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## Risks Relating Specifically to SMi 

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## RISKS RELATING TO ALL OF OUR PRIVATE COMPANY PARTNERS, GENERALLY 

In addition to the risks relating specifically to our material Private Company Partners (being KMH, Killick, Quetico, Labstat, SCR, Sequel, and SMi), there are several other risks which impact all of our current and future Private Company Partners collectively, which if realized, could have a material impact on our operations and financial condition, as described below. 

## How a Private Company Partner is leveraged may have adverse consequences to them 

Leverage may have important adverse consequences on our Private Company Partners. Private Company Partners may be subject to restrictive financial and operating covenants. Leverage may impair our Private Company Partners ability to finance their future operations and capital needs. As a result, their flexibility to respond to changing business and economic conditions and to business opportunities may be limited. A leveraged company's income and net assets will tend to increase or decrease at a greater rate than if borrowed money was not used. 

## Our Private Company Partners rely on key personnel 

Often, the success of a private business depends on the management talents and efforts of one or two persons or a small group of persons. The death, disability or resignation of one or more of these persons could have a material adverse impact on a Private Company Partner's operations or ability to access additional capital qualified personnel, expand or compete. 

