Equity Research INITIATING COVERAGE

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1 Equity Research INITIATING COVERAGE NIGHTINGALE INFORMATIX CORP. NGH-V $0.25 April 16, 2013 Rating: STRONG BUY Target Price: $0.65 Market Capitalization: $19.1M Risk Profile: SPECULATIVE TECHNOLOGY HEALTHCARE IT Ralph Garcea, P.Eng, MBA Analyst Anuj Nijhawan Associate COMPANY PROFILE Nightingale is a healthcare technology company that provides cloud-based electronic medical records (EMR) products and services to physicians and nurse practitioners at primary care practices, multi-physician outpatient clinics and hospitals, as well as government and regional health organizations. Coupled with integrated practice management and transcription, Nightingale's comprehensive service offering allows customers to enhance patient care, increase revenue opportunities, and optimize operations. The Company has ~150 full-time employees and is based in Markham, Ontario. Source: BigCharts.com Financial Summary Last Price $0.25 Price Target $0.65, (+160.0%) Div/ Yield $0.00/0.0% 52-week Range $ $0.33 S/O Basic (M) 76.3 S/O FD (M) 90.1 Market Float (%) 57.5% Market Cap (M) 19.1 Net Debt (in $M) 6.6 Enterprise Value ($M) Avg. Weekly Vol. (M) 0.11 Fiscal YE 31-Mar NIGHTINGALE - EMR IN THE CLOUD INVESTMENT THESIS Nightingale Informatix Corp. ( Nightingale or the Company ) is a healthcare technology company with ~12,500 Electronic Medical Records ( EMR ) and practice management users in larger, enterprise practices and clinics. The Company has strong organic growth prospects in the small- and medium-sized clinics market by leveraging its position in the enterprise market and extending its new product, as well as opportunities for accretive inorganic growth in the fragmented healthcare IT market. FINANCIAL REVIEW Nightingale has consistently achieved positive adjusted EBITDA over the last several quarters once revenue passed the $5M per quarter threshold. We believe that the Company s recurring revenue base of over 50% of total revenues and a strong foothold in the stable enterprise EMR market provides it with a solid springboard for growth. VALUATION Nightingale is currently trading at a C13E EV/Sales of 1.0x and EV/EBITDA of 4.1x versus its comparables at 2.7x and 10.2x, respectively. UPCOMING CATALYSTS NEAR TERM: Opportunity to leverage the new EMR product, Nexia, to win new enterprise contracts, as well as target small- and medium-sized clinics. LONG TERM: Opportunity to capture a share of the current market from existing EMR providers given the consolidation in the Canadian EMR market. Growth from strategic, accretive tuck-in acquisitions. We are initiating coverage on Nightingale with a STRONG BUY recommendation and a 12-month price target of $0.65 per share, providing a 160% upside to our target. Given the risk inherent with the healthcare IT market and EMR adoption, we rate the risk profile as SPECULATIVE. Forecasts F2011 F2012 F2013E F2014E F2015E Revenue ($M) $17.37 $18.08 $21.10 $22.64 $25.81 Adj. EBITDA ($M) $1.85 $1.28 $3.69 $5.31 $7.09 EPS (FD) ($0.01) ($0.02) $0.02 $0.03 $0.05 EPS (basic) ($0.01) ($0.02) $0.02 $0.04 $0.06 CFPS $0.04 $0.03 $0.00 $0.04 $0.07 P/E NM NM 15.2x 7.6x 5.4x EV/ Sales 1.5x 1.4x 1.2x 1.1x 1.0x EV/EBITDA 13.7x 19.8x 6.8x 4.8x 3.6x See back page for analyst certification and disclosures All figures in C$ unless otherwise noted.

2 TABLE OF CONTENTS INVESTMENT THESIS... 3 COMPANY OVERVIEW... 3 GLOBAL EMR MARKET... 5 EMR MARKET IN CANADA... 6 EMR MARKET AND HEALTHCARE IT... 7 FINANCIAL REVIEW VALUATION RECENT EVENTS RISKS APPENDIX A KEY HISTORICAL DEVELOPMENTS APPENDIX B PRODUCT OVERVIEW APPENDIX C MANAGEMENT AND BOARD OF DIRECTORS APPENDIX D FINANCIALS APPENDIX E AOHC EMR DEPLOYMENT SCHEDULE RESEARCH DISCLOSURES

3 INVESTMENT THESIS Nightingale Informatix Corporation is a healthcare IT service, software and EMR provider in North America. The Company has a number of long-term contracts, such as that with the Association of Ontario Health Centres (AOHC), as well as the opportunity to build upon the current user base of ~12,500 total users: ~7,500 practitioners under agreement on its cloud-based EMR product Nightingale On Demand (NOD) and ~5,000 practitioners using the Company s Practice Management software. Nightingale derives its revenue from initial user setup, data migration services and recurring revenue from its users (on a per user/per month basis), which accounts for over 50% of its annual revenue. This recurring revenue model drives higher gross margins over time. Nightingale has also modernized its new EMR product, Nexia, which is user friendly and designed with the same interface as consumer software apps. Nexia is currently being tested and undergoing compliance conformance with an expected launch at the end of C2013. The Canadian EMR space has witnessed consolidation with Telus (T-T, TU-US; Not Rated) acquisitions of MD Practice Software, KinLogix, and Wolf Medical Systems over the last 15 months. As Telus orchestrates its own roll-up strategy on the product side, we believe there will be opportunities for other players with suitable user-friendly offerings to capture a share of existing EMR users. We are initiating coverage on Nightingale with a STRONG BUY recommendation and a 12-month price target of $0.65 per fully diluted share, providing an upside of 160% to our target. Given the risk inherent with the healthcare IT market and EMR adoption, we rate the risk profile as SPECULATIVE. COMPANY OVERVIEW Nightingale was incorporated in 2001 and went public in September NOD, the Company s cloudbased EMR product, is available to physicians and medical staff in primary care practices, multi-physician outpatient clinics, hospitals, governments, and regional health organizations. At the end of FQ313, Nightingale had ~7,500 practitioners and ~5,000 practice management practitioners under contract to utilize its cloud-based EMR product. The Company is currently developing and testing the latest version of its EMR product, Nexia, which is expected to be in production at the end of C2013. Nightingale has a dedicated sales team focussing on the enterprise market and a self-serve model for small- and medium-sized targets, allowing for lower customer acquisition costs. The Company also has an inorganic growth strategy to acquire revenue stream companies with complementary offerings in order to strengthen its position in the small- and medium-sized clinic markets, as well as acquire a customer base it can leverage for its existing products and services (Exhibit 1). Nightingale has successfully acquired and integrated technology offerings from a number of companies in the IT healthcare sector (Exhibit 2). The Company currently employs approximately 150 full-time staff and has its head office in Markham, Ontario. 3

4 EXHIBIT 1 NIGHTINGALE S STRATEGY AND KEY CLIENTS Source: Company reports EXHIBIT 2 NIGHTINGALE S ACQUISITIONS AND DIVESTITURES Date Corporation Name Details Value December 2011 Medrium Inc. Provider of Practice Management solution in the US US$1.75M February 2008 Therapist Helper Product Suite Divested to Netsmart Technologies Inc. (Decision - Software) April 2007 VantageMed Corp. Provider of Healthcare Software products US$11.2M April 2006 Integrated Healthware Inc. Provider of EHR Software US$3.84M March 2006 HealtheNet Inc. Healthcare IT provider $7.13M March 2004 OpenX Technologies Provider of interactive voice response technology - April 2002 VisionMD Provider of Medical Administration System Tools - Source: Company reports 4

5 GLOBAL EMR MARKET The global EMR market is expected to grow at an estimated CAGR of 14.6% from $17.9B in 2011 to $35.4B in The rising demand for healthcare cost containment and need to improve the quality of healthcare service are driving the growth of the EMR market globally. Based on a study by Markets&Markets, the US EMR market is expected to grow from US$2.1B in 2009 to $6.0B in 2015, at an estimated CAGR of 18.1% during the forecast period The study found that the expected high growth rate is driven by two main factors: 1) medical professionals are seeking to use EMRs and Electronic Health Records (EHRs) to improve the quality of their services; and 2) they hope that these systems will be able to decrease the operating costs of hospitals and other healthcare facilities in the long run. We note that the current US EMR market segment is highly fragmented with more than 1,000 vendors, and in need of consolidation. Source: Markets&Markets U.S. Electronic Medical Records Market - Emerging Trends, Market Share, Winning Strategies, Adoption & Forecasts till 2015 EXHIBIT 3 GLOBAL EMR MARKET GROWTH, RISE OF EMR ADOPTION IN US EHR Adoption by family physicians and other physician specialities, NAMCS-NonFP NAMCS-FP Percentage Note: NAMCS - National Ambulatory Medical Care, FP - Family Physicians Source: Company report, Kalorama Partners (2011), NAMCS Survey 5

6 EMR MARKET IN CANADA Based on a 2011 edition of Canadian Institute of Health Information s (CIHI) annual report titled Supply, Distribution and Migration of Canadian Physicians, the number of physicians in Canada increased 14% from 2007 to In comparison, the Canadian population grew only 4.7% over the same period. Each province in Canada also experienced a rise in the number of physicians. Nova Scotia, Newfoundland and Labrador, and Quebec demonstrated the highest physician-topopulation ratios in the country, with 240, 231, and 231 physicians per 100,000 inhabitants, respectively. The Canadian Medical Association (CMA) compiled 2011 statistics and noted that there were ~37,000 family physicians and ~25,000 speciality practitioners in Canada. Source: CIHI, CMA CIHI website - CMA website - EMR SOLUTIONS ARE BEING ADOPTED BY PHYSICIANS Based on the 2010 National Physician survey, exclusive use of EMRs by family physicians, general physicians, and other specialists across Canada has increased from 10% in 2007 to 16% in The province of Alberta leads the way with 28% of physicians exclusively using EMRs, followed by Ontario (20%) and British Columbia (19%). Results from a Canadian Family Physician survey showed that physicians in Canada are gaining confidence in the use of EMRs for improving the quality of patient care and practice management. Source: Canadian Family Physician website The New EMR Adopter Funding Program, supported by ehealth in Ontario, helps physicians in the transition from paper-based records to EMRs. The funding program has been extended until March 31, 2014, and assists physicians in the adoption and implementation of funding-eligible EMR offerings (Exhibit 4). The funding is open to community-based physicians, both family practitioners and specialists. As new physicians enter the medical practice and with the widespread use of technology in everyday life, we believe a gradual shift toward EMR will occur. The financial support extended by the federal government to deploy and maintain EMR s also aids in developing a business case for the same. 6

7 EXHIBIT 4 EMR FUNDING PROGRAMS IN CANADA Province Program Funding Alberta Physician Office Systems Program (POSP) POSP provides 70% of of eligible EMR vendor-invoiced costs. Physicians using a Vendor Conformance & Usability Requirements (VCUR) 2008 system receive a maximum of $35,000 (70% of $50,000) over a five-year period, per physician unit. Ontario Ontario MD For ASP offerings, Ontario MD provides total funding of $29,800 consisting of $3,500 readiness grant, $2,000 performance grant and $675 monthly subsidy for 36 months. Nova Scotia Primary Healthcare Information Management (PHIM) Source: Canadian Medical Association, POSP website, Ontario MD, PHIM website EMR MARKET AND HEALTHCARE IT PHIM provides approximately $9,800 plus costs of change management services/ programs. Under agreement in place ( ), in year 1, imlpementation costs($5,300) and training costs ($2,000). For years 2-5, a maximum of $2,000 annually. There are a number of healthcare IT companies that provide software solutions and services in Canada and the US including: Medworxx Solutions Inc. (MWX-V; Not Rated) Medworxx develops workflow management software solutions for hospitals. Epocrates, Inc. (EPOC-US; Not Rated) Epocrates provides mobile drug reference tools to healthcare professionals and interactive services to the healthcare industry. Epocrates operates in two segments: Subscriptions and Interactive Services, and EHR. Athenahealth (ATHN-US; Not Rated) recently acquired Epocrates for ~$293M (valued at 1.9x EV/Sales and 15.9x EV/EBITDA). Merge Healthcare Inc. (MRGfE-US; Not Rated) Merge develops healthcare information software solutions and delivers related services. Allscripts Healthcare Solutions, Inc. (MDRX-US; Not Rated) Allscripts provides integrated clinical software applications for hospitals, physician practices, and post-acute organizations. Its clinical solutions also consist of a range of acute care EHR systems, integrated with financial/administrative solutions, including performance management and revenue cycle/access management. Allscripts acquired Eclipsys in September 2010 for ~$1.2B (valued at 2.1x EV/Sales and 12.3x EV/EBITDA). EMIS Group plc (EMIS-AIM; Not Rated) EMIS designs and markets clinical software and related services to general practitioners (GPs) and other healthcare practitioners. The company has two segments: the EMIS business, principally relating to GP practices, and the RX Systems business, relating to community pharmacies. Quality Systems (QSII-US; Not Rated) Quality Systems develops and markets healthcare information systems that automate certain aspects of physician, in-patient and dental practices, networks of practices, such as physician hospital organizations (PHOs) and management service organizations (MSOs), ambulatory care centres, community health centres, Federal Qualified Health centres (FQHC) and medical and dental schools. 7

8 The following companies develop, market, and distribute EMR products and related services in Canada and can be considered Nightingale s direct competitors. ABELMed Inc. (Private) ABELMed Inc., a Microsoft Gold Certified Partner, offers physicians clinical and practice management software solutions and services to small- and medium-sized medical practices, clinics and wellness centres. Bell Aliant (BA-T; Not Rated) (formerly xwave) xwave is a health systems integrator, owned and operated by Bell Aliant. Its portfolio includes the current implementation of several interoperable electronic health record (iehr) solutions in Canada; and the development of xwaveemr, a cloudbased EMR system that helps doctors improve preventive care and chronic disease management. OSCAR MCMASTER (Private) OSCAR EMR is an open source EMR system containing healthcare information with billing capabilities, chronic disease management tools, prescription module, and scheduling capabilities. The OSCAR EMR solution has no license fees and complete ownership of data. Oscar McMaster is the primary operational partner that promotes, supports, develops, and certifies OSCAR, which consists of a suite of five open source applications. P&P Data Systems Inc. (Private) P & P Data Systems is a developer of paperless solutions for the medical industry. QHR Technologies Inc. (QHR-V; Not Rated) QHR Technologies Inc. is a healthcare IT company focussing on EMR solutions, Enterprise Management Solutions (EMS) and Hosting. QHR acquired assets of Healthscreen (previously MDU-V). Telus (T-T, TU-US) TELUS Health provides telehomecare, electronic medical and health records, consumer health, benefits management, and pharmacy management solutions. General Electric (GE-US; Not Rated) General Electric s Centricity EMR (formerly Logician) is an EMR system that enables ambulatory care physicians and clinical staff to document patient encounters, streamline clinical workflow, and securely exchange clinical data with other providers, patients, and information systems. We note that Telus has continued to consolidate the market with its recent acquisitions (MD Practice Software L.P. in Ontario in March 2013; KinLogix in Quebec in October 2012; Wolf Medical Systems in Western Canada in February 2012), which added to Telus acquisition of Emergis back in In addition, QHR Technologies (QHR-V, Not Rated) has acquired Open EC Technologies and Healthscreen, both privately-held. 8

9 EXHIBIT 5 EMR PRODUCT COMPARISON Features ABELMed Inc. MD PSI (acq by Telus) Nightingale Informatix Corp. Os car P & P Data McMaster Systems Inc. Product Name EHR-EMR/ PM PS Suite On Demand ASP OSCAR P&P Clinic Information System QHR Sof t w ar e Accuro(R) (owned by Optimed Software Corp) Telus Health Solutions Wolf Medical Suite EMR Offering conception N/A N/A Conformance Tests Windows compatible > Ontario (OntarioMD Certification v 2.0 (2008) and OntarioMD Certification v 3.0 ) > Alberta (VCUR V1 2004, VCUR V2 2006, VCUR V ) > Ontario (CMS 2.0 (Local and ASP), CMS v3.0 Conditionally certified) > Saskatchewan (Conditionally certified for the SMA Physician EMR Project > Alberta (Alberta Netcare EHR Physician Office System Program v ) > Nova Scotia (Nova Scotia Department of Health Primary Healthcare Information Management Program) > Ontario (OntarioMD CMS Specification 3.0 for both ASP and local solution 2009) > Ontario > Ontario (OMD v , OMD v ) > Alberta (VCUR 2007 (Local Install and ASP)) British Columbia (Alternative Specialist Funding Program Jun2010) Manitoba (MB ehealth 7Jul2009) Ontario (Specification 4 (CMS4)) Saskatchewan (Approved Vendor 1Sep2009) Yes Yes Yes Yes Yes Yes Yes Mac OS compatible No Yes Yes Yes Yes Yes Yes > Alberta (VCUR 08) > British Columbia (PITO-approved Vendor, July 2007) > Ontario (Ontario MD CMS V1.3) Languages English English English English English English French French Provinces product sold in Ontario Alberta British Columbia Manitoba New Brunswick Alberta British Columbia Manitoba New Brunswick Ontario Alberta Manitoba Ontario Québec Alberta British Columbia Manitoba Newfoundland Nova Scotia Newfoundland Saskatchewan Ontario Northwest Territories Nunavut Ontario Prince Edward Island Québec Saskatchewan Yukon Territory Nova Scotia Northwest Territories Ontario Saskatchewan Yukon Territory Saskatchewan Licensing Options available Per physician basis Per physician basis N/A Provider, Workstation and site basis Source: Canadian EMR ( Per physician # of physicians in Canada who have purchased, installed & completed training to use full version of EMR 500 1,906 2, ,000 1,250 English Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Northwest Territories Nunavut Ontario Prince Edward Island Saskatchewan Yukon Territory Per medical practitioner 9

10 FINANCIAL REVIEW Nightingale reported FQ313 results (quarter ending December 31, 2012) on March 1, 2013, with revenue of $5.1M, adjusted EPS of $0.00, and adjusted EBITDA of $0.9M. As of December 31, 2012, Nightingale had $1.1M in cash, current portion of convertible debentures of $0.9M and a term loan of US$2.5M. Currently, Nightingale has ~$3.4M in cash (post the close of the Series C convertible debenture offering), current portion of convertible debentures of $1.1M, term loan of ~US$4.2M and long-term portion of convertible debentures of $4.7M. DEBT Nightingale has a US$1M revolving line of credit and a US$4.5M term loan secured by the lender with a first priority general security interest on all of the assets of the Company (including intellectual property) and that of its subsidiaries. As of December 31, 2012, the Company had ~$2.5M of the term loan outstanding. On March 12, 2013, Nightingale increased its term loan facility by US$2M at an interest rate of bank prime rate plus 2.25%. CONVERTIBLE DEBENTURES Series A $1.1M unsecured Convertible Debentures bear interest at a rate of 12% per annum, payable monthly scheduled to mature on January 15, Series B $2.75M unsecured Convertible Debentures bear interest at a rate of 12% per annum, payable monthly and scheduled to mature on January 15, Series C $3.2M unsecured Convertible Debentures bear interest at a rate of 10% per annum, payable monthly and scheduled to mature on March 14, 2016, which are convertible to common shares any time at $0.60/share. This was completed on March 12, 2013, and certain holders of $0.9M of Series A agreed to tender debentures for early redemption. There are no Series A convertible debentures remaining after the Series C offering. LONG-TERM AOHC CONTRACT In December 2011, Nightingale signed a ten-year agreement with the Association of Ontario Health Centres (AOHC) to provide a provincial license for NOD and its practice management solution (PMS) to Community Health Centres (CHCs), Aboriginal Health Access Centres (AHACs), Nurse Practitioner-Led Clinics (NPLCs), and Community Family Health Teams (CFHTs) across Ontario. In April 2012, the Company signed an associated deployment services agreement. The contract covers ~3,500 health care providers at 83 CHCs and AHACs across Ontario. Nightingale won the contract through a competitive six-stage procurement process involving a year of preparation, a month and half of evaluation, and representation from CHCs across the province ehealth Ontario, the AOHC, the Ontario government Health Services Cluster, and OntarioMD. Bell Aliant s EMR (formerly xwave) and PS Suite (acquired by Telus in March 2013) were the other competing short-listed companies. 10

11 At the time of signing, NGH expected to realize $9M+ in revenue from the contract over the first three years. Deployment was slated to begin in early 2012 and is expected to be completed over a two-year period. However, due to scalability issues that have been addressed, the project is currently behind schedule. The updated deployment plan is illustrated in Appendix E. Nightingale s recurring revenue is supported by the pricing model shown below. EXHIBIT 6 EMR ENTERPRISE AND SMB PRICING Source: Company reports EXHIBIT 7 REVENUE AND EBITDA % 6,000 5,000 Revenue EBITDA Margin 50% 40% Revenue ($, '000) 4,000 3,000 2,000 1,000 30% 20% 10% 0% EBITDA Margin (%) 0 FQ110 FQ210 FQ310 FQ410 FQ111 FQ211 FQ311 FQ411 FQ112 FQ212 FQ312 FQ412 FQ113 FQ213 FQ313 FQ413E -10% Source: Company reports, GMC 11

12 EXHIBIT 8 RECURRING AND NON-RECURRING REVENUE 6,000 5,000 Non-Recurring Revenue Recurring Revenue 4,000 Revenue $M 3,000 2,000 1,000 0 FQ110 FQ210 FQ310 FQ410 FQ111 FQ211 FQ311 FQ411 FQ112 FQ212 FQ312 FQ412 FQ113 FQ213 FQ313 Source: Company reports, GMCI EXHIBIT 9 CASH AND CASHFLOW Cash & Equiv ($,'000) ) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Cash & Equiv CFOPS $0.02 $0.02 $0.01 $0.01 $0.00 -$0.01 -$0.01 -$0.02 CFOPS ($) 0 FQ110 FQ210 FQ310 FQ410 FQ111 FQ211 FQ311 FQ411 FQ112 FQ212 FQ312 FQ412 FQ113 FQ213 FQ313 FQ413E -$0.02 Source: Company reports, GMCI 12

13 VALUATION We value Nightingale at $0.65/shr using a discounted cash flow ( DCF ) model in which we forecast F E CAGR of 13.6% for revenue and 93.2% for EBITDA. EXHIBIT 10 DCF ANALYSIS Nightingale Informatix Corp. (NGH-V) Discounted Cash Flow Analysis F2010 F2011 F2012 F2013E F2014E F2015E 2016E Revenue 16,581 17,374 18,080 21,101 22,640 25,810 30,120 Revenue Growth (10.2%) 4.8% 4.1% 16.7% 7.3% 14.0% 16.7% EBITDA 924 1, ,488 5,151 6,907 9,012 EBITDA Growth (215.3%) 68.0% (58.4%) 439.7% 47.7% 34.1% 30.5% EBITDA Margin 5.6% 8.9% 3.6% 16.5% 22.8% 26.8% 29.9% NOPAT -1, ,897 3,613 4,812 6,296 Less Capital Expenditures ($) ,110-4, , , ,717.2 EPS (Continuing) Unlevered Free Cash Flow ($) , , ,852 2,212 PV of Unlevered FCFs ($) 2, , ,431 1,553 Valuation Assumptions: Discount Rate 10.0% Terminal Multiple 8.00x Valuation Analysis: Current 1-Yr Target 2-Yr Target Total PV of FCFs ($) 2,068 3,022 2,983 Terminal Value ($) 72,092 72,092 72,092 PV of Terminal Value ($) 55,684 61,252 67,378 Net (debt) cash position -5,636-6,102-5,144 FQ313 Net Debt Total Value ($) 52,117 58,173 65,217 FQ314E 0 DCF Value/Share $0.58 $0.65 $0.72 FQ315E Net Debt/Equity FD Shares O/S 90,083 90,083 90,083 Source: Company reports, GMC EXHIBIT 11 DCF SENSITIVITY ANALYSIS Terminal EV/EBITDA Multiplier $ % % Discount Rate 10.0% % % % Source: Company reports, GMCI 13

14 EXHIBIT 12 GLOBAL HEALTHCARE IT COMPARABLES Local Price Div. Mkt. Cap. Revenue (USD) P/E EV/Sales EV/EBITDA GLOBAL IT HEALTHCARE COMPS Ticker 15-Apr-13 Target Yield (US$M) C12E C13E C12E C13E C12E C13E C12E C13E Nightingale Informatix Corp NGH-V N/A Quality Systems Inc QSII-US % 1, Medworxx Solutions Inc MWX-V N/A NMF NMF NMF NMF NMF NMF Qhr Technologies Inc QHR-V N/A Greenway Medical Technologies Inc GWAY-US NMF Merge Healthcare Inc MRGE-US Athenahealth Inc ATHN-US , NMF NMF NMF Allscripts Healthcare Solutions Inc MDRX-US N/A 2,233 1,465 1, Emis Group Plc EMIS-LN % Computer Programs And Systems Inc CPSI-US % Mean (excluding NGH) 23.7x 22.4x 3.1x 2.7x 16.3x 10.2x Mean 22.1x 20.2x 2.9x 2.5x 15.2x 9.4x Median 20.9x 18.2x 2.1x 1.9x 10.9x 8.3x Note: All data is Consensus from Thomson, except NGH-V GMCI Price target, Source: Thomson One, GMCI 14

15 RECENT EVENTS March 27, 2013: Nightingale signed an exclusive $3.0M, five-year agreement with Giiwednong Health Link (GHL) for deployment of its cloud-based EMR, at GHL's 16 healthcare sites that employ ~200 healthcare providers. GHL is a health and information management joint venture between First Nation health organizations for the communities of Manitoulin Island and the North Shore of Lake Huron. March 12, 2013: Nightingale completed a $3.2M convertible debenture Series C offering, three-year callable bearing a 10% annual interest, to be paid monthly in cash. The Company also increased its senior loan facility by US$2M. Nightingale will use the proceeds to redeem the remainder of the outstanding Series A debentures and for general corporate purposes. February 26, 2013: Nightingale s new product, Nexia EMR v. 1.2, was tested and certified under the Drummond Group's Electronic Health Records Office of the National Coordinator Authorized Certification Body (ONC-ACB) program. January 21, 2013: Nightingale announced a three-year agreement with MCI Medical Clinics Inc. of Altima HealthCare Inc., to provide NOD, enterprise EMR, and practice management solutions to 20 MCI family practice and walk-in clinics across Ontario. September 13, 2012: Nightingale completed a non-brokered private placement of $2.75M convertible debentures maturing on January 15, 2016, bearing interest at 12%, which shall be calculated and payable in cash monthly. April 23, 2012: Nightingale signed a $2.15M services contract with the AOHC following the EMR software deployment contract awarded to the Company in December EMR deployment for the AOHC contract is underway with the latest project plan published in Appendix E. March 22, 2012: Nightingale announced that its NOD product has completed and passed the "live" Reference Site phase for OntarioMD's EMR Specification 4.0 and has achieved Funding Eligible status. OntarioMD was established by the Ontario Medical Association and the Ministry of Health and Long- Term Care to manage the EMR Adoption Program, which funds and assists physicians to acquire, implement and adopt technology solutions within the healthcare system in the province. 15

16 RISKS Nightingale is a technology company that is exposed to risks related to product development, patent infringement and operational management, as well as regulatory risks prevalent in the healthcare IT industry (data privacy, product certification, and others). Regulatory The Company operates in Canadian and US markets that vary in terms of size, maturity and relevant laws. The Canadian government has been a strong supporter of EMR products, which it financially supports through eligible provincial and federal funding. Changes to funding and related government regulations can be detrimental to the EMR adoption rate. The adoption rates in the US are also supported by government funding (through the American Recovery and Reinvestment Act (ARRA)), which can be reduced or withdrawn at any time. Competition The healthcare IT industry and EMR sector have a number of different competitors, both small and large, that can swiftly capture a significant part of the market. Recent consolidation in the market, both in Canada and the US, has further complicated matters. Integration Nightingale has completed a number of acquisitions; however, each time an acquisition is completed, the Company undertakes inherent integration risks. 16

17 APPENDIX A KEY HISTORICAL DEVELOPMENTS $2.00 Close Price, Daily 50-Day MA 200-Day MA 12.0 $1.80 B $ $1.40 A 8.0 $1.20 $1.00 $ Volume (M Shares) $0.60 $ $0.20 $ Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 Stock Price ($) C D E F G H I J K Point Date Event A September 1, 2005 NGH was formed pursuant to an amalgamation between Venquest Capital and Nightingale Informatix Corp. (Private) B January 12, 2006 Nightingale Announces Acquisition of Integrated Healthware Inc. of Boston C February 19, 2007 Nightingale Announces Acquisition of VantageMed Corporation D October 22, 2007 Nightingale Signs 15 Year Clinical Management System Agreement with OntarioMD E February 29, 2008 Nightingale Announces US$12.3 Million Sale of its Therapist Helper Business to Netsmart Technologies F October 29, 2009 Nightingale well positioned to benefit after $236M EMR Funding Program announced by the OMA G December 6, 2011 Nightingale Signs EMR Agreement with the AOHC Covering 3,500 Health Care Providers Across Ontario H December 19, 2011 Nightingale Acquires U.S.-based Practice Management Software (PMS) Business from Medrium Inc. I March 19, 2012 Nightingale Strengthens EMR Market Position With Two Contracts Totaling $1.0M J April 23, 2012 Nightingale signs $2.15M EMR data migration and retention contract with the AOHC K March 27, 2013 Nightingale signs C$3.0M, 5-Year Agreement with Giiwednong Health Link Source: Company reports, Thomson ONE, GMCI 17

18 APPENDIX B PRODUCT OVERVIEW Nightingale On Demand (NOD) is a cloud-based EMR product geared toward medical staff in primary care practices, multi-physician outpatient clinics, hospitals, governments, and regional health organizations. The Company s next generation cloud-based, user-friendly, platform-agnostic EMR product, Nexia EMR, is currently being developed, tested, and certified. The Company intends to start migrating users to the new product by the end of C2013. On February 26, 2013, Nightingale announced that Nexia EMR v1.2 tested and certified under the Drummond Group's Electronic Health Records Office of the National Coordinator Authorized Certification Body (ONC-ACB) program. This will allow Nightingale s clients to achieve Meaningful Use certification and qualify for incentive funds under the ARRA. The Company now anticipates that it will have achieved certification for Meaningful Use Stage 2 by the end of C2013. EXHIBIT 13 NIGHTINGALE CLOUD EMR (NEW VERSION) NEXIA SCREENSHOTS 18

19 Source: Company reports 19

20 APPENDIX C MANAGEMENT AND BOARD OF DIRECTORS EXHIBIT 14 MANAGEMENT AND BOARD OF DIRECTORS SHAREHOLDINGS Management and Board of Directors Shares Options Brian Schachter, Chairman 14,769, ,000 David H. Atkins, Director 10, ,073 Marc Filion, Director - 100,000 David Banks, Director 1,907, ,642 George Christodoulou, Director 4,707, ,428 Charles Frumberg, Director 11,929, ,642 Sam Chebib, President, CEO and Director 11,018, ,377 Peter Cauley, CFO - 200,000 Trevor Henderson, EVP - Operations 15, ,000 Source: Company reports, SEDI MANAGEMENT TEAM Sam Chebib, President, CEO, and Director Mr. Chebib has been the President and Chief Executive Officer of Nightingale since April Prior to Nightingale, Mr. Chebib was the President and COO of MedcomSoft from April 2000 to September Between 1988 and April 2000, he held a number of positions with Toromont Industries. Mr. Chebib holds a Bachelor of Science Degree and became a professional engineer in Ontario in Peter Cauley, Chief Financial Officer Mr. Cauley has 25+ years of financial and operational management experience with public and private technology companies. Prior to joining Nightingale, Mr. Cauley held senior management positions at Solarsoft Business Systems, an ERP software company, and BorderWare Technologies. He also served as CFO of DataMirror Corporation (TSX-listed prior to its sale to IBM). Mr. Cauley is a Chartered Accountant and holds a Bachelor of Arts, Financial Studies from the University of Western Ontario. Trevor Henderson, Executive Vice-President, Operations Mr. Henderson oversees Nightingale s North American operations. He has 20+ years of experience in corporate strategy, business development, information technology and marketing. Most recently, Mr. Henderson held senior management roles at Adesa and Openlane, divisions of KAR Auction Services (KAR-US; Not Rated). He holds an MBA from the Rotman School of Management and undergraduate degrees in economics and political science from McMaster University. Source: Company reports, Reuters 20

21 BOARD OF DIRECTORS Sam Chebib, President, CEO, and Director Bio under Management section. Brian Schachter, Chairman Mr. Schachter has been the President and Chief Executive Officer of Counseltron Ltd., a developer, manufacturer and importer of consumer goods to national retailers since Mr. Schachter received his Bachelor of Commerce degree from Concordia University. David H. Atkins, Director Mr. Atkins was a Senior Adviser to Lang Michener LLP, Barristers & Solicitors, from 1999 to Prior to joining Lang Michener LLP, he was a partner and member of the Executive Committee of Coopers & Lybrand, Chartered Accountants. Mr. Atkins is a Director and Chairman of the Audit Committees of Pethealth (PTZ-T; Not Rated) and Integrated Asset Management (IAM-T; Not Rated). His professional designations include M.A. (Law), Oxford and FCA, Ontario. Marc Filion, Director Mr. Filion has more than 20 years of experience in business leadership, turnaround, strategy, sales, negotiation, partnership, merger and acquisition, as well as divestiture, with deep experience within the healthcare, finance, internet and telecommunications sectors. Mr. Filion held various senior positions at Emergis from 1997 to 2008, such as EVP Health Benefit Management, EVP of Business Development and Corporate Strategy, President of Webdoxs and President of e-lending US. Following the acquisition of Emergis by Telus in 2008, Mr. Filion became Chief Operating Officer of TELUS Health and Financial solutions. Mr. Filion holds an MBA in Strategy and Marketing from UCLA Anderson School of Management and a BA in Marketing from HEC Montréal. David Banks, Director Mr. Banks is the Managing Partner of Carlyle Banks & Co. Inc., a Torontobased financial firm. During his career, Mr. Banks held senior roles at Chase Manhattan Bank, Continental Grain Company, General Atlantic Group Limited, AT&T Capital Corporation and Newcourt Credit Group. Mr. Banks is currently the non-executive Director of Medicure Inc. and Penna Plc. Mr. Banks received an AB and an honorary LLD from Kenyon College in the US. He received a Juris Doctor from the University of Florida in George Christodoulou, Director Dr. Christodoulou is a Co-Founder and Senior Partner of Altima Dental Canada Inc., one of the largest private dental groups in Canada. He is also a member of the Royal College of Dental Surgeons of Ontario and the Alberta Dental Association and College. Dr. Christodoulou received his Doctor of Dental Surgery and MBA from the University of Toronto. Charles Frumberg, Director Mr. Frumberg is the Founder and a Managing Member of Emancipation Capital Master Ltd., a hedge fund focused on publicly traded technology companies. Before founding Emancipation Capital Master Ltd., Mr. Frumberg served as the Co-Head of Equities for SG Cowen Securities Corp., a leading investment bank specializing in technology and healthcare. Prior to joining SG Cowen, Mr. Frumberg was the Director of US equity research and Co-head of global research at UBS Securities. Source: Company reports 21

22 APPENDIX D FINANCIALS EXHIBIT 15 INCOME STATEMENT Income Statement (in CAD '000s) F2011 F2012 FQ113 FQ213 FQ313 FQ413E F2013E F2014E F2015E F2016E Total Revenue 17,374,095 18,080,384 5,561,117 5,068,283 5,096,167 5,375,757 21,101,324 22,640,206 25,809,835 30,120,077 Total Cost of Goods Sold 3,212,174 3,050, , , , ,739 2,690,936 2,776,300 3,164,982 3,531,903 Total Gross Profit 14,161,921 15,029,602 4,940,446 4,569,835 4,336,089 4,564,018 18,410,388 19,863,906 22,644,853 26,588,174 General and Administration 3,211,825 3,351, , , , ,254 3,513,323 3,396,031 3,871,475 4,246,931 Sales and Marketing 2,359,392 3,291,377 1,056, , , ,115 3,453,034 3,418,671 3,897,285 4,337,291 Research and Development 3,163,757 2,919,698 1,522,606 1,363,825 1,227,111 1,220,297 5,333,839 4,822,364 4,749,010 5,451,734 Client Services 3,576,062 4,192,026 1,022,490 1,035,312 1,054,442 1,107,406 4,219,650 4,324,279 4,929,678 5,752,935 Stock Based Compensation 298, ,803 66,423 35,380 27,855 26, , , , ,899 Amortization 1,891,966 1,513, , , , ,489 1,647,713 1,248,538 1,710,045 2,212,218 Business acquisition costs 0 512,889 49, , Total Operating Expenses 14,501,198 15,897,185 4,515,944 4,040,497 3,949,304 4,064,072 16,569,817 15,961,345 17,447,448 19,788,891 Operating Income (339,277) (867,583) 424, , , ,945 1,840,570 3,902,561 5,197,404 6,799,283 Total Other Income (646,122) (332,299) (161,385) 9,186 (158,559) (143,715) (454,473) (667,588) (622,115) (600,271) EBT (985,399) (1,199,882) 263, , , ,231 1,386,098 3,234,972 4,575,289 6,199,012 Income Taxes 23,408 (18,514) (13,480) 85,130 (1,621) (28,498) 41,531 (258,798) (366,023) (495,921) Net Income (Loss) to Company (961,991) (1,218,396) 249, , , ,732 1,427,628 2,976,175 4,209,266 5,703,091 EPS - Excluding Non-Recurring Items Basic EPS - ex-non-recurring items ($0.01) ($0.02) $0.00 $0.01 $0.00 $0.00 $0.02 $0.04 $0.06 $0.07 Basic EPS - ex-non-recurring items ($0.01) ($0.02) $0.00 $0.01 $0.00 $0.00 $0.02 $0.03 $0.05 $0.06 Shares Outstanding Basic 75,979,348 76,310,915 76,310,915 76,310,915 76,310,915 76,310,915 76,310,915 76,310,915 76,310,915 76,310,915 Diluted 75,979,348 76,310,915 76,310,915 90,085,652 90,083,199 90,083,199 86,640,741 90,085,652 90,085,652 90,085,652 Operating Metrics Gross Profit 14,161,921 15,029,602 4,940,446 4,569,835 4,336,089 4,564,018 18,410,388 19,863,906 22,644,853 26,588,174 Adj. EBITDA 1,850,885 1,275, , , , ,313 3,694,791 5,311,246 7,086,788 9,221,401 EBITDA 1,552, , , , , ,434 3,488,283 5,151,098 6,907,449 9,011,502 EBIT (339,277) (867,583) 424, , , ,945 1,840,570 3,902,561 5,197,404 6,799,283 EBT (985,399) (1,199,882) 263, , , ,231 1,386,098 3,234,972 4,575,289 6,199,012 Net Income (ex-non-recurring items) (961,991) (1,273,098) 249, , , ,732 1,427,628 2,976,175 4,209,266 5,703,091 Fiscal Year End: March-31 Source: Company reports, GMCI 22

23 EXHIBIT 16 BALANCE SHEET Balance Sheet (in CAD '000s) F2011 F2012 F2013E F2014E F2015E F2016E Current Assets Cash 4,165,406 3,199,058 3,435,238 2,224,315 2,936,256 4,483,399 Trade & Other Receivables 3,072,941 2,371,367 3,296,837 4,071,358 4,641,348 5,416,453 Inventories 19, ,459 3,944 3,894 Prepaid Expenses 418, , , , , ,608 Total Current Assets 7,676,301 6,152,018 7,056,770 6,804,539 8,168,514 10,483,354 Non-Current Assets Deferred Costs 198, Property & Equipment 573, , ,934 1,149,338 1,486,774 1,938,738 Other , , , ,511 Goodwill 4,692,399 4,792,399 4,792,399 4,792,399 4,792,399 4,792,399 Intangible Assets 3,220,105 5,808,744 8,560,659 11,221,277 14,166,604 17,219,595 Total Assets 16,361,134 17,204,150 21,935,272 24,556,063 29,202,802 35,022,597 Current Liabilities Line of Credit 950, , , , , ,000 Trade & Other Payables 2,323,880 3,351,187 3,065,163 3,013,071 3,434,901 3,391,832 Income Taxes Payable Current Portion of Deferred Revenue 4,778,811 4,689,175 3,494,242 3,948,494 4,501,283 5,010,551 Current Portion of Financial Lease Obligations 145, ,710 64,776 64,776 64,776 64,776 Current Portion of Term Loan 800, , , ,822 1,322,038 1,350,266 Current Portion of Subordinated Debt , , , ,000 Other Current Liabilities Total Current Liabilities 8,998,128 9,705,885 9,015,471 9,579,163 10,962,997 11,457,425 Non-Current Liabilities Term Loan 767,857 2,287,608 3,434,276 2,355,053 1,229, ,730 Convertible Debentures 1,820,050 1,802,256 4,632,791 4,632,791 4,632,791 4,632,791 Deferred Revenue 2,731,075 2,619,448 2,011,634 2,011,634 2,011,634 2,011,634 Financial Lease Obligations 128,130 37,345 44,777 44,777 44,777 44,777 Income Taxes Payable 667, , , , , ,131 Landlord inducement , , , ,693 Total Liabilities 15,112,948 17,139,463 19,964,772 19,449,242 19,707,376 19,614,181 Shareholders' Equity Capital Stock 29,629,683 29,629,683 29,629,683 29,629,683 29,629,683 29,629,683 Contributed Surplus 4,761,620 4,811,456 5,581,763 5,741,910 5,921,249 6,131,148 Equity Portion of Convertible Debentures 269, , , , , ,138 Warrants 701, , Deficit (34,114,449) (35,411,712) (33,984,084) (31,007,909) (26,798,643) (21,095,552) Total Shareholders Equity 1,248,186 64,687 1,970,500 5,106,822 9,495,426 15,408,417 Total Shareholders Equity 1,248,186 64,687 1,970,500 5,106,822 9,495,426 15,408,417 Total Liabilities & Shareholders Equity 16,361,134 17,204,150 21,935,272 24,556,063 29,202,802 35,022,597 Source: Company reports, GMCI 23

24 EXHIBIT 17 CASH FLOW STATEMENT Cash Flow Statement (in CAD '000s) F2011 F2012 F2013E F2014E F2015E F2016E Cash Provided By Operating Activities Net Income (961,991) (1,218,396) 1,427,628 2,976,175 4,209,266 5,703,091 Depreciation 1,891,966 1,513,913 1,647,714 1,248,538 1,710,045 2,212,218 Amortization of Transaction Costs 40, ,313 42, Other 0 36,143 23, Non-Controlling Interest 0 0 (87,682) Interest Accretion 61,657 92,484 95, Stock-Based Compensation 298, , , , , ,899 Unrealized Loss (Gain) on Foreign Exchange 92,438 12,079 10, Change in Non-Cash Working Capital Trade & Other Receivables (301,362) 599,898 (1,445,764) (774,521) (569,990) (775,105) Prepaid Expenses 35,998 (154,389) 256,897 (180,711) (81,560) 7,360 Inventories 10,826 19,882 0 (3,459) (484) 49 Deferred Costs (115,016) Trade & Other Payables (230,832) 945,147 (140,068) (52,092) 421,830 (43,068) Income Taxes Payable (38,232) 19,213 (1,790) Deferred Revenue 2,270,860 (201,263) (1,802,747) 454, , ,268 Deferred Compensation Payable Work in Process Other 0 0 (140,950) Total Cash Provided By Operating Activities 3,055,024 1,910,827 40,169 3,828,327 6,421,234 7,823,713 Investing Activities Purchase of Property & Equipment (168,772) (241,177) (1,175,355) (1,460,942) (2,047,481) (2,664,183) Capitalized Development Costs (584,656) (1,869,120) (3,680,651) (2,660,619) (2,945,327) (3,052,992) Total Cash From Investing Activities (753,428) (3,872,177) (4,856,006) (4,121,560) (4,992,808) (5,717,174) Financing Activities Proceeds from Line of Credit Borrowing 950, ,602, Repayment of Line of Credit Borrowing 0 (280,000) (1,473,000) Proceeds from Issuance of Common Shares 1,243, Proceeds from Convertible Debt Financing 2,017, ,269, Proceeds from Term Loan 1,871,575 3,374,983 4,589, Repayment of Term Loan (333,333) (1,886,917) (865,246) (917,689) (716,485) (559,395) Proceeds from Subordinated Debt Financing (5,250,000) Repayment of Subordinated Debt Financing (339,448) Total Cash From Financing Activities 159, ,342 5,043,184 (917,689) (716,485) (559,395) Effect of exchange rates on cash (93,723) 17,660 8, Net Increase in cash 2,367,159 (966,348) 236,180 (1,210,923) 711,941 1,547,143 Beginning Cash 1,798,247 4,165,406 3,199,058 3,435,238 2,224,315 2,936,256 Ending Cash 4,165,406 3,199,058 3,435,238 2,224,315 2,936,256 4,483,399 Source: Company reports, GMCI 24

25 NGH-V APPENDIX E AOHC EMR DEPLOYMENT SCHEDULE EXHIBIT 18 AOHC CONTRACT DEPLOYMENT SCHEDULE MARCH 27, 2013 Source: Ontario CHC

26 RESEARCH DISCLOSURES Analyst Certification The Global Maxfin Capital Inc ( GMCI ) research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst s personal views about the company and the securities that are the subject of this report and all other companies and securities mentioned in this report and (ii) no part of the research analyst s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this report. Analyst Ethics As a condition of employment, analysts are required to adhere to the Code of Ethics and Standards of Professional Conduct of The CFA Institute. Analyst Trading GMCI permits analysts to own and trade in the securities and/or derivatives of those companies under their research coverage, subject to the following restrictions. No trades can be executed in anticipation of the initiation of coverage or a change in recommendation, until 48 hours after the dissemination of such information to our clients. A transaction against an analyst s recommendation can only be executed for a reason unrelated to the outlook for the stock and with the prior approval of the Chief Compliance Officer. Conflicts of Interest The research analyst and/or associates who prepared this report are compensated based on the overall profitability of GMCI, which includes the overall profitability of investment banking and related services. In the normal course of its business, GMCI or its affiliates may provide financial advisory and/or investment banking services for the issuers mentioned in this report in return for remuneration and may seek to become engaged for these services from any of the issuers mentioned in this report. GMCI may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. GMCI, and/or its respective officers, directors or employees may from time to time acquire, hold or sell the securities discussed herein or in related securities or in options, futures or other derivative instruments based thereon. Dissemination of Research GMCI uses its best efforts to disseminate its equity research to all clients on a timely and effective basis in electronic form, via fax, mail and through its website ( Please contact your GMCI representative for more information. Equity Research Rating System The rating system is based on the stock s expected absolute total return over the next 6 to 12 months. STRONG BUY is expected to produce a total return of 25% or more, BUY a total return of 10% to 25%, HOLD a total return of 0% to 10%, and SELL a negative total return. The risk rating is a summary measure of the authoring analyst's subjective assessment of the underlying fundamental risks of the issuer and the business environment in which it operates. In general, we regard large capitalization stocks with a consistent dividend history as being at the low end of the risk continuum and small capitalization early stage companies as speculative. Our rating system has four categories: LOW, MEDIUM, HIGH and SPECULATIVE. 26

27 General Disclosures NGH-V The opinions, estimates and projections contained in this report are those of GMCI as of the publication date of this report and are subject to change without notice. GMCI endeavours to ensure that its research reports are compiled or derived from sources that it believes are reliable and contain information and opinions that are accurate and complete. However, GMCI makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. This report is not to be construed as an offer or solicitation to buy or sell any security. The Nightingale logo used on the front page of this report is a copyrighted trademark of Nightingale Informatix Corp., if applicable. Applicable Disclosures for Issuer (Nightingale Informatix): 6 1. As of the end of the month immediately preceding the date of issuance of this research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month, GMCI and its affiliates collectively beneficially own 1% or more of any class of the issuer's equity securities. 2. The authoring analyst and/or an associate of the analyst are long/short in any of the issuer s securities directly or through derivatives. 3. A GMCI partner, director or officer has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services. 4. GMCI has provided investment banking services for the issuer during the 12 months preceding the date of issuance of the report. 5. List name(s) of any partner, director, officer, employee or agent of GMCI, who is also an officer, director or employee of the issuer. 6. The authoring analyst has visited the material operations of the issuer. 7. The authoring analyst received reimbursement for travel expenses. Distribution of Recommendations Strong Buy Buy Hold Sell Under Review The particulars contained herein were obtained from sources, which we believe to be reliable, but are not guaranteed by us and may be incomplete or inaccurate. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or an offer to buy or sell the securities mentioned herein. GMCI may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein, and may receive remuneration for its services. GMCI and/or its principals, officers, directors, representatives, associates may have a position in the securities mentioned herein and may make purchases and/or sales of these securities from time to time in the open market or otherwise. This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever nor may the information, opinions or conclusions contained herein be referred to without in each case the prior written consent of GMCI. 27

28 CORPORATE DIRECTORY Equity Research Ralph Garcea, P. Eng, MBA Managing Director, Head of Equity Research Tel: (647) Anuj Nijhawan Equity Research Associate Tel: (647) Institutional Sales & Trading Fabiene Evans, CPA, CA Managing Director, Head of Institutional Sales Tel: (416) Steve Duenkler, CFA Managing Director, Head of Institutional Trading Tel: (416) Investment Banking Dean McPherson, MBA, CFA Managing Director, Head of Investment Banking Tel: (647) Electronic Trading Steve Burns Vice President, Electronic Trading Tel: (647) Kent Learoyd Vice President, Electronic Trading Tel: (647) Bay Street, Suite 800 Toronto, ON M5H 2S6 28