1.Describe the Warrants:

The Warrants create an opportunity to increase the return on your Investment. The potential profit is based on the increase of the Turnover of the End Borrower between the start and the repayment date of the Loan. As you will only be paying a few pounds for the Warrants the downside on this element of the Investment Unit is minimal. Equally, if the borrower’s revenues do not grow, there will be no gains. The Warrants are issued to each Member directly by the End Borrower pro-rata to their investment.

You will not need to invest further monies to exercise your Warrants because on the date of exercise the End Borrower must buy them back from you. You will have two choices of the date you exercise the Warrants, being

(i) The First Exercise Date, which is a date soon after the date the Loan is due to be repaid. The price will be the First Exercise Price less the original Strike Price per share; or,

(ii) On an IPO, or sale of the End Borrower which could be at a much later date than the repayment date. In this event your profit will be linked to the IPO or sale price. It could be higher than if you exercise at the First Exercise Date, or there might never be an IPO or sale.

RVF or the End Borrower will inform you if an exercise date has arisen and you will decide whether you wish to exercise your Warrants, or not, at the time of The First Exercise Date or wait until a potential IPO or sale. RVF may provide background information, but it will not give advice. The decision whether you exercise earlier, or later, will be your choice.

For some Investments you may be able to acquire shares at the original Strike Price if there is an IPO.

2.How much profit could I receive from the Warrants?

There is no guarantee you will make a profit at either Exercise Date.

Here is an example of how the profit calculation is made (please note that this information is provided for illustrative purposes only, and details will vary for each investment opportunity):

Before the Loan is made, RVF and Backup Drones Ltd agree that for the purposes of the Warrant calculation the capitalisation of Backup Drones Ltd is £5,000,000. The number of shares in issue is 100,000 so each share has a Strike Price of £50.

The End Borrower, Backup Drones Ltd, had revenues of £1 million for the 12-month period prior to the Loan being made. Later, during the 12-month period prior to the repayment date, their revenues increased and were £2 million, a factor of 1:2

The investing Members who invested a total of £1,000,000 were entitled to Warrants equating to 10% of their investment which is £100,000. As each share has a Strike Price of £50, they receive Warrants for 2,000 shares at £50. If they exercised their option shortly after the repayment date, which is known as the First Exercise Date, they will receive a factor of 2 times the Strike Price, less the Strike Price which is £100, less £50 per share =£50 per share. Their warrants for 2,000 shares would make a profit of £50x2 =£100,000.

So, had you invested £50,000, in this example, you would have received £5,000 in addition to the interest on your Loan Note.

3.Do I have to pay money to exercise my Warrants?

No. The End Borrower will pay you the Exercise Price less the Strike Price.

4. What happens if the End Borrower is sold or floats before the end of the loan period before the Warrant can be exercised?

If there is a sale or an IPO of the company, then The Loan is immediately repayable. The Warrants are then redeemable at the price equivalent to the purchase, or IPO, price, and not the increase revenue formula. The Warrants of some investments may be capable of conversion into shares in the event of an IPO as described in the relevant Offer Document.

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