Mr. Stephen Reid reports

DLC ADOPTS MONTHLY CASH DISTRIBUTION POLICY

Founders Advantage Capital Corp. has provided an update. The board of directors of Dominion Lending Centre Group of Companies (DLC) has resolved to distribute $900,000 of monthly cash distributions to its securityholders commencing in October, 2016. As the corporation holds a 60-per-cent interest in DLC, the corporation anticipates receiving aftertax cash distributions of $540,000 per month ($6.5-million annually) from DLC. As the DLC entities are taxed at the operating entity level, no additional tax amounts are payable by the corporation on the cash distributions received from DLC.

As previously disclosed, the corporation is entitled to 60 per cent of all annual cash distributions from DLC up to $14.6-million and the corporation is entitled to 30 per cent of annual cash distributions exceeding $14.6-million. It was initially anticipated that the corporation would receive annual taxable cash distributions of $8.8-million from DLC in the event the annual distribution threshold was met (or approximately $6.4-million annually after tax). However, the transaction was ultimately structured such that the tax liability is at the DLC operating entity level, whereby the cash distributions to securityholders are received on an aftertax basis. As such, the corporation now anticipates receiving $6.5-million per annum without any additional tax amounts owed on such distributions. Accordingly, the cash distributions from DLC are consistent with the corporation's initial expectations.

Stephen Reid, president and chief executive officer of the corporation, noted, "We are delighted that the DLC board of directors has adopted a sustainable cash distribution policy and that we are now receiving monthly cash distributions from our first investment."

We seek Safe Harbor.