360 VOX's management team will continue to run 360 VOX's day-to-day business following completion of the Arrangement. The directors of 360 VOX entitled to vote on the Arrangement have unanimously determined that the Arrangement is in the best interests of 360 VOX and is fair to its shareholders and recommends that 360 VOX shareholders vote in favour of the Arrangement at the special meeting that will be called to approve the transaction. The determination of the Board was made upon the recommendation of a special committee of independent directors (the "Independent Committee"), and after consideration of the advice of legal and financial advisors to the Independent Committee and 360 VOX. The Independent Committee has engaged Crosbie & Company Inc. as financial advisor. Crosbie & Company has provided an opinion to the Board of 360 VOX that, based upon and subject to the assumptions, limitations and qualifications stated therein, the consideration to be received by holders of 360 VOX Shares (which does not include Dundee and its affiliates) is fair from a financial point of view to such holders. Management s Discussion & Analysis - Page 12 of 22

13 As financial advisor to 360 VOX, Crosbie & Company did not consider the fairness, from a financial point of view, of the Arrangement to Dundee and its affiliates. The completion of the Arrangement is subject to customary conditions, including receipt of all necessary court and stock exchange approvals and the approval of the shareholders of 360 VOX at a special meeting (the "Special Meeting") expected to be held in June As the transaction will constitute a "business combination" for the purposes of Multilateral Instrument Protection of Minority Security Holders in Special Transactions, the implementation of the Arrangement will be subject to disinterested shareholder approval, in addition to approval by 66⅔% of the votes cast by holders of 360 VOX Shares. The Arrangement Agreement provides for, among other matters, a non-solicitation covenant on the part of 360 VOX (subject to customary fiduciary out provisions). The Arrangement Agreement also provides Dundee with a "right to match" and requires 360 VOX to pay a termination fee equal to $1,800,000 in certain circumstances. All of the directors and senior officers of 360 VOX and certain shareholders and other security holders of 360 VOX, who together hold an aggregate of approximately 35.3% of the outstanding 360 VOX Shares, have entered into voting agreements pursuant to which, among other matters, they have agreed to vote their 360 VOX Shares in favour of the Arrangement and not to exercise any options or warrants held by them prior to completion of the Arrangement. In connection with the transaction, all of the options and warrants of 360 VOX (other than warrants to purchase 360 VOX Shares issued in connection with the private placement of units of 360 VOX on May 26, 2013 not held by Dundee and its affiliates) will be cancelled pursuant to the Arrangement. The terms and conditions of the proposed Arrangement will be disclosed in an information circular that will be mailed in late May or early June 2014 to the shareholders of 360 VOX that will be entitled to vote at the Special Meeting. It is anticipated that the transaction, if approved by 360 VOX shareholders, the Court and stock exchanges, will be completed in the third quarter of In connection with entering into the Arrangement Agreement and conditional on completion of the Arrangement, 360 VOX has agreed to pay the sellers of the Sotheby's International Realty Canada, Sotheby's International Realty Quebec and Blueprint Global Marketing businesses the amount of their earn-out in respect of 2014 in cash within 15 days following closing of the transaction. Copies of the Arrangement Agreement, the information circular for the Special Meeting and certain related documents have been filed with Canadian securities regulators and are available on the Canadian SEDAR website at In addition to the Arrangement, conditioned upon the closing of the transaction, the Company executed the following additional documents: Dundee agreed to waive the payment for the interest due under the convertible debenture as at March 31, 2014; The license agreement for the trademarks Enchantment and Mii amo, described in Note 9(i) of the Financial Statements, has been amended to allow the contingent share payment of US$1,000,000 ($1,105,300) to be paid either with Dundee Class A subordinate voting shares or with cash; The share purchase agreement entered into on October 1, 2011 for the acquisition of 360 VOX Developments Inc., as described in Note 16(iii) of the Financial Statements, has been amended to allow for the contingent consideration to be settled with Dundee Class a subordinate voting shares rather than 360 VOX Shares; The share purchase agreement entered into with the sellers of Sotheby s International Realty Canada, as described in Note 16(iv) of the Financial Statements, has been amended to confirm that the earn-out for the year ended December 31, 2014 has been earned and is to be paid in cash within 15 days following the closing of the Arrangement with Dundee; The contract of employment with an officer of the Company, as described in Note 22(c)(iii) of the Financial Statements, has been amended to waive the entitlement to the contingent payment of 500,000 options; and The holders of 30,040,000 options and 5,500,000 warrants have agreed not to exercise and confirmed the cancellation of these options and warrants. In addition to the above, the termination agreement between the Dalmi Group and CRLM, as described in Note 20(ii) of the Financial Statements, has been amended by changing the payment due date to October 31, 2014 and changing the monthly subscription requirements starting from May 2014 to October Management s Discussion & Analysis - Page 13 of 22

14 PERFORMANCE Three months ended Corporate March March Segment revenue $ 101,891 $ - % of total company revenue 1% 0% Operating expenses (excluding amortization and w rite-off) (1,631,648) (1,483,028) % of segment revenue 1601% n/a Reportable segment loss (LBITDA) (1,529,757) (1,483,028) % of segment revenue 1501% n/a The revenue earned relates to advertising revenue from the Company s IA&D magazine acquired in April Corporate costs consist mostly of head office costs incurred by the parent company to oversee the operations of the various segments. In addition, significant due diligence costs and travel costs are incurred to grow its existing businesses, or to source new transactions that would be beneficial to the long-term growth of the Company. STRATEGIC PRIORITIES The future growth of the Company is largely dependent on the global economy as well as external political factors. Management believes that the demand for a broad base of expertise in diverse global markets and the availability of high quality real estate developments will add to the growth of the Company. We remain focused on the following strategic priorities: Continue the growth of the Sotheby s International Realty brand in Canada organically and through potential acquisition targets; Creating value from the Company s managed properties and development properties through master planning, optimizing entitlements, building design optimization, construction and development and management services; Prudent capital management including sourcing future financing for development and construction; Expanding the Company s business platform through the growth of additional development properties, hospitality management agreements and asset management agreements; and The Company is focused on opportunistic markets with potential for above market returns including the development of Greenfield sites and redevelopment of existing hotels and other tourism facilities in emerging markets, managing distressed asset situations and other high potential return global destinations. KEY PERFORMANCE DRIVERS Management considers the following items to be important drivers to the Company s future anticipated financial performance: The ability to grow the Sotheby s International Realty brand through both the brokerage platform and the sale and marketing platform for large scale developments; The ability to improve property values through optimization of entitlements and zoning permits; The ability to manage complex large scale development files on a vertical basis. These developments normally require that property owners engage multiple consulting firms which inherently require greater time and cost through the analysis and execution stages. The Company s integrated capabilities offer rapid, cost effective solutions in the resolution of distressed asset portfolios and large scale development projects on a highly competitive and cost effective basis; The ability to increase operating efficiencies, maximize operating revenues and drive profitability through optimizing market focus. The Company has capital market expertise in the structuring and execution of project financings and distressed asset resolution; The ability to focus on revenue maximization utilizing yield management strategies focusing on leveraging today s unique market realities; and Cost controls through achieving economies of scale and diligently managing construction and management contracts. We also believe that the key external performance drivers are: Management s Discussion & Analysis - Page 14 of 22

15 The availability of equity capital at a reasonable cost; The availability of debt capital at a cost and on terms conducive to the Company s goals; and The availability of real estate development opportunities, asset management and consulting contracts and other related business lines that fit into the Company s strategic plan. FINANCIAL STATEMENT ANALYSIS AND SELECTED ANNUAL INFORMATION Three months ended March 31, 2014 Year ended December 31, 2013 Year ended December 31, 2012 Revenue $ 15,590,343 $ 72,748,393 $ 13,718,098 Commission and other related agent costs $ (9,256,007) $ (47,297,494) $ (3,699,672) Commission and other related agent costs as a % of revenue 59% 65% 27% Operating costs $ (7,478,914) $ (30,471,782) $ (21,629,795) Operating costs as a % of revenue 48% 42% 158% Operating loss $ (1,144,578) $ (5,020,883) $ (11,611,369) Operating loss as a % of revenue 7% 7% 85% E (L) BITDA* $ (762,538) $ (1,191,365) $ (4,800,200) E (L) BITDA per share - basic $ (0.003) $ (0.004) $ (0.021) Net loss $ (1,239,039) $ (3,357,010) $ (10,415,524) Loss per share basic** $ (0.005) $ (0.013) $ (0.046) Weighted average number of shares 271,482, ,294, ,092,852 Total assets $ 62,597,808 $ 61,774,387 $ 39,891,764 Long term liabilities $ 14,415,646 $ 15,124,229 $ 3,935,285 Total liabilities $ 43,103,993 $ 41,717,123 $ 20,877,311 Equity $ 19,493,815 $ 20,057,264 $ 19,014,453 * E (L) BITDA stands for Earning (Loss) Before Interest, Tax, Depreciation and Amortization ** Basic net loss per share amounts no adjustment is made for share dilution as the effect would be anti-dilutive NET LOSS The Company s net loss and net loss per share for the three months ended March 31, 2014 was $1,239,039 and $0.005 (per basic share), respectively, compared with a net loss of $546,095 and $0.002 (per basic share) during the same period in A summary of the consolidated results follows: March March Note Revenue $ 15,590,343 $ 13,925,496 (1) Commission and other related agent costs $ (9,256,007) $ (7,739,255) (2) Operating costs Operating loss (L) E BITDA Net loss Loss per share - basic $ (7,478,914) $ (7,344,868) (3) $ (1,144,578) $ (1,158,627) $ (762,538) $ 808,033 (4) $ (1,239,039) $ (546,095) $ (0.005) $ (0.002) (1) The increase in revenue is driven by the real estate development segment as new development agreements were entered into in the latter part of Please refer to segmented reporting above for detail of change in revenue, period over period. (2) The increase in commission and other related agent costs is due to the fact that the revenue from the real-estate resale business has increased significantly as compared to prior period. Please refer to segmented reporting above for more detail. Management s Discussion & Analysis - Page 15 of 22

16 (3) The increase in operating costs is related mostly to the additional operating expenses to run the hospitality division which was not in place during the same quarter in Please refer to segmented reporting above for detail of change in operating costs, period over period. (4) Loss before interest, tax, depreciation and amortization includes acquisition and due diligence related costs in the amounts of $253,131 (March 31, $11,750). Excluding these costs would have resulted in LBITDA of $509,452 (March 31, 2013 EBITDA $819,783). Reconciliation of operating loss to net loss per financial statements: Operating loss March March $ (1,144,578) $ (1,158,627) Add: amortization and w rite-off expense 382,040 1,966,660 (L) E BITDA (762,538) 808,033 Less: amortization and w rite-off expense (382,040) (1,966,660) Other (expense) income (126,488) 175,421 Income taxes recovery 32, ,111 Net loss $ (1,239,039) $ (546,095) Changes in financial position: March December 31, 2013 % change Notes Current assets $ 23,613,037 $ 24,252,677-3% (1) Non-current assets 38,984,771 37,521,710 4% (2) Total assets $ 62,597,808 $ 61,774,387 1% Current liabilities $ 28,688,347 $ 26,592,894 8% (3) Non-current liabilities 14,415,646 15,124,229-5% (4) Total liabilities $ 43,103,993 $ 41,717,123 3% Working capital $ (5,075,310) $ (2,340,217) 117% (5) Current ratio Shareholders's equity $ 19,493,815 $ 20,057,264-3% Debt to equity (6) (1) The decrease in current assets is due to decrease in cash resulting from acquisitions of property, plant, and equipment, interest payments made and acquisition and due diligence costs incurred. (2) The increase in non-current assets results from the acquisition of property, plant and equipment and amounts capitalized to the property under development. (3) The increase in current liabilities is comprised mostly of short term portion of loans and borrowings, reclassified from non-current. This liability was considered long-term on December 31, 2013 and as at March 31, 2014 is due within 12 months, so now considered short term. The increase is also due to the increase in the trust liability. The trust liability is fully offset by funds held in trust. (4) The decrease in non-current liabilities is due to a decrease in the fair value of the derivative liability and the reclassification of loans and borrowings from non-current to current as per the previous point. (5) The increase in working capital deficiency is due to the combination of decrease in cash and the reclassification of a portion of the loan from non-current to current as describe above. (6) Increase in debt to equity is due mostly to the increase in the trust liability included in current liabilities. Excluding the trust liability, debt to equity would be 0.78 (December 31, ). Management s Discussion & Analysis - Page 16 of 22

17 SHARE CAPITAL As at May 23, 2014, the Company had 271,482,441 Class A common shares issued and outstanding. There have been no share issuances in Please refer to note 22 of the Company s Financial Statements for additional details on share capital. SUMMARY OF QUARTERLY RESULTS Quarter 1 Quarter 4 Quarter 3 Quarter 2 Quarter 1 Quarter 4 Quarter 3 Quarter 2 Revenue $ 15,590,343 $ 20,853,090 $ 19,752,369 $ 18,217,438 $ 13,925,496 $ 7,061,994 $ 2,607,311 $ 1,678,755 Commission and other related agent costs $ (9,256,007) $ (13,265,257) $ (13,881,653) $ (12,411,329) $ (7,739,255) $ (3,699,672) $ - $ - Commission and other related agent costs as a % of revenue 59% 64% 70% 68% 56% 52% 0% 0% Operating costs $ (7,478,914) $ (9,146,830) $ (6,940,404) $ (7,039,681) $ (7,344,868) $ (13,891,113) $ (2,990,274) $ (2,510,923) Operating costs as a % of revenue 48% 44% 35% 39% 53% 197% 115% 150% Operating income (loss) $ (1,144,578) $ (1,558,996) $ (1,069,688) $ (1,233,571) $ (1,158,627) $ (10,528,791) $ (382,963) $ (832,167) Operating income as a % of revenue 7% 7% 5% 7% 8% 149% 15% 50% E (L) BITDA $ (762,538) $ (938,246) $ (550,378) $ (510,775) $ 808,033 $ (3,909,062) $ (318,638) $ (768,823) E (L) BITDA per share - basic $ (0.003) $ (0.003) $ (0.002) $ (0.002) $ $ (0.017) $ (0.001) $ (0.004) Net (loss) income $ (1,239,039) $ (298,281) $ (934,719) $ (1,577,915) $ (546,095) $ (8,907,955) $ 76,323 $ (1,413,947) Income (loss) per share basic $ (0.005) $ (0.001) $ (0.004) $ (0.006) $ (0.002) $ (0.040) $ $ (0.006) Weighted average number of shares 271,482, ,294, ,088, ,883, ,732, ,092, ,575, ,182,441 Operating income (loss) $ (1,144,578) $ (1,558,996) $ (1,069,688) $ (1,233,571) $ (1,158,627) $ (10,528,791) $ (382,963) $ (832,167) Add: amortization and w rite-off expense $ 382,040 $ 620,750 $ 519,311 $ 722,797 $ 1,966,660 $ 6,619,729 $ 64,325 $ 63,344 E (L) BITDA $ (762,538) $ (938,246) $ (550,378) $ (510,775) $ 808,033 $ (3,909,062) $ (318,638) $ (768,823) Less: amortization and w rite-off expense $ (382,040) $ (620,750) $ (519,311) $ (722,797) $ (1,966,660) $ (6,619,729) $ (64,325) $ (63,344) Other income (expense) $ (126,488) $ 903,030 $ 116,415 $ (388,293) $ 175,421 $ 1,128,226 $ 324,149 $ (225,250) Income taxes recovery (expense) $ 32,027 $ 357,684 $ 18,555 $ 43,950 $ 437,111 $ 492,610 $ 135,137 $ (356,530) Net (loss) income $ (1,239,039) $ (298,281) $ (934,719) $ (1,577,915) $ (546,095) $ (8,907,955) $ 76,323 $ (1,413,947) *Basic and diluted per share amounts no adjustment is made for share dilution as the effect would be anti-dilutive LIQUIDITY Net funds used in operating activities for the three months ended March 31, 2014 were $221,774, an increase from the same period in 2013 due to increase in non-recurring due diligence costs. Funds spent on investing activities for the three months ended March 31, 2014 were $592,146 consisting mostly of acquisition of property, plant and equipment. Funds used in financing activities for the three months ended March 31, 2014 were $34,696 which consist of interest paid and offset by Franchisor advances received. As at March 31, 2014, the Company s financial liabilities mature as follows: Carrying amount Contractual cash flow s 1 year 2 to 5 years over 5 years Financial liabilities: Trade and other payables $ 6,817,635 $ 6,817,635 $ 6,817,635 $ - $ - Trust liability $ 15,587,476 $ 15,587,476 $ 15,587,476 $ - $ - Compensation earn-out and contingent consideration liability $ 2,300,584 $ 3,900,000 $ 450,000 $ 3,450,000 $ - Franchisor advances $ 697,494 $ 1,389,135 $ 203,017 $ 712,817 $ 473,301 Long-term debt $ 7,774,372 $ 7,774,372 $ 4,664,058 $ 3,110,314 $ - Convertible debenture and derivative liability $ 8,062,555 $ 12,402,705 $ 712,500 $ 11,690,205 $ - $ 41,240,116 $ 47,871,323 $ 28,434,686 $ 18,963,336 $ 473,301 *Trust liability is fully offset by funds held in trust Management s Discussion & Analysis - Page 17 of 22

18 Please refer to note 4 of the Financial Statements for a detailed description of the financial instruments and related risks. The principal liquidity needs for the next twelve months are to: Fund the Company s short term contractual commitments; Fund growth and expansion of the sales and marketing division of the Company; Fund current development costs associated with Monte Barreto, including architectural drawings, engineering studies, and tendering construction bids; Fund current development costs associated with Clearpoint Resort and First Bay Resort; Fund due diligence activities related to certain potential acquisitions; and Fund recurring expenses, including general and administrative costs and pay trade and other payables due within one year. As at March 31, 2014, the Company s cash and cash equivalents, including its accounts receivables and less its trade and other payables amounted to $5,075,310. The Company does not currently have sufficient resources to repay the current portion of loans and borrowings of $4,664,058 that are due within twelve months by the Company s subsidiary, Clearpoint Resort Limited. The Company is exploring financing alternatives, including raising equity capital from strategic investors or a potential sale of a portion or all of the Company s interests in Clearpoint Resort Limited. Historically, the Company has been able to obtain financing in order to discharge its commitments and liabilities related to its projects and management continues to believe that the Company will be able to raise financing for Clearpoint Resort. However, there are no certainties that the Company will be able to obtain such financing and should the Company not be able to obtain the required financing to pay these loans or not be able to reach an agreement with the lenders, the maximum risk exposure to the Company, net of non-controlling interest, is $4.6 million. The construction of Monte Barreto requires the approval of the construction budget by the joint venture and will require additional equity and/or debt financing. The Company has historically financed its operations primarily through the sale of equity securities such as common shares and convertible debentures. For the foreseeable future, the Company will earn revenue through its asset management agreement, hospitality agreements, development activities and sales and marketing operations which will cover a significant portion of operations, however, management expects that the Company will continue to rely on the sale of securities, seek debt financing to finance large scale activities related to its development projects, or rely on Dundee for financing, should the plan of arrangement with Dundee be approved. The Company remains active in pursuing hotel project equity/debt partnerships and hotel management opportunities to generate additional liquidity. COMMITMENTS The Company is committed under several operating leases to non-related parties. The minimum annual rental payments over the next five years are approximately as follows: 1 year $ 1,325, years 4,265,416 >5 years 2,894,630 Management s Discussion & Analysis - Page 18 of 22

19 OFF BALANCE SHEET ARRANGEMENTS Other than operating leases considered in the commitments section, the Company did not enter into any off-balance sheet arrangements during the three months ended March 31, TRANSACTIONS WITH RELATED PARTIES Dundee owns approximately 18% of the outstanding common shares of the Company. On April 26, 2013, the Company closed a brokered private placement in which Dundee purchased 8,800 units of securities of the Company at a price of $1,000 per unit for aggregate proceeds of $8.8 million. Please refer to note 18 of the Financial Statements for detailed amounts paid and due to related parties. RISKS AND UNCERTAINTIES FINANCIAL RISK The Company has made significant progress in arranging prospective sources of financing for its current development projects, but definitive terms and conditions, and agreements reflecting these, have not been finalized. There is no assurance that those terms, conditions and agreements acceptable to the Company will be completed on a timely basis. REAL ESTATE DEVELOPMENT The Company is exposed to several industry-specific risks, including an inability to obtain zoning approvals or building permits; construction and other development costs could exceed our budgets; project completion could be delayed; and purchasers could rescind their purchase contracts. In addition, there is no assurance that market conditions will support our planned real estate development activities. The ability to raise financing and delays from the Cuban government with respect to Cuban related assets increases the risk of impairment of the Cuban development costs capitalized in the financial statements. COUNTRY RISK The Company s financial position and its development projects may be affected by political or economic instability. CRITICAL ACCOUNTING POLICIES AND ESTIMATES CRITICAL ACCOUNTING POLICIES The preparation of the Company s Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of the Company s ongoing evaluation of these estimates forms the basis of making judgements about the carrying values of assets and liabilities and that reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. Management s Discussion & Analysis - Page 19 of 22

20 The following summarizes the Company s critical accounting policy, which requires the most significant judgement and estimates in the preparation of its annual financial statements. DEVELOPMENT COSTS Direct costs relating to the development opportunities have been capitalized as incurred. Direct costs include architectural services, design and engineering services, market studies, feasibility studies, legal costs and overhead directly attributable to the development projects. Development costs are not amortized and are carried at cost less accumulated impairment losses. An impairment loss was recognized in 2012 and 2005, see note 10 of the Financial Statements. CHANGES IN ACCOUNTING POLICIES AND ADOPTION OF NEW ACCOUNTING STANDARDS A number of new standards, and amendments to standards and interpretations, are not yet effective for, and have not been applied in preparing the March 31, 2014 Financial Statements. These standards and interpretations include the following: IFRS 9, Financial Instruments IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 (2010) introduces additional changes relating to financial liabilities. IFRS 9 (2013) includes a new general hedge accounting standard which will align hedge accounting more closely with risk management. This new standard does not fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness. However it will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce more judgment to assess the effectiveness of a hedging relationship. Special transitional requirements have been set for the application of the new general hedging model. The Company intends to adopt IFRS 9 (2009), IFRS 9 (2010) and/or IFRS 9 (2013) in its consolidated financial statements for the annual period beginning January 1, The extent of the impact of adoption of IFRS 9 (2013) has not yet been determined. Annual improvements to IFRS and cycles In December 2013, the IASB issued narrow-scope amendments to a total of nine standards as part of its annual improvements process. The IASB uses the annual improvements process to make non-urgent but necessary amendments to IFRS. Most amendments will apply prospectively for annual periods beginning on or after July 1, Earlier application is permitted, in which case, the related consequential amendments to other IFRS would also apply. Amendments were made to clarify the following in their respective standards: Definition of vesting condition in IFRS 2, Share-based payment; Classification and measurement of contingent consideration, and scope exclusion for the formation of joint arrangements in IFRS 3, Business Combinations; Disclosures on the aggregation of operating segments in IFRS 8, Operating segments; Measurement of short-term receivables and payables, and scope of portfolio exception in IFRS 13, Fair Value Measurement; Restatement of accumulated depreciation (amortization) on revaluation in IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets; Definition of related party in IAS 24, Related Party Disclosures and Inter-relationship of IFRS 3 and IAS 40 in IAS 40, Investment Property. Special transitional requirements have been set for amendments to IFRS 2, IAS 16, IAS 38 and IAS 40. Management s Discussion & Analysis - Page 20 of 22