Ann: Accelerating Cashflow through enforcement of Legacy Licenses, page-225

Why I am still a Bull:

The equity swap between Pan Andean Pty Ltd ("PA") a private investment company which is the second largest holder of KPO, tightly held by John Newton an affiliated investor with John Byrne the Chairman and Lion Bay Capital LLC ("LB") a TSX listed company was simply a corporate reshuffle of equity between key management personnel.

The result of which 'evens out' the playing field for those who had lent money and were a creditor of PA. As well as further incentivising John Byrne and Ross MacLachlan.

Why did they choose a listed vehicle on the TSX ventures in Canada? simply put Ross MacLachlan is Canadian (most likely a domiciled Canadian for tax purposes) he along with others has been able to roll their holdings into a tax-free environment through LB. Note: specifically the shares of LB are held personally by various structures in British Columbia as it appears on the sales and purchases agreement. For those of you who are not familiar with this tax structure, it is 100% legal and commonplace on the TSX ventures exchange. The majority of PE/VC firms employ this method of keeping the tax structure universally appealing for worldwide investors that operate overseas. That being investors are taxed in their own domiciled country as opposed to dealing with outdated and catastrophic Australian tax laws that deflect international investment.

The next question is why did PB sell down 3.6m KPO shares at 11 cents. Primarily because they wanted to roll over their equity in PA to LB with a bit of privacy (as their holding fell below 5% on the register). Also being a privately held company with creditors they probably needed the liquidity to set up LB to begin with. A worthwhile investment if you ask me.

Now tieing all the above together... you have to seriously ask yourself why on earth would management go to all this effort? and why have they only rolled over now? I think the answers are glaringly obvious... there are diamonds in the vault.

As they say, before TAKE OFF, fit your own oxygen mask first before helping others.

RR