Dated June 1, 2015 PROPOSED ACQUISITION OF ASSETS FROM...

ACL INTERNATIONAL LTD.

FILING STATEMENT Dated June 1, 2015

PROPOSED ACQUISITION OF ASSETS FROM BLUE SKY LANGSA LTD.

Neither the TSX Venture Exchange Inc. nor any securities regulatory authority has in any way passed upon the merits of the Change of Business described in this Filing Statement.

TABLE OF CONTENTS

GLOSSARY OF GENERAL TERMS ..................................................................................................................... - 1 -

TECHNICAL ABBREVIATIONS........................................................................................................................... - 3 -

SUMMARY OF FILING STATEMENT ................................................................................................................. - 4 -

PART I - THE ACQUISITION .............................................................................................................................. - 12 -

THE ACQUISITION ............................................................................................................................................... - 12 - ARM’S LENGTH TRANSACTION ........................................................................................................................... - 12 - FINDER’S FEE ...................................................................................................................................................... - 13 - BACKGROUND TO AND REASONS FOR THE ACQUISITION ..................................................................................... - 13 - CONDITIONS TO THE ACQUISITION ...................................................................................................................... - 13 - TERMINATION OF THE ASSET PURCHASE AGREEMENT ........................................................................................ - 14 - LOANS FROM ACL TO BSL ................................................................................................................................. - 14 - ADDITIONAL INFORMATION CONCERNING ACL, THE BLUE SKY ASSETS AND THE RESULTING ISSUER .............. - 14 - RISK FACTORS ..................................................................................................................................................... - 14 -

PART II - INFORMATION CONCERNING ACL PRIOR TO ACQUISITION .................................................. - 27 -

CORPORATE STRUCTURE ..................................................................................................................................... - 27 - HISTORY .............................................................................................................................................................. - 27 - INTERCORPORATE RELATIONSHIPS ...................................................................................................................... - 28 - SELECTED CONSOLIDATED FINANCIAL INFORMATION ........................................................................................ - 29 - MANAGEMENT’S DISCUSSION AND ANALYSIS .................................................................................................... - 29 - DESCRIPTION OF THE SECURITIES ........................................................................................................................ - 29 - STOCK OPTION PLAN ........................................................................................................................................... - 30 - PRIOR SALES ....................................................................................................................................................... - 30 - STOCK EXCHANGE PRICE .................................................................................................................................... - 30 - EXECUTIVE COMPENSATION ............................................................................................................................... - 31 - NON-ARM’S LENGTH PARTY TRANSACTIONS ..................................................................................................... - 37 - LEGAL PROCEEDINGS .......................................................................................................................................... - 38 - AUDITOR, TRANSFER AGENT AND REGISTRAR .................................................................................................... - 38 - MATERIAL CONTRACTS ....................................................................................................................................... - 38 -

PART III - INFORMATION CONCERNING THE BLUE SKY ASSETS .......................................................... - 39 -

CORPORATE STRUCTURE OF BSL ........................................................................................................................ - 39 - PROPERTY DESCRIPTION AND LOCATION - THE LANGSA TAC ............................................................................ - 39 - MCDANIEL’S REPORT ......................................................................................................................................... - 40 - REGIONAL GEOLOGY .......................................................................................................................................... - 40 - GEOLOGY OF THE LANGSA FIELD ........................................................................................................................ - 41 - PRODUCTION HISTORY ........................................................................................................................................ - 42 - PROPOSED WORK PROGRAM ............................................................................................................................... - 42 - RESERVES DATA AND OTHER OIL AND GAS INFORMATION ................................................................................ - 42 -

PART IV - INFORMATION CONCERNING THE RESULTING ISSUER ........................................................ - 52 -

CORPORATE STRUCTURE ..................................................................................................................................... - 52 - NARRATIVE DESCRIPTION OF THE BUSINESS ....................................................................................................... - 52 - DESCRIPTION OF THE SECURITIES ........................................................................................................................ - 52 - SELECTED PRO FORMA FINANCIAL INFORMATION .............................................................................................. - 53 - PRO FORMA CONSOLIDATED CAPITALIZATION ................................................................................................... - 53 - AVAILABLE FUNDS AND PRINCIPAL PURPOSES ................................................................................................... - 54 - PRINCIPAL SECURITYHOLDERS ............................................................................................................................ - 55 - DIRECTORS, OFFICERS AND PROMOTERS ............................................................................................................. - 56 - EXECUTIVE COMPENSATION ............................................................................................................................... - 60 - INDEBTEDNESS OF DIRECTORS AND OFFICERS .................................................................................................... - 61 -

INVESTOR RELATIONS ARRANGEMENTS .............................................................................................................. - 61 - OPTIONS TO PURCHASE SECURITIES .................................................................................................................... - 61 - VALUE SECURITY ESCROW AGREEMENT ............................................................................................................ - 62 - AUDITORS, TRANSFER AGENT AND REGISTRAR .................................................................................................. - 62 -

PART V - GENERAL MATTERS ......................................................................................................................... - 63 -

SPONSORSHIP AND AGENT RELATIONSHIP .......................................................................................................... - 63 - EXPERTS .............................................................................................................................................................. - 63 - OTHER MATERIAL FACTS .................................................................................................................................... - 63 - BOARD APPROVAL .............................................................................................................................................. - 63 -

APPENDIX “A” - FINANCIAL STATEMENTS OF ACL INTERNATIONAL LTD. ...........................................A-1

APPENDIX “B” - ACL INTERNATIONAL LTD. MD&A ......................................................................................B-1

APPENDIX “C” - PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ...............................................C-1

APPENDIX “D” - SUMMARY OF PRICE FORECAST - MCDANIELS ...............................................................D-1

APPENDIX “E” - FORM 51-101F2 ......... .................................................................................................................E-1

APPENDIX “F” - FORM 51-101F3 ...........................................................................................................................F-1

APPENDIX “G” - NEW OPTION PLAN ………………………………………......................................................G-1

CERTIFICATE OF ACL INTERNATIONAL LTD. ..............................................................................................CC-1

ACKNOWLEDGEMENT – PERSONAL INFORMATION...................................................................................CC-1

CERTIFICATE OF BLUE SKY LANGSA LTD. ..................................................................................................CC-2

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GLOSSARY OF GENERAL TERMS

In this Filing Statement, the following terms shall have the meaning ascribed thereto as set out below:

“ACL” means ACL International Ltd., a corporation formed under the laws of the Province of Alberta.

“ACL Option Plan” means the incentive stock option plan of ACL currently in place, which provides that the board of directors of ACL may from time to time, in its discretion, and in accordance with the requirements of the NEX, grant to directors, officers, employees, and technical consultants to ACL, non-transferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance under the plan does not exceed 1,710,395.

“Acquisition” means the proposed acquisition by ACL of the Blue Sky Assets upon the terms and subject to the conditions set forth in the Asset Purchase Agreement and as described herein;

“Affiliate” means a corporation that is Affiliated with another corporation as follows:

(a) a corporation is an “Affiliate” of another corporation if:

(i) one of them is the subsidiary of the other; or

(ii) each of them is controlled by the same Person.

(b) a corporation is “controlled” by a Person if:

(i) voting securities of the corporation are held, other than by way of security only, by or for the benefit of that Person; and

(ii) the voting securities, if voted, entitle the Person to elect a majority of the directors of the corporation.

(c) a Person beneficially owns securities that are beneficially owned by:

(i) a corporation controlled by that Person; or

(ii) an Affiliate of that Person or an Affiliate of any corporation controlled by that Person.

“Asset Purchase Agreement” means the Asset Purchase Agreement dated March 13, 2015 between ACL and BSL, as amended by the Amended and Restated Asset Purchase Agreement between ACL and BSL dated April 30, 2015 pursuant to which ACL will purchase and BSL will sell the Blue Sky Assets to ACL.

“Associate” when used to indicate a relationship with a person or company, means

(a) an issuer of which the person or company beneficially owns or controls, directly or indirectly, voting securities entitling him to more than 10% of the voting rights attached to outstanding securities of the issuer,

(b) any partner of the person or company,

(c) any trust or estate in which the person or company has a substantial beneficial interest or in respect of which a person or company serves as trustee or in a similar capacity,

(d) in the case of a person, a relative of that person, including

(i) that person’s spouse or child, or

(ii) any relative of the person or of his spouse who has the same residence as that person;

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but

(e) where the Exchange determines that two persons shall, or shall not, be deemed to be associates with respect to a Member firm, Member corporation or holding company of a Member corporation, then such determination shall be determinative of their relationships in the application of Rule D with respect to that Member firm, Member corporation or holding company.

“Blue Sky Assets” means BSL’s properties located in the East Aceh Offshore contract area of the Republic of Indonesia in the Strait of Malacca as further described in “Part III - Information Concerning the Blue Sky Assets”.

“Blue Sky BVI” means Blue Sky Langsa Inc., a corporation wholly owned by ACL, which was formed by ACL under the laws of the British Virgin Islands specifically to hold the Blue Sky Assets.

“BSL” means Blue Sky Langsa Ltd., a corporation formed under the laws of the Republic of Mauritius.

“Common Shares” means common shares in the capital of ACL.

“Control Person” means any Person that holds or is one of a combination of Persons that holds a sufficient number of any of the securities of an issuer so as to affect materially the control of that issuer, or that holds more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holder of those securities does not materially affect the control of the issuer.

“Escrow Agent” means Canadian Stock Transfer Company Inc.

“Exchange” or “TSXV” means the TSX Venture Exchange Inc.

“Exchange Requirements” means and includes the articles, by-laws, policies, circulars, rules, guidelines, orders, notices, rulings, forms, decisions and regulations of the Exchange as from time to time enacted, any instructions, decisions and directions of a Regulation Service Provider or the Exchange (including those of any committee of the Exchange as appointed from time to time), the Securities Act (Alberta) and rules and regulations thereunder as amended, the Securities Act (British Columbia) and rules and regulations thereunder as amended and any policies, rules, orders, rulings, forms or regulations from time to time enacted by the Alberta Securities Commission or British Columbia Securities Commission and all applicable provisions of the securities laws of any other jurisdiction.

“Final Exchange Bulletin” means the Exchange Bulletin which is issued following closing of the Acquisition and the submission of all required documentation and that evidences the final Exchange acceptance of the Acquisition.

“Finder’s Fee” means the fee in the amount of $528,730.00 payable through the issuance of an aggregate of 4,406,083 Common Shares. See Part I - “The Acquisition” under the heading, “Finder’s Fee”.

“Insider” if used in relation to an issuer, means:

(a) a director or senior officer of the issuer;

(b) a director or senior officer of the corporation that is an Insider or subsidiary of the issuer;

(c) a Person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the issuer; or

(d) the issuer itself if it holds any of its own securities.

“Interim Loans” means the loans in the aggregate principal amount of US$800,000.00 made by ACL to BSL (see Part I - “The Acquisition” under the heading “Loan from ACL to BSL”.

“Mackie Research” means Mackie Research Capital Corporation, an investment firm with an office in Toronto, Ontario.

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“Filing Statement” means this Filing Statement of ACL dated June 1, 2015, filed with the Exchange pursuant to the Exchange Requirements.

“McDaniels” means McDaniel & Associates Consultants Ltd., a petroleum consulting firm with an office in Calgary, Alberta.

“McDaniels Report” means the independent report dated April 2015, entitled “Evaluation of Crude Oil Reserves, Langsa Field, Indonesia, Based on Forecast Prices and Costs as of December 1, 2014”, prepared for ACL in compliance with NI 51-101 by McDaniels, which appraises the Blue Sky Assets.

“Member” means a Person who has executed the Members’ Agreement, as amended from time to time, and is accepted as and becomes a member of the Exchange under the Exchange Requirements.

“New Option Plan” means the incentive stock option plan proposed for adoption by the Resulting Issuer upon completion of the Acquisition, which plan provides that the board of directors of the Resulting Issuer may from time to time, in its discretion, and in accordance with the requirements of the Exchange, grant to directors, officers, employees, and technical consultants to the Resulting, non-transferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance will not exceed 10% of the issued and outstanding Common Shares.

“NEX” means the NEX board of the TSXV.

“NI 51-101” means National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

“Person” means a corporation or an individual.

“Resulting Issuer” means the issuer that exists upon issuance of the Final Exchange Bulletin, which, for the purposes of this Filing Statement, shall mean ACL after completion of the Acquisition.

“Sponsorship Agreement” means the agreement to be entered into by ACL and Mackie Research pursuant to which Mackie Research will act as the sponsor for the Acquisition.

“TSXV” or “Exchange” means the TSX Venture Exchange Inc.

“Value Security Escrow Agreement” means an agreement to be entered into concurrent with the completion of the Acquisition between ACL and certain Insiders of ACL, which shall be in the form of Exchange Form 5D – Escrow Agreement (Value Security Escrow).

TECHNICAL ABBREVIATIONS

The following abbreviations may be used in various places throughout this Filing Statement:

bbl barrel

bopd barrels of oil per day

Mbbl thousands of barrels

M$ thousand dollars

MM$ million dollars

Mcf thousand cubic feet

NVP Net Present Value

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SUMMARY OF FILING STATEMENT

The following is a summary of information relating to ACL, the Blue Sky Assets and the Resulting Issuer (assuming completion of the Acquisition) and should be read together with the more detailed information and financial data and statements contained elsewhere in this Filing Statement.

ACL International Ltd.: ACL is a public company trading on the NEX. ACL formerly operated general insurance brokerages in Canada and the United States, but it has since divested itself of all of its operating assets.

Since the divesture of its assets, ACL has not carried on any business other than to identify and evaluate corporations, businesses or assets for acquisition with a view to completing a reactivation transaction and to enter into the Asset Purchase Agreement with BSL pursuant to which ACL will agree to purchase the Blue Sky Assets from BSL.

For a detailed description of ACL, see Part II - “Information Concerning ACL Prior to Acquisition”.

Blue Sky Assets: The Blue Sky Assets comprise a 50% working interest held by BSL under the Langsa TAC, which covers an area located in the East Aceh Offshore contract area in the Strait of Malacca approximately 30 miles offshore North Sumatra known as the Langsa Field. BSL is the operator under the Langsa TAC.

The average water depth in the Langsa Field is 310 feet. Two oil pools have been discovered in the Langsa Field, referred to as the H and L pools. The Langsa H pool was discovered in June 1979 with the first well encountering light crude oil in a Middle Miocene Malacca carbonate buildup. The Langsa L pool was discovered in September 1980 with the first well in that pool also encountering light crude oil in a Middle Miocene Malacca carbonate buildup. Current production comes only from well NSB-L3 in the L pool, which produces approximately 670 bopd with limited water and it is proposed that well NSB-H3 in the H pool be recompleted in 2015.

For a detailed description of the Blue Sky Assets, see Part III - “Information Concerning the Blue Sky Assets”.

Acquisition: ACL has entered into the Asset Purchase Agreement with BSL pursuant to which it proposes to acquire the Blue Sky Assets for a purchase price of CA$9,924,600 payable through the payment to BSL of CA$100,000 in cash and the issuance of an aggregate of 81,871,667 Common Shares in the capital of ACL at a deemed price of CA$0.12 per Common Share to certain nominees of BSL (the “Acquisition”). In this Filing Statement, ACL, after it has completed the Acquisition, will be referred to as the “Resulting Issuer”. Upon completion of the Acquisition, the nominees of BSL will own, collectively, approximately 85.39% of the then issued and outstanding Common Shares of the Resulting Issuer. Upon completion of the Acquisition, ACL will immediately transfer the Blue Sky Assets to Blue Sky BVI (ACL’s wholly-owned subsidiary registered in the British Virgin Islands) and Blue Sky BVI will become the owner of the Blue Sky Assets. It is expected that Blue Sky BVI will be appointed the operator of the Blue Sky Assets.

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Arm’s Length Transaction:

The Acquisition is an Arm’s Length Transaction as defined under the policies of the Exchange because none of the insiders of ACL are also insiders of BSL, nor does any insider of ACL own, control or have direction over, directly or indirectly, any of the securities of BSL carrying more than 10% of the voting rights attached to all BSL’s outstanding voting securities, or vice versa, and because BSL is not affiliated with any insider of ACL, or vice versa.

Estimated Available Funds:

The following table sets forth the estimated available funds (based upon total current assets less total current liabilities) plus the amounts and sources of other funds available to ACL prior to, or concurrently with, the completion of the Acquisition, after giving effect to the Acquisition.

Amount

($)

ACL funds available(1) 625,000

Net value of BSL oil in storage(2) 3,903,200

Legal and Professional Expenses(3) (175,000)

TOTAL 4,353,200

Notes: (1) As of April 30, 2015. Unaudited - Based on estimates from ACL. (2) As of April 30, 2015. Unaudited - Based on estimates from BSL. Denotes amounts

attributable to 50% working interest. Pursuant to the Asset Purchase Agreement, ACL is entitled to oil in tanks or in storage commencing January 1, 2015, which is the effective date of the Acquisition.

(3) Includes legal expenses for ACL counsel and BSL counsel, accounting expenses and engineering costs. Fees owing to the Sponsor in the amount of $60,000 were prepaid by ACL.

Proposed Principal Uses of Available Funds:

The following table sets out the estimated available funds after giving effect to the Acquisition and the proposed principal uses for those funds.

Expenditure

Amount

($)

Work Program 2,500,000(1)

General and Administrative Indonesia (2) 375,000

General and Administrative Canada (3) 578,000

Unallocated Working Capital 900,200

TOTAL: 4,353,200

Notes: (1) Denotes 50% working interest share of US$2,000,000 for recompletion of H-3 well for which

the total gross cost is estimated to be US$4,000,000 (see “Proposed Work Program” in Part III - “Information Concerning the Blue Sky Assets” in this Filing Statement). Amount has been converted to Canadian dollars at an estimated conversion rate of 1 United States Dollars to 1.25 Canadian dollars.

(2) Denotes general and administrative expenses expected for staff in Indonesia for the 18 month period commencing January 2, 2015 to June 30, 2016. Additional operating costs will come from production revenue.

(3) Denotes general and administrative expenses expected to be incurred in Canada for salaries, Exchange fees, audit fees, legal fees and miscellaneous expenses for the 18 month period commencing January 2, 2015 to June 30, 2016.

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Proposed Principal Uses of Available Funds (cont’d):

The above uses of available funds are estimates only. Notwithstanding the proposed uses of available funds as discussed above, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. It is difficult at this time to definitively project the total funds necessary to execute the planned undertakings of the Resulting Issuer. For these reasons, management considers it to be in the best interests of the Resulting Issuer and its shareholders to permit management a reasonable degree of flexibility as to how the Resulting Issuer’s funds are employed among the above uses or for other purposes, as the need may arise.

Selected Pro Forma Financial Information:

The following table sets forth selected financial information for the Resulting Issuer as at December 31, 2014 on a pro forma basis, as if the Acquisition had occurred on December 31, 2014. Such information is derived from the unaudited pro forma balance sheet of ACL as at December 31, 2014, which is attached hereto as Appendix “C”, and should be read in conjunction with such financial statements.

As at December 31, 2014 (unaudited)

($)

Total Assets 11,617,096

Total Long Term Liabilities 748,265

Accounts Payable and Accrued Liabilities 125,644

Share Capital 17,137,325

Deficit (9,175,132)

Pro Forma Consolidated Capitalization:

The following table sets forth the pro forma share and loan capital of ACL, based on the pro forma consolidated financial statements contained in this Filing Statement as Appendix “C”, after giving effect to the completion of the Acquisition and all matters ancillary thereto.

Designation of Security Amount authorized or to

be authorized

Amount outstanding after giving effect to the

Acquisition(3)

Common Shares Unlimited 95,882,934 (1)(2) ($17,137,325)(4)

Notes: (1) Of these Common Shares, 74,871,667 will be held in escrow under the Value Security

Escrow Agreement. See Part IV - “Information Concerning the Resulting Issuer” under the heading, “Escrowed Securities”.

(2) Figures do not deduct estimated issuance costs, expenses and commissions associated with the Acquisition estimated to be, in the aggregate, $175,000

(3) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition See Part IV - “Information Concerning the Resulting Issuer” under the heading, “Options to Purchase Securities”.

(4) As at December 31, 2014, ACL had a deficit of $8,411,402.

Listing on the Exchange: The Common Shares of ACL are listed and posted for trading on the NEX under the trading symbol, “ACL.H”.

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Market Price of Common Shares:

The Common Shares have been halted from trading since October 31, 2014, pending Exchange review of the Acquisition. On October 30, 2014, the last trading day prior to the date trading of the Common Shares was halted, the closing price of Common Shares of ACL on the NEX was $0.07. The See Part II - “Information Concerning ACL Prior to Acquisition - Stock Exchange Price”.

Sponsorship and Agent Relationship:

Mackie Research has been retained as sponsor in connection with the Acquisition. See Part V - “General Matters - Sponsorship and Agent Relationship”.

Mackie Research is at arm’s length to ACL and to BSL. At the date hereof, Mackie Research owns, directly or indirectly, in the aggregate, no securities of ACL.

Interests of Insiders or Control Persons of ACL:

Except as otherwise stated herein, none of the Insiders or Control Persons or any of their respective Associates and Affiliates (before and after giving effect to the Acquisition) have any interest in the Acquisition. Robert Sadleir, currently a director of ACL, will be appointed as a director of the Resulting Issuer.

Interests of Experts: At the date hereof, McDaniels, the author of the McDaniels Report, owns, directly or indirectly, in the aggregate, no securities of ACL. No employee, partner or associate of McDaniels are expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

As at the date hereof, partners and associates of D+H Group LLP, ACL’s current auditors, own, respectively, directly or indirectly, in the aggregate, no securities of either ACL or BSL. No partner or associate of D+H Group LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

At the date hereof, lawyers with Demiantschuk Lequier Burke & Hoffinger LLP, counsel to ACL, own, directly or indirectly, in the aggregate, 38,500 Common Shares of ACL and no securities of BSL. No lawyer with Demiantschuk Lequier Burke & Hoffinger LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

At the date hereof, lawyers with Tingle Merrett LLP, counsel to BSL, own, directly or indirectly, in the aggregate, no securities of either ACL or BSL. No lawyer with Tingle Merrett LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

Conflicts of Interest: Certain of the individuals proposed for appointment as directors or officers of ACL upon completion of the Acquisition are also directors, officers and/or promoters of other reporting and non-reporting issuers. Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible acquisitions or in generally acting on behalf of ACL, notwithstanding that they will be bound by the provisions of the Business Corporations Act (Alberta) to act at all times in good faith in the interests of ACL and to disclose such conflicts to ACL if and when they arise. To the best of their respective knowledge, neither ACL nor BSL is aware of the existence of any conflicts of interest between ACL or BSL and any of the individuals proposed for appointment as directors or officers of ACL upon completion of the Acquisition, as of the date of this Filing Statement.

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Risk Factors: Due to the nature of the proposed operations, the legal and economic climate in which the Resulting Issuer will operate and the present stage of development of the proposed operations, the Resulting Issuer may be subject to significant risks. The Resulting Issuer’s future development and actual operating results may be very different from those expected as at the date of this Filing Statement. Accordingly, readers should carefully consider all such risks, which include but are not limited to the following:

▪ Neither the Resulting Issuer nor Blue Sky BVI will have had an operating history as a resource company

▪ The Resulting Issuer will have had no history as an operator of oil and gas properties

▪ The Resulting Issuer will rely on the Resulting Issuer’s ability to retain and recruit skilled personnel and professional staff

▪ The Resulting Issuer’s ability to operate effectively could be impaired if the Resulting Issuer fail to retain the Resulting Issuer’s management or attract other qualified senior executives

▪ The Resulting Issuer’s business, revenues and profits may fluctuate with changes in oil and gas prices

▪ The Resulting Issuer may be negatively affected by continued uncertainty in the global financial markets and the global economy

▪ The Resulting Issuer’s business development may require external financing and the Resulting Issuer’s ability to obtain such financing is uncertain

▪ The Resulting Issuer may not successfully expand its business into new jurisdictions or new regions

▪ The Resulting Issuer will conduct its operations through joint operations

▪ The Resulting Issuer will rely on access to necessary equipment and transportation systems from independent third-party providers

▪ The Resulting Issuer will face development and production risks

▪ The Resulting Issuer’s insurance coverage may not cover all types of possible losses and may be insufficient to cover certain losses

▪ Reserve and resource estimates depend on many assumptions that may turn out to be inaccurate

▪ The unaudited pro forma financial information are presented for illustrative purposes only

▪ The Resulting Issuer may face unanticipated increased or incremental costs

▪ The expected levels of energy demand in Southeast Asia may not materialize

▪ It may be expensive and logistically burdensome to discontinue operations should economic, physical or other conditions subsequently deteriorate

▪ The Resulting Issuer will be subject to environmental regulations and risks

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Risk Factors (cont’d): ▪ The Resulting Issuer will not be able to accurately predict the Resulting Issuer’s future decommissioning liabilities

▪ The Resulting Issuer is subject to government regulations relating to the oil and gas industry and the procurement of relevant government permits, licenses and approvals. In particular, the Langsa TAC will expire on May 15, 2017. Pursuant to Indonesia’s Law No. 22/2001 dated November 23, 2001 regarding Petroleum and Natural Gas, no existing technical assistance contracts will be extended. The Resulting Issuer intends to enter into a new contract regarding the contract area, but there can be no assurance that the government of Indonesia will grant such a contract or that such a contract would be granted on terms acceptable to the Resulting Issuer.

▪ The area in which the Resulting Issuer will operate face political, economic, fiscal, legal, regulatory and social uncertainties

▪ Risks associated with emerging and developing markets generally

▪ The areas in which the Resulting Issuer will operate may suffer from governmental or business corruption

▪ Some of the areas in which the Resulting Issuer will operate suffer from terrorism and militant activity

▪ Some of the areas in which the Resulting Issuer will operate lack physical infrastructure or contain physical infrastructure in poor condition

▪ The interpretation and application of laws and regulations in the jurisdictions in which the Resulting Issuer will operate involves uncertainty

▪ The Resulting Issuer may be subject to sovereign immunity risk in the countries in which the Resulting Issuer will operate

▪ The Resulting Issuer may be subject to changes in taxation in the countries in which the Resulting Issuer will operate

▪ Natural disasters in areas in which the Resulting Issuer will operate could disrupt the economy of such countries and the Resulting Issuer’s business

Forward Looking Statements

This Filing Statement contains forward-looking statements. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Resulting Issuer to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this Filing Statement. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect.

Forward-looking statements and information in this Filing Statement include, but are not limited to, statements with respect to:

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• the price of and price volatility of natural resources;

• the ability of the Resulting Issuer to obtain all government approvals, permits and third party consents in connection with the Resulting Issuer’s exploration and development activities on the Blue Sky Assets;

• the Resulting Issuer’s future exploration, capital and operating costs, including the costs and potential impact of complying with existing and proposed environmental laws and regulations;

• general business and economic conditions;

• growth expectations within the Resulting Issuer;

• capital expenditure programs and the timing and funding thereof;

• expectations regarding the Resulting Issuer’s ability to raise capital;

• treatment under governmental regulatory regimes; and

• realization of the anticipated benefits of acquisitions and dispositions.

Various assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions are based on information currently available to ACL, including information obtained by ACL from third-party sources. In some instances, material assumptions are presented or discussed elsewhere in this Filing Statement in connection with the forward-looking information. ACL cautions you that the following list of material assumptions is not exhaustive. The assumptions include, but are not limited to:

• the ability of ACL to satisfy the requirements of the Exchange with respect to the Acquisition and completion of the Acquisition; and

• assumptions relating to the economy, commodity pricing and competition, generally.

Although ACL believes that the expectations reflected in the forward-looking statements and information are reasonable, there can be no assurance that such expectations will prove to be correct. ACL cannot guarantee future results, levels of activity, performance or achievements. Consequently, there is no representation by ACL that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements and information. Some of the risks and other factors, some of which are beyond the control of ACL, which could cause results to differ materially from those expressed in the forward-looking statements and information contained in this Filing Statement are disclosed above and under the heading, “Risk Factors” in Part I - “The Acquisition”.

Actual results, performance or achievement could differ materially from the forward-looking information expressed herein. While ACL anticipates that subsequent events and developments may cause its views to change, ACL specifically disclaims any obligation to update these forward-looking statements except as required by applicable securities laws. These forward-looking statements should not be relied upon as representing ACL’s views as of any date subsequent to the date of this Filing Statement. Although ACL has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The factors identified above are not intended to represent a complete list of the factors that could affect ACL or the Resulting Issuer.

The forward looking statements contained in this Filing Statement are expressly qualified by this cautionary statement. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and, except as required by law, ACL undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which

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the statements are made or to reflect the occurrence of unanticipated events. Readers are cautioned against attributing undue certainty to, and placing undue reliance on, forward-looking statements.

Note on Information Concerning BSL and the Blue Sky Assets

The information contained or referred to in this Filing Statement relating to BSL and the Blue Sky Assets has been furnished by the management of BSL or is based on the McDaniels Report. In preparing this Filing Statement, ACL has relied upon such information provided by the management of BSL to ensure that this Filing Statement contains full, true and plain disclosure of all material facts relating to BSL and the Blue Sky Assets.

Notes on Reserves Data

All oil reserve information contained in this Filing Statement have been prepared and presented in accordance with NI 51-101. In the disclosure contained in this Filing Statement: (a) the discounted and undiscounted net present value of future net revenues attributable to reserves do not represent fair market value; and (b) the estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

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PART I - THE ACQUISITION

The Acquisition

As stated above, BSL and ACL have agreed on the terms of an arm's length transaction whereby ACL will purchase the Blue Sky Assets for a purchase price of CA$9,924,600 payable through the payment to BSL of CA$100,000 in cash and the issuance of an aggregate of 81,871,667 Common Shares in the capital of ACL at a deemed price of CA$0.12 per Common Share to BSL’s nominees as follows:

Name of Nominee and Municipality of Residence

Position with Resulting Issuer Post-Acquisition

Number of Common Shares to be Issued

Pursuant to Acquisition(2)

Number and Percentage of

Common Shares of Resulting Issuer

Post-Acquisition(3)

BSIH Ltd. (1)

Road Town, Tortola, British Virgin Islands

Insider and Control Person 61,571,667 64.22%

Mohammad Fazil Calgary, Alberta, Canada

President, Chief Executive Officer and Director

11,300,000 11.79%

Harvey Lalach Kelowna, British Columbia, Canada

Chief Financial Officer, Corporate Secretary and Director

2,000,000 2.09%

Arshad Farooq Ontario, California, USA

Shareholder only 7,000,000 7.30%

Total 81,871,667 85.39%

Notes: (1) BSIH Ltd. is a wholly-owned subsidiary of Blue Sky International Holdings Inc., an Alberta corporation, all of the shares of

which are owned by Danyal Chaudhary Foundation. Danyal Chaudhary Foundation is a foundation registered in the State of California.

(2) Of these Common Shares except the shares of Arshad Farooq will be escrowed. See “Value Security Escrow Agreement” in Part IV - “Information Concerning the Resulting Issuer”.

(3) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition See “Options to Purchase Securities” in Part IV - “Information Concerning the Resulting Issuer”.

The parties have agreed to complete the Acquisition on the terms set out in the Asset Purchase Agreement.

Upon completion of the Acquisition, the nominees of BSL will own, collectively, approximately 85.39% of the then issued and outstanding Common Shares of the Resulting Issuer. Upon completion of the Acquisition, ACL will immediately transfer the Blue Sky Assets to Blue Sky BVI (ACL’s wholly-owned subsidiary registered in the British Virgin Islands) and Blue Sky BVI will become the owner of the Blue Sky Assets. It is expected that Blue Sky BVI will be appointed the operator of the Blue Sky Assets. Arm’s Length Transaction

The Acquisition is an Arm’s Length Transaction as defined under the policies of the Exchange because none of the insiders of ACL are also insiders of BSL, nor does any insider of ACL own, control or have direction over, directly or indirectly, any of the securities of BSL carrying more than 10% of the voting rights attached to all BSL’s outstanding voting securities, or vice versa, and because BSL is not affiliated with any insider of ACL, or vice versa.

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Finder’s Fee

ACL has agreed to pay a fee of $528,730.00 to David Galbraith, in consideration for the assistance provided by Mr. Galbraith in completing the Acquisition (the “Finder’s Fee”). The Finder’s Fee will be payable to Mr. Galbraith upon completion of the Acquisition in Common Shares at a deemed price of $0.12 per share for an aggregate of 4,406,083 Common Shares. David Galbraith is at arm’s length to ACL and to BSL. Payment of the Finder’s’ Fee to Mr. Galbraith is subject to the approval of the Exchange.

Background to and Reasons for the Acquisition

Since the divestiture by ACL of its operating assets, management of ACL has selectively reviewed certain opportunities to complete a reactivation transaction, including a merger or business combination with other corporations with assets or business activities which would meet the initial listing requirements of the TSXV. To this end, ACL and BSL began to exchange and review certain confidential information in the fall of 2014. After the consideration of a number of factors and the review of various documents relating to the Blue Sky Assets, the parties entered into a letter of intent dated January 26, 2015, which contemplated the acquisition by ACL of the Blue Sky Assets. Subsequent thereto, ACL completed its due diligence of the Blue Sky Assets and entered into the Asset Purchase Agreement on March 13, 2015, which was subsequently amended and restated on April 30, 2015.

ACL believes that the Acquisition will be of benefit to the holders of Common Shares of ACL for reasons including the following

• the terms and conditions of the Acquisition are reasonable in the opinion of the board of directors of ACL;

• the consideration to be paid for the Blue Sky Assets consists primarily of equity therefore, leaving more funds available to the Resulting Issuer to continue development of the Blue Sky Assets;

• the consideration being paid per share is 71% over the trading price of the ACL Shares on the Exchange on the last day of trading prior to the date the ACL shares were halted from trading;

• completion of the Acquisition will allow the Resulting Issuer to trade on Tier 1 of the Exchange rather than the NEX;

• no material regulatory issues are expected to arise to prevent completion of the Acquisition and it is anticipated that all required regulatory clearances will be obtained; and

• BSLs obligation to complete the Acquisition is not conditional on financing.

Conditions to the Acquisition

The respective obligations of ACL and BSL to complete the transactions contemplated by the Asset Purchase Agreement are subject to a number of conditions which must be satisfied or waived in order for the Acquisition to become effective. There is no assurance that these conditions will be satisfied or waived on a timely basis. Unless all of the conditions are satisfied or waived, the Acquisition will not proceed. The following is a summary of the significant conditions contained in the Asset Purchase Agreement:

▪ all consents, orders and approvals, including regulatory approvals, required or necessary or desirable for the completion of the Acquisition shall have been obtained including, without limitation, the Exchange approval of the Acquisition as ACL’s reactivation transaction in accordance with Exchange policies and the acceptance of the Common Shares issuable pursuant to the Acquisition for listing on the Exchange;

▪ BSL and ACL shall have complied in all material respects with the Asset Purchase Agreement;

▪ the Asset Purchase Agreement shall not have been terminated; and

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▪ no material adverse change shall have occurred in the Blue Sky Assets prior to the time of the closing of the Acquisition.

Termination of the Asset Purchase Agreement

The Asset Purchase Agreement provides that ACL may terminate the agreement in the event of a material title defect and that the Asset Purchase Agreement may be mutually terminated by the parties or may be terminated by the directors of BSL or ACL if the conditions contained in the Asset Purchase Agreement for their benefit have not been fulfilled or performed prior the dates provided for therein.

Loans from ACL to BSL

On March 10, 2015, in anticipation of the completion of the Acquisition, ACL loaned BSL the amount of US$250,000.00 (the “First Loan”), on April 7, 2015, ACL loaned BSL a further US$250,000.00 (the “Second Loan”) and on April 21, 2015, ACL loaned BSL an additional US$300,000.00 (the “Third Loan” and together with the First Loan and the Second Loan, the “Interim Loans”). The Interim Loans bear interest at a rate of 12% per annum, calculated and payable on the last day of each month. The First Loan and Second Loan are payable on or before July 31, 2015 and August 31, 2015, respectively, and are secured by a general security agreement between ACL and BSL dated March 10, 2015, which grants collateral over all of the present and after acquired personal property of BSL. The Third Loan is payable on or before September 21, 2015 and is secured by a general security agreement between ACL and BSL dated April 21, 2015, which grants collateral over 92,000 barrels of stored oil owned by BSL

BSL has applied US$800,000.00 from the Interim Loans towards completion of its 2015 work program. See Part IV - “Information Concerning the Resulting Issuer” under the heading “Proposed Work Program”.

Additional Information Concerning ACL, the Blue Sky Assets and the Resulting Issuer

For additional information concerning ACL, the Blue Sky Assets and the Resulting Issuer, see Part II - “Information Concerning ACL Prior to Acquisition”, Part III - “Information Concerning the Blue Sky Assets” and Part IV - “Information Concerning the Resulting Issuer”.

Risk Factors

Upon completion of the Acquisition, it is anticipated that the Resulting Issuer will immediately transfer the Blue Sky Assets to Blue Sky BVI and that Blue Sky BVI will be appointed operator of the Blue Sky Assets. Due to the nature of that business, the legal and economic climate in which the Resulting Issuer will be operating and the present stage of development of the proposed operations, the Resulting Issuer may be subject to significant risks. The Resulting Issuer’s future development and actual operating results may be very different from those expected as at the date of this Filing Statement. There can be no certainty that the Resulting Issuer will be able to implement successfully the strategy set out in this Filing Statement. No representation is or can be made as to the future performance of the Resulting Issuer and there can be no assurance that the Resulting Issuer will achieve its objectives. Accordingly, readers should carefully consider the following discussion of risks that pertain to ACL and the Resulting Issuer (the text below summarizes some of these risks and is not intended to be complete or exhaustive).

The Resulting Issuer will have had no operating history as a resource company

Neither the Resulting Issuer nor Blue Sky BVI will have had an operating history upon which an investor can base an evaluation of the Resulting Issuer’s business and prospects. As a company in the early stage of development, there are substantial risks, uncertainties, expenses and difficulties to which the Resulting Issuer’s business is subject. To address these risks and uncertainties, the Resulting Issuer and Blue Sky BVI must successfully develop and execute the Resulting Issuer’s business strategy and respond to competitive developments. There can be no assurance that the Resulting Issuer or Blue Sky BVI will be able to manage effectively the expansion of the Resulting Issuer’s operations through organic growth or acquisitions.

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Neither the Resulting Issuer nor Blue Sky BVI will have had a history as an operator of oil and gas properties

The Resulting Issuer will have had no history as an operator of oil and gas properties and will have to rely upon the expertise of the management and staff that will be appointed upon completion of the Acquisition. There can be no assurance that the Resulting Issuer will be able to effectively manage the operations of the Blue Sky Assets. Further, the Resulting Issuer or Blue Sky BVI will have to be appointed the operator under the JOA. Such appointments are subject to a vote of the participants under the JOA. There is no assurance that the Resulting Issuer or Blue Sky BVI will be appointed the operator under the JOA on a timely basis, if at all.

The Resulting Issuer will rely on the Resulting Issuer’s ability to retain and recruit skilled personnel and professional staff

The Resulting Issuer will require highly skilled personnel to provide technical and engineering services in the production and development of, and the exploration for, hydrocarbon resources. As the demand for experienced geoscientists and petroleum engineers increases, shortages of qualified personnel occur from time to time. These shortages could result in the loss of qualified personnel to competitors, impair the Resulting Issuer’s ability to attract and retain qualified personnel for new or existing projects, impair the timeliness and quality of the Resulting Issuer’s work and create upward pressure on personnel costs, any of which could adversely affect the Resulting Issuer’s operations and financial performance. Additionally, the Resulting Issuer’s business requires skilled personnel and professional staff in the areas of exploration and production, operations, engineering, legal, finance and accounting. Competition for such skilled personnel and professional staff is intense and stems primarily from similar businesses active in the oil and gas industry, many of which possess greater resources. Limitations in the Resulting Issuer’s ability to hire and train the required number of skilled personnel and professional staff to ensure the Resulting Issuer will operate effectively would reduce the Resulting Issuer’s capacity to undertake further projects and may have an adverse impact on the Resulting Issuer’s business, financial condition, results of operations and prospects.

The Resulting Issuer’s ability to operate effectively could be impaired if the Resulting Issuer fail to retain the Resulting Issuer’s management or attract other qualified senior executives

The success of the Resulting Issuer will be heavily dependent upon the collective efforts of the executive management team who will be instrumental in the Resulting Issuer’s development. In particular, the Resulting Issuer will rely on the expertise and experience of the executive directors and the Resulting Issuer’s executive officers who will play a pivotal role in the Resulting Issuer’s daily operations. If the Resulting Issuer loses the services of any of these key individuals and is unable to suitably replace them in a timely manner, the business of the Resulting Issuer may be materially and adversely affected.

The Resulting Issuer’s business, revenues and profits may fluctuate with changes in oil and gas prices

The Resulting Issuer’s business, revenues and profits will be substantially dependent upon the prevailing prices of oil and gas. Historically, the markets for oil and gas have been volatile and they may continue to experience volatility in the future. In particular, crude oil prices have been exceptionally volatile in recent months. The Resulting Issuer can give no assurance as to the level of oil prices in the future. It is impossible to predict accurately further crude oil price movements. Accordingly, crude oil prices may not remain at their current levels and may decline substantially.

The price the Resulting Issuer receive for the Resulting Issuer’s oil and gas will depend on changes in the supply of, and demand for, oil and gas in the global markets, market uncertainty and a variety of additional factors that are beyond the Resulting Issuer’s control.

Lower oil and gas prices may not only decrease the Resulting Issuer’s revenues on a per unit basis but also may reduce the amount of oil and gas that the Resulting Issuer can produce commercially or may reduce the economic viability of the production levels of specific the wells or of projects planned or in development to the extent that production costs exceed anticipated income from such production. Lower prices may also negatively impact the value and even quantum of the Resulting Issuer’s reserves, because the measure of the Resulting Issuer’s reserves depends upon the Resulting Issuer’s ability to commercially exploit any underlying petroleum quantities. A future decline in oil or gas

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prices may materially and adversely affect the Resulting Issuer’s future business, results of operations, financial condition, liquidity or ability to finance planned capital expenditures.

The Resulting Issuer may be negatively affected by continued uncertainty in the global financial markets and the global economy

Commencing in 2007 and continuing into 2015, certain adverse financial developments have affected the global financial markets. These developments include a general slowing of economic growth globally, substantial volatility in equity securities markets, and volatility and tightening of liquidity in credit markets. While there has been a recovery, such developments could continue to present risks for the Resulting Issuer, including a potential slowdown in the Resulting Issuer’s sales to customers. The Resulting Issuer’s customers may also not be able to obtain adequate access to credit, which could affect their ability to make timely payments. If the Resulting Issuer’s customers are not able to make timely payments, the Resulting Issuer’s accounts receivable and bad debts could increase.

In addition, the Resulting Issuer’s results of operations and financial condition could be adversely affected if, as a result of economic conditions, key suppliers upon which the Resulting Issuer rely are unable to provide it with the materials needed on a timely basis or on terms that the Resulting Issuer find acceptable. Any disruptions in the financial markets could also affect the Resulting Issuer’s ability to obtain debt or equity financing or to refinance the Resulting Issuer’s existing indebtedness on favorable terms or if at all, which could adversely affect the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer’s business development may require external financing and the Resulting Issuer’s ability to obtain such financing is uncertain

The Resulting Issuer may need to obtain external debt and equity financing, through public or private financing, or farm-out certain contract areas to support growth, to acquire new contract areas or to develop new projects. Moreover, the Resulting Issuer is subject to drilling and other development commitments under the terms of the Resulting Issuer’s contract areas, and if, for any reason, the Resulting Issuer is unable to fully fund the Resulting Issuer’s drilling budget and fail to satisfy the Resulting Issuer’s commitments, the Resulting Issuer may face penalties or the possible loss of some of the Resulting Issuer’s rights and interests in prospects. The Resulting Issuer’s ability to finance its capital expenditure plans is subject to a number of risks, contingencies and other factors, some of which are beyond the Resulting Issuer’s control. Among other things, any significant decrease in the prices or demand for oil or gas, or adverse developments in the Asian and international equity capital or credit markets, may be significant barriers to raising financing and may significantly increase the overall cost of the Resulting Issuer’s funds. Moreover, the Resulting Issuer may not be successful in the Resulting Issuer’s ordinary course business strategy of farming out interests in the Resulting Issuer’s contract areas in order to reduce the Resulting Issuer’s necessary exploration and development expenditures, which could result in it requiring more capital resources than otherwise anticipated.

There is no assurance that additional funding, if needed, will be available on acceptable terms, or at all. If adequate funding is not available to the Resulting Issuer on terms acceptable, or at all, this will materially and adversely affect the Resulting Issuer’s ability to fund the development and expansion of the Resulting Issuer’s business. The Resulting Issuer’s inability to obtain sufficient funding for operations or development plans could adversely affect the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer may not successfully expand its business into new jurisdictions or new regions

The Resulting Issuer intends to pursue a strategy to expand the Resulting Issuer’s oil and gas exploration and production business into new jurisdictions. The Resulting Issuer may have difficulty managing the Resulting Issuer’s expansion into new geographic markets where the Resulting Issuer have limited knowledge and understanding of the local economy, an absence of business relationships, or unfamiliarity with local governmental and permitting procedures and regulations. Further, the majority of the Resulting Issuer’s technical and exploration staff’s experience is focused in Southeast Asia and the Resulting Issuer may not be familiar with the geological conditions of other regions. The Resulting Issuer may not succeed in expanding the Resulting Issuer’s business into new jurisdictions on a timely basis or in achieving profitability in these new locations.

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The Resulting Issuer must overcome significant regulatory and legal barriers before the Resulting Issuer can begin operations in any new jurisdiction. In addition to significant regulatory barriers, the Resulting Issuer may also encounter problems conducting operations in new jurisdictions with different cultures and legal systems from those encountered elsewhere. Any of these factors could adversely affect the Resulting Issuer’s ability to successfully expand the Resulting Issuer’s business, and the Resulting Issuer’s failure to effectively manage this expansion may adversely affect the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer will conduct its operations through joint operations

The Resulting Issuer holds its interests through joint operations. It is possible that the Resulting Issuer’s interests and those of the Resulting Issuer’s joint-venture partners will not always be aligned, resulting in, among other things, possible project delays, additional costs or disagreements.

Moreover, the Resulting Issuer’s joint-venture partners must obtain any applicable license or related agreement pursuant to which the Resulting Issuer will operate, in addition to joint operating agreements or other arrangements governing the Resulting Issuer’s relationship with the joint-venture partners and comply with all requirements thereto. The Resulting Issuer may suffer unexpected costs or other losses if a joint-venture partner does not meet the obligations under the license or related agreement or the agreements governing the Resulting Issuer’s relationship with them or if such violations lead to fines, penalties, restrictions, withdrawal of licenses and termination of the agreements under which the Resulting Issuer will operate. In some instances, the Resulting Issuer may be jointly and severally liable for required payments pursuant to the terms of the petroleum licenses in which the Resulting Issuer have interests. The Resulting Issuer may also be subject to claims by the Resulting Issuer’s joint-venture partners regarding potential non-compliance with the Resulting Issuer’s obligations.

In the event that any of the Resulting Issuer’s joint-venture partners becomes insolvent or otherwise unable to pay its debts as they fall due, licenses or agreements awarded to them may revert back to the relevant government authority who will then reallocate the license. In addition, according to the terms of some of the Resulting Issuer’s petroleum licenses, the Resulting Issuer may not always be able to choose the Resulting Issuer’s partners in the event that one of the Resulting Issuer’s partners assigns their interest to another party. As the Resulting Issuer typically either share an undivided interest with the Resulting Issuer’s partners (at the fields where the Resulting Issuer have a participation interest) or have a contractual right to production with no participation interest, the Resulting Issuer rely on the Resulting Issuer’s partners or other entities as license holders.

Although the Resulting Issuer anticipate that the relevant government authority may permit it to continue operations at a field during a reallocation process, there can be no assurances that the Resulting Issuer will be able to continue operations pursuant to a reclaimed license or that any transition related to the reallocation of a license would not materially disrupt the Resulting Issuer’s operations or development and production schedule. In a reallocation process, the other joint-venture partners who are not insolvent will have the right to acquire the Working Interest of the insolvent joint-venture partner. If none of the other joint-venture partners acquires the insolvent joint-venture partner’s Working Interest, the relevant government authority may step in to either acquire the Working Interest through a state-owned oil company or direct that the Working Interest be transferred to an operator designated by the said government authority. The occurrence of any of the situations described above could have a material and adverse effect on the Resulting Issuer’s business, financial condition, results of operations and prospects.

The Resulting Issuer will rely on access to necessary equipment and transportation systems from independent third-party providers

Oil and gas development activities are dependent upon the availability of drilling and related equipment in the particular areas where such activities will be conducted. Demand for limited equipment such as drilling rigs, or access restrictions on such equipment, may affect the availability of, and the Resulting Issuer’s access to, such equipment. There is significant demand for drilling rigs and other related equipment in the area in which the Resulting Issuer will operates, and even if the Resulting Issuer are successful in obtaining access to drilling rigs and other equipment, it may only be after significant delay. Failure by the Resulting Issuer or the Resulting Issuer’s contractors to secure necessary equipment could have a material and adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

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The Resulting Issuer will contract or lease services and capital equipment from third-party providers, post-transaction. Such equipment and services can be scarce and may not be readily available. In addition, costs of third-party services and equipment have increased significantly over recent years and may continue to rise. Scarcity of equipment and services and increased prices may in particular result from any significant increase in exploration and development activities on a region by region basis. In the regions in which the Resulting Issuer will operate, there is significant demand for capital equipment and services. The unavailability and high costs of such equipment and services could result in a delay or restriction in the Resulting Issuer’s projects and adversely affect the feasibility and profitability of such projects, and therefore have a material and adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer and the Resulting Issuer’s future offtakes will rely upon transportation systems, including systems owned and operated by third parties which may become unavailable. The Resulting Issuer may be unable to access such transportation systems. Further, the Resulting Issuer’s offtakes could become subject to increased tariffs imposed by government regulators or the third-party operators or owners of the transportation systems available for the transport of the Resulting Issuer’s oil and gas which could result in decreased offtake demand and downward pricing pressure.

Moreover, the Resulting Issuer are subject to drilling and other exploration commitments under the terms of a number of the Resulting Issuer’s contract areas, and if, for any reason, the Resulting Issuer is unable to obtain the equipment or services necessary to fully perform the Resulting Issuer’s commitments, the Resulting Issuer may face penalties or the possible loss of some of the Resulting Issuer’s rights and interests in such contract areas, which may have a material and adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

Additionally, importation of certain equipment and chemicals for drilling, exploration and production requires licenses of the relevant governmental agencies which may cause unexpected delay and substantial costs.

The Resulting Issuer will face development and production risks

Post transaction, the Resulting Issuer will face a variety of risks related to the development and production of hydrocarbon products as well as operational, geophysical, financial and regulatory risks. The results of development and production are uncertain and, therefore, may involve unprofitable efforts, not only from dry the wells, but from the wells that are productive but do not achieve sufficient revenues to return a positive cash flow after taking into account drilling, development, operating and other costs. Completion of a well does not assure a profit on the investment or recovery of costs associated with drilling, completion or other aspects of operations. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and adverse field operating conditions may affect production from successful the wells. These conditions may include, amongst other things, shut-ins of connected the wells resulting from extreme weather conditions, insufficient storage or transportation capacity or other geological and mechanical conditions. Production delays and declines from normal field operating conditions may occur, and may adversely affect revenue and cash flow levels.

The Resulting Issuer’s oil development and production operations involve risks including blowouts, oil spills and fires (each of which could result in damage to, or destruction of, the wells, production facilities or other property, injury to persons or environmental pollution), geological uncertainties (such as unusual or unexpected rock formations and abnormal pressures, which may result in dry the wells), failure to produce oil or gas in commercial quantities or an inability to fully produce discovered reserves.

Offshore operations are also subject to hazards inherent in marine operations, such as capsizing, sinking, grounding, collision and damage from severe weather conditions or damage to pipelines, platforms, facilities and subsea facilities from trawlers, anchors and vessels, storms, strong currents, and risks and hazards resulting from navigational difficulties. These hazards could result in substantial losses to it due to injury and loss of life, severe damage to, or destruction of, property and equipment, pollution and other environmental damage or suspension of operations, and the Resulting Issuer may be exposed to substantial liability in connection with any of these hazards. These risks may individually or collectively diminish the returns the Resulting Issuer obtain in relation to any discovery or even the ability to realize any value from the discovery at all, which may have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

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The occurrence of a significant event that is not fully insured, or the insolvency of the Resulting Issuer’s insurers, could have an adverse effect on the Resulting Issuer’s business results of operations, financial condition or prospects.

The Resulting Issuer’s insurance coverage may not cover all types of possible losses and may be insufficient to cover certain losses

The Resulting Issuer’s operations will be subject to various risks inherent in its development and production activities; however, the insurance industry is not yet fully developed in the countries in which the Resulting Issuer will operate, and many forms of insurance protection common in other more developed countries are not yet available in these countries on comparable terms. The Resulting Issuer will endeavour to obtain insurance that will include coverage for damage to or loss of the majority of the Resulting Issuer’s production facilities, loss of production income (to a limited extent) in respect of the Resulting Issuer’s production assets in Indonesia, insurance for out-of-control the wells (including coverage of pollution and environmental damage caused thereby), mandatory third-party liability coverage (including employer’s liability insurance), tanker pollution coverage, and directors and officers liability insurance, in each case subject to deductibles, exclusions and limitations. There can be no assurance that such insurance can be obtained by the Resulting Issuer or that such insurance will be sufficient to cover the risks of the Resulting Issuer’s business. Nor can there be any assurance that any insurance proceeds the Resulting Issuer receive would be sufficient to cover expenses relating to insured losses or liabilities. Moreover, depending on the severity of the damage, the Resulting Issuer may not be able to rebuild damaged property in a timely manner or at all. The Resulting Issuer may suffer material losses from uninsurable or uninsured risks or insufficient insurance coverage, which could have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer does not intend to obtain key-person, onshore terrorism or sabotage insurance.

Reserve and resource estimates depend on many assumptions that may turn out to be inaccurate

This document includes estimates of the share of reserves to be held by the Resulting Issuer post-transaction and contingent and prospective resources made by McDaniels. The process of estimating hydrocarbon quantities is complex, requiring interpretations of available technical data and many assumptions made in a particular hydrocarbon price environment. Any significant deviations from these interpretations, prices or assumptions could materially affect the estimated quantities of hydrocarbons reported. The uncertainties inherent in estimating quantities of hydrocarbons include, inter alia, the following:

• variable factors and assumptions such as historical production from the relevant contract areas;

• the quality and quantity of technical and economic data;

• the prevailing oil and natural gas prices applicable to production;

• drilling and operating expenses, capital expenditures, taxes and the availability of funds, both debt and equity;

• the assumed effects of regulations by governmental agencies and future operating costs;

• the production performance of the reserves; and

• extensive engineering, geological and geophysical judgments.

Understanding of the subsurface conditions is based on McDaniel’s interpretation of the best data available but due to the inherent uncertainty of such interpretation, McDaniels may have reached incorrect conclusions. The reserves and contingent and prospective resources data set out in this document represents estimates only and represents quantities estimated at a given point in time. Many of the factors, assumptions and variables involved in estimating hydrocarbon volumes are beyond McDaniels’ control and may prove incorrect over time. Estimates of the commercially recoverable hydrocarbon volumes attributable to any particular contract area, classification of such hydrocarbons volumes based on risk of recovery and estimates of future net revenues expected, prepared by different persons at different times, may vary substantially. In the event that actual production with respect to these hydrocarbons volumes

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is lower than these estimates and/or actual future prices are materially lower, the Resulting Issuer’s revenue and therefore the Resulting Issuer’s results of operations and financial condition will be adversely affected.

The uncertainties inherent in estimating oil and gas resources and reserves are generally greater for areas where there has been limited historic hydrocarbon exploration, such as in the case of contingent, and in particular, prospective resource estimates, which are derived from the interpretation of seismic and other geoscientific data and, where appropriate, drilling results. Such interpretation and estimates of the amounts of oil and gas resources are subjective and the results of drilling, testing and production subsequent to the date of any particular estimate may result in substantial revisions to the original interpretation and estimates, including the recoverability and commerciality of the reserves and resources.

The Resulting Issuer may need to obtain external debt and equity financing to support growth, undertake acquisitions of new contract areas or to develop new projects. Accordingly, the Resulting Issuer’s ability to obtain bank financing depends, to a certain extent, on the value of the Resulting Issuer’s proved and probable reserves. Any revisions to hydrocarbon volume estimates may have an effect on the Resulting Issuer’s current and future banking facilities.

Furthermore, any revisions may also have an effect on the book value of the contract areas recorded in the Resulting Issuer’s financial statements. In the event that the Resulting Issuer’s reserves are assessed to be lower than previously recorded, the Resulting Issuer’s business, results of operations, financial condition and prospects may be adversely affected.

The unaudited pro forma financial information are presented for illustrative purposes only

ACL has prepared and presented the Resulting Issuer’s unaudited pro forma financial statements to show what the Resulting Issuer’s results of operations and cash flows might be as at December 31, 2014; however, the unaudited pro forma financial statements are not necessarily indicative of what the Resulting Issuer’s actual results of operations, financial position and cash flow would have been on or as of such dates nor does it purport to project the Resulting Issuer’s results of operations, financial position or cash flows for any future period or date. Moreover, the inclusion of the unaudited pro forma financial information does not provide any assurance that the Acquisition proposed hereunder will occur in a timely manner or at all. The Resulting Issuer’s unaudited pro forma financial statements do not include all of the information required for financial statements under IFRS and should be read in conjunction with ACL’s historical consolidated financial statements included elsewhere in this Filing Statement.

The Resulting Issuer may face unanticipated increased or incremental costs

The oil and gas industry is capital intensive. To implement the Resulting Issuer’s business strategy, the Resulting Issuer will be required to invest in drilling and development activities and infrastructure. The Resulting Issuer’s current and planned expenditures on such projects may be subject to unexpected problems, costs and delays, and the economic results and the actual costs of these projects may differ significantly from the Resulting Issuer’s current estimates.

Post transaction, the Resulting Issuer will rely on suppliers and contractors to provide materials and services in conducting the Resulting Issuer’s development and production activities. Any competitive pressures on the Resulting Issuer’s suppliers and contractors, or substantial increases in the worldwide prices of commodities, such as steel, could result in a material increase of costs for the materials and services required to conduct the Resulting Issuer’s business. The cost increases may be the result of inflationary pressures. For example, due to high global demand and a limited number of suppliers, the cost of oil and gas services and goods has increased significantly in recent years and could continue to increase. Future increases could have a material adverse effect on the Resulting Issuer’s operating income, cash flows and borrowing capacity and may require a reduction in the carrying value of the Resulting Issuer’s contract areas, the Resulting Issuer’s planned level of spending for development and the level of the Resulting Issuer’s reserves, which depends upon the Resulting Issuer’s ability to commercially exploit any underlying petroleum quantities.

Prices for the materials and services on which the Resulting Issuer will depend to conduct the Resulting Issuer’s business may not be sustained at levels that enable it to operate profitably. The Resulting Issuer may also need to incur various unanticipated costs, such as those associated with personnel, transportation, government taxes and compliance

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with environmental and safety requirements. Personnel costs, including salaries, are increasing as the standard of living rises in the countries in which the Resulting Issuer will operate and as demand for suitably qualified personnel in the oil and gas industry increases. An increase in any of these costs could have a material and adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

The expected levels of energy demand in Southeast Asia may not materialize

The Blue Sky Assets are located in Southeast Asia. If the economic growth in Southeast Asia does not continue or declines, or if all or part of the region enters into a recession, demand for oil and gas in the region and the prices of oil and gas in the region are likely to decline. As the Resulting Issuer’s hydrocarbon sales would be made in Southeast Asia, the Resulting Issuer’s revenues and results of operations will be materially adversely affected if the Resulting Issuer is unable to find alternative markets. Even if the Resulting Issuer is successful in finding alternative markets outside of Southeast Asia, the Resulting Issuer may incur higher costs of sales as a result of, among other things, higher transportation expenses and additional import/export tariffs and taxes. Consequently, a decline in the actual or anticipated levels of energy demand in Southeast Asia may have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

It may be expensive and logistically burdensome to discontinue operations should economic, physical or other conditions subsequently deteriorate

It may be expensive and logistically burdensome to discontinue its established production operation, should the deterioration of economic, physical or other conditions make such discontinuance necessary. This would be due to, among other reasons, the significant capital investments required in connection with oil and gas exploration and production, the nature of the contractual arrangements with government authorities in the relevant jurisdictions, and significant decommissioning costs.

Additionally, because oil and gas assets in general are relatively illiquid, and would be even more so should the circumstances in the relevant jurisdiction deteriorate, the Resulting Issuer’s ability to promptly sell its assets or business in the event the Resulting Issuer were to discontinue operations may be limited.

No assurance can be given that the Resulting Issuer will be able to sell any asset for the price or on terms the Resulting Issuer set, or whether any price or other terms offered by a prospective purchaser would be acceptable to it. It is also not possible to predict with certainty the length of time that could be needed to find purchasers for the Resulting Issuer’s assets, if at all, and to complete the disposal of the Resulting Issuer’s assets in times of political, economic, financial or investment uncertainty.

The Resulting Issuer will be subject to environmental regulations and risks

The oil and gas industry is subject to laws and regulations relating to environmental and safety matters in the exploration for and the development and production of hydrocarbons. Many of the environmental laws and regulations applicable to the Republic of Indonesia are significantly less developed than those in certain developed market economies. The Resulting Issuer expects to incur substantial capital and operating costs in order to comply with increasingly complex health, safety and environmental laws and regulations. New laws and regulations, the imposition of tougher licensing requirements, increasingly strict enforcement of, or new interpretations of, existing laws, regulations and licenses, or the discovery of previously unknown contamination may require further expenditures to do such things as modify operations, install pollution control equipment, perform site clean ups, curtail or cease certain operations, cease operations temporarily or permanently, or pay fees or fines or make other payments for pollution, discharges or other breaches of environmental requirements. These factors may lead to delayed or reduced exploration, development or production activity as well as increased costs.

Furthermore, the discharge of oil, gas or other pollutants into the air, soil or water, whether inadvertent or otherwise, may give rise to liabilities to the government of Indonesia and/or to third parties, and may require the Resulting Issuer to incur costs to remedy such discharge. The terms of licenses or permissions may include even more stringent environmental and/or health and safety requirements. In certain cases, severe environmental damage, such as that

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seen during the Deepwater Horizon incident in the Gulf of Mexico in 2010, could give rise to financial liabilities that exceed the value of the Resulting Issuer’s assets.

Further, there is a risk that, in the event that the Resulting Issuer does incur costs to remedy any such discharges, such costs would exceed that value of the Resulting Issuer’s assets or insurance coverage.

The Resulting Issuer will not be able to accurately predict the Resulting Issuer’s future decommissioning liabilities

Although the Resulting Issuer will not be responsible for abandonment costs in respect of the Blue Sky Assets, post transaction, the Resulting Issuer may assume certain obligations in respect of the decommissioning of the Resulting Issuer’s fields and related infrastructure for other oil and gas properties it may acquire. These liabilities will be derived from legislative and regulatory requirements concerning the decommissioning of the wells and production facilities and will require the Resulting Issuer to make provision for and/or underwrite the liabilities relating to such decommissioning. Although the Resulting Issuer’s accounts will make a provision for such decommissioning costs, there can be no assurances that the costs of decommissioning will not exceed the amount of the long term provision set aside to cover such decommissioning costs. In addition, local or national governments may require decommissioning to be carried out in circumstances where there is no express obligation to do so, which may result in higher decommissioning costs than the Resulting Issuer expected at the time when the Resulting Issuer made provisions. It is therefore difficult to forecast accurately the costs that the Resulting Issuer will incur in satisfying the Resulting Issuer’s decommissioning obligations and the Resulting Issuer may have to draw on funds from other sources to bear such costs. Any significant increase in the actual or estimated decommissioning costs that the Resulting Issuer incur could have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer are subject to government regulations relating to the oil and gas industry and the procurement of relevant government permits, licenses and approvals

Post transaction, the Resulting Issuer’s operations will be subject to licenses, regulations and approvals for the exploration, development, construction, operation, production, marketing, pricing, transportation and storage of oil and gas.

One matter of specific importance is that the Langsa TAC will expire on May 15, 2017. Pursuant to Indonesia’s Law No. 22/2001 dated November 23, 2001 regarding Petroleum and Natural Gas, no existing technical assistance contracts will be extended. The Resulting Issuer intends to enter into a new contract regarding the contract area, but there can be no assurance that the government of Indonesia will grant such a contract or that such a contract would be granted on terms acceptable to the Resulting Issuer.

More generally, the Indonesian government will exercise significant influence its oil and gas industries. For example, in certain developing countries, petroleum companies have faced the risks of expropriation or nationalization, breach, abrogation or renegotiation of project agreements, application to such companies of laws and regulations from which they were intended to be exempt, denials of required permits and approvals, increases in royalty rates and taxes that were intended to be stable, application of exchange or capital controls, and other risks. Any government action (such as a change in oil and/or gas pricing policy or taxation rules or practice, or renegotiation or nullification of existing concession contracts or oil and gas exploration policy, laws or practice), could have a material adverse effect on the Resulting Issuer.

Sovereign or regional governments could also require the Resulting Issuer to grant to them larger shares of oil and gas or revenues than previously agreed to, or postpone or review projects, nationalize assets, or make changes to laws, rules, regulations or policies, in each case, which could adversely affect the Resulting Issuer’s business, prospects, financial condition and results of operations. Possible future changes in the government, major policy shifts or increased security arrangements in the countries in which the Resulting Issuer will operate could have to varying degrees an adverse effect on the value of the Resulting Issuer’s investments. These factors could have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

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The implementation of the Resulting Issuer’s development plans is subject to receiving the necessary government permits, licenses and approvals, and failure to obtain, or a delay in obtaining, such permits, licenses and approvals, or the subsequent revocation of such permits, licenses and approvals, could have a material adverse effect on the Resulting Issuer’s business, financial condition, results of operations and prospects. Further, the Resulting Issuer may be required under the terms of the Resulting Issuer’s license to apply for contract extensions from time to time to provide adequate time to explore and develop the relevant contract area. Approvals of such extensions are based on the fulfillment of work programs. In the event that the Resulting Issuer are not able to fulfill a work program’s obligations in respect of a contract area or are in breach of the terms of the Resulting Issuer’s license, the host government might not grant extensions on the terms of these contract areas.

There is no assurance that the governments of the countries in which the Resulting Issuer will operate will not postpone or review projects or will not make any changes to government policies, in each case which could adversely affect the Resulting Issuer’s business results of operations, financial position and prospects.

The area in which the Resulting Issuer will operate face political, economic, fiscal, legal, regulatory and social uncertainties

The Resulting Issuer’s operations will exposed to the political, economic, fiscal, legal, regulatory and social environment of Indonesia. The Resulting Issuer’s business involves a high degree of risk, which a combination of experience, knowledge and careful evaluation may not overcome. These risks include, but are not limited to, civil strife or labor unrest, armed conflict, limitations or price controls on oil exports and limitations or the imposition of tariffs or duties on imports of certain goods.

Exploration and development activities in developing countries may require protracted negotiations with host governments, national oil companies and third parties and may be subject to economic and political considerations such as the risks of war, community disturbances, criminal activities (such as oil or gas theft), expropriation, nationalization, renegotiation, forced change or nullification of existing contracts or royalty rates, unenforceability of contractual rights, foreign ownership controls or approvals, protests, changing taxation policies or interpretations, adverse changes to laws (whether of general application or otherwise) or the interpretation thereof, foreign exchange restrictions, inflation, changing political conditions, the death or incapacitation of political leaders, local currency devaluation, currency controls, and foreign governmental regulations that favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Any of the factors detailed above or similar factors could have a material adverse effect on the Resulting Issuer’s business, results of operations or financial condition. If disputes arise in connection with the Resulting Issuer’s operations Indonesia, the Resulting Issuer may be subject to the exclusive jurisdiction of foreign courts or foreign arbitration tribunals or may not be successful in subjecting foreign persons, especially foreign oil ministries and national oil companies, to the jurisdiction of courts in other countries. Further, the Resulting Issuer may also be adversely affected by increased action by nongovernmental organizations opposing to the oil and gas exploration and production industry.

Risks associated with emerging and developing markets generally

The disruptions experienced in the international and domestic capital markets have led to reduced liquidity and increased credit risk premiums for certain market participants and have resulted in a reduction of available financing. Companies located in countries with emerging markets, such as those in Southeast Asia where the Resulting Issuer will operate, may be particularly susceptible to these disruptions and reductions in the availability of credit or increases in financing costs, which could result in them experiencing financial difficulty. In addition, the availability of credit to entities operating within the emerging and developing markets is significantly influenced by levels of investor confidence in such markets as a whole and as such any factors that impact market confidence including a decrease in credit ratings, state or central bank intervention in a market or terrorist activity and conflict, could affect the price or availability of funding for entities within any of these markets. Since the onset of the global economic crisis in 2007, certain emerging market economies have been, and may continue to be, adversely affected by market downturns and economic slowdowns elsewhere in the world. As has happened in the past, financial problems outside countries with emerging or developing economies, or an increase in the perceived risks associated with investing in such economies could dampen foreign investment in and adversely affect the economies of these countries.

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Investments in emerging markets such as Indonesia are therefore subject to greater risks than more developed markets, including in some cases significant legal, fiscal, economic and political risks.

The areas in which the Resulting Issuer will operate may suffer from governmental or business corruption

The Resulting Issuer will operate and conduct business in jurisdictions which some perceive as having potentially more corrupt governmental and business environments compared to certain developed countries. Corrupt action against the Resulting Issuer could have a material adverse effect on its business, results of operations or financial condition. In spite of the Resulting Issuer’s best efforts, it may not be possible for it to detect or prevent every instance of fraud, bribery and corruption in every jurisdiction in which the Resulting Issuer’s employees, agents, subcontractors or joint-venture partners are located. The Resulting Issuer may therefore be subject to civil and criminal penalties and to reputational damage. Instances of fraud, bribery and corruption, and violations of laws and regulations in the jurisdictions in which the Resulting Issuer will operate, could have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

Some of the areas in which the Resulting Issuer will operate suffer from terrorism and militant activity

The Resulting Issuer will operate and conduct business in areas which have experienced terrorist and militant activity. There can be no assurance that further terrorist acts will not occur in the future. The fear of terrorist actions, either against the Resulting Issuer’s properties or generally, could have an adverse effect on the Resulting Issuer’s ability to adequately staff and/or manage the Resulting Issuer’s operations or could substantially increase the costs of doing so. Any future terrorist acts in the countries in which the Resulting Issuer will operate, or neighbouring countries in Southeast Asia, could destabilize those countries and increase internal divisions within their governments, and might result in concerns about stability in the region and negatively affect investors’ confidence.

Violent acts arising from and leading to instability and unrest have in the past had, and could continue to have, a material adverse effect on investment and confidence in, and the performance of, the economies in Southeast Asia, and in turn on the Resulting Issuer’s business. Any terrorist attack, including those targeting the Resulting Issuer’s properties, could interrupt parts of the Resulting Issuer’s business and materially and adversely affect the Resulting Issuer’s business, results of operations, financial condition and prospects.

Some of the areas in which the Resulting Issuer will operate lack physical infrastructure or contain physical infrastructure in poor condition

Physical infrastructure in some areas of Indonesia is obsolete or non-existent and in certain respects has not been adequately funded and maintained. In some areas, oil and gas pipelines are particularly affected. Breakdowns or failures of any part of the physical infrastructure in the areas where the Resulting Issuer will operate may disrupt the Resulting Issuer’s normal business activity, cause it to suspend operations or result in environmental damage to the surrounding areas. Further deterioration of the physical infrastructure in the areas where the Resulting Issuer operate may disrupt the transportation of goods and supplies, increase operational costs to doing business in these areas and generally interrupt business operations, any or all of which could have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

The interpretation and application of laws and regulations in the jurisdictions in which the Resulting Issuer will operate involves uncertainty

The courts in the jurisdictions in which the Resulting Issuer will operate may offer less certainty as to the judicial outcome or a more protracted judicial process than is the case in more established economies. Businesses can become involved in lengthy court cases over simple issues when rulings are not clearly defined, and the poor drafting of laws and excessive delays in the legal process for resolving issues or disputes compound such problems. Accordingly, the Resulting Issuer could face risks such as: (i) effective legal redress in the courts of such jurisdictions being more difficult to obtain, whether in respect of a breach of law or regulation, or in an ownership dispute, (ii) a higher degree of discretion on the part of governmental authorities and therefore less certainty, (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations, (iv) inconsistencies or conflicts between and

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within various laws, regulations, decrees, orders and resolutions, or (v) relative inexperience or unpredictability of the judiciary and courts in such matters.

Enforcement of laws in some of the jurisdictions in which the Resulting Issuer will operate may depend on and be subject to the interpretation placed upon such laws by the relevant local authority, and such authority may adopt an interpretation of an aspect of local law which differs from the advice that has been given to it by local lawyers or even previously by the relevant local authority itself. Furthermore, there is limited or no relevant case law providing guidance on how courts would interpret such laws and the application of such laws to the Resulting Issuer’s contracts, joint operations, licenses, license applications or other arrangements.

Moreover, in Indonesia, regional autonomy is a sensitive political subject. Laws and regulations have changed the regulatory environment by decentralizing certain regulatory and other authority from the central Indonesian Government to regional (i.e. provincial and/or local) governments. The process of devolving authority to regional governments is ongoing, and while the regulations on regional autonomy, as well as various sector-specific laws, have set out the divisions of authority between the central Indonesian Government and the regional governments, the implementation of such regulations has been erratic, causing the scope of devolved authority to be uncertain. Although the central Indonesian Government has made efforts in the regulatory sector to curb overreaching by regional governments, jurisdictional uncertainty is expected to continue for the foreseeable future. One consequence of this uncertainty is that the powers of the licensing authorities in Indonesia are not completely transparent or clearly delineated. It is unclear whether the rights granted by the Indonesian Government at the central, provincial and local levels conflict with each other, or that the application of regulatory powers will be consistent.

There can be no assurance that unfavourable interpretation or application of the laws in the jurisdictions in which the Resulting Issuer will operates will not adversely affect the Resulting Issuer’s contracts, joint operations, licenses, license applications or other legal arrangements. In certain jurisdictions, the commitment of local businesses, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be less certain and more susceptible to revision or cancellation, and legal redress may be uncertain or delayed. If the existing body of laws and regulations in the countries in which the Resulting Issuer will operate are interpreted or applied, or relevant discretions exercised, in an inconsistent manner by the courts or applicable regulatory bodies, this could result in ambiguities, inconsistencies and anomalies in the enforcement of such laws and regulations, which in turn could hinder the Resulting Issuer’s long term planning efforts and may create uncertainties in the Resulting Issuer’s operating environment.

The Resulting Issuer may be subject to sovereign immunity risk in the countries in which the Resulting Issuer will operate

Indonesia has a constitution and laws which entrench and vest all of the rights over their natural resources in the state, including oil and gas resources, which are regarded as sovereign state assets. Indonesia has also established state-owned entities which enter into commercial contracts with oil and gas exploration and production companies in relation to the exploration, development and production of oil and gas resources. Accordingly, the natural resources discovered within a contract area are ultimately owned by the state and the exploration and a production company only has contractual rights of exploration, development and production. As the Resulting Issuer’s contracts are with state-owned entities, in the event of a dispute, it is uncertain if these state-owned entities will be able to invoke the principles of sovereign immunity. The invocation of such immunity may limit the Resulting Issuer’s ability to enforce the Resulting Issuer’s rights, which in turn adversely affects the Resulting Issuer’s business, results of operations, financial condition and prospects.

The Resulting Issuer may be subject to changes in taxation in the countries in which the Resulting Issuer will operate

Post transaction, the Resulting Issuer will be subject to taxation in Indonesia, the British Virgin Islands and Canada and will be faced with increasingly complex tax laws. The amount of tax the Resulting Issuer pays could increase substantially as a result of changes in, or new interpretations of, these laws, which could have a material adverse effect on the Resulting Issuer’s liquidity and results of operations. During periods of high profitability in the oil and gas industry, there are often calls for increased or windfall taxes on oil and gas revenue. Taxes have increased or been imposed in the past and may increase or be imposed again in the future. In addition, taxing authorities could review and question the Resulting Issuer’s tax returns leading to additional taxes and penalties that could be material.

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Natural disasters in areas in which the Resulting Issuer will operate could disrupt the economy of such countries and the Resulting Issuer’s business

The Resulting Issuer’s operations, including the Resulting Issuer’s drilling and other exploration activities and the transport and other logistics on which the Resulting Issuer will be dependent, may be adversely affected and severely disrupted by climatic or geophysical conditions. Natural disasters or adverse conditions may occur in those geographical areas in which the Resulting Issuer will operate, including severe weather, tsunamis, cyclones, tropical storms, earthquakes, floods, volcanic eruptions, excessive rainfall and droughts as well as power outages or other events beyond the Resulting Issuer’s control. A significant earthquake or other geological disturbance or natural disaster in more populated cities and financial centers could severely disrupt that country’s economy and undermine investor confidence and have a material adverse effect on the Resulting Issuer’s business, results of operations, financial condition and prospects.

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PART II - INFORMATION CONCERNING ACL PRIOR TO ACQUISITION

Corporate Structure

The full corporate name of ACL is “ACL International Ltd.”. ACL was created by Certificate of Amalgamation on February 28, 1999 under the name “Anthony Clark International Insurance Brokers Ltd.”. The Articles of ACL were amended by Certificate of Amendment and Registration of Restated Articles dated May 15, 2000 to remove the private issuer provisions. ACL was registered as an extra-provincial company in British Columbia by Certificate of Registration dated May 11, 2006. ACL changed its name to “ACL International Ltd.” by Certificate of Amendment on May 1, 2014.

The head office and principal office of ACL is located at Suite 500, 5940 Macleod Trail SW, Calgary, Alberta, T2H 2G4.

The registered office of ACL is located at Suite 1200, 1015 – 4th Street SW, Calgary, Alberta, T2R 1J4.

History

ACL’s primary business activity involved the operation of general insurance brokerages in Canada and the United States. Shares of ACL traded on the TSX Venture Exchange under the symbol “ACL”. ACL voluntarily delisted from the OTCQX due to low trading volume. The last day of trading on the OTCQX was December 31, 2013. ACL expanded through internal growth and acquisitions. ACL operated in two economic environments and revenues were attributed to geographic areas based on the location of resources producing the revenues.

On March 3, 2014 ACL sold the property and equipment and customer accounts of its U.S. operations for net sales proceeds of $3,204,664 including transaction costs of $ 178,396. ACL realized a loss from discontinued operations of $2,804,844.

On May 1, 2014 ACL completed the sale of all of its shares (51%) in its Canadian subsidiary, Anthony Clark Insurance Brokers Ltd., to an arm’s length third party for cash consideration of approximately $13,000,000, before repayment of certain senior debt and adjustments. As the transaction contemplated the sale of all or substantially all of ACL’s assets shareholder approval was obtained on April 14, 2014 and Exchange approval on April 22, 2014. ACL paid certain liabilities in the amount of $7,942,971 from the sale proceeds including debt settlement $6,101,475, legal expenses $277,221 and severance and outstanding compensation of $1,564,275.

Subsequent to obtaining Exchange approval on April 29, 2014, ACL changed its name to “ACL International Ltd.” effective May 1, 2014, and transferred its common shares listing to the NEX Board of the Exchange effective May 2, 2014.

On May 26, 2014, Board of Directors of ACL declared a capital distribution to the ACL shareholders following completion of the sale of Anthony Clark Insurance Brokers Ltd. and the payment of certain liabilities from the amounts received. The record date for the distribution was June 9, 2014. ACL made an initial distribution of a portion of the remaining proceeds of $0.28 per common share to its shareholders on or about June 18, 2014. The distribution was treated as a return of capital for Canadian income tax purposes but was treated as a dividend for any US investors.

Effective March 31, 2015, all of the issued and outstanding shares in the capital of Addison Low Cost Insurance Brokers Ltd. were sold to an unrelated third part for a purchase price of US$1.00. Addison Low Cost Insurance Brokers Ltd. is ACL’s wholly-owned American subsidiary owned by ACL through Addison America Partnership (see “Intercorporate Relationships” below in this Part II. The shares of Addison Low Cost Insurance Brokers Ltd. were sold by Addison America Partnership in order to take advantage of the resulting tax loss.

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Other than as set out above, since the divesture of its assets, ACL has not carried on any business other than to identify and evaluate corporations, businesses or assets for acquisition with a view to completing a reactivation transaction and to enter into the Asset Purchase Agreement with BSL pursuant to which ACL will agree to purchase the Blue Sky Assets from BSL.

Intercorporate Relationships

As stated above, ACL sold a number of its assets and shares in its operating entities in Canada and the United States. ACL still has a number of subsidiaries, however, most of which it holds through Addison America Partnership. The following corporate organizational chart describes ACL’s intercorporate relationships:

ACL International Ltd.

100% 100%

99%

1275925 Alberta Inc.

Blue Sky Langsa Inc.

(“Blue Sky BVI”)

1%

Addison America Partnership

100% 100% 100%

Addison York Insurance Brokers

Ltd.

Addison Bay Insurance Brokers Ltd.

American Edge

Insurance Services Ltd.

1275925 Alberta Ltd. is a Canadian corporation incorporated under the laws of the Province of Alberta. The company was formed for the purposes of the formation of Addison America Partnership and is now inactive.

Addison America Partnership is a general (unlimited) partnership organized under the laws of the State of Delaware. The partnership to own all of ACL’s US subsidiaries. The partnership is largely inactive but is the debtor under a loan made to it by a third party in the amount of US$645,000.00.

Addison York Insurance Brokers Ltd. is an American corporation incorporated under the laws of the State of Delaware in order to run US operations. The company is now inactive, but does hold some tax losses.

Addison Bay Insurance Brokers Ltd. is an American corporation incorporated under the laws of the State of Delaware to act as ACL’s commercial arm in San Francisco. The company is now inactive but for a pending lawsuit brought by the company against an ex-employee.

American Edge Insurance Services Ltd. is an American corporation incorporated under the laws of the State of Delaware, created for ACL’s managing general agent program. The company is now inactive.

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In connection with the Acquisition, ACL has also incorporated Blue Sky BVI as its wholly-owned subsidiary incorporated under the laws of the British Virgin Islands. Upon completion of the Acquisition, ACL will transfer the Blue Sky Assets to Blue Sky BVI. It is expected that Blue Sky BVI will be appointed the operator of the Blue Sky Assets.

Selected Consolidated Financial Information

The following table sets forth selected historical financial information for ACL for the year ended March 31, 2014 and for the nine months ended December 31, 2014, and selected balance sheet data as at March 31, 2014 and December 31, 2014. Such information is derived from the audited financial statements of ACL as at March 31, 2014 and the unaudited interim financial statements for the nine months ended December 31, 2014, which are attached hereto in Appendix “A”, and should be read in conjunction with such financial statements.

Year Ended March 31, 2014

(audited) ($)

Nine Months Ended December

31, 2014 (unaudited)

($)

Total Revenue 10,294,961 Nil

Total Expenses 8,425,593 1,890,961

Net income (Loss) 1,680,178 10,206,148

Per share (basic and diluted) (0.29) 1.06

Total Assets 11,155,724 2,127,496

Total Long Term Liabilities 12,751,983 748,265

Accounts Payable and Accrued Liabilities

1,859,837 225,644

Share Capital 9,473,447 6,783,995

Deficit (18,582,336) (8,411,402)

Management’s Discussion and Analysis

The management discussion and analysis of ACL in respect of the year ended March 31, 2014 and the management discussion and analysis of ACL in respect of the nine months ended December 31, 2014 are attached hereto as Appendix “B”. The management discussion and analysis is based on and derived from the audited financial statements of ACL as at March 31, 2014 and the unaudited interim financial statements for the nine months ended December 31, 2014, both of which are attached hereto in Appendix “A”, and should be read in conjunction with such financial statements.

Description of the Securities

The authorized capital of ACL consists of an unlimited number of Common Shares without nominal or par value. As of the date of this Filing Statement, 9,605,184 Common Shares were issued and outstanding as fully paid and non-assessable shares.

The holders of Common Shares are entitled to receive notice of and attend any meeting of ACL’s shareholders and are entitled to cast one vote for each Common Shares held. The holders of Common Shares are entitled to receive dividends, if, as and when declared by the board of directors of ACL and to receive a proportionate share, on a per share basis, of the assets of ACL available for distribution in the event of a liquidation, dissolution or winding-up of ACL.

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Stock Option Plan

ACL has adopted the ACL Option Plan, which provides that the board of directors of ACL may, from time to time, in its discretion and in accordance with the Exchange Requirements, grant to directors, officers, employees and consultants to ACL, non-transferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance will not exceed 1,710,395 Common Shares. Such options will be exercisable for a period of up to ten years from the date of grant. The number of Common Shares reserved for issuance to any individual director or officer will not exceed five percent (5%) of the issued and outstanding Common Shares, the number of Common Shares reserved for issuance to any one consultant will not exceed two percent (2%) of the issued and outstanding Common Shares and the number of Common Shares reserved for issuance to persons employed to provide investor relations services will not exceed two percent (2%) of the issued and outstanding Common Shares. Under the ACL Option Plan, options may be exercised by the later of twelve (12) months after the completion of the Acquisition and no later than 90 days following cessation of the optionee’s position with ACL (provided that if the cessation of office, directorship, or technical consulting arrangement was by reason of death, the option may be exercised within a maximum period of one year after such death, subject to the expiry date of such option). Any Common Shares acquired pursuant to the exercise of options prior to the completion of the Acquisition must be deposited in escrow and will be subject to escrow until the Final Exchange Bulletin is issued.

As of the date hereof, no options are issued and outstanding.

In connection with the Acquisition, upon completion of the Acquisition, the directors of the Resulting Issuer intend to adopt a new stock option plan (the “New Option Plan”) and it is proposed that new options shall be issued under the New Option Plan to the directors and management of the Resulting Issuer. For details regarding the options that may be issued post-Acquisition, please see the information under the heading entitled, “Options to Purchase Securities” in Part IV - “Information Regarding the Resulting Issuer”.

Prior Sales

ACL has issued no securities during the 12 month period prior to the date of this Filing Statement.

Stock Exchange Price

The outstanding Common Shares are listed on the NEX under the trading symbol “ACL.H”. The following table sets forth the high and low sales prices and trading volumes of board lots of Common Shares on a monthly basis, as reported by the NEX from May 2, 2014 (being the date the Common Shares were originally listed on the NEX) to the date hereof.

High ($) Low ($) Volume (Shares)

2014

May No trades No trades No trades

June No trades No trades No trades

July 0.10 0.07 26,530

August 0.045 0.045 1,165

September 0.10 0.075 71,777

October 0.10 0.055 443,576

November No trades No trades No trades

December No trades No trades No trades

2015

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High ($) Low ($) Volume (Shares)

January No trades No trades No trades

February No trades No trades No trades

March No trades No trades No trades

April No trades No trades No trades

May No trades No trades No trades

Note: (1) The Common Shares have been halted from trading, pending preliminary Exchange review of the Acquisition, since October

31, 2014. Executive Compensation

Compensation Discussion and Analysis

The purpose of this Compensation Discussion and Analysis is to provide information regarding the significant elements of compensation awarded to, earned by, paid or payable to ACL’s named executive officers (NEOs) for the most recently completed fiscal year, ACL’s executive compensation objectives and processes and other information related to executive compensation. For the purposes of this disclosure, ACL’s NEOs are Tony Consalvo, President and Chief Executive Officer and Mahesh Bhatia, Vice-President of Finance and Chief Financial Officer.

ACL ended its most recent financial year on March 31, 2014. On May 1, 2014 ACL sold substantially all of its assets to a third party. That sale and other transactions were approved by the shareholders at a special meeting of shareholders held on April 14, 2014. Concurrent with the sale of substantially all of the assets, certain employees, consultants and officers including Messrs. Consalvo and Bhatia terminated their employment with ACL. Effective May 1, 2014 the Board of Directors of ACL determined to disband the Compensation Committee and all decisions as to compensation subsequent to May 1, 2014 were made by decision of the Board of Directors. Unless otherwise specifically noted, the discussion below related to Executive Compensation is up to March 31, 2014. Effective May 1, 2014, the Board approved a resolution to reappoint Tony Consalvo as ACL’s President and Chief Executive Officer on a volunteer basis and for no monetary compensation. The Board also approved the employment of Mahesh Bhatia in the capacity of ACL’s Chief Financial Officer and Vice President, Finance, at a fixed compensation of $14,500 per month for May 2014 and June 2014; thereafter, the compensation will be fixed at $3,000 per month.

Additionally, following the year end, ACL entered into consulting agreements with each of Mr. Mahesh Bhatia and Robert Sadleir to conduct the due diligence process for the Acquisition and engaged McDaniel & Associates Consultants Ltd. to prepare an Independent Reserves Evaluation in accordance with NI 51-101. Messrs. Bhatia and Sadleir each were paid $5,000.00 under the consulting agreements.

Compensation Committee and Goals

The Compensation Committee was responsible for approving the compensation program for the NEOs based upon performance. The Compensation Committee considered specific information and made recommendations to the full Board regarding compensation levels. The Board was ultimately responsible for oversight and decision-making with respect to ACL’s executive compensation principles, policies and programs, including the management of compensation risk.

ACL’s compensation philosophy is reflected in the following key priorities that governed compensation decisions:

(a) alignment with stockholders’ interests;

(b) financial performance of ACL;

(c) capital and risk management;

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(d) to attract, retain and motivate highly qualified and the most talented executives to promote superior performance;

(e) individual performance; and

(f) pay for performance.

The Compensation Committee was comprised of Douglas Farmer and Robert Sadleir both of whom are independent directors. Mr. Sadleir has worked within and has managed various incentive compensation programs for a number of companies of varying sizes and industries.

Mr. Farmer has assisted in focus groups, developed and implemented the compensation programs for mortgage underwriting production staff of First National Financial LP including its management and its branch employees throughout Canada. Mr. Farmer has also helped develop and implement the compensation programs for Sun Life Trust Company.

An individual NEO’s compensation was established after considering the following factors:

(a) median compensation for similar job and job levels in the market;

(b) ACL’s performance against financial measures including earnings per share, total shareholder return, economic profit, cash flow management and cost management discipline;

(c) ACL’s performance relative to goals approved by the Committee;

(d) individual performance versus personal goals and contributions to ACL; and

(e) business climate, economic conditions and other factors.

After an analysis of these factors the Compensation Committee developed a compensation recommendation for the NEOs to be considered by the Board.

The Compensation Committee met numerous times in the fiscal year ended March 31, 2014 (these meetings were simply held as part of ACL’s Board meetings as all members of the Compensation Committee are also directors). In addition, individual Compensation Committee members periodically reviewed ACL’s approach to executive compensation with management. In the last financial year, no compensation consultant or advisor was been retained to assist the Board or the Compensation Committee in determining compensation for any of ACL’s NEOs or directors.

Elements of Compensation

ACL’s compensation program for NEOs was comprised primarily of salary, bonuses, incentive stock options and benefits. The compensation program was designed to provide an incentive to achieve short and long term objectives, attract and retain the most capable executives while motivating these individuals to continue to enhance shareholder value. ACL’s goals and objectives determining executive compensation are:

(a) to attract and retain qualified and experienced executives in today’s competitive marketplace;

(b) to encourage and reward outstanding performance that will enhance ACL’s near-term results and long-term prospects;

(c) to align executive compensation with shareholders’ interests; and

(d) to encourage the retention of key executives for leadership succession.

Reference Market Group

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ACL’s compensation policy aimed to position target compensation for NEOs at a median of its comparable executive roles at companies forming part of its reference market group (being Canadian insurance companies or financial services companies) or companies that are otherwise comparable for the purposes of recruiting and retaining individuals with the requisite skills and capabilities. Individual targets were established above or below the median of this reference market group based on and executive’s knowledge, experience and performance track record. A significant factor taken into account was organizational scope that focuses on companies in relevant industry sectors that are comparable in asset/revenue size, occupational scope, market capitalization and profitability. The Compensation Committee looked at available salary and compensation surveys for comparable insurance companies and financial service companies in determining target compensation levels. The Compensation Committee revised the target compensation for ACL’s NEOs on a regular basis based on what is offered by other companies within its reference market.

Salary and Bonuses

The salary element of compensation was designed to ensure ACL’s access to skilled employees necessary to achieve its corporate success. The Compensation Committee annually reviewed executive salary levels in relation to key performance indicators such as ACL’s financial condition, share price, finance and corporate advancement. Salaries were determined by evaluating the responsibilities of the position held and the experience of the individual, and by reference to the competitive marketplace for executive talent, including a comparison of salaries for comparable positions at other similar companies.

The Compensation Committee also considered awarding discretionary cash and/or share bonuses on an annual basis to reward extraordinary performance during the preceding fiscal year and performance bonuses to reward the meeting of certain pre-determined financial targets. In determining whether a discretionary bonus will be given, the Compensation Committee considered factors such as the NEO’s performance over the past year, ACL’s achievements in the past year and the NEO’s role in effecting such achievements. The EBITDA Bonus payable to Messrs. Consalvo and Bhatia is based upon the following formula:

EBITDA Target Achieved Recommended Bonus

120% 70% of current salary

115% 52.5% of current salary





During the fiscal year ended on March 31, 2014 and since that date to the date of this Filing Statement, no bonuses were declared or paid.

Option-Based Awards

The Compensation Committee from time to time recommended the grant of stock options to ACL’s executive officers under the ACL Option Plan. All grants of options were reviewed and approved by the Board. The stock option component of ACL’s executive compensation program was intended to provide incentive for ACL’s NEOs to work to enhance ACL’s value over the long term, remain with ACL, encourage and reward outstanding performance over short and long terms and align the interests of ACL’s NEOs with those of its shareholders. The Compensation Committee took into consideration the amount and terms of outstanding stock options in determining its recommendations regarding the options to be granted during any fiscal year. Option based compensation serves to increase management ownership of ACL, provides a level of deferred compensation, aids in employee retention and conserves cash. During the fiscal year ended on March 31, 2014, the Board awarded no stock options to the NEO and

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executives. No stock options have been awarded subsequent to the fiscal year ended March 31, 2014 to the date of this Filing Statement.

Perquisites

Perquisites available to all employees, subsidized partially or wholly by ACL, through group plans include group medical, dental, critical care, life and disability insurance. The group medical, dental, disability and life insurance plans provide for different benefit levels based on class that is defined by the participants position level in the organization and these plans allow for enhanced benefit levels for eligible NEO and executives. In addition to the group plans, Messrs. Consalvo and Bhatia also each receive a car allowance of $6,000 per year. The car allowance to Messrs. Consalvo and Bhatia ceased on May 1, 2014.

Risk Management

The Board understands the concerns of Shareholders that want to ensure that compensation mechanisms do not actually cause management to increase risk. The Compensation Committee considered the implication of the possible risks associated with ACL’s (and its material subsidiaries’) compensation policies and practices that included identifying anything that may encourage NEOs to take inappropriate or excessive risks and identification and mitigation of risks arising from those policies and practices that were reasonable likely to have a material adverse effect on ACL (and its subsidiaries). The Compensation Committee periodically reviewed and assessed the compensation policies and practices in relation to those risks, including the policies and practices identified by the Canadian Securities Administrators as potentially encouraging NEOs to expose ACL and its subsidiaries to inappropriate or excessive risk. It was the Compensation Committee’s view that ACL and its subsidiaries compensation policies and practices did not encourage inappropriate or excessive risk-taking.

As described above, the annual incentive bonuses were determined by a number of factors, many of which relate to the overall financial performance of ACL and its subsidiaries and that beyond the capability of any particular NEO to affect directly in a significant way. Accordingly, the Compensation Committee believed that the annual incentive bonus program did not encourage potentially inappropriate short term risk taking behavior. The Compensation Committee was not of the view that these executive officers and NEOs were encouraged to take action that provide short term benefits or that could expose ACL and its subsidiaries to inappropriate or excessive risks in the long term.

There is little likelihood of any one executive officer being encouraged to expose ACL to inappropriate or excessive risks as the compensation policies and practices are structured similarly for all NEOs and other executive officers. The NEOs and directors are not permitted to purchase financial instruments, including prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly by the NEO or director.

Summary Compensation Table

The following table contains information about the compensation paid for each of ACL’s last three most recently completed years for services rendered in all capacities to ACL, including compensation paid to or earned by ACL’s named executive officers (NEOs), being:

(a) ACL's chief executive officer (or an individual who acted in a similar capacity) (CEO);

(b) ACL's chief financial officer (or an individual who acted in a similar capacity) (CFO);

(c) each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000; and

(d) each individuals who would be an NEO under paragraph (c) except that the individual was neither an executive officer of ACL nor acting in a similar capacity as at the end of that financial year (being March 31, 2014).

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Annual Compensation

Non-Equity Incentive Plan Compensation

($)

Name and Principal Position

Fiscal Year

Ended March

31

Salary ($)

Share Based

Awards ($)

Option Based

Awards ($)

Annual Incentive

Plans

Long-Term Incentive

Plans

Pension Value

($)

All Other Compensation

($)

Total Compensation

($)

Tony Consalvo President and Chief Executive Officer

2014

2013

2012

206,179

206,179

206,179

N/A

N/A

N/A

Nil

Nil

Nil

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

7,884(5)

50,862(4)

151,770(3)

214,063

257,041

357,949(3)

Mahesh Bhatia Chief Financial Officer

2014

2013

2012

174,974

174,974

174,974

N/A

N/A

N/A

Nil

Nil

Nil

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

$7,884

53,809(4)

130,463(3)

182,858

218,783

305,437(3)

Notes: (1) ACL has no annual or long-term incentive plan. (2) ACL has no pension or other benefit or actuarial plan. (3) These amounts were partially paid in cash with the balance outstanding for the year ended March 31, 2012. (5) These amounts were not paid and remain outstanding for the year ended March 31, 2013. (6) These amounts include bonus and severance payments that were not paid and remain outstanding for the year ended March 31, 2014.

Outstanding Share-Based and Option-Based Awards

The NEOs did not hold any SARs during the fiscal year ended March 31, 2014. There were no options issued or outstanding as of March 31, 2014 and no options were exercised in the fiscal year ending March 31, 2014.

Pension Plan Benefits

ACL does not provide any pension, retirement plan or other such remuneration for its NEOs or directors.

Termination and Change of Control Benefits

ACL has recognized the valuable services that the NEOs provide to ACL and the importance of the continued focus of the NEOs in the event of a possible termination without cause or change of control. Because a change of control could give rise to the possibility that the employment of a NEO would be terminated without cause or adversely modified, the Board determined that it would be in the best interests of ACL to ensure that any distraction or concern associated with a possible termination without cause or change of control be alleviated by ensuring that, if there is a change of control, each NEO would have the rights set out below.

ACL entered into an employment agreement dated April 1, 2003 as amended September 2013 (the Agreement) with Tony Consalvo (the present CEO) whereby, among other things, if ACL ends Mr. Consalvo’s employment without just cause, then he will receive payment equal to 300% of his then current annual base salary. In addition, if any of the following events occur:

(a) an adverse change in any of the current duties, powers, rights, discretion, salary or benefits of the CEO;

(b) a diminution of the current title of the CEO;

(c) a change in the person or body to whom the CEO currently reports, except if that person or body is of equivalent rank or stature or that change is a result of the resignation or removal of such person or persons comprising such body, as the case may be, provided that this does not include a change resulting from a promotion in the normal course of business;

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(d) a change in the municipality at which the CEO currently carries out his terms of employment with ACL, without the CEO’s consent, unless the CEO’s terms of employment include the obligation to receive geographic transfers from time to time in the normal course of business;

(e) the CEO is not nominated as a management nominee of the Board of ACL at a general meeting of the shareholders of ACL; or

(f) a sale of all or substantially all of the insurance assets or book of insurance business of ACL;

the CEO will be entitled to terminate his employment with ACL and receive a payment equal to 300% of his then current annual base salary.

ACL also entered into an employment agreement dated August 1, 2006, as amended September 2013 with Mahesh Bhatia (the CFO) whereby, among other things, should ACL end Mr. Bhatia’s employment without just cause, then the CFO will receive payment equal to 200% of his then current annual base salary. If there will be a change of control of ACL wherein Mr. Bhatia does not remain as CFO after such change in control, or if there was a sale of all or substantially all of ACL’s assets then he will receive payment equal to 200% of his then current annual base salary.

On May 1, 2014, ACL sold all or substantially all of the assets of ACL to a third party thereby triggering the termination and change of control benefits. Accordingly, Mr. Consalvo was entitled to receive certain payments including severance pay equal to three years’ annual salary of $204,978 while Mr. Bhatia was entitled to receive payments including severance pay equal to two year’s annual salary of $173,773. In addition, Messrs. Consalvo and Bhatia were paid bonuses as reported in ACL’s management information circulars dated August 14, 2013 and August 20, 2012 that had remained unpaid. Bonuses in the amount of $100,000 awarded to Mr. Consalvo remain unpaid as of the date of this Compensation Discussion and Analysis Report. August 20, 2012 and August 14, 2013 management circulars are available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com.

Directors Compensation

Each director that is not a full-time employee or officer of ACL received $15,000 for their services as directors to ACL for the last financial year. This amount was paid quarterly in arrears over ACL's fiscal year and. There are no other arrangements in addition to or in lieu of the above described fees under which directors of ACL were compensated by ACL during the most recently completed financial year for their services in their capacity as directors other than as disclosed in this Filing Statement.

Effective July 1, 2014, there will be no compensation payable for an individual’s services as a director. ACL's directors who are also senior officers do not receive any cash payments for their services as directors.

The table below represents the compensation paid to the directors for the year ended March 31, 2014:

Name

Fees Earned

($)

Share Based

Awards ($)

Option Based

Awards ($)

Non-Equity Incentive Plan Compensation

($)

Pension Value

($)


($)

Total Compensation

($)

Douglas Farmer $15,000 N/A Nil N/A N/A Nil $15,000

Normand Cournoyer

$15,000 N/A Nil N/A N/A Nil $15,000

Robert Sadleir $15,000 N/A Nil N/A N/A Nil $15,000

ACL has no pension plan or other arrangement for non-cash compensation for directors.

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Indebtedness of Directors and Executive Officers

None of the directors and officers of ACL, any proposed management nominee for election as a director of ACL or any associate of any director, officer or proposed management nominee is or has been indebted to ACL at any time during the last completed financial year.

Management Contracts

There are no management functions of ACL that are to any substantial degree performed by a person or company other than the directors or executive officers (or private companies controlled by them, either directly or indirectly) of ACL. Non-Arm’s Length Party Transactions

ACL entered into consulting agreements with each of Mr. Mahesh Bhatia and Robert Sadleir to conduct the due diligence process for the Acquisition and to arrange for the preparation of an Independent Reserves Evaluation in accordance with NI 51-101. Messrs. Bhatia and Sadleir each were paid $5,000.00 under the consulting agreements.

Additionally, ACL entered into an employment agreement dated April 1, 2003 as amended September 2013 (the Agreement) with Tony Consalvo (the present CEO) whereby, among other things, if ACL ends Mr. Consalvo’s employment without just cause, then he will receive payment equal to 300% of his then current annual base salary. In addition, if any of the following events occur:

(a) an adverse change in any of the current duties, powers, rights, discretion, salary or benefits of the CEO;

(b) a diminution of the current title of the CEO;

(c) a change in the person or body to whom the CEO currently reports, except if that person or body is of equivalent rank or stature or that change is a result of the resignation or removal of such person or persons comprising such body, as the case may be, provided that this does not include a change resulting from a promotion in the normal course of business;

(d) a change in the municipality at which the CEO currently carries out his terms of employment with ACL, without the CEO’s consent, unless the CEO’s terms of employment include the obligation to receive geographic transfers from time to time in the normal course of business;

(e) the CEO is not nominated as a management nominee of the Board of ACL at a general meeting of the shareholders of ACL; or

(f) a sale of all or substantially all of the insurance assets or book of insurance business of ACL;

the CEO will be entitled to terminate his employment with ACL and receive a payment equal to 300% of his then current annual base salary.

ACL also entered into an employment agreement dated August 1, 2006, as amended September 2013 with Mahesh Bhatia (the CFO) whereby, among other things, should ACL end Mr. Bhatia’s employment without just cause, then the CFO will receive payment equal to 200% of his then current annual base salary. If there will be a change of control of ACL wherein Mr. Bhatia does not remain as CFO after such change in control, or if there was a sale of all or substantially all of ACL’s assets then he will receive payment equal to 200% of his then current annual base salary. Additionally, ACL has entered into management agreement with Mr. Bhatia for the one-time payment of fees in the amount of $7,000 in consideration for his services in connection with the Acquisition.

On May 1, 2014, ACL sold all or substantially all of the assets of ACL to a third party thereby triggering the termination and change of control benefits. Accordingly, Mr. Consalvo was entitled to receive certain payments including severance pay equal to three years’ annual salary of $204,978 while Mr. Bhatia was entitled to receive payments including severance pay equal to two year’s annual salary of $173,773. In addition, Messrs. Consalvo and

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Bhatia were paid bonuses as reported in ACL’s management information circulars dated August 14, 2013 and August 20, 2012 that had remained unpaid. Bonuses in the amount of $100,000 awarded to Mr. Consalvo remain unpaid as of the date hereof. August 20, 2012 and August 14, 2013 management circulars are available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com.

Other than the foregoing, ACL has not completed or entered into any non-arm’s length acquisition of assets or services or provision of assets or services in any transaction within 24 months before Filing Statement.

Legal Proceedings

ACL has not been, and is not presently involved in, any legal proceedings material to it and insofar as it is aware, no such proceedings are contemplated.

Auditor, Transfer Agent and Registrar

Auditor

ACL’s current auditors are D+H Group LLP, Chartered Accountants, whose principal office is located on the 10th Floor, 1333 West Broadway, Vancouver, British Columbia, V6H 4C1. D+H Group LLP have been ACL’s auditors since April 2005.

Transfer Agent and Registrar

The transfer agent and registrar for Common Shares is Canadian Stock Transfer Company Inc. at its Calgary office located at Suite 600, 333 - 7th Avenue SW, Calgary, Alberta T2P 2Z1.

Material Contracts

ACL has not entered into any material contracts, outside of the ordinary course of business, prior to the date hereof, other than the following:

1. Asset Purchase Agreement (see Part I - “The Acquisition”); and

2. Promissory Notes and General Security Agreements regarding the Interim Loans amounting to US$800,000.00 made by ACL to BSL (see Part I - “The Acquisition” under the heading “Loan from ACL to BSL”).

Copies of these material contracts will be available for inspection without charge at the registered office of ACL at Suite 1200, 1015 - 4th Street SW, Calgary, Alberta, T2R 1J4, during ordinary business hours from the date hereof until the completion of the Acquisition and for a period of 30 days thereafter.

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PART III - INFORMATION CONCERNING THE BLUE SKY ASSETS

Corporate Structure of BSL

BSL is a private mineral exploration company incorporated on November 25, 2003 under the Companies Act 2001 of the Republic of Mauritius under the name, “Medco Moeco Langsa Limited”. On November 20, 2007, it changed its name to “Medco E&P Langsa Limited” and on January 15, 2010, it changed its name again to “Blue Sky Langsa Ltd.”.

The head office and principal business address of BSL is located at Menara Prima 26th Floor - Unit G-1, Jl, Lingkar Mega Kuningan Blok 6.2 Jakarta Selatan, Jakarta, Indonesia, 12950.

The registered office of BSL is located at. c/O CIM Corporate Services Ltd., Les Cascades Building, Edith Cavell Street, Port Louis, Republic of Mauritius.

The only shareholder of BSL is Blue Sky International Holdings Inc., a privately held Alberta corporation, which owns 100% of the shares of BSL. Danyal Chaudhary Foundation, a foundation organized under the laws of the State of California, owns 100% of the shares of Blue Sky International Holdings Inc. BSL has no subsidiaries.

Property Description and Location - The Langsa TAC

BSL is the registered holder of a 100% working interest in the Langsa Field, which is located in the East Aceh Offshore contract area in the Strait of Malacca approximately 30 miles offshore North Sumatra as shown in the figure below.

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Under the Indonesian oil and gas regime, participation in upstream activities can only be possible pursuant to contractual engagements with the Government of Indonesia, represented by Pertamina (full name, Perusahaan Pertambangan Minyak dan Gas Bumi Negara), an Indonesian state-owned oil and natural gas corporation based in Jakarta. Investors will usually enter into two agreements: the first, to obtain rights to invest in cooperation with the Government in oil and gas exploration and exploitation and a second agreement to outline the conduct of petroleum operations.

In the case of the Blue Sky Assets, the original rights were first granted under the East Aceh Offshore-Langsa (EAO-Langsa) Technical Assistance Contract dated May 15, 1997 originally among Pertamina, GFB Resources (Langsa) Limited and PT Indama Putera Langsa, which agreement is referred to in this Filing Statement as the “Langsa TAC”.

Under the Langsa TAC, the government grants holders (called the “Contractor” under the Langsa TAC) the exclusive right to conduct petroleum operations on the Blue Sky Assets. Under the Langsa TAC, Pertamina shall be responsible for management of operations, but the Contractor shall be responsible for the execution of operations and the responsibility for all costs. The Contractor is entitled to recover all operating costs from sales proceeds to a maximum of 65% per annum of oil production, and the remainder of the sales proceeds is divided 73.2% to Pertamina and 26.8% to the Contractor. Pertamina may elect to take its potion of crude oil in kind, upon notice to the Contractor. The Langsa TAC will expire on May 15, 2017. Pursuant to Indonesia’s Law No. 22/2001 dated November 23, 2001 regarding Petroleum and Natural Gas, no existing technical assistance contracts will be extended; however, a new contract may be formed regarding the contract area.

Operations under the Langsa TAC are governed by the Joint Operating Agreement dated May 15, 1997 between GFB Resources (Langsa) Limited and PT Indama Putera Langsa (referred to in this Filing Statement as the “JOA”). The JOA sets out provisions under which the participants can appoint an operator, sets out the rules for operation of the property, provides for the establishment of an operating committee, and sets out the rights and obligations of the participants to the government and to each other. The JOA provides that all rights and interests in and under the JOA, all property and any hydrocarbons produced from the Blue Sky Assets shall be owned by the parties to the JOA in accordance with their respective participating interests in the JOA.

BSL acquired a 90% interest under the Langsa TAC in 2003 and acquired the remaining 10% participating interest under the Langsa TAC in 2011. On February 11, 2011, Pertamina confirmed BSL as a 100% interest owner.

BSL is the Contractor under the Langsa TAC and is the operator under the JOA.

On March 13, 2015 (subsequently amended), BSL agreed to sell the Blue Sky Assets to ACL pursuant to the terms of the Asset Purchase Agreement (see Part I - “The Acquisition”). Upon completion of the Acquisition, ACL will own a 50% participating interest in the Langsa TAC and it will immediately transfer such interests to Blue Sky BVI. It is expected that Blue Sky BVI will be appointed the operator under the JOA.

McDaniel’s Report

ACL commissioned the McDaniels Report from McDaniels, which appraises the Blue Sky Assets. All technical information set out in this Part III is taken from the McDaniels Report, with the consent of McDaniels.

Regional Geology

ACL commissioned the McDaniels Report from McDaniels, which appraises the Blue Sky Assets. The following information hereunder and under the subheading, “Geology of the Langsa Field” in this Part II, is taken from the McDaniels Report.

The Langsa Field is located near the southeastern margin of the North Sumatra Basin. The North Sumatra Basin is a typical back-arc rifted basin characterized by graben and horst extensional faulting related to sea-floor spreading and continental drift. It formed during the early Tertiary (Oligocene Period) and contains in excess of 20,000 feet of sediments in the deep down-thrown graben areas. The age of the sediments range in age from Eocene to Recent. The

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basement consists of pre-tertiary aged sandstones, carbonates, volcanic and metamorphic rocks. The basin is bounded on the east by the Asahan Arch, which forms the southern extension of the Malaysian Shield (volcanic and metamorphic zone), and on the west by the Plio-Pleistocene volcanic Barisan Mountain belt.

Three major depositional cycles characterize basin evolution during the Tertiary. In the first cycle, the pre-tertiary surface was deeply eroded in many parts of the basin particularly in uplifted horst areas. This resulted in a very uneven erosional surface with significant topographic variation. During Oligocene time, the uplifted horsts were sources of clastic sediments that were transported into the deep graben areas. Thick organic rich shales were deposited in restricted grabens and provided good source rocks for hydrocarbon generation in the basin.

The second depositional cycle occurred during the Lower to Middle Miocene. A major marine transgression covered the basin resulting in the widespread deposition of carbonates of the Belamai formation and reef growth on erosional highs. Clastic sediments such as the Belamai dolomitic sandstone were also locally deposited during this time. These dolomitic sandstone deposits are interpreted to be marine gravity flow turbidites. In Middle Miocene time, an increase in sediment source and slowing subsidence resulted in a major regressive cycle moving across the basin resulting in decrease in water depth and an increase in clastic deposition characterized by the Lower Baong Formation shales. These shales are also believed to be source rocks within the basin. Shallow water platform carbonate deposits such as the Malacca Carbonate member of the Belamai Formation were also common during this period and formed the most productive reservoirs in the basin. The Malacca Carbonate is the productive reservoir in the Langsa Field and also the productive reservoir in the giant Arun gas condensate field located to the south. At the end of this period the transgression reach its maximum and the Lower Baong shales were replaced by fluviodeltaic Upper Baong sandstones. These sandstones form the principal reservoir in many fields on the western side of the basin, in particular, and are secondary potential reservoirs in the Langsa Field. This second cycle was terminated by a major basin wide erosional unconformity.

The third cycle of basin deposition was characterized by widespread fluvial to deltaic sedimentation. Coarse-grained clastic sediments derived from the Malaysian Shield on the east edge of the basin and finer grained volcanic sediments, derived from the Barisan Mountains to the west were deposited within the basin.

It is important to note that although basin subsidence and movement along the old pre-Tertiary fault system was significantly reduced by this time, movement did in fact continue throughout the basin; however, at a slower rate. This continued subsidence and re-activation of basement faults combined with differential compaction and drape over the old topographic highs resulted in primarily structural traps related to the underlying basement structure.

Geology of the Langsa Field

The Langsa Field consists of two separate hydrocarbon accumulations, the L pool and the H pool located approximately three kilometres apart. Both pools are productive from Miocene age, Malacca carbonate and are believed to have formed on a Pre-Tertiary dolomite basement high. The trapping mechanism is primarily structural with the hydrocarbons accumulating at the top of the carbonate sequence under impermeable shales and siltstones of the Baong Formation, which form the seal for the reservoir. The reservoir rocks consist of a complex facies assemblage of dolomitic limestone and dolomite comprising reefal, coralline to bioclastic wackestones and packstones. The porosity is reported to be primarily intergranular and intercrystalline; however, vugs are common especially in the uppermost sections of the reservoir. The magnitude of fracturing has not been determined within these two reservoirs; however, evidence from logs and cores combined with lost circulation zones and the high production rates indicates that fracturing is present in both pools.

The H pool is located on a four kilometres long and one kilometre wide, elongate northeast to southwest trending horst block. The main trap configuration is fault-bounded closure with a limited or no dip component. It is uncertain from the existing seismic whether internal compartmentalization may exist, but there may be baffles due to a lithological change from predominantly limestones in the NSB-H1 well to dolomite in the NSB-H3 well. Three wells, the NSB-H1, NSB-H3 and NSB-H4 wells were drilled into the structural feature. The NSB-H1 and NSB-H3 wells encountered a 60 feet and 30 feet oil column, respectively underlain by tight carbonates. The average porosity in the reservoir limestones in the NSB-H1 well is about 8.0 percent increasing to 13.5 percent in the dolomites in the NSB-H3 well. The NSB-H1 well drilled into the pre-Tertiary basement directly below this tight carbonate zone while the NSB-H3 well encountered a 30 feet wet zone of predominantly dolomite. This zone does not appear to be in communication

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with the shallower, tested dolomite zone based on the lack of water production observed in the NSB-H4 well. The NSB-H2 was drilled across a normal fault directly into the pre- Tertiary basement high, missing the Malacca zone.

The L pool is an elongated structure with four-way dip closure trending northeast to southwest approximately four kilometres long by three kilometres wide. Four wells, NSB-L1, NSB-L2, NSB-L3 and NSB-L4 were drilled into the Malacca Carbonate. Similar to the H pool, the Malacca carbonate seems to consist of two permeable zones, an Upper and Lower Malacca, separated by a tight zone. The Upper Malacca carbonates thin away from the NSB-L1 well towards the NSB-L2 well. The overall reservoir quality also appears to deteriorate away from the central part of the reef around the NSB-L1 well with porosity decreasing from about eight percent in the NSB-L1 well to less than six percent in the NSB-L2 well. In the Upper Malacca a 32-foot gas cap was encountered in the NSB-L1 well while the deeper horizontal NSB-L4 well only produced water from this zone. A possible explanation could be a two zone system with two permeable intervals separated by impermeable, tight carbonates. The Lower Malacca carbonates appear to be oil bearing only and an oil-water contact was interpreted at the base of approximately a 50-foot wide transition zone at 5,702 feet subsea. The NSB-L2 and horizontal NSB-L3 well both produced oil from the Lower Malacca carbonates.

Production History

Two oil pools have been discovered in the field, referred to as the H and L pools. The Langsa H pool was discovered in June 1979 by Mobil Exploration Indonesia Inc. (“Mobile”) with the well NSB-H1 encountering light crude oil in a Middle Miocene Malacca carbonate buildup. The NSB-H2 appraisal well was subsequently drilled in late 1979 southwest of NSB-H1 but missed the zone. The NSB-H3 well was then successfully drilled in 1983 northeast of NSB-H1. The deviated NSB-H4 well was drilled in 2004 near the NSB-H1 well and was the only well put on production in the H pool. The NSB-H4 well was put on production in March 2005, but was shut-in in July 2005 due to a mechanical failure of the downhole equipment. The well resumed production in April 2007, and experienced a steep oil-rate decline with an increasing gas-oil ratio until it was shut-in in March 2013.

The Langsa L pool was discovered in September 1980 with the NSB-L1 well also encountering light crude oil in a Middle Miocene Malacca carbonate buildup. Another appraisal well at NSB-L2 was drilled in the L pool in 1983 southwest of NSB-L1. The horizontal NSB-L3 well was drilled in 2004 and another horizontal well, NSB-L4, was drilled in 2007, but tested 100 percent water. The NSB-L1 well was put on production for a few months in 2002 and was shut-in until March 2005 when it resumed production. The well experienced a steep oil rate and oil-cut decline until it was eventually shut-in in September 2008. The NSB-L3 well was put on production in November 2004 and experienced a similar production profile to NSB-L1 until it was shut-in in mid-2007. The NSB-L3 well was recently put back on production in July 2014 and is currently producing approximately 670 bopd with limited water.

Mobil did not proceed to the production stage with the Langsa Field so the development rights reverted back to the state. In early 1997, GFB Resources (Langsa) Limited, in partnership with the private Indonesian company P.T. Indama Putera Jaya (hereinafter referred to as “Indama”), signed the Langsa TAC with Pertamina in with the intent of developing the Langsa Field. GFB Resources (Langsa) Limited failed to start the development of the fields and its parent company decided to sell the company. Matrix Oil subsequently acquired GFB Resources (Langsa) Limited in January 2000. In 2002, Matrix Oil ran into financial problems and had to suspend production until operations were succeeded by BSL 2003.

Proposed Work Program

The only future work proposed for the properties is to re-complete the H-3 well at a gross cost of US$4,000,000.00 of which the portion attributable for a 50% interest would be US$2,000,000.00. Re-completion commenced in April 2015 and is anticipated to be completed by August 2015.

Reserves Data and Other Oil and Gas Information

Crude oil reserves estimates and the associated net present values were evaluated in the McDaniels Report for the Blue Sky Assets. The reserves were estimated at December 1, 2014 and the revenue forecasts and net present value estimates were calculated using forecast prices and costs using McDaniels’ opinion of future crude oil prices at

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December 1, 2014 and were presented in United States Dollars. The reserves estimates presented in the McDaniels Report were estimated as of the effective date and based on information available to that time. The reserves estimates and future net revenue forecasts were prepared in accordance with standards set out in the Canadian National Instrument 51-101 (NI 51-101) and the Canadian Oil and Gas Evaluation Handbook (COGEH).

The following is a summary of the reserves data and other oil and gas information dated effective December 1, 2014 as set out in the McDaniels Report.

Crude Oil Reserves Estimates

Crude oil reserves estimates for the Langsa Field were based on performance characteristics of the existing wells and are summarized in Table 7. The reserves were classified into Proved Producing (PP), Proved Developed (PD), Proved Undeveloped (PUD), Total Proved (TP), Proved plus Probable (2P) and Proved plus Probable plus Possible (3P) classes as defined in the Reserves Classification section of the McDaniels Report.

No recent seismic interpretations or digital grids were provided by ACL to update the volumetric estimates prepared by McDaniel & Associates in 2000. There have been three new wells drilled since that time which appear to have altered the previous interpretations so it was determined that the previous volumetric estimates could not be relied upon for this evaluation. As such, the reserves estimates for the Langsa Field were based on an oil rate versus time and semi-log oil rate versus cumulative production decline curve analyses of the existing wells.

Classification of Reserves

Petroleum reserves included in this summary are classified by degree of proof as proved, probable, or possible. For purposes of this summary reserves are those quantities of oil or gas anticipated to be economically recoverable from known accumulations. The definitions of reserves shown below serve as the basis for the estimates contained herein. The crude oil and natural gas reserves estimates presented in this report were based on the Canadian reserves definitions and guidelines prepared by the Standing Committee on Reserves Definitions of the CIM (Petroleum Society) as presented in the Canadian Oil and Gas Evaluation Handbook Second Edition September 1, 2007, Volume 1 Reserves Definitions and Evaluation Practices and Procedures (the “COGE Handbook”). A summary of those definitions is presented below.

Reserves Categories

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on

▪ analysis of drilling, geological, geophysical, and engineering data;

▪ the use of established technology; and

▪ specified economic conditions, which are generally accepted as being reasonable, and shall be disclosed.

Reserves are classified according to the degree of certainty associated with the estimates.

Proved Reserves – Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

Probable Reserves – Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable reserves.

Possible Reserves – Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved + probable + possible reserves.

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Development and Production Status – Each of the reserves categories (proved, probable, and possible) may be divided into developed and undeveloped categories.

Developed Reserves – Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g., when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and nonproducing.

Developed Producing Reserves – Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

Developed Nonproducing Reserves – Developed nonproducing reserves are those reserves that either have not been on production, or have previously been on production, but are shut in and the date of resumption of production is unknown.

Undeveloped Reserves – Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.

In multi-well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities, and completion intervals in the pool and their respective development and production status.

Levels of Certainty for Reported Reserves – qualitative certainty levels contained in the definitions in the reserves categories above are applicable to individual reserves entities, which refer to the lowest level at which reserves calculations are performed, and to reported reserves, which refers to the highest level sum of individual entity estimates for which reserves estimates are presented. Reported reserves should target the following levels of certainty under a specific set of economic conditions:

▪ at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved reserves,

▪ at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable reserves,

▪ at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable + possible reserves.

A quantitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates are prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods.

Estimated Reserves

A 50% share of crude oil reserves as of December 1, 2014 and the respective net present values assigned to these reserves , expressed in thousands of barrels (“Mbbl”) based on forecast prices and costs assumptions were estimated to be as follows:

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Proved Producing

Proved Developed

Proved Undeveloped

Total Proved Probable

Total Proved & Probable Possible

Total Proved,

Probable & Possible

Gross (1) 171 171 - 171 223 394 198 592

Net (1) 127 127 - 127 166 293 147 440

Notes: (1) Gross reserves include the working interest reserves before deductions of royalties payable to others. (2) Net reserves are based on Company share of Cost Oil and Profit Oil revenues.

Estimated Share of Net Present Values

Based on the Forecast Price Case described herein, estimated future net revenue and net present value of a 50% interest at various discount rates, both before and after taxes, are summarized as follows, expressed in thousands of United States dollars (M$): Net Present Value Discounted At

0% 5% 10% 15% 20%

Proved Developed Producing Reserves 5,135 5,015 4,904 4,800 4,704

Proved Developed Reserves 5,135 5,015 4,904 4,800 4,704

Proved Undeveloped Reserves - - - - -

Total Proved Reserves 5,135 5,015 4,904 4,800 4,704

Probable Reserves 6,152 5,828 5,538 5,277 5,041

Total Proved & Probable Reserves 11,287 10,843 10,442 10,077 9,745

Possible Reserves 9,111 8,491 7,950 7,474 7,053

Total Proved, Probable & Possible Reserves 20,398 19,334 18,391 17,551 16,798

Notes: (1) Based on forecast prices and costs at December 1, 2014 (see Appendix “D”). (2) The net present values may not necessarily represent the fair market value of the reserves.

Revenue Forecasts The future crude oil revenue was derived by employing future production forecast for each reserves category and the McDaniel & Associates December 1, 2014 forecast of future crude oil prices. The field crude oil price is based on a $0.40/bbl differential to of the Attaka Indonesia Crude Price (ICP). The ICP was forecast to be a $1.07/bbl differential to the Brent forecast crude oil price. All of the revenues and costs presented in the McDaniels Report are in United States Dollars. A summary of the price forecasts are presented in Appendix “D” of this Filing Statement.

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Estimated Future Revenue and Net Present Value

Based on the Forecast Price Case described herein, estimated future net revenue and net present value for a 50% interest in Proved Producing Reserves, Proved Developed Reserves, Total Proved Reserves, Total Proved plus Probable Reserves, and Total Proved plus Probable plus Possible Reserves, respectively at various discount rates, taking into account certain cost and expense elements, are summarized as follows, expressed in thousands of American dollars (M$):

Proved Producing Reserves:

Gross Annual Oil Production

Net Annual Oil Production

Cost Revenues

Profit Revenues

Operating Costs

Capital Costs Bonuses

Net Revenue Before

Tax Income

Tax

Net Revenue

After Tax

NPV 10%

NPV 15%

NPV 20%

Year Mbbl Mbbl US$MM US$MM US$M US$M US$M US$M US$M US$M US$M US$M US$M

2014 24 18 1,126 162 356 - - 933 - 933 929 927 926

2015 147 109 7,483 1,079 4,361 - - 4,202 - 4,202 3,975 3,873 3,778

2016 - - - - - - - - - - - - -

2017 - - - - - - - - - - - - -

Proved Developed Reserves:



Cost Revenues

Profit Revenues

Operating Costs


Net Revenue Before

Tax Income

Tax

Net Revenue

After Tax

NPV 10%

NPV 15%

NPV 20%


2014 24 18 1,126 162 356 - - 933 - 933 929 927 926

2015 147 109 7,483 1,079 4,361 - - 4,202 - 4,202 3,975 3,873 3,778

2016 - - - - - - - - - - - - -

2017 - - - - - - - - - - - - -

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Total Proved plus Probable Reserves:



Cost Revenues

Profit Revenues

Operating Costs


Net Revenue Before

Tax Income

Tax

Net Revenue

After Tax

NPV 10%

NPV 15%

NPV 20%


2014 25 19 1,176 170 356 - - 990 - 990 986 984 982

2015 240 178 12,236 1,765 4,361 2,650 - 6,990 - 6,990 6,612 6,443 6,285

2016 129 96 6,777 978 4,448 - - 3,307 - 3,307 2,844 2,651 2,478

2017 - - - - - - - - - - - - -

Total Proved plus Probable plus Possible Reserves:



Cost Revenues

Profit Revenues

Operating Costs


Net Revenue Before

Tax Income

Tax

Net Revenue

After Tax

NPV 10%

NPV 15%

NPV 20%


2014 27 20 1,229 177 356 - - 1,049 - 1,049 1,045 1,043 1,042

2015 297 221 15,158 2,186 4,361 2,650 - 10,334 - 10,334 9,775 9,525 9,292

2016 185 138 9,743 1,405 4,448 - - 6,701 - 6,701 5,762 5,371 5,021

2017 83 62 4,665 673 3,024 - - 2,314 - 2,314 1,809 1,612 1,445

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Reserves Reconciliation

The following tables set forth the reconciliation of the reserves as at December 1, 2014, based on the Forecast Price Case described herein:

Total Oil (BBL)

Opening Balance (Dec 31, 2013) 4,738,133 Extensions - Improved Recovery - Technical Revisions(1) - Discoveries - Acquisitions(2) -- Dispositions(2) - Economic Factors(3) - Production 353,597 Closing Balance (Dec 31, 2014) 4,384,536 Opening Balance (Dec 31, 2013) 194,628 Extensions - Improved Recovery - Technical Revisions(1) - Discoveries - Acquisitions(2) - Dispositions(2) - Economic Factors(3) - Production - Closing Balance (Dec 31, 2014) 194,628 Opening Balance (Dec 31, 2013) 4,932,952 Extensions - Improved Recovery - Technical Revisions(1) - Discoveries - Acquisitions(2) - Dispositions(2) - Economic Factors(3) - Production 353,597 Closing Balance (Dec 31, 2014) 4,579,355

Notes: (1) Includes technical revisions due to reservoir performance, geological and engineering changes, economic

revisions due to changes in economic limits and working interest changes resulting from timing and interest reversions.

(2) Includes production attributable to any acquired interests from the acquisition date to the effective date of the McDaniels Report and production realized from disposed interests from the opening balance date to the effective date of disposition.

(3) Includes economic revisions related to price and royalty factor changes.

Undeveloped Reserves BSL has no proved undeveloped reserves. Significant Factors or Uncertainties Affecting Reserves Data The process of estimating reserves is complex. It requires significant judgments and decisions based on available geological, geophysical, engineering, and economic data. These estimates may change substantially as additional data from ongoing development activities and production performance becomes available and as economic conditions impacting oil and gas prices and costs change. The reserve estimates contained herein are based on current production forecasts, prices and economic conditions.

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As circumstances change and additional data become available, reserve estimates also change. Estimates made are reviewed and revised, either upward or downward, as warranted by the new information. Revisions are often required due to changes in well performance, prices, economic conditions and governmental restrictions. Although every reasonable effort is made to ensure that reserve estimates are accurate, reserve estimation is an inferential science. As a result, the subjective decisions, new geological or production information and a changing environment may impact these estimates. Revisions to reserve estimates can arise from changes in year-end oil and gas prices, and reservoir performance. Such revisions can be either positive or negative. Future Development Costs The only future work proposed for the properties is to re-complete the H-3 well at a gross cost of US$4,000,000.00 of which the portion attributable for a 50% interest would be US$2,000,000.00. BSL has applied US$800,000.00 from the Interim Loans towards the work program.

Oil and Gas Wells

BSL has an interest in eight wells in total. Of these wells, one is producing, five have been shut in and two have been plugged and abandoned. The following table summarizes BSL’s interest as at December 1, 2014 in wells that are producing and non-producing.

Producing Wells Non-Producing Wells Oil/Gas Oil/Gas Gross Net Gross Net Indonesia

1

1

7

7

Properties with No Attributed Reserves

The Langsa block has one prospect (H5) with reserves estimate of 0.9 million barrels of oil. The block has 2 leads (F and G) identified from 2D Seismic analysis with indication to possibly have 80 million barrels of oil Resources. Contingent Resources have been identified in Baong Sandstone Reservoir situated above the current Malacca Limestone reservoir. The Baong sandstone has been tested by DST in H-1 and H-3 wells but was never been produced. Regionally Baong Sandstone or its equivalent is an oil and gas zone. The following table summarizes and the gross and net acres (at 50%) of unproved properties in which BSL has an interest and also the number of net acres (at 50%) for which BSL’s rights to explore, develop or exploit will, absent further action, expire within one year.

Gross Acreage

Net Acreage

Net Acres Expiring Within One Year

Indonesia 77.010 km2 38.505 km2

0

Significant Factors or Uncertainties Relevant to Properties with No Attribute Reserves The uncertainty surrounding the oil price is the main factor affecting BSL’s decision to proceed with further work on the H5 well and the two leads. Forward Contracts

BSL does not have any product price hedges on forward contracts at the date hereof.

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Abandonment and Reclamation Costs

Pursuant to the Asset Purchase Agreement, BSL will be responsible for all abandonment and reclamation costs for the Blue Sky Assets and BSL has indemnified ACL for all such costs. BSL does not envision any abandonments in the next three year period. Tax Horizon Based on the projected revenue/costs and using forecast prices in the McDaniels Report, the Resulting Issuer estimates that taxes may become payable in the year 2017 after the cost recovery pool of US$60.65 Million for the Langsa TAC has been exhausted. Costs Incurred The following table outlines the development costs incurred by BSL during the financial year ended December 31, 2014. BSL did not incur any property acquisition costs or exploration costs during the financial year ended December 31, 2014.

Indonesia Description Costs

Re-worked 2 wells to return to production 6,530,141

Exploration and Development Activities No exploration is planned for the property. The only future work proposed for the properties is to re-complete the H-3 well at a gross cost of US$4,000,000.00 of which the portion attributable for a 50% interest would be US$2,000,000.00. It is proposed that re-completion will commence in April 2015 and be completed by August 2015. Production Estimates In addition to the gross production of 670 bopd currently, BSL estimates that H3 will produce 2,000+ bopd. The following tables disclose by product type and by field, the total volume of production (net at 50%) estimated by McDaniels for the year 2015. Forecast Prices & Costs Total Proved Probable Total Proved + Probable RESERVES CATEGORY Gross Daily Production Gross Daily Production Gross Daily Production Light & Medium Oil (bbls/d) 1,801 - 1,801 Heavy Oil (bbls/d) - - - Associated and Non-Associated Gas (Mcf/d - - - Natural Gas Liquids (bbls/d) - - - TOTAL (boe/d) 1,801 1,801

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Production History

0

1000

2000

3000

4000

5000

6000

Jan‐01

Jan‐02

Jan‐03

Jan‐04

Jan‐05

Jan‐06

Jan‐07

Jan‐08

Jan‐09

Jan‐10

Jan‐11

Jan‐12

Jan‐13

Jan‐14

Jan‐15

Jan‐16

Bluesky LangsaHistoricalProduction (BOPD)

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PART IV - INFORMATION CONCERNING THE RESULTING ISSUER

Corporate Structure

Name and Incorporation

Following the completion of the Acquisition, the Resulting Issuer will own and operate all of the Blue Sky Assets through its wholly-owned subsidiary, Blue Sky BVI, but its corporate structure will otherwise remain unchanged.

It is expected that, following the completion of the Acquisition, the registered office of the Resulting Issuer will be located at Suite 1250, 639 - 5th Avenue SW, Calgary, Alberta, T2P 0M9 and that the head office of the Resulting Issuer will be located at Suite 1250, 639 - 5th Avenue SW, Calgary, Alberta, T2P 0M9.

Intercorporate Relationships

Following completion of the Acquisition, the Resulting Issuer will still have all of the subsidiaries noted in Part II – “Information Concerning ACL Prior to Acquisition” under the heading “Intercorporate Relationships”.

Narrative Description of the Business

Business Objective

Following completion of the Acquisition, the Resulting Issuer intends to operate and exploit the Blue Sky Assets as its primary business objective.

Exploration and Development Plan

The only future work proposed for the properties is to re-complete the H-3 well at a gross cost of US$4,000,000.00 of which the portion attributable for a 50% interest would be US$2,000,000.00. Re-completion commenced in April 2015 and is anticipated to be completed by August 2015. Funding for the work program will come from the Resulting Issuer’s available funds and from cash flow from the Blue Sky Assets. BSL has applied US$800,000.00 from the Interim Loans towards the work program. Description of the Securities

The authorized capital of the Resulting Issuer will consist of an unlimited number of common shares without nominal or par value.

Upon completion of the Acquisition, it is expected that 95,882,934 Common Shares and no other securities will be issued and outstanding in the capital of the Resulting Issuer.

Subject to the approval of the board of directors of the Resulting Issuer, the Resulting Issuer may also issue additional incentive stock options to its directors, officers, employees and consultants after the completion of the Acquisition. The Resulting Issuer expects that it will issue an aggregate of 6,000,000 incentive stock options, each of which will entitle the holder thereof to purchase one Common Share at a price of $0.12 per Common Share for a period of five years. See “Options to Purchase Securities”, below.

The holders of Common Shares are entitled to receive notice of and attend any meeting of the Resulting Issuer’s shareholders and are entitled to cast one vote for each Common Share held. The holders of Common Shares are entitled to receive dividends, if, as and when declared by the Board of Directors of the Resulting Issuer and to receive a proportionate share, on a per share basis, of the assets of the Resulting Issuer available for distribution in the event of a liquidation, dissolution or winding-up of the Resulting Issuer.

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Selected Pro Forma Financial Information

The following table sets forth selected financial information for ACL as at December 31, 2014 on a pro forma basis, as if the Acquisition had occurred on December 31, 2014. Such information is derived from the unaudited pro forma balance sheet of ACL as at December 31, 2014, which is attached hereto as Appendix “C”, and should be read in conjunction with such financial statements.

As at December 31, 2014 (unaudited)

($)

Total Assets 11,617,096

Total Long Term Liabilities 748,265

Accounts Payable and Accrued Liabilities 125,644

Share Capital 17,137,325

Deficit (9,175,132)

Pro Forma Consolidated Capitalization

Pro Forma Consolidated Capitalization

The following table sets forth the pro forma share and loan capital of ACL as at December 31, 2014, based on the pro forma consolidated financial statements contained in this Filing Statement as Appendix “C”, after giving effect to the completion of the Acquisition and all matters ancillary thereto.

Designation of Security Amount authorized or to

be authorized

Amount outstanding after giving effect to the

Acquisition(3)

Common Shares Unlimited 95,882,934 (1)(2) ($17,137,325)(4)

Notes:

(1) Of these Common Shares, 74,871,667 will be held in escrow under the Value Security Escrow Agreement. See Part IV - “Information Concerning the Resulting Issuer” under the heading, “Escrowed Securities”.

(2) Figures do not deduct estimated costs and expenses associated with the Acquisition estimated to be, in the aggregate, $175,000.

(3) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition See “Options to Purchase Securities” in this Part IV.

(4) As at December 31, 2014, ACL had a deficit of $8,411,402.

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Fully Diluted Share Capital

The following table summarizes the securities of ACL currently issued and outstanding and the securities of the Resulting Issuer to be issued and outstanding following completion of the Acquisition:

Number of Securities

Percentage of Total Number of Common

Shares to be Issued and Outstanding Following

completion of the Acquisition

Common Shares outstanding as of the date of this Filing Statement

9,605,184 10.02%

Common Shares to be issued as consideration for the Blue Sky Assets

81,871,667 85.39%

Finder’s Fee 4,406,083 4.59%

Total Common Shares (undiluted): 95,882,934

Common Shares issuable upon exercise of convertible securities

Nil(1) 0.00%

Total Common Shares (fully diluted):

95,882,934 100.00%

Notes: (1) Does not include incentive stock options that may be issued by the Resulting Issuer following completion of the Acquisition.

See “Options to Purchase Securities” in this Part IV. Available Funds and Principal Purposes

Funds Available

The following table sets forth the estimated available funds (based upon total current assets less total current liabilities) plus the amounts and sources of other funds available to ACL prior to, or concurrently with, the completion of the Acquisition, after giving effect to the Acquisition.

Amount

($)

ACL Working Capital(1) 625,000

Net value of BSL oil in storage(2) 3,903,200

Legal and Professional Expenses(3) (175,000)

TOTAL 4,353,200

Notes: (1) As of April 30, 2015. Unaudited - Based on estimates from ACL. (2) As of April 30, 2015. Unaudited - Based on estimates from BSL. Denotes amounts attributable to 50% working interest.

Pursuant to the Asset Purchase Agreement, ACL is entitled to oil in tanks or in storage commencing January 1, 2015, which is the effective date of the Acquisition.

(3) Includes legal expenses for ACL counsel and BSL counsel, accounting expenses and engineering costs. Fees owing to the Sponsor in the amount of $60,000 were prepaid by ACL.

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Dividends

There are no restrictions in the Resulting Issuer’s articles or elsewhere which could prevent the Resulting Issuer from paying dividends subsequent to the completion of the Acquisition. The Resulting Issuer does not contemplate paying any dividends on any shares of the Resulting Issuer in the immediate future subsequent to the completion of the Acquisition, as it anticipates investing all available funds to finance the growth of the Resulting Issuer’s business. The directors of the Resulting Issuer will determine if, and when, to declare and pay dividends in the future from funds properly applicable to the payment of dividends based on the Resulting Issuer’s financial position at the relevant time. All of the Common Shares will be entitled to an equal share in any dividends declared and paid on a per share basis.

Proposed Use of Funds

The following table sets out the estimated available funds after giving effect to the Acquisition and the proposed principal uses for those funds.

Expenditure

Amount

($)

Work Program 2,500,000(1)

General and Administrative Indonesia (2) 375,000

General and Administrative Canada (3) 578,000

Unallocated Working Capital 900,200

TOTAL: 4,353,200

Notes: (1) Denotes 50% working interest share of US$2,000,000 for recompletion of H-3 well for which the total gross cost is

estimated to be US$4,000,000 (see “Proposed Work Program” in Part III - “Information Concerning the Blue Sky Assets” in this Filing Statement). Amount has been converted to Canadian dollars at an estimated conversion rate of 1 United States Dollars to 1.25 Canadian dollars.

(2) Denotes general and administrative expenses expected for staff in Indonesia for the 18 month period commencing January 2, 2015 to June 30, 2016. Additional operating costs will come from production revenue.

(3) Denotes general and administrative expenses expected to be incurred in Canada for salaries, Exchange fees, audit fees, legal fees and miscellaneous expenses for the 18 month period commencing January 2, 2015 to June 30, 2016.

The above uses of available funds are estimates only. Notwithstanding the proposed uses of available funds as discussed above, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. It is difficult at this time to definitively project the total funds necessary to execute the planned undertakings of the Resulting Issuer. For these reasons, management considers it to be in the best interests of the Resulting Issuer and its shareholders to permit management a reasonable degree of flexibility as to how the Resulting Issuer’s funds are employed among the above uses or for other purposes, as the need may arise.

Principal Securityholders

To the best of the knowledge of management of ACL, other than as set out in the following table, no Person who will beneficially own, directly or indirectly, or exercise control or direction over, more than 10% of the voting rights attached to all of the outstanding shares of the Resulting Issuer after completion of the Acquisition.

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Name and Municipality of Residence

Shares Held of Record or

Beneficially

Number and Percentage of Common Shares as of Date of Filing Statement

Number and Percentage of Common Shares Held after completion of Acquisition

BSIH Ltd. Road Town, Tortola, British Virgin Islands

Shares are Held of Record and Beneficially(1)

Nil [0%]

61,571,667 [64.22%]


Shares are Held of Record and Beneficially

Nil [0%]

11,300,000 [11.79%]

Notes: (1) BSIH Ltd. is a wholly-owned subsidiary of Blue Sky International Holdings Inc., an Alberta corporation, all of the shares of

which are owned by Danyal Chaudhary Foundation. Danyal Chaudhary Foundation is a foundation registered in the State of California.

(2) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition. See “Options to Purchase Securities” in this Part IV.

Directors, Officers and Promoters

Name, Municipality of Residence, Occupation and Security Holdings

It is expected that upon completion of the Acquisition, the current directors of ACL will resign and will be replaced by the following nominees disclosed in the table below, with the term of office of the directors to expire on the date of the next annual general meeting of the shareholders of Resulting Issuer.

The following table lists the name, municipality of residence, proposed office, principal occupation and anticipated shareholdings of each proposed director and officer of Resulting Issuer.

Name and Municipality of

Residence

Positions and Offices to be Held

Principal Occupation During the Past Five Years(1)

Number and % of Common Shares

Owned, Beneficially Held or Controlled

upon completion of the Acquisition (2)(5)

Director or Officer of ACL Since

MOHAMMAD

FAZIL (1)(2)(4)

Calgary, Alberta, Canada

President, CEO, Director and Promoter

Since September 2014, President of BSL; President and director of Fulucai Productions Inc., a public company with oil and gas assets which trades on the OTCBB since July 2013; Vice President and Investment Advisor with PI Financial Corp. from October 2012 to July 2013; Vice President and Investment Advisor with Union Securities Ltd. from November 2010 to October 2012; Vice President and Investment Advisor with Mackie Research Capital Corporation from July 2004 to November 2010. PI Financial Corp., Union Securities Ltd. and Mackie Research Capital Corporation are all private, full service investment firms.

11,300,000 [11.79%]

Incoming director and officer

- 57 -

Name and Municipality of

Residence

Positions and Offices to be Held

Principal Occupation During the Past Five Years(1)

Number and % of Common Shares

Owned, Beneficially Held or Controlled

upon completion of the Acquisition (2)(5)

Director or Officer of ACL Since

HARVEY LALACH (1)(3)

Kelowna, British Columbia, Canada

CFO, Corporate Secretary and Director

Since March 2012, President of Eco Easy Clean Corp., a private company that sells marine cleaning products to retail stores and wholesale distributors, from April 2006 to June 2012, President and Chief Financial Officer of Anavex Life Sciences, a publicly traded biopharmaceutical company.

2,000,000 [2.09%]

Incoming director and officer

ROBERT SADLEIR (1)(2)(3) (4)


Director Retired 50,556 [0.05%]

Director of ACL since February 27, 2006

JAMES MURARO (2)(3) (4)


Director President of Darcy Energy Corp., a sole proprietorship geoscience consultancy with expertise in oil and gas exploration and exploitation

Nil [0%]

Incoming director

Total: 13,350,556 [13.92%]

Notes: (1) For a complete description of the proposed directors, officers and other management personnel of the Resulting Issuer, see

“Information Concerning the Resulting Issuer - Directors, Officers and Promoters - Management”, below. (2) All percentages are on an undiluted basis. (3) Proposed member of the Audit Committee. (4) Proposed member of the Reserves Committee. (5) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the

Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition. See “Options to Purchase Securities” in this Part IV.

Following the completion of the Acquisition, the board of directors of the Resulting Issuer intend to establish a compensation committee and such other committees of the board as it determines to be appropriate in addition to the Audit Committee and the Reserves Committee.

As of the date of this Filing Statement, Common Shares beneficially owned, directly or indirectly, by all promoters, directors and officers of ACL, as a group, is 1,346,874 Common Shares or approximately 14.02% of the 9,605,184 Common Shares that are currently issued and outstanding. Upon completion of the Acquisition, Common Shares beneficially owned, directly or indirectly, by all promoters, directors and officers of the Resulting Issuer, as a group, will be 13,350,556 Common Shares or approximately 13.92% of the 95,882,934 Common Shares then to be issued and outstanding.

Management

The following are summaries of the proposed directors and principal management of the Resulting Issuer, including their respective proposed positions with the Resulting Issuer and relevant work and educational background. None of these parties have entered into employment or consulting agreements, or non-competition or non-disclosure agreements with ACL at this time, although it is intended that such agreements will be entered into with the Resulting Issuer following the completion of the Acquisition. At present, it has not yet been determined whether the officers will enter into employment agreements or consulting agreements with the Resulting Issuer.

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Mohammad Shahid Fazil, age 53, will be the President, Chief Executive Officer and a Director of the Resulting Issuer, post-Acquisition. Mr. Fazil has 19 years of experience with Canadian boutique investment dealers Mackie Research Capital PI Financial, Union Securities and Global Securities. Mr. Fazil raised funding for junior oil and gas, mining and biotech companies through IPOs and secondary financings during his career in the investment industry. He was instrumental in identifying and structuring transactions/issuers. In addition to Canadian assets, companies covered had assets in Indonesia, Nigeria, Brazil, Colombia, India, Russia, Pakistan and the US. He is currently the President Blue Sky Langsa Ltd. and President of Fulucai Productions Ltd. (listed on the OTCBB) which holds a 5% working interest in the Langsa TAC asset. Following the Acquisition, Mr. Fazil intends to spend approximately 80% of his time on the business of the Resulting Issuer.

Harvey Lalach, age 50, will be the Chief Financial Officer, Corporate Secretary and a Director of the Resulting Issuer, post-Acquisition. Mr. Lalach has diverse experience across business sectors and organizations. From 1986 through to 1997 he was involved in various roles in financial institutions starting at the Vancouver Stock Exchange and later working in securities related roles for BMO Nesbitt Burns and TD Green Line Investor Services. For the past 12 years Mr. Lalach has focused on the operation and administration of numerous startup US and Canadian public companies serving as both director and officer in various capacities. Mr. Lalach served as President and CEO for Assure Energy, Inc., Quarry Oil & Gas Corp., Savary Capital Corp, and most recently as President and CFO for Anavex Life Sciences Corp. Following the Acquisition, Mr. Lalach intends to spend approximately 75% of his time on the business of the Resulting Issuer.

James Muraro, age 54, will be a Director of the Resulting Issuer, post-Acquisition. Mr. Muraro’s Geoscience career spans 30 years working with Chevron, PanCanadian, and Anderson Exploration domestically, and internationally with companies like Sherritt International, Alange Energy, and MND. Mr. Muraro has contributed to the discovery and exploitation of more than 100 Bcf of gas, and 320 MMbls of Oil through the thorough integration of all geotechnical information while working on projects. He has held management roles at Anderson Exploration and Tornado, and technical leadership roles at Sherritt and most recently Manitok Energy. International onshore experience includes onshore work in Africa, Madagascar, Czech Republic, and Colombia. Offshore work has involved the Canadian Arctic, North Sea, Spain, Turkey, Namibia, and Brazil. Mr. Muraro holds a Bachelors of Science degree from the University of Victoria which he obtained in 1985, and holds a Professional Geophysicist designation under APEGA. Following the Acquisition, Mr. Muraro intends to spend approximately 5% of his time on the business of the Resulting Issuer.

Robert Sadleir, age 66, will be a Director of the Resulting Issuer, post-Acquisition. Mr. Sadleir is a director and Chairman of the Audit Committee for Anthony Clark International Insurance Brokers Ltd from 2006 to present and is a proposed director of the Resulting Issuer. Prior thereto he was Vice President of Finance of Cal-Gas Inc. from 2003 to 2007. Robert obtained his Bachelor of Commerce degree from the University of Calgary in 1971 and obtained his Chartered Accountant designation in 1974. He successfully participated in the Executive Development Program at Dalhousie University in 1989. Mr. Sadleir holds a Bachelors of Commerce degree from the University of Calgary, which he obtained in 1971 and holds a Chartered Accountants designation with the Institute of Chartered Accountants of Alberta and the Canadian Institute of Chartered Accountants. Following the Acquisition, Mr. Sadleir intends to spend approximately 5% of his time on the business of the Resulting Issuer.

Promoters

Mohammad Fazil will be the promoter of the Resulting Issuer.

Mr. Fazil currently owns no Common Shares of ACL, but will be issued 11,300,000 Common Shares in the Resulting Issuer upon completion of the Acquisition, which comprise 11.79% of the Common Shares that will be issued and outstanding upon completion of the Acquisition. Subject to the approval of the directors of the Resulting Issuer, Mr. Fazil may also be granted additional options entitling him to purchase up to an additional 3,000,000 Common Shares.

Mr. Fazil will receive no compensation, remuneration or anything of value from the Resulting Issuer except the compensation set out under the heading “Executive Compensation”, below.

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Cease Trade Orders or Bankruptcies

None of the directors, proposed directors, officers, insiders or the promoters of ACL or a shareholder holding a sufficient number of securities of ACL to affect materially the control of ACL is, or within 10 years before the date of this Filing Statement has been, a director, officer, insider or promoter of any other issuer that, while that person was acting in that capacity:

(a) was the subject of a cease trade or similar order, or an order that denied the other issuer access to any exemptions under applicable securities legislation for a period of more than 30 consecutive days; or

(b) became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;

except that:

1. Mohammad Fazil is a director and officer of Fulucai Productions Ltd., which, as of August 18, 2014, is subject to a cease trade order issued by the Alberta Securities Commission for failure to file its annual audited financial statements for the year ended January 31, 2014 and unaudited financial statements for the period ended April 30, 2014.

2. In the year ended June 30, 1999, Tornado Resources Ltd., for which James Muraro served as the Vice President, Exploration from May 1998 to August 1999, filed a Reorganization Plan under the Company Creditors Arrangement Act, which was presented to creditors and approved on January 2000. Under the Reorganization Plan, Tornado sold substantially all of its proved reserved and applied the proceeds to pay all secured creditors in full and 17.7% of unsecured liabilities. The balance of its unsecured liabilities was eliminated under the Reorganization Plan.

Penalties or Sanctions

None of the directors, proposed directors, officers, insiders or the promoters of ACL or a shareholder holding a sufficient number of securities of ACL to affect materially the control of ACL has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by any securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or has been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that would be likely to be considered important to a reasonable investor making an investment decision.

Personal Bankruptcies

None of the directors, proposed directors, officers, insiders or the promoters of ACL or a shareholder holding a sufficient number of securities of ACL to affect materially the control of ACL is, or within the 10 years before the date of this Filing Statement, has been declared bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or has been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold their assets.

Conflicts of Interest

There are potential conflicts of interest to which some of the directors, proposed directors, officers and insiders and the promoters of the Resulting Issuer will be subject in connection with the operations of the Resulting Issuer. Some of the directors, proposed directors, officers and insiders and the promoters are engaged in and will continue to be engaged in corporations or businesses which may be in competition with the search by the Resulting Issuer for businesses or assets in order to close a reactivation transaction. Accordingly, situations may arise where some of the directors, officers and insiders and the promoter will be in direct competition with the Resulting Issuer. Conflicts, if any, will be subject to the procedures and remedies as provided under the Business Corporations Act (Alberta).

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Other Reporting Issuer Experience

The following table sets out the current and proposed directors, officers and promoters of the Resulting Issuer that are, or have been within the last five years, directors, officers or promoters of other reporting issuers:

Name Name of Reporting Issuer Exchange or Market (1)(2) Position From To

Mohammad Fazil Fulucai Productions Ltd. OTCQB President and Director

July 2013 Present

Harvey Lalach Anavex Life Sciences Corp. OTCBB President, CFO, Secretary and Director

April 2006 June 2012

Savary Capital Corp. TSXV President, CFO, Secretary and Director

February 2008 March 2011

Assure Energy Inc. OTCBB President and Director

September 2002

September 2005

Robert Sadleir ACL International Ltd. TSXV/NEX Director February 2006 Present

Notes: (1) “TSXV” means the TSX Venture Exchange. (2) “OTCQB” means the OTCQB marketplace of the OTC Markets Group. (2) “OTCBB” means the OTC Bulletin Board. Executive Compensation

The Resulting Issuer will have two executive officers: Mohammad Fazil, President and Chief Executive Officer; and Harvey Lalach, Chief Financial Officer and Corporate Secretary.

The following table sets out the proposed annual compensation to be paid, after giving effect to the Acquisition for the twelve months following completion of the Acquisition, to the executive officers of the Resulting Issuer.

Name and Principal Position

Annual Compensation Long Term Compensation

Salary ($)

Bonus ($)

Other Annual Compensation

($)

Securities Under Stock Options Granted

(#)


($)

Mohammad Fazil President and Chief Executive Officer

144,000(1) Note 2 Nil 3,000,000(3) Nil

Harvey Lalach Chief Financial Officer

108,000(1) Note 2 Nil 500,000(3) Nil

Notes: (1) Amounts are subject to the approval of the board of directors of the Resulting Issuer following completion of the Acquisition.

It is expected that any salaries payable to the officers of the Resulting Issuer will be commensurate to industry standards, having regard to various factors, including but not limited to: the stage of development of the Resulting Issuer; the financial capacity of the Resulting Issuer; the relative experience of such officers; and the proportion of time devoted to the performance of their responsibilities as officers of the Resulting Issuer.

(2) The issuance of bonuses will be determined by the board of directors of the Resulting Issuer post-Acquisition. (3) Represents options that may be issued following completion of the Acquisition, subject to the approval of the board of

directors of the Resulting Issuer. Each option shall entitle the holder to purchase one Common Share at a price of $0.12 per share for a period of five years from the date of issuance. See “Options to Purchase Securities” in this Part IV.

- 61 -

Following completion of the Acquisition, it is anticipated that the Resulting Issuer may pay compensation of $1,000 per month to each of its directors.

Indebtedness of Directors and Officers

Upon completion of the Acquisition, none of the directors or officers of the Resulting Issuer, nor any other individual who at any time since incorporation of ACL was a director or officer of ACL, nor any of their Associates, will be indebted to the Resulting Issuer, and neither will any indebtedness of any of these individuals or Associates to another entity be the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Resulting Issuer.

Investor Relations Arrangements

ACL has not entered into any written or oral agreement or understanding with any person to provide promotional or investor relations services to either of them, or to engage in activities for the purposes of stabilizing the market, either now or in the future.

Options to Purchase Securities

Stock Option Plan

Currently, ACL has a fixed option stock option plan. Upon closing of the Acquisition, it is proposed that the Resulting Issuer adopt a rolling stock option plan reserving a maximum of 10% of the issued and outstanding shares of the Resulting Issuer for the issuance of incentive stock options in the form attached hereto as Appendix “G” (the “New Option Plan”) to govern the options issued by the Resulting Issuer. The TSXV requires the Plan to be approved by the shareholders of the Resulting Issuer. The Resulting Issuer proposes to have the New Option Plan confirmed, ratified and adopted by its shareholders at the next occurring annual general meeting of the shareholders of the Resulting Issuer.

Options To Purchase Securities

As at the date hereof, there are no options issued and outstanding and no options are expected to be granted prior to the completion of the Acquisition; however, subject to the approval of the board of directors of the Resulting Issuer, the Resulting Issuer may issue an additional 6,000,000 options following the completion of the Acquisition as set out below. If issued, these options will be governed by the New Option Plan.

The following table illustrates the number of options expected to be held by the officers, directors, employees and consultants of the Resulting Issuer upon completion of the Acquisition:

Name and Category Number of

Holders ACL Options

(#)

Exercise or Base Price

($/Common Share) Expiration

Officers of the Resulting Issuer, as a group

2 3,500,000 $0.12 five years from issue date

Directors of the Resulting Issuer who are not officers, as a group

2 500,000 $0.12 five years from issue date

Officers and Directors of subsidiaries of the Resulting Issuer, as a group

0 0 N/A five years from issue date

Employees of the Resulting Issuer, as a group


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Name and Category Number of

Holders ACL Options

(#)

Exercise or Base Price

($/Common Share) Expiration

Consultants of the Resulting Issuer, as a group

0 2,000,000 $0.12 five years from issue date

Former Directors and Officers of the Resulting Issuer, as a group


Total: 6,000,000

Value Security Escrow Agreement

The following Common Shares will be deposited upon completion of the Acquisition under the Value Security Escrow Agreement to be entered into concurrent with the completion of the Acquisition between BSL and Canadian Stock Transfer Company Inc. whereby 25% of such securities shall be released from escrow on the issuance of the Final Exchange Bulletin and 25% shall be released every six months thereafter.

Name and Municipality of Residence of

Securityholder Designation

of Class

Prior to Giving Effect to the Acquisition

After Giving Effect to the Acquisition

No. of securities held in escrow

Percentage of class

No. of Common Shares to be

held in escrow Percentage of

Class (2)

BSIH Ltd. (1)

Road Town, Tortola, British Virgin Islands

Common Shares

Nil 0% 61,571,667 64.22%


Common Shares

Nil 0% 11,300,000 11.79%

Harvey Lalach Kelowna, British Columbia, Canada

Common Shares

Nil 0% 2,000,000 2.09%

Total Nil 0% 74,871,667 78.09%

Notes: (1) All of the issued and outstanding shares in the capital of BSIH Ltd. are owned by Blue Sky International Holdings Inc., an

Alberta corporation, all of the shares of which are owned by Danyal Chaudhary Foundation. Danyal Chaudhary Foundation is a foundation registered in the State of California.

(2) Fully diluted, without including the shares issuable upon exercise of 6,000,000 stock options that may be issued by the Resulting Issuer to its directors, officers, employees and consultants after the completion of the Acquisition See “Options to Purchase Securities” in this Part IV.

Auditors, Transfer Agent and Registrar

Auditor

The Resulting Issuer’s auditors will be MNP LLP at their offices located at 1500, 640 - 5th Avenue SW, Calgary, Alberta, T2P 3G4.

Transfer Agent and Registrar

The registrar and transfer agent for Common Shares subsequent to the completion of the Acquisition will be Canadian Stock Transfer Company Inc. at its Calgary office located at Suite 600, 333 - 7th Avenue SW, Calgary, Alberta T2P 2Z1.

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PART V - GENERAL MATTERS

Sponsorship and Agent Relationship

Mackie Research has been appointed the sponsor for the Acquisition pursuant to the Sponsorship Agreement.

Mackie Research’s address is Suite 4500, 199 Bay Street, Commerce Court West, Toronto, Ontario, M5L 1G2. Mackie Research is at arm’s length to ACL and to BSL. At the date hereof, Mackie Research owns, directly or indirectly, in the aggregate, no securities of ACL.

Experts

Opinions

ACL engaged McDaniels for the purposes of preparing a report in accordance with NI 51-101. McDaniels does not have any direct or indirect interest in the Blue Sky Assets or any other properties of BSL or ACL, nor will any such interest be receivable upon closing of the Acquisition.

Interests of Experts

At the date hereof, McDaniels, the author of the McDaniels Report, owns, directly or indirectly, in the aggregate, no securities of ACL. No employee, partner or associate of McDaniels are expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

As at the date hereof, partners and associates of D+H Group LLP, ACL’s current auditors, own, respectively, directly or indirectly, in the aggregate, no securities of either ACL or BSL. No partner or associate of D+H Group LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

At the date hereof, lawyers with Demiantschuk Lequier Burke & Hoffinger LLP, counsel to ACL, own, directly or indirectly, in the aggregate, 38,500 Common Shares of ACL and no securities of BSL. No lawyer with Demiantschuk Lequier Burke & Hoffinger LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

At the date hereof, lawyers with Tingle Merrett LLP, counsel to BSL, own, directly or indirectly, in the aggregate, no securities of either ACL or BSL. No lawyer with Tingle Merrett LLP is or is expected to be elected, appointed or employed as a director, officer or employee of ACL or of any associate or Affiliate of ACL.

Other Material Facts

There are no other material facts about ACL, the Blue Sky Assets, the Resulting Issuer, or the Acquisition that are not elsewhere disclosed herein and which are necessary in order for this Filing Statement to contain full, true and plain disclosure of all material facts relating to ACL, BSL and the Resulting Issuer, assuming completion of the Acquisition.

Board Approval

The contents and the filing of this Filing Statement have been approved by the board of directors of each of ACL and BSL. Where information contained in this Filing Statement rests particularly within the knowledge of a person other than ACL, ACL has relied upon information furnished by such person.

A-1

APPENDIX “A”

FINANCIAL STATEMENTS OF ACL INTERNATIONAL LTD.

(attached)


(formerly Anthony Clark International

Insurance Brokers Ltd.)

Audited Consolidated Financial Statements

For the years ended March 31, 2014 and 2013

Independent Auditor’s Report To the Board of Directors of ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.) We have audited the accompanying consolidated financial statements of ACL International Ltd., which comprise the consolidated balance sheets as at March 31, 2014 and March 31, 2013, and the consolidated statements of operations and comprehensive income (loss), consolidated statements of cash flows and consolidated statements of changes in equity for the years ended March 31, 2014 and March 31, 2013, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of ACL International Ltd. as at March 31, 2014 and March 31, 2013, and its financial performance and its cash flows for the years ended March 31, 2014 and March 31, 2013 in accordance with International Financial Reporting Standards. Emphasis of Matter Without qualifying our opinion, we draw attention to Notes 21 and 22 to the consolidated financial statements which describe the sale of substantially all of ACL International Ltd.’s assets. “D&H Group LLP” Vancouver, B.C. June 24, 2014 Chartered Accountants

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.)

Consolidated Balance Sheets

(Expressed in Canadian dollars)

March 31, March 31,

As at Note 2014 2013

Assets

Current assets Cash 1,005,850$ 1,148,674$ Trade receivables 1,162,656 2,062,758 Trust cash - 62,052 Prepaid expenses 182,998 206,489

2,351,504 3,479,973

Property and equipment 7 389,481 510,809

Customer accounts 8 1,097,379 1,373,408

Goodwill 9 7,317,360 12,391,291

11,155,724$ 17,755,481$

LiabilitiesCurrent liabilities Trade payables and accrued liabilities 1,859,837$ 1,715,994$ Income taxes payable 700,521 442,281 Current portion of long-term debt 10 1,310,953 1,309,448 Current portion of leasehold inducement 72,850 72,850

3,944,161 3,540,573

Long-term debt 10 12,556,018 16,436,706 Leasehold inducement 139,629 212,479

Deferred income tax 15 56,336 73,121

16,696,144 20,262,879

EquityShare capital 11 9,473,447 9,561,719 Accumulated other comprehensive income (loss) - (61,913) Contributed surplus 2,780,994 2,703,024 Deficit (18,582,336) (15,760,394) Equity attributable to owners of the Company (6,327,895) (3,557,564)

Non-controlling interest in consolidated subsidiary 12 787,475 1,050,166 (5,540,420) (2,507,398)

11,155,724$ 17,755,481$

Event after the reporting period 21Commitments 16Contingencies 20

The accompanying notes are an integral part of these consolidated financial statements.

"Tony Consalvo" "Rob Sadleir"Director Director

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.)Consolidated Statements of Operations and Comprehensive Income (Loss)Years ended March 31, 2014 and 2013 (Expressed in Canadian dollars)

Note 2014 2013

Revenue 10,294,961$ 9,886,810$ Expenses

Salaries and wages 4,996,935 4,757,212 General and administrative 1,607,215 1,473,698 Rent 246,689 216,545

6,850,839 6,447,455

Earnings before interest, income taxes, depreciation and 3,444,122 3,439,355 amortization

Interest and financing costs 17 (863,676) (885,215)

Depreciation and amortization 7, 8 (711,078) (748,686)

Earnings before income taxes 1,869,368 1,805,454

Income taxes 15Current (823,400) (825,140) Deferred recovery 16,785 6,687

(806,615) (818,453)

Net earnings from continuing operations 1,062,753 987,001 Gain (loss) from discontinued operations 6 (2,804,844) 176,019 Net earnings (loss) for the year (1,742,091) 1,163,020

Other comprehensive income (loss)

Reclassification adjustment relating to discontinued operations (10,450) 167

72,363 32,676

Comprehensive income (loss) for the year (1,680,178)$ 1,195,863$

Earnings (loss) attributable to:

Common shareholders (2,832,392)$ 67,464$

Non-controlling interest in consolidated subsidiary 1,090,301 1,095,556

(1,742,091)$ 1,163,020$

Comprehensive income (loss) attributable to:

Common shareholders (2,770,479)$ 100,307$

Non-controlling interest in consolidated subsidiary 1,090,301 1,095,556

(1,680,178)$ 1,195,863$

Earnings (loss) per share

From continuing and discontinued operations

Basic (0.29)$ 0.01$

Diluted (0.29)$ 0.01$

From continuing operations

Basic -$ (0.01)$

Diluted -$ (0.01)$


Exchange differences on translating foreign operations


Consolidated Statements of Cash Flows


Note 2014 2013

Cash flow from (used in) operating activities

Net earnings (loss) for the year (1,742,091)$ 1,163,020$

(Gain) loss from discontinued operations 2,804,844 (176,019)

Net earnings from continuing operations 1,062,753 987,001

Adjustments to reconcile net cash provided by operating activities

Depreciation and amortization 711,078 748,686

Deferred income taxes (recovery) (16,785) (6,687)

Amortization of deferred financing costs 12,865 12,865

1,769,911 1,741,865

Changes in non-cash working capital accounts

Trade receivables 494,080 (150,502)

Prepaid expenses (28,794) 2,195

Trade payables and accrued liabilities 223,570 (21,806)

Income taxes payable 258,240 121,294

Leasehold inducement liability (72,850) (60,709)

Changes in non-cash working capital accounts from discontinued operations (216,730) (328,066)

2,427,427 1,304,271

Cash flow from (used in) financing activities

Repayments on long-term debt (4,453,988) (1,411,794)

Repurchase of shares under issuer bid (10,302) (36,580)

Distribution to non-controlling interest 12 (1,352,992) (1,125,406)

(5,817,282) (2,573,780)

Cash flow from (used in) investing activities

Additions to property and equipment (7,229) (14,146)

Additions to customer accounts (162,398) -

Proceeds on sale of discontinued operations 6 3,383,060 1,078,120

3,213,433 1,063,974

Effect of foreign exchange 33,598 (33,042)

Increase (decrease) in cash during the year (142,824) (238,577)

Cash, beginning of the year 1,148,674 1,387,251

Cash, end of the year 1,005,850$ 1,148,674$

Supplemental cash flow information - See Note 19.


Years ended March 31, 2014 and 2013


Number of shares Amount

Accumulated other

comprehensive income (loss)

Contributed surplus Deficit

Equity attributable to owners of the

Company

Non-controlling interest in

consolidated subsidiary Total equity

Balance as at April 1, 2013 9,694,684 9,561,719$ (61,913)$ 2,703,024$ (15,760,394)$ (3,557,564)$ 1,050,166$ (2,507,398)$

Distributions to non-controlling interest - - - - - - (1,352,992) (1,352,992)

Charge to capital on repurchase of shares through issuer bid (89,500) (88,272) - - - (88,272) - (88,272)

Excess of share stated amount over share redemption amount - - - 77,970 - 77,970 - 77,970

Reclassification adjustment relating to discontinued operations - - (10,450) - 10,450 - - -

- - 72,363 - - 72,363 - 72,363

Net earnings (loss) for the year - - - - (2,832,392) (2,832,392) 1,090,301 (1,742,091)

Balance, March 31, 2014 9,605,184 9,473,447$ -$ 2,780,994$ (18,582,336)$ (6,327,895)$ 787,475$ (5,540,420)$





- - 167 - (167) - - -

- - 32,676 - - 32,676 - 32,676

Net earnings for the year - - - - 67,464 67,464 1,095,556 1,163,020

Balance, March 31, 2013 9,694,684 9,561,719$ (61,913)$ 2,703,024$ (15,760,394)$ (3,557,564)$ 1,050,166$ (2,507,398)$




Reclassification adjustment relating to discontinued operations

Share capital


Consolidated Statements of Changes in Equity

Years ended March 31, 2014 and 2013

Attributable to equity holders of the Company

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.) Notes to the Consolidated Financial Statements March 31, 2014 and 2013 (Expressed in Canadian dollars)

1. NATURE OF OPERATIONS

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.) (the “Company”) is an Alberta, Canada Corporation with common shares listed on the TSX Venture Exchange under the trading symbol “ACL”. The Company’s principal office is located at 102, 7909 Flint Road SE, Calgary, Alberta, Canada, T2H 1G3.

The Company’s principal business activities involved the operation of a general insurance brokerage, which was

sold subsequent to year end. See Note 21. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation These audited consolidated financial statements have been prepared in accordance with International Financial

Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). These audited consolidated financial statements and the accompanying notes were authorized for issuance in accordance with a resolution of the Board of Directors on June 24, 2014.

These consolidated financial statements have been prepared on a going concern basis in accordance with IFRS

which contemplates the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Financial assets and liabilities are offset and the net amount is reported on the audited consolidated balance

sheets only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of

certain financial assets and financial liabilities to fair value. Basis of Consolidation The consolidated financial statements of the Company include the accounts of all of its subsidiaries. Subsidiaries

are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. Assets, liabilities, revenues and expenses of the subsidiaries are recognized in accordance with the Company’s accounting policies. Inter-company transactions and balances are eliminated upon consolidation. Transactions with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-controlling interests are computed and recorded in equity.

As at March 31, 2014 and 2013 the subsidiaries of the Company were:

Location of Ownership Ownership

incorporation or Functional interest interest

Company organization Currency 2014 2013

Anthony Clark Insurance Brokers Ltd. ("ACI") Canada Cdn 51% 51%

1275925 Alberta Inc. Canada Cdn 100% 100%

Addison America Partnership United States U.S. 100% 100%

Addison York Insurance Brokers Ltd. United States U.S. 100% 100%

Addison Bay Insurance Brokers Ltd. United States U.S. 100% 100%

Addison Low Cost Insurance Brokers Ltd. United States U.S. 100% 100%

American Edge Insurance Services Ltd. United States U.S. 100% 100%

Use of Estimates and Judgments The preparation of these consolidated financial statements requires management to make judgments, estimates

and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results could differ from these estimates.

Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any

future periods affected. In preparing these consolidated financial statements, the significant judgments made by management in applying

the Company’s accounting policies and the key sources of estimation uncertainty are as follows: Use of Judgments

Cash Generating Units The determination of cash generating units (“CGUs”) requires judgment in defining the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are determined by geographical area, similar exposure to market risk and materiality.

Impairment of Customer Accounts The assessment of customer accounts for any indications of impairment involves judgment. If an indication

of impairment exists, a formal estimate of recoverable amount is performed and an impairment loss is recognised to the extent that carrying amount exceeds recoverable amount. The assessment requires judgment as to the economic and industry conditions, the estimated future revenues to be generated by the customer accounts, operating costs and the discount rate to be applied to such revenues and costs.

Income tax Management exercises judgment in estimating the provision for income taxes. The Company is subject to

income tax laws in various jurisdictions where it operates. Various tax laws are potentially subject to different interpretations by the taxpayer and the relevant tax authority. To the extent that the Company’s interpretations differ from those of tax authorities or the timing of realization is not as expected, the provision for income taxes may increase or decrease in future periods to reflect actual experience.

Use of Estimates

Impairment of Goodwill Goodwill is assessed for impairment at the CGU level on an annual basis and more frequently if there are

potential indicators of impairment. An impairment loss is recognized if the carrying value of a CGU exceeds its recoverable amount. The recoverable amount of a CGU is determined from the greater of fair value less costs to sell or “value in use” calculations based on the net present value of discounted cash flows. Key assumptions used in the calculation of recoverable amounts are normalized EBITDA (Earnings Before Interest, Taxes, and Depreciation and Amortization) based on past performance and management expectations for the Company and industry and WACC (Weighted Average Cost of Capital).

Amortization and Depreciation Management is required to make certain estimates and assumptions when determining the amortization and

depreciation methods and rates and residual values of property and equipment and customer accounts. Useful lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life. Management reviews amortization and depreciation methods, rates, and residual values annually and adjusts amortization and depreciation accordingly on a prospective basis.

Revenue recognition Commission revenue, which is earned by the placement of insurance policies with underwriters, is recognized as

of the effective date of each policy provided that collection is believed to be probable. Funds received in respect of revenue not yet earned are accounted for as deferred revenue. Contingent commissions are based on the underwriters’ profitability on insurance policies placed by the Company and are recognized when received.

Trust cash Certain premiums collected, net of related commissions, but not yet remitted to insurance carriers are restricted by

contract and by law in certain jurisdictions.

Property and equipment Property and equipment is stated at historical cost less accumulated depreciation and, where necessary, write-

downs for impairment. Depreciation is calculated over the estimated useful lives of the property and equipment, using the following rates and methods:

Computer equipment - 30% declining balance Furniture and equipment - 20% declining balance Leasehold improvements - straight-line over the term of the related lease

The useful lives are reviewed annually and are adjusted if current estimated useful lives are different from previous estimates.

Leasehold inducement liability

Leasehold inducement liability resulted from leasehold improvements at the inception of a premise lease on the main Canadian location and is being amortized over the term of the lease.

Business combinations The acquisition method of accounting is used to account for business combinations that meet the definition of a

business under IFRS. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Contingent consideration is included in the cost of acquisition at fair value. Directly attributable transaction costs are expensed in the current period and reported within general and administrative expenses. The excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recorded as goodwill. The results of operations and cash flows of an acquired business are included in the Company’s financial statements from the date of acquisition.

Goodwill Goodwill results from business combinations and represents the excess of the consideration given over the fair

value of identifiable net assets acquired. Goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortized.

Customer accounts Customer accounts acquired separately are measured initially at cost. Customer accounts acquired in a business

combination are recorded at fair value as at the date of acquisition. Following initial recognition, customer accounts are carried at cost less accumulated amortization and any accumulated impairment losses. Amortization is provided on a straight-line basis over the estimated useful lives of the acquired customer accounts currently ranging between five and ten years. The useful lives are reviewed annually and are adjusted if current estimated useful lives are different from previous estimates.

Impairment of non-current assets The carrying values of the Company’s non-financial assets are assessed for impairment when events and

circumstances indicate that their carrying amounts may not be recoverable. Additionally, the carrying amount of goodwill is tested at least annually for impairment. For the purposes of impairment testing, goodwill acquired in a business combination is allocated to the CGU that is expected to benefit from the combination. Gains and losses calculated on the disposal of a business include the carrying value of goodwill relating to the business sold.

The Company performs its annual test for goodwill impairment at March 31. The Company currently has one CGU.

The recoverable amount of the CGU is determined based on greater of fair market value less costs to sell and the present value of expected future cash flows.

Customer accounts are amortized over their useful lives and assessed for impairment whenever there is an

indication that the carrying value may be impaired.

Leases Leases are classified as either operating or finance, based on the substance of the transaction at inception of the

lease. Classification is re-assessed if the terms of the lease are changed.

Finance lease Leases in which substantially all the risks and rewards of ownership are transferred to the Company are

classified as finance leases. Assets meeting finance lease criteria are capitalized at the lower of the present value of the related lease payments or the fair value of the leased asset at the inception of the lease. Minimum lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Operating lease Leases other than finance leases are classified as operating leases. Payments made under operating leases

are recognized in the statements of operations and comprehensive income on a straight-line basis over the period of the lease.

Foreign currency The consolidated financial statements are presented in Canadian dollars, which is the Company’s presentation

currency. The financial statements of each of the Company’s subsidiaries are prepared in the local currency of their home

jurisdictions. Consolidation of each subsidiary includes re-measurement from the local currency to the subsidiary’s functional currency. Functional currency is the currency of the primary economic environment in which the subsidiary operates.

Exchange rates published by the Bank of Canada were used to translate each subsidiary’s financial statements

into the consolidated financial statements. Assets and liabilities of subsidiaries with functional currencies other than Canadian dollars are translated at the period-end rates of exchange, and the results of their operations are translated at rates approximating the exchange rate at the transaction date. The resulting translation adjustments are included in accumulated other comprehensive income in shareholders’ equity.

Earnings (loss) per share Earnings (loss) per share is determined by dividing net earnings (loss) attributable to shareholders by the weighted

average number of common shares outstanding during the reporting period, which amounted to 9,627,807 (2013 – 9,860,679) common shares. Diluted earnings (loss) per share is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all potentially dilutive shares, which include share options granted.

Share-based compensation Share-based compensation is accounted for at fair value as determined by the Black-Scholes option pricing model

using amounts that are believed to approximate the volatility of the trading price of the Company’s shares, the expected lives of awards of share-based compensation, the fair value of the Company’s shares and the risk-free interest rate. The estimated fair value of awards of share-based compensation are charged to expense as services are provided and the awards vest, with offsetting amounts recognized as contributed surplus.

Income taxes Current income tax expense is based on the results of operations for the period as adjusted for items that are not

taxable or not deductible. Current income tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized using the liability method, providing for temporary differences arising between

the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is calculated using tax rates and laws that have been enacted or substantively enacted at the end of the reporting period, and which are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be

available against which the temporary differences can be utilized.

The effect of a change in enacted or substantively enacted income tax rates on deferred income tax assets and liabilities is recognized in profit or loss in the period that the change occurs unless the original entry was recorded to equity.

Treasury stock The Company records the repurchase of its shares at the average cost, being total share capital cost divided by

total shares outstanding at the time of purchase. The difference between the average cost and actual purchase price is adjusted to contributed surplus.

Financial instruments Financial assets All financial assets are initially recorded at fair value and designated upon inception into one of the following four

categories: held to maturity, available for sale, loans and receivables or at fair value through profit and loss. Financial assets classified as fair value through profit and loss are measured at fair value with unrealized gains

and losses recognized through comprehensive income. Cash and trust cash are classified as fair value through profit and loss.

Financial assets classified as loans and receivables and held to maturity are measured at amortized cost with

gains or losses recognized through comprehensive income when realized or impaired. Trade receivables are classified as loans and receivables.

Financial assets classified as available for sale are measured at fair value with unrealized gains and losses

recognized in other comprehensive income except when realized or impaired. At March 31, 2014 the Company has not classified any financial assets as available for sale.

Financial liabilities All financial liabilities are initially recorded at fair value and designated upon inception as fair value through profit

and loss or other financial liabilities. Financial liabilities classified as other financial liabilities are measured at amortized cost with gains and losses

recognized in comprehensive income when the liability is extinguished. Trade payables and accrued liabilities, and long-term debt are classified as other financial liabilities.

Financial liabilities classified as fair value through profit and loss are measured at fair value with unrealized gains

and losses recognized through comprehensive income. At March 31, 2014, the Company has not classified any financial liabilities as fair value through profit and loss.

Transaction costs

Transaction costs associated with financial instruments at fair value through profit or loss are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount.

Related parties Related parties are parties that have the ability to control or to exercise significant influence over the Company.

Accounting standards and interpretations issued but not yet adopted As at the date of these consolidated financial statements, the following standard has not been applied in these consolidated financial statements:

(i) IFRS 9 Financial Instruments; effective for annual periods beginning on or after January 1, 2018. IFRS 9

replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortized cost and fair value. IFRS 9 prohibits reclassifications except in rare circumstances when the entity’s business model changes. The new standard removes the requirement to separate embedded derivatives from financial asset hosts. It requires a hybrid contract to be classified in its entirety at either amortized cost or fair value.

Management is currently assessing the impact of this new standard on the Company’s accounting policies and financial statement presentation.

3. ADOPTION OF NEW ACCOUNTING STANDARDS

The Company has adopted the following new accounting standards effective April 1, 2013. These changes were made in accordance with the applicable transitional provisions and had no impact on the financial statements.

(i) IFRS 10 Consolidated Financial Statements. IFRS 10 defines a single concept of control as the

determining factor in whether an entity should be included within the consolidated financial statements of a parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

(ii) IFRS 11 Joint Arrangements. IFRS 11 focuses on the rights and obligations of an arrangement rather

than its legal form, as was previously the case. The standard distinguishes between joint operations, where the joint operator accounts for the assets, liabilities, revenues, and expenses relating to its involvement, and joint ventures, which must be accounted for using the equity method.

(iii) IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 is a new and comprehensive standard on

disclosure requirements for all forms of interests in other entities, including subsidiaries, joint operations, joint ventures, associates and unconsolidated structured entities.

(iv) IFRS 13 Fair Value Measurement. IFRS 13 is a new standard that applies to both financial and non-

financial items measured at fair value. It defines fair value, sets out a single framework for measuring fair value and requires disclosures about fair value measurements. Previously, a variety of fair value techniques and disclosures were possible under the requirements of separate applicable IFRS.

4. FINANCIAL INSTRUMENTS

a) Overview The Company’s activities expose it to a variety of financial risks that arise as a result of its operating and

financing activities such as credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company manages its exposure to these risks by operating in a manner that minimizes this exposure.

b) Fair value of financial instruments

The Company’s financial instruments as at March 31, 2014 included cash, trade receivables, trade payables and accrued liabilities, and long-term debt. The carrying amounts for short-term financial assets and liabilities, which includes trade receivables and trade payables and accrued liabilities approximate fair values due to the immediate or short-term maturities of these financial instruments. Cash and trust cash are classified as fair value through profit and loss and therefore are recorded at fair value. Management estimated the fair value of its long-term debt taking into account market rates of interest, the condition of any related collateral and the current conditions in credit markets applicable to the Company based on recent transactions. The estimated fair value of long-term debt approximates its carrying value.

For financial instruments measured at fair value, disclosure about the inputs to fair value measurements are required, including their classification within a fair value hierarchy that prioritizes the significance of inputs used in making fair value measurements. Level 1 Fair Value Measurements quoted prices in active markets for identical assets or liabilities; Level 2 Fair Value Measurements inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and Level 3 Fair Value Measurements inputs for the assets or liabilities that are not based upon observable market data. Cash and trust cash are based on Level 1 inputs of the fair value hierarchy.

c) Financial risk management The Company’s financial instruments are exposed to certain financial risks, including credit risk, foreign

currency risk, interest rate risk and liquidity risk. Credit risk The Company is exposed to credit risk resulting from the possibility that counterparties may default on their

financial obligations, or if there is a concentration of transactions carried out with the same counterparty or of financial obligations which have similar economic characteristics such that they could be similarly affected by changes in economic conditions.

The Company’s financial instruments that are exposed to concentrations of credit risk relate primarily to cash

and trade receivables from clients and insurance carriers. Cash is in place with major financial institutions. Concentrations of credit risk with respect to client and insurance carrier trade receivables are limited due to the large number of customers and insurance carriers. The Company has evaluation and monitoring processes in place and writes off accounts when they are determined to be uncollectible.

As at March 31, 2014, the Company’s maximum exposure to credit risk is through the following assets: Trade receivables $ 1,162,656 Net credit risk $ 1,162,656 Foreign currency risk

The Company is exposed to the financial risk related to fluctuations of foreign exchange rates. The Company has U.S. dollar denominated indebtedness and is therefore exposed to cash flow risks associated with fluctuations in the relative value of the Canadian and U.S. dollar. A significant change in the currency exchange rate of the Canadian dollar relative to the U.S. dollar could have a material effect on the Company’s results of operations, financial position and cash flows. The Company does not engage in hedging activities or use financial instruments to reduce its risk exposure.

At March 31, 2014, the Company is exposed to currency risk through the following assets and liabilities

denominated in U.S. dollars: Cash $ 138,843 Trade receivables 56,813 Trade payables and accrued liabilities (262,196) Long-term debt (712,919) Net exposure $ (779,459)

Based on the above net exposure at March 31, 2014, and assuming all other variables remain constant, a 10% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in a decrease or increase of $ 77,945 in the Company’s other comprehensive income (loss).

Interest rate risk All of the Company’s indebtedness bears interest at fixed rates and as a result the Company is not exposed to

significant interest rate risk arising from long-term debt. Liquidity risk

Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its short and long-term obligations as they come due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. The Company manages its liquidity risk through cash and debt management. The Company’s objective in managing liquidity risk is to increase revenues, minimize operational costs and to maintain sufficient liquidity in order to meet these operational requirements at any point in time. The Company’s ability to obtain funding from external sources may be restricted if the Company’s financial performance and condition deteriorate. In addition, credit and capital markets are subject to inherent global risks that may negatively affect the Company’s access and ability to fund its short-term and long-term debt requirements. The Company mitigates these risks by actively monitoring market conditions and diversifying its sources of funding and debt maturity. The Company’s trade payables are generally due within 60 days. The current portion of long-term debt is due within 12 months.

5. CAPITAL RISK MANAGEMENT The Company considers the capital it manages to be the amounts it has in cash, debt (long-term and short-term

borrowings) and equity attributable to owners of the Company. The Company’s objectives when managing capital are to: − safeguard the Company’s ability to continue as a going concern − ensure sufficient liquidity to support its financial obligations and execute its operating and strategic plans − optimize the cost of its capital at an acceptable level in light of current and future industry, market and

economic risks and conditions − utilize the long-term funding sources to manage its working capital and restructure debt to minimize the cost of

its capital − acquire assets and dispose of non-performing assets The Company manages the capital structure and makes adjustments to it in light of changes in economic

conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, repurchase shares, issue debt, acquire or dispose of assets. The Company requires capital to repay existing obligations. There can be no certainty of the Company’s ability to refinance its existing obligations. In order to facilitate the management of the Company’s capital, the Company prepares annual cash flow forecasts that are updated as necessary depending on various factors and general industry conditions. There were no changes in the Company’s approach to capital management.

The declaration and payment of dividends and the amount thereof are at the discretion of the Board. In order to

maintain and maximize growth, maintain sufficient liquidity to support its financial obligations and optimize the cost of capital, the Company currently does not pay out dividends.

The Company is also subject to certain working capital covenants on an ongoing basis, and compliance with these

covenants has the effect of restricting the availability of cash from the Canadian operations to the other operations of the Company.

See Notes 10, 11 and 12 for description of changes in capital for the years ended March 31, 2014 and 2013.

6. DISCONTINUED OPERATIONS On March 3, 2014 the Company sold the property and equipment and customer accounts of its U.S. operations for

net sales proceeds of $ 3,204,664 including transaction costs of $ 178,396. The Company realized a loss from discontinued operations of $ 2,804,844.

U.S. Operations

Balance sheet as at March 31, 2013

Property and equipment $ 50,163

Goodwill 5,073,931

Total non-current assets $ 5,124,094

On May 8, 2012, the Company sold the property and equipment, customer accounts and accounts receivables of

its Northern California operations for net sales proceeds of $ 869,272 including transaction costs of $ 208,848. The Company realized a gain from discontinued operations of $ 167,973.

Northern California operations


Accounts receivable $ 255,156

Total current assets $ 255,156


Customer accounts 248,264

Total non-current assets $ 270,181

Total Assets $ 525,337

The gain (loss) from discontinued operations for the years ended March 31, 2014 and 2013 is summarized below:

Virginia Agency

Northern California

Agency TotalVirginia Agency

Northern California

Agency Total

Revenue from discontinued operations 2,672,608$ 2,662$ 2,675,270$ 3,160,830$ 131,825$ 3,292,655$

Expenses of discontinued operations (5,036,350) (1,834) (5,038,184) (3,152,784) (322,842) (3,475,626) Earnings (loss) from discontinued operations (2,363,742) 828 (2,362,914) 8,046 (191,017) (182,971) Gain (loss) on sale of discontinued operations (441,930) - (441,930) - 358,990 358,990

Gain (loss) from discontinued operations (2,805,672)$ 828$ (2,804,844)$ 8,046$ 167,973$ 176,019$

Year ended March 31, 2013Year ended March 31, 2014

7. PROPERTY AND EQUIPMENT

DescriptionComputer equipment

Computer equipment

under finance lease

Furniture and equipment

Furniture and equipment

under finance lease

Leasehold improvements Total

CostBalance at April 1, 2012 290,890$ 44,460$ 239,294$ 37,012$ 405,358$ 1,017,014$ Additions 14,146 31,452 - 7,312 - 52,910 Derecognized on disposal of a subsidiary (41,416) - (33,071) - (13,095) (87,582) Reclassified from assets under finance lease 35,065 (35,065) 23,224 (23,224) - - Effects of foreign currency exchange differences 1,465 156 1,005 400 470 3,496 Balance at March 31, 2013 300,150 41,003 230,452 21,500 392,733 985,838 Additions 4,372 20,407 2,857 - - 27,636 Dispositions (32,938) - - - - (32,938) Derecognized on disposal of a subsidiary (94,499) (10,430) (69,193) (23,482) (30,875) (228,479) Effects of foreign currency exchange differences 7,975 879 5,802 1,982 2,392 19,030 Balance at March 31, 2014 185,060$ 51,859$ 169,918$ - 364,250$ 771,087$

Depreciation and impairment losses:Balance at April 1, 2012 213,387$ 24,266$ 120,793$ 13,707$ 54,117$ 426,270$ Depreciation 26,547 6,399 24,147 2,728 52,036 111,857 Eliminated on disposal of a subsidiary (31,016) - (22,113) - (13,095) (66,224) Reclassified from assets under finance lease 20,460 (20,460) 9,847 (9,847) - - Effects of foreign currency exchange differences 1,480 86 815 275 470 3,126 Balance at March 31, 2013 230,858 10,291 133,489 6,863 93,528 475,029 Depreciation 21,542 12,216 19,732 2,817 52,036 108,343 Dispositions (32,938) - - - - (32,938) Eliminated on disposal of a subsidiary (81,042) (7,281) (53,567) (10,273) (30,875) (183,038) Effects of foreign currency exchange differences 6,315 574 4,337 593 2,391 14,210 Balance at March 31, 2014 144,735$ 15,800$ 103,991$ -$ 117,080$ 381,606$

Net book value:At March 31, 2013 69,292$ 30,712$ 96,963$ 14,637$ 299,205$ 510,809$ At March 31, 2014 40,325$ 36,059$ 65,927$ -$ 247,170$ 389,481$

8. CUSTOMER ACCOUNTS

CostBalance at April 1, 2012 9,654,720$ Additions - Dispositions (1,038,424) Effects of foreign currency exchange differences 623 Balance at March 31, 2013 8,616,919 Additions 339,105 Dispositions - Effects of foreign currency exchange differences - Balance at March 31, 2014 8,956,024$

Amortization and impairment losses:Balance at April 1, 2012 7,381,763$ Amortization 651,285 Dispositions (790,299) Effects of foreign currency exchange differences 762 Balance at March 31, 2013 7,243,511 Amortization 615,134 Dispositions - Effects of foreign currency exchange differences - Balance at March 31, 2014 7,858,645$

Net book value:At March 31, 2013 1,373,408$ At March 31, 2014 1,097,379$

9. GOODWILL

CostBalance at April 1, 2012 12,308,857$ Additions - Dispositions - Effects of foreign currency exchange differences 82,434 Balance at March 31, 2013 12,391,291 Additions - Dispositions (5,450,539) Effects of foreign currency exchange differences 376,608 Balance at March 31, 2014 7,317,360$

Impairment lossesBalance at April 1, 2012 -$ Impairment losses - Derecognized on disposal of a subsidiary - Effects of foreign currency exchange differences - Balance at March 31, 2013 - Impairment losses 2,122,939 Derecognized on disposal of a subsidiary (2,122,939) Effects of foreign currency exchange differences - Balance at March 31, 2014 -$

Net book value:At March 31, 2013 12,391,291$ At March 31, 2014 7,317,360$

Impairment test of goodwill The Company performed its annual test for goodwill impairment as at March 31, 2014 in accordance with its policy described in Note 2. The test results indicate that the recoverable amount of the Canada CGU exceeded its carrying value and no impairment loss for goodwill has been recognized for the year ended March 31, 2014.

Carrying amount of goodwill at

Cash Generating Unit March 31, 2014 March 31, 2013Canada 7,317,360$ 7,317,360$ US - 5,073,931 Total Goodwill 7,317,360$ 12,391,291$

The U.S. CGU was assessed for impairment because of market indicators in the third quarter. The Company concluded that the carrying value of the CGU exceeded the recoverable amount. As a result, the Company determined there was an impairment loss for goodwill. The Company recorded a total goodwill impairment charge of $2,122,939 which was recognized in the third quarter ended December 31, 2013. The valuation techniques, significant assumptions and sensitivities applied in the goodwill impairment test are described below. The selection and application of valuation techniques and the determination of significant assumptions requires judgment. Valuation technique The recoverable amount of the CGU was based on the fair value less cost to sell using a market approach. The market approach assumes that companies operating in the same industry will share similar characteristics and that company values will correlate to those characteristics. Therefore, a comparison of a CGU to similar companies whose financial information is publicly available may provide a reasonable basis to estimate the fair value. Under the market approach, fair value is calculated based on EBITDA multiples of benchmark companies comparable to the business in the CGU. The EBITDA multiples were also compared to internally calculated WACC. The WACC is an estimate of the overall required rate of return on an investment for both debt and equity owners and serves as the basis for developing an appropriate discount rate. Determination of the WACC requires separate analysis of the cost of equity and debt, and considers a risk premium based on an assessment of risks related to the projected cash flows of the unit. Assumptions The WACC used by the Company for testing ranged from 8% to 11% (March 31, 2013 - 8% to 19%). Normalized EBITDA was based on past performance and management expectations for the Company. The key assumptions described may change as economic and market conditions change. The fair value for the CGU was in excess of its carrying value. The Company is not aware of any reasonably possible change in any of the above key assumptions that would cause the carrying value of the Canada CGU to exceed its recoverable amount.

10. LONG-TERM DEBT

March 31, 2014 March 31, 2013

Senior notes – 4.5% – 6.75%, due between June 2018 and July 2023 (a) $ 13,175,867 $ 14,042,739

U.S. Note payable – 6.75% interest only, due February 2017 (b) 712,919 2,539,000

U.S. Note payable – 12% interest only, due Feb 2015 (b) - 1,218,720

Obligations under capital leases, collateralized by the assets under lease 32,513 37,868

13,921,299 17,838,327

Deferred financing costs (128,649) (154,039)

Accumulated amortization 74,321 61,866

(54,328) (92,173)

13,866,971 17,746,154

Less: Current Portion (1,310,953) (1,309,448)

$ 12,556,018 $ 16,436,706

a) The Company had a principal repayment holiday on one Senior note ($6,067,347) totaling $182,927 from

December 1, 2013 to March 1, 2014. The Senior notes are secured by the Canadian assets only with a guarantee provided by the Company. See Note 21.

The Company is also subject to certain covenants on an ongoing basis, with failure to maintain compliance

resulting in the loans becoming due on demand. The Company is in compliance with the covenants.

On August 1, 2013, the Company acquired customer accounts from an independent insurance broker in Calgary, Alberta for $176,707 which was funded through an expansion of the Company’s existing acquisition facility (Senior note).

b) On March 18, 2013, the Company and the U.S. lender agreed to the terms for restructuring the U.S.

$1,200,000 note payable whereby the existing note was cancelled and restructured for cash and a new note. Under the new promissory note, the Company made three principal payments of U.S. $25,000; on April 15, 2013, September 1, 2013 and January 2, 2014 . In addition, the Company paid a U.S. $25,000 fee to the lender related to this restructuring. In conjunction with the sale of the Virginia agency, the net proceeds of the sale transaction were used to pay down the U.S. notes payable in the amount of $3,305,416 (U.S. $2,980,000) on March 3, 2014. Interest only payments at 6.75% per annum continue on the unpaid balance until maturity of the loan.

The U.S. denominated debt is secured with a guarantee provided by the Company.

c) The Company is obligated to make the following principal payments in each of the next five fiscal years: 2015 $ 1,310,953 2016 1,382,867 2017 2,169,897 2018 1,542,566 2019 7,427,988 Thereafter 87,028 $ 13,921,299

11. SHARE CAPITAL a) Authorized Unlimited common shares without par value Unlimited class B voting preferred shares without par value Unlimited class C non-voting preferred shares without par value Issued

All common shares issued are fully paid, carry one vote per share and carry a right to dividends.

b) Normal Course Issuer Bid The Company receives regulatory approval from the TSX Venture Exchange (the “Exchange”) to make a

normal course issuer bid. Pursuant to the bid, the Company could purchase up to 10% of its common shares issued and outstanding at the time of the bid.

- 2014 - The bid commenced May 20, 2013 and will terminate on May 19, 2014 and pursuant to the bid, the

Company has approval to purchase up to 969,168 of its common shares. The Company has repurchased 85,000 common shares under the bid.

- 2013 - The bid commenced May 19, 2012 and will terminate on May 18, 2013 and pursuant to the bid, the

Company has approval to purchase up to 1,022,447 of its common shares. The Company has repurchased 220,000 common shares under the bid.

12. NON-CONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY

On June 10, 2008, April 23, 2009 and July 14, 2010, the Company closed equity financings under which a non-controlling interest, totaling 49% of a consolidated subsidiary of the Company which operates the Canadian operations, was sold. Under IFRS, transactions with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-controlling interests are computed and recorded in equity. Within the unanimous shareholder agreement, there is a contingent put option with the non-controlling shareholder. See Note 20 and 21. Distributions from the Canadian operations to the parent and non-controlling shareholder are paid as and when approved by the Board of Directors of the Canadian subsidiary. The distributions are based on a formula in the unanimous shareholder agreement. The non-controlling shareholder is the lender on the Senior notes. See Note 10.

13. SHARE-BASED COMPENSATION The Company has an incentive share option plan, which provides for the award of share options to directors,

officers, employees and consultants. A maximum of 1,601,395 common shares remain reserved under the plan. The terms and exercise prices of all share option awards are determined by the directors at the time of issue.

Changes in share options, outstanding and exercisable, during the years ended March 31, 2014 and 2013 are as

follows:

2014 2013

Number of Options Weighted average

exercise price Number of Options Weighted average

exercise price

Beginning of year 450,000 $ 0.36 450,000 $ 0.36

Expired (450,000) (0.36) - -

End of year - - 450,000 $ 0.36

The outstanding options expired unexercised on April 1, 2013.

14. RELATED PARTY DISCLOSURES The Company enters into transactions with related parties from time to time in the normal course of business, as

well as key management personnel. During the year ended March 31, 2014, the Company incurred $ nil (2013 - $ 2,365) of consulting fees charged by

a director. Compensation of key management personnel

Key management personnel are comprised of all members of the Board of Directors and the Named Officers (as defined in Form 51-102F6 Statement of Executive compensation and disclosed in the Company’s Management Proxy Circular in connection with its annual meeting of shareholders). The summary of compensation of key management personnel is as follows:

For the years ended March 31, 2014 2013 Salary and bonuses $ 426,153 $ 506,153 Short-term employee benefits 15,769 15,132 Total compensation of key management personnel $ 441,922 $ 521,285

15. INCOME TAXES

a) Tax provision

The provision for income tax differs from the result which would have been obtained by applying the statutory income tax rate of 25% to the Company's net income (loss) before income taxes. The difference results fromthe following items:

2014 2013

Net income before income taxes 1,869,368$ 1,805,454$

Expected income tax expense (recovery) 467,342 451,364 Permanent items 12,463 4,957 Effect of foreign income tax rate differences - (45,670) Rate changes during the year - 41,181 Unrecognized deferred tax asset (liability) 454,226 380,564 Other (127,416) (13,943)

Total tax expense 806,615$ 818,453$

b) Recognized deferred tax liability

The recognized income tax effects of temporary differences that give rise to signficant deferred taxassets and liabilities are as follows:

March 31, 2014 March 31, 2013 March 31, 2012

Customer accounts without tax basis (58,735)$ (76,807)$ (103,029)$ Goodwill - (1,114,599) (969,810)

(58,735) (1,191,406) (1,072,839)

Other assets 2,399 1,118,285 993,031

(56,336)$ (73,121)$ (79,808)$

c) Movements in the tax effect of the temporary differences during the year are as follows:

April 1, 2012 Recognized in earnings (loss) March 31, 2013

Recognized in earnings (loss) March 31, 2014

Customer accounts without tax basis (103,029)$ 26,222$ (76,807)$ 18,072$ (58,735)$ Goodwill (969,810) (144,789) (1,114,599) 1,114,599 - Other assets 993,031 125,254 1,118,285 (1,115,886) 2,399

(79,808)$ 6,687$ (73,121)$ 16,785$ (56,336)$

16. COMMITMENTS The Company leases office premises under operating leases that expire at various dates during the 2015 through

2019 fiscal years. In addition, the Company has current obligations under certain advertising contracts. The Company’s minimum lease and other payments under the agreements are as follows:

2015 $ 374,693 2016 243,612 2017 212,108 2018 201,607 2019 151,205 $ 1,183,225 17. INTEREST AND FINANCING COSTS

18. ECONOMIC DEPENDENCE

The majority of the Company’s revenue are earned by selling general insurance to more than 40,000 customers. The Company also earns certain revenue from the insurance carriers in the form of contingency income and other incentives. Contingent income is based on the insurance carrier’s profitability on insurance policies placed by the Company. The Company places its customer insurance policies with a variety of insurance carriers. Included in revenue for the year ended March 31, 2014 are approximately 93% of revenue which arose from placing insurance policies and earning contingent income with the Company’s three largest insurance carriers (each of the three largest insurance carriers percentage of revenue is as follows: 63%, 16% and 14%).

Included in revenue for the year ended March 31, 2013 are approximately 95% of revenue which arose from placing insurance policies and earning contingent income with the Company’s three largest insurance carriers (each of the three largest insurance carriers percentage of revenue is as follows: 68%, 14% and 13%). See Note 21.

d) Unrecognized deferred tax assets

The tax effect of the Company's deferred tax assets have not been recognized in respect of the following:

March 31, 2014 March 31, 2013Customer Accounts, with tax basis -$ 267,291$ Other assets 3,362,013 1,974,357 Non capital losses 6,907,382 5,903,991

10,269,395$ 8,145,639$

As at March 31, 2014, the Company had accumulated Canadian non-capital losses of approximately $5,295,663which commence expiring in 2031 and U.S. net operating losses of approximately U.S.$13,204,249 which commence expiring in 2023 and can be carried forward and charged against future taxable income, with somerestrictions. The benefit of these losses and the other assets have not been reflected in the financial statements.

Year ended March 31, 2014 2013

Interest on long-term debt 845,449$ 869,169$ Amortization of deferred financing costs and loan discount 12,865 12,865 Interest on obligations under capital lease 5,362 3,181

863,676$ 885,215$

19. SUPPLEMENTAL CASH FLOW INFORMATION

During the years ended March 31, 2014 and 2013, the Company had non-cash transactions as follows:

March 31, 2014 March 31, 2013

Financing activitiesDebt incurred for purchase of customer accounts 176,707$ -$

Capital lease for financing property and equipment purchase 20,407 38,764

197,114 38,764

Investing activitiesPurchase of customer accounts for senior note payable (176,707) -

Property and equipment additions financed by capital lease (20,407) (38,764)

(197,114) (38,764)

-$ -$

Additional Information:

Interest paid $ 1,155,205 $ 1,134,429

Income taxes paid $ 603,504 $ 707,260

20. CONTINGENCIES The Company may, from time to time, be involved in various claims, lawsuits, disputes with third parties, actions

involving allegations of discrimination, or breach of contract incidental to the operations of its business. The Company is not currently involved in any such incidental litigation which it believes could have a materially adverse effect on its financial condition or results of operations.

As part of the unanimous shareholder agreement with the non-controlling interest, there is a contingent put option which if exercised will require the Company to purchase the non-controlling interest. The contingent put option can only be exercised, within 60 days written notice, if:

There is an arm’s length third party offer to purchase the consolidated subsidiary and the non-controlling shareholder wishes to accept, but the Company does not, then the non-controlling shareholder can exercise the put option for the price set out in the offer, or

There is a change of control in the consolidated subsidiary or the Company, the non-controlling shareholder can exercise the put option for the higher of fair value formula in the unanimous shareholder agreement or the price set out in the change of control transaction.

There is uncertainty as to the occurrence, timing and amount of the cash outflow since the put option is contingent

on a third party offer or purchase. See Note 12 and 21. 21. EVENT AFTER THE REPORTING PERIOD On May 1, 2014 the Company completed the sale of all of its shares (51%) in the Canadian subsidiary ACI held by

the Company, to an arm’s length third party for cash consideration of approximately $13,000,000, before repayment of certain senior debt and adjustments. As the transaction contemplated the sale of all or substantially all of the Company’s assets, shareholder approval was obtained on April 14, 2014 and TSX Venture Exchange approval on April 22, 2014. The Company paid certain liabilities in the amount of $7,942,971 from the sale proceeds including debt settlement of $6,101,475, legal expenses of $277,221 and severance and outstanding compensation of $1,564,275.

Subsequent to obtaining TSX Venture Exchange approval on April 29, 2014, the Company changed its name to ACL International Ltd. effective May 1, 2014 and transferred its common shares listing to the NEX Board of the TSX Venture Exchange effective May 2, 2014.

On May 26, 2014, the Board of Directors of the Company declared a capital distribution to the shareholders and set the record date for the distribution at June 9, 2014. The Company made an initial distribution of $0.28 per common share to its shareholders on June 18, 2014.

22. PROFORMA FINANCIAL INFORMATION (UNAUDITED)

The following table presents the unaudited proforma balance sheet as at March 31, 2014 as if the sale by the Company of all of the shares held by it in its Canadian subsidiary ACI (Note 21) had occurred as at March 31, 2014. The unaudited proforma information is not necessarily indicative of the combined results that would have occurred had the sale of the shares held in the Canadian subsidiary and settlement of the Senior note taken place at the beginning of the year presented, nor is it necessarily indicative of results that may occur in the future.

As at March 31, 2014 Current assets $ 5,467,124 Total Assets $ 5,467,124 Current Liabilities $ 464,426 Long-term debt 712,919 Shareholders’ Equity 4,289,779 Total Liabilities and Shareholders’ Equity $ 5,467,124




Condensed Interim Consolidated Financial Statements (unaudited)

For the nine months ended December 31, 2014


Formerly ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.

Condensed Interim Consolidated Balance Sheets

Unaudited (Expressed in Canadian dollars)

Note December 31, March 31,

As at 2014 2014

Assets

Current assets

Cash 2,118,703$ 1,005,850$

Trade receivables 4,130 1,162,656

Prepaid expenses 474 182,998

2,123,307 2,351,504

Property and equipment 4,189 389,481

Customer accounts - 1,097,379

Goodwill - 7,317,360

2,127,496$ 11,155,724$

Liabilities

Current liabilities

Trade payables and accrued liabilities 225,644$ 1,859,837$

Income taxes payable - 700,521

Current portion of leasehold inducement - 72,850

Current portion of long-term debt 6 - 1,310,953

225,644 3,944,161

Long-term debt 6 748,265 12,556,018

Leasehold inducement - 139,629

Deferred income tax - 56,336

973,909 16,696,144

Equity

Share capital 7 6,783,995 9,473,447

Contributed surplus 2,780,994 2,780,994

Deficit (8,411,402) (18,582,336)

Equity attributable to shareholders of the Company 1,153,587 (6,327,895) Dividend -

Non-controlling interest in consolidated subsidiary 8 - 787,475

1,153,587 (5,540,420)

2,127,496$ 11,155,724$

Contingencies 12

Subsequent Event 13

The accompanying notes are an integral part of these condensed interim consolidated financial statements.


Formerly ANTHONY CLARK INTERNATIONAL INSURANCE BROKERS LTD.

Condensed Interim Consolidated Statements of Cash Flows

For the nine months ended December 31,

Note 2014 2013

Cash flow from (used in) operating activities

Net earnings for the period 10,206,148$ (1,186,179)$

(Gain) loss from discontinued operations (12,084,539) (224,808)

Net earnings from continuing operations (1,878,392) (1,410,987)

Adjustments to reconcile net cash provided by operating activities

Depreciation and amortization 230 -

Deferred income taxes (recovery) (12,570) (9,899)

Amortization of deferred financing costs and loan discounts 50,281 18,480

(1,840,450) (1,402,406)

Changes in non-cash working capital accounts

Trade receivables 52,694 226,698

Prepaid expenses 11,357 (9,453)

Trade payables and accrued liabilities (667,203) 11,468

Income taxes payable (700,521) (442,281)

Leasehold inducement liability (212,479) (212,479)

Changes in discontinued operations non-cash working capital 2,400,556 1,159,247

(956,046) (669,206)

Cash flow from (used in) financing activities

Repayments on long-term debt (6,067,347) (353,768)

Repurchase of shares under issuer bid - (10,302)

Capital distribution to Shareholders (2,689,452) -

(8,756,799) (364,070)

Cash flow from (used in) investing activities

Additions to property and equipment (4,591) -

Proceeds on sale of discontinued operations 10,865,503 -

10,860,912 -

Effect of foreign exchange (35,214) 1,619

Increase (decrease) in cash during the period 1,112,853 (1,031,657)

Cash, beginning of the period 1,005,850 1,148,674

Cash, end of the period 2,118,703$ 117,017$

Supplemental cash flow information - See Note 11.




Number of shares Amount

Accumulated

other

comprehensive

income (loss)

Contributed

surplus Deficit

Equity

attributable to

owners of the

Company

Non-controlling

interest in

consolidated

subsidiary Total equity

Balance as at April 1, 2014 9,605,184 9,473,447$ -$ 2,780,994$ (18,582,336)$ (6,327,895)$ 787,475$ (5,540,420)$

Capital distribution to Shareholders - (2,689,452) - - - (2,689,452) - (2,689,452)

Reclassification adjustment relating to discontinued operations - - 35,214 - (35,214) - - -

- - (35,214) - - (35,214) - (35,214)

Net earnings (loss) for the period - - - - 10,206,148 10,206,148 - 10,206,148

Elimination on sale of Canadian subsidiary - - - - - - (787,475) (787,475)

Balance, December 31, 2014 9,605,184 6,783,995$ -$ 2,780,994$ (8,411,402)$ 1,153,587$ - 1,153,587$





- - 89,504 - (89,504) - - -

- - 85,073 - - 85,073 - 85,073

Net earnings for the period - - - - (1,186,179) (1,186,179) 937,924 (248,254)

Balance, December 31, 2013 9,605,184 9,473,447$ 112,664$ 2,780,994$ (17,036,077)$ (4,668,972)$ 899,852$ (3,769,119)$


Share capital

Formerly Anthony Clark International Insurance Brokers Ltd.

Condensed Interim Consolidated Statements of Shareholders' Equity


Attributable to equity holders of the Company

Exchange difference on translating foreign operations

Exchange difference on translating foreign operations

Reclassification adjustment relating to discontinued operations

ACL INTERNATIONAL LTD. (formerly Anthony Clark International Insurance Brokers Ltd.) NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited) For the three months ended December 31, 2014 and 2013 (Expressed in Canadian dollars)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ACL International Ltd. (the “Company”) is an Alberta, Canada Corporation with common shares listed on the TSX Venture Exchange under the trading symbol “ACL”. The Company’s principal office is located at Suite 500, 5940 Macleod Trail SW, Calgary, AB T2H 2G4.

The Company’s principal business activities involved the operation of a general insurance brokerage, which was

sold subsequent to year end. These condensed interim Consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard 34- Interim Financial Reporting. The disclosure provided below are incremental to those included with the annual consolidated financial statements. Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or have been disclosed on an annual basis only. Accordingly these condensed interim Consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended March 31, 2014.

The consolidated financial statements of the Company include the accounts of all of its subsidiaries. Subsidiaries

are entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. Assets, liabilities, revenues and expenses of the subsidiaries are recognized in accordance with the Company’s accounting policies. Inter-company transactions and balances are eliminated upon consolidation. Transactions with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-controlling interests are computed and recorded in equity.

These condensed interim Consolidated financial statements have been prepared on a going concern basis in

accordance with International Financial Reporting Standards (IFRS) which contemplates the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Financial assets and liabilities are offset and the net amount is reported on the condensed interim consolidated

balance sheets only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of

certain financial assets and financial liabilities to fair value. These condensed interim Consolidated financial statements and the accompanying notes were authorized for

issuance in accordance with a resolution of the Board of Directors on February 26, 2015. 2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied during the three month period ended December 31, 2014 are the same as those described and disclosed in Note 2 of the March 31, 2014 audited Consolidated financial statements.

3. FINANCIAL INSTRUMENTS

a) Overview The Company’s activities expose it to a variety of financial risks that arise as a result of its operating and

financing activities such as credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company manages its exposure to these risks by operating in a manner that minimizes this exposure.


The Company’s financial instruments as at December 31, 2014 included cash, trust cash, trade receivables, trade payables and accrued liabilities, and long-term debt. The carrying amounts for short term financial assets and liabilities, which includes trade receivables and trade payables and accrued liabilities approximate fair values due to the immediate or short-term maturities of these financial instruments. Cash and trust cash are classified as fair value through profit and loss and therefore are recorded at fair value. Management estimated the fair value of its long-term debt taking into account market rates of interest, the condition of any related collateral and the current conditions in credit markets applicable to the Company based on recent transactions. The estimated fair value of long-term debt approximates its carrying value. For financial instruments measured at fair value, disclosure about the inputs to fair value measurements are required, including their classification within a fair value hierarchy that prioritizes the significance of inputs used in making fair value measurements.

Level 1 Fair Value Measurements quoted prices in active markets for identical assets or liabilities;

Level 2 Fair Value Measurements inputs other than quoted prices included in Level 1 that are observable for the asset or liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and

Level 3 Fair Value Measurements inputs for the asset or liability that are not based upon observable market data. Cash and trust cash is based on Level 1 inputs of the fair value hierarchy.

c) Financial risk management The Company’s financial instruments are exposed to certain financial risks, including credit risk, foreign

currency risk, interest rate risk and liquidity risk. Credit risk The Company is exposed to credit risk resulting from the possibility that counterparties may default on their

financial obligations, or if there is a concentration of transactions carried out with the same counterparty or of financial obligations which have similar economic characteristics such that they could be similarly affected by changes in economic conditions.

The Company’s financial instruments that are exposed to concentrations of credit risk relate primarily to cash,

trust cash and trade receivables from clients and insurance carriers. Cash is in place with major financial institutions. Concentrations of credit risk with respect to client and insurance carrier trade receivables are limited due to the large number of customers and insurance carriers. See Note 13. The Company has evaluation and monitoring processes in place and writes off accounts when they are determined to be uncollectible.

As at December 31, 2014, the Company’s maximum exposure to credit risk is through the following assets: Receivables $ 4,130 Net credit risk $ 4,130 Foreign currency risk

The Company is exposed to the financial risk related to fluctuations of foreign exchange rates. The Company conducts business operations in the United States and has U.S. dollar denominated indebtedness and is therefore exposed to cash flow risks associated with fluctuations in the relative value of the Canadian and U.S. dollar. A significant change in the currency exchange rate of the Canadian dollar relative to the U.S. dollar could have a material effect on the Company’s results of operations, financial position and cash flows. The Company does not engage in hedging activities or use financial instruments to reduce its risk exposure.

At December 31, 2014, the Company is exposed to currency risk through the following assets and liabilities

denominated in U.S. dollars:

Cash $ 8,222 Trade receivables 4,118 Trade payables and accrued liabilities (72,335) Long-term debt (748,265) Net exposure $ (808,259)

Based on the above net exposure at December 31, 2014, and assuming all other variables remain constant, a 10% depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in a decrease or increase of $ 80,825 in the Company’s other comprehensive income (loss).

Interest rate risk All of the Company’s indebtedness bears interest at fixed rates and as a result the Company is not exposed to

significant interest rate risk arising from long-term debt. Liquidity risk

Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its short and long-term obligations as they come due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. The Company manages its liquidity risk through cash and debt management. The Company’s objective in managing liquidity risk is to increase revenues, minimize operational costs and to maintain sufficient liquidity in order to meet these operational requirements at any point in time. The Company’s ability to obtain funding from external sources may be restricted if the Company’s financial performance and condition deteriorate. In addition, credit and capital markets are subject to inherent global risks that may negatively affect the Company’s access and ability to fund its short-term and long-term debt requirements. The Company mitigates these risks by actively monitoring market conditions and diversifying its sources of funding and debt maturity. The Company’s trade payables are generally due within 60 days.

4. DISCONTINUED OPERATIONS On March 3, 2014 the Company sold the property and equipment and customer accounts of its U.S. operations for net sales proceeds of $ 3,204,664 including transaction costs of $ 178,396. The Company realized a loss from discontinued operations of $ 2,804,844.

On May 1, 2014, the Company completed the sale of all of its shares (51%) in the Canadian subsidiary Anthony Clark Insurance Brokers Ltd. held by the Company, to an arm’s length third party for cash consideration of approximately $13,000,000, before repayment of certain senior debt and adjustments. As the transaction contemplated the sale of all or substantially all of the Company’s assets shareholder approval was obtained on April 14, 2014 and TSX Venture Exchange approval on April 22, 2014. The Company paid certain liabilities in the amount of $7,942,971 from the sale proceeds including debt settlement $6,101,475, legal expenses $277,221 and severance and outstanding compensation of $1,564,275. The transaction resulted in a gain on sale of discontinued operations of $12,095,558

The gain (loss) from discontinued operations for the three month period ended December 31, 2014 and 2013 is summarized below:

Canada US Total Canada US Total

Revenue from discontinued operations -$ 42,977$ 42,977$ 2,576,133$ 675,568$ 3,251,701$

Expenses of discontinued operations - (83,239) (83,239) (1,907,919) (827,163) (2,735,082)

Earnings (loss) from discontinued operations - (40,262) (40,262) 668,214 (151,595) 516,619

Gain (loss) on sale of discontinued operations - - - - - -

Gain (loss) from discontinued operations -$ (40,262)$ (40,262)$ 668,214$ (151,595)$ 516,619$

Three month period ended December 31, 2014 Three month period ended December 31, 2013

The gain (loss) from discontinued operations for the nine month period ended December 31, 2014 and 2013 is summarized below:


Revenue from discontinued operations 455,290$ 144,460$ 599,750$ 7,943,628$ 2,012,541$ 9,956,169$

Expenses of discontinued operations (425,162) (155,479) (580,641) (5,727,847) (2,330,191) (8,058,038)

Earnings (loss) from discontinued operations 30,128 (11,019) 19,109 2,215,781 (317,650) 1,898,131

Gain (loss) on sale of discontinued operations 12,065,430 - 12,065,430 - - -

Gain (loss) from discontinued operations 12,095,558$ (11,019)$ 12,084,539$ 2,215,781$ (317,650)$ 1,898,131$

Nine month period ended December 31, 2014 Nine month period ended December 31, 2013

5. INTEREST AND FINANCING COSTS

Three months ending

December 31, 2014

Three months ending

December 31, 2013

Nine months ending

December 31, 2014

Nine months ending

December 31, 2013

Canadian operations

Interest on long-term debt -$ 102,640$ 34,129$ 314,183$

Amortization of deferred financing costs and loan discount - 2,987 50,281 8,961

- 105,627 84,410 323,144

U.S. operations

Interest on long-term debt 12,362$ -$ 36,397$ -$

12,362 - 36,397 -

12,362$ 105,627$ 120,807$ 323,144$

6. LONG-TERM DEBT

December 31, 2014 March 31, 2014

Senior notes – 4.5% – 6.75%, due between June 2018 and January 2019 (a) $ - $ 6,067,345

U.S. Note payable – 6.75% interest only, due February 2017 (b) 748,265 712,919

748,265 6,780,264

Deferred financing costs - (154,039)

Accumulated amortization - 103,759

- (50,280)

748,265 6,729,984

Less: Current portion - (561,327)

$ 748,265 $ 6,168,657

a) The Senior notes are secured by the Canadian assets only with a guarantee provided by the Company. The Company is also subject to certain covenants on an ongoing basis, with failure to maintain compliance

resulting in the loans becoming due on demand. The Company is in compliance with the covenants.

b) The U.S. denominated debt is guaranteed by the Company.

c) The Company is obligated to make the following principal payments in each of the next six fiscal years: 2014 $ - 2015 - 2016 - 2017 748,265 2018 - 2019 - $ 748,265

7. SHARE CAPITAL

a) Authorized Unlimited common shares without par value Unlimited class B voting preferred shares without par value Unlimited class C non-voting preferred shares without par value Issued

All common shares issued are fully paid, carry one vote per share and carry a right to dividends.

b) Normal Course Issuer Bid The Company receives regulatory approval from the TSX Venture Exchange (the “Exchange”) to make a

normal course issuer bid. Pursuant to the bid, the Company could purchase up to 10% of its common shares issued and outstanding at the time of the bid.

2014 - The bid commenced May 20, 2013 and terminated on May 19, 2014 and pursuant to the bid, the

Company had approval to purchase up to 969,168 of its common shares. The Company had repurchased 37,500 common shares under the bid.

2013 - The bid commenced May 19, 2012 and terminated on May 18, 2013 and pursuant to the bid, the

Company had approval to purchase up to 1,022,447 of its common shares. The Company repurchased 220,000 common shares under the bid.

8. NON-CONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY

On June 10, 2008, April 23, 2009 and July 14, 2010, the Company closed equity financings under which a non-controlling interest, totaling 49% of a consolidated subsidiary of the Company which operates the Canadian operations, was sold. Under IFRS, transactions with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-controlling interests are computed and recorded in equity. Within the unanimous shareholder agreement, there is a contingent put option with the non-controlling shareholder. Distributions from the Canadian operations to the parent and non-controlling shareholder are paid as and when approved by the Board of Directors of the Canadian subsidiary. The distributions are based on a formula in the unanimous shareholder agreement.

The non-controlling shareholder is the lender on the Senior notes. The balance of the non-controlling interest was eliminated upon the sale of the Canadian subsidiary

9. SHARE-BASED COMPENSATION The Company has an incentive share option plan, which provides for the award of share options to directors,

officers, employees and consultants. A maximum of 1,601,395 common shares remain reserved under the plan. The terms and exercise prices of all share option awards are determined by the directors at the time of issue.

Changes in share options during the nine month periods ended December 31, 2014 and the year ended March 31,

2014 are as follows:

December 31, 2014

March 31, 2014

Number of

Options

Weighted average exercise

price

Number of

Options

Weighted average exercise

price

Beginning of period - $ -

450,000 $ 0.36

Expired - -

(450,000) (0.36)

End of period - $ - - $ -

10. RELATED PARTY TRANSACTIONS The Company enters into transactions with related parties from time to time in the normal course of business, as

well as key management personnel. During the six month period ended December 31, 2014, the Company incurred $ nil (2013- $ nil) of consulting fees

charged by a director. 11. SUPPLEMENTAL CASH FLOW INFORMATION During the nine month periods ending December 31, 2014 and 2013, the Company had non-cash transactions as

follows:

December, 2014 December, 2013

Additional Information:

Interest paid $ - $ 316,173

Income taxes paid $ - $ -

12. CONTINGENCIES

The Company may, from time to time, be involved in various claims, lawsuits, disputes with third parties, actions involving allegations of discrimination, or breach of contract incidental to the operations of its business. The Company is not currently involved in any such incidental litigation which it believes could have a materially adverse effect on its financial condition or results of operations.

13. SUBSEQUENT EVENT

On October 31, 2014, the Company executed a non-binding letter of intent (“LOI”) with Fulucai Productions Ltd. (FCPS:OTC US), pursuant to which Fulucai had agreed to sell to the Corporation, on an arm’s length basis, a 5% interest in a Technical Assistance Contract for a block referred to as “Langsa TAC” located offshore, North Sumatra in exchange for shares of the Corporation. The purchase price would have been negotiated based on information provided in an Independent Reserves Evaluation to be prepared in accordance with the Standards of Disclosure for Oil and Gas Activities National Instrument 51-101 report. The reserve report was received in January 2015.

The Proposed Transaction was intended to constitute a reactivation transaction of the Corporation to enable it to list on the TSX Venture Exchange. It was anticipated that the Proposed Transaction will constitute a Change of Business and/or a Reverse Takeover under the policies of the Exchange. It was anticipated that upon completion of the Proposed Transaction, the current board of directors and the officers of the Corporation would resign and new officers and a board would be appointed. The new board would have comprised of at least four members with such directors being the nominees of Fulucai, subject to the policies of the Exchange and securities laws. The Corporation terminated the LOI with Fulucai on February 15, 2015.

On January 26, 2015, the Corporation entered into another letter of intent with Blue Sky International Holdings, Inc. with regard to an acquisition of additional interests in the Langsa TAC.

Under the terms of the LOI, the Corporation will acquire 100% of the issued and outstanding shares of Blue Sky Langsa Ltd. (“BSL”), effective January 1, 2015, from Blue Sky International Holdings. The BSL shares will be acquired through the issuance of shares of the Corporation at a price based upon the valuation of the additional Langsa TAC interests as determined in the final independent reserves evaluation report being prepared by McDaniel & Associates Consultants Ltd., as previously announced.

BSL was incorporated in Mauritius in March 2003 and is the operator approved by Pertamina, the Indonesian state-owned oil and natural gas corporation, under the Langsa TAC. BSL’s assets include ownership of a 47% interest in oil and gas properties, equipment located in Balawan, Sumatra and historic sunk costs on the Langsa TAC of approximately US $29.61 million. The Blue Sky International Holdings, Inc. LOI recognizes that the Corporation had entered into the LOI with Fulucai and that it might be in the best interests of all parties for the Fulucai Interest to be acquired by BSL (rather than by the Corporation) prior to completion of the transaction. If BSL does acquire the Fulucai Interest, the Corporation and Blue Sky International Holdings, Inc. will sign and deliver such further documents as may be required. The Corporation has agreed to pay a refundable deposit of $100,000 as a good faith gesture to be credited towards the final purchase price. If the Transaction does not close for any reason, the deposit will be fully refunded to the Corporation.

http://en.wikipedia.org/wiki/State-owned

http://en.wikipedia.org/wiki/Oil

http://en.wikipedia.org/wiki/Natural_gas

B-1

APPENDIX “B”

ACL INTERNATIONAL LTD. MD&A

(attached)




MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED

MARCH 31, 2014

June 26, 2014


FORWARD LOOKING STATEMENTS

Certain of the statements in this MD&A about the Company’s current and future plans, expectations and intentions, results, levels of

activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The

words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”,

“believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other similar or

comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and

perception of historical trends, current conditions and expected future developments, as well as other factors that management believes

are appropriate in the circumstances. Many factors could cause the Company’s actual results, performance or achievements or future

events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without

limitation, the following factors: the Company’s ability to implement its strategy or operate its business as management currently

expects; unfavorable capital market developments or other factors which may affect the Company’s capital and debt obligations;

government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense

competition; the Company’s reliance on information technology and telecommunications systems; the Company’s dependence on key

employees; general economic, financial and political conditions; the Company’s dependence on the results of operations of its

subsidiaries; the volatility of the stock market and other factors affecting the Company’s share price.

All of the forward-looking statements included in this MD&A are qualified by these cautionary statements for the year ended March

31, 2014. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these

factors should be considered carefully, and readers should not place undue reliance on forward-looking statements made herein. The

Company and management have no intention and undertake no obligation to update or revise any forward-looking statements, whether

as a result of new information, future events or otherwise, except as required by law.

This MD&A should be read in conjunction with the audited consolidated financial statements for the year ended March 31, 2014. The

audited consolidated financial statements for the year ended March 31, 2014 are prepared in accordance with IFRS. These filings are

available at www.sedar.com.

All amounts are in Canadian Dollars unless otherwise indicated.

OVERVIEW

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.) (the “Company”) primary business activity

involved the operation of general insurance brokerages in Canada and the United States. Shares of the Company traded on the TSX

Venture Exchange under the symbol “ACL”. The Company voluntarily delisted from the OTCQX due to low trading volume. The last

day of trading on the OTCQX was December 31, 2013. The Company, founded in 1989, expanded through internal growth and

acquisitions. The Company operated in two economic environments and revenues were attributed to geographic areas based on the

location of resources producing the revenues.

On May 1, 2014 the Company completed the sale of all of its shares (51%) in the Canadian subsidiary Anthony Clark Insurance

Brokers Ltd. held by the Company, to an arm’s length third party for cash consideration of approximately $13,000,000, before

repayment of certain senior debt and adjustments. As the transaction contemplated the sale of all or substantially all of the Company’s

assets shareholder approval was obtained on April 14, 2014 and TSX Venture Exchange approval on April 22, 2014. The Company

paid certain liabilities in the amount of $7,942,971 from the sale proceeds including debt settlement $6,101,475, legal expenses

$277,221 and severance and outstanding compensation of $1,564,275.

Subsequent to obtaining TSX Venture Exchange approval on April 29, 2014, the Company changed its name to ACL International Ltd.

effective May 1, 2014 and transferred its common shares listing to the NEX Board of the TSX Venture Exchange effective May 2,

2014.

On May 26, 2014, the Board of Directors of the Company declared a capital distribution to the shareholders and set the record date for

the distribution at June 9, 2014. The Company made an initial distribution of $0.28 per common share to its shareholders on June 18,

2014.

The following table presents unaudited proforma balance sheet as at March 31, 2014 as if the sale by the Company of all of the shares

held by it in its Canadian subsidiary Anthony Clark Insurance Brokers Ltd. had occurred as at March 31, 2014. The unaudited proforma

information is not necessarily indicative of the combined results that would have occurred had the sale of the shares held in the

Canadian subsidiary and settlement of the Senior note taken place at the beginning of the year presented, nor is it necessarily indicative

of results that may occur in the future.

As at

March 31, 2014

Current assets $ 5,467,124

Total Assets $ 5,467,124

Current Liabilities $ 464,426

Long-term debt 712,919

Shareholders’ Equity 4,289,779

Total Liabilities and Shareholders’ Equity $ 5,467,124

DISCONTINUED OPERATIONS

On March 3, 2014 the Company sold the property and equipment and customer accounts of its U.S. operations for net sales proceeds of

$ 3,204,664 including transaction costs of $ 178,396. The Company realized a loss from discontinued operations of $ 2,804,844. In

conjunction with the sale of the U.S. operations, the net proceeds of the sale transaction were used to pay down the U.S. notes payable

in the amount of $3,305,416 (US$2,980,000) on March 3, 2014.

U.S. operations



Goodwill 5,073,931

Total non-current assets $ 5,124,094

On May 8, 2012, the Company sold the property and equipment, customer accounts and accounts receivables of its Northern California

operations for net sales proceeds of $ 869,272 including transaction costs of $ 208,848. The Company realized a gain from

discontinued operations of $ 167,973.

Northern California operations


Accounts receivable $ 255,156

Total current assets $ 255,156


Customer accounts 248,264

Total non-current assets $ 270,181

Total Assets $ 525,337

The gain (loss) from discontinued operations for the years ended March 31, 2014 and 2013 is summarized below:

Virginia

Agency

Northern

California

Agency Total

Virginia

Agency

Northern

California

Agency Total

Revenue from discontinued operations 2,672,608$ 2,662$ 2,675,270$ 3,160,830$ 131,825$ 3,292,655$

Expenses of discontinued operations (5,036,350) (1,834) (5,038,184) (3,152,784) (322,842) (3,475,626)

Earnings (loss) from discontinued operations (2,363,742) 828 (2,362,914) 8,046 (191,017) (182,971)

Gain (loss) on sale of discontinued operations (441,930) - (441,930) - 358,990 358,990

Gain (loss) from discontinued operations (2,805,672)$ 828$ (2,804,844)$ 8,046$ 167,973$ 176,019$

Year ended March 31, 2013Year ended March 31, 2014

2014 OPERATIONAL HIGHLIGHTS

EBITDA for the year ended March 31, 2014 - $3,444,122 compared to $3,439,355

Earnings per share for the year ended March 31, 2014 – $(0.29) per share compared to $0.01 per share

SELECTED ANNUAL INFORMATION

Years ended March 31, 2014 2013 2012

Revenue $ 10,294,961 $ 9,886,810 $ 10,726,276

Net earnings (loss) (1,742,091) 1,163,020 911,296

Total assets 11,155,724 17,755,481 19,594,605

Total long-term liabilities 12,695,647 16,649,185 16,739,426

Shareholder’s equity (6,327,895) (3,557,564) (3,621,125)

Earnings (loss) per share – basic and

fully diluted (0.29) 0.01 (0.04)

The Company’s total assets have decreased as at March 31, 2014 compared to March 31, 2013 primarily due to the sale of the Virginia

agency and decrease in customer accounts due to amortization. The Company’s long-term liabilities have decreased as at March 31,

2014 compared to March 31, 2013 primarily due to paying down the US notes payable with the net proceeds of the Virginia sale and

the current year principal repayments. Revenue increased primarily due to growth in the Canadian operations, partially offset by

reduced contingent growth incentive income in Canada.

The Company’s total assets have decreased as at March 31, 2013 compared to March 31, 2012 primarily due to the sale of the Northern

California agency and decrease in customer accounts due to amortization. The Company’s long-term liabilities have decreased as at

March 31, 2013 compared to March 31, 2012 primarily due to current year principal repayments significantly offset by the

reclassification of the U.S. $1.2 million note payable from current to long-term. Revenue decreased primarily due to reduced contingent

growth incentive income in Canada.

The net earnings (loss) for the year ended March 31, 2014 of $(1,742,091) included $3,512,002 of net non-cash expenses consisting of

amortization of deferred financing costs, deferred income taxes recovery, depreciation and amortization and loss from discontinued

operations of $2,804,844.

The net earnings for the year ended March 31, 2013 of $1,163,020 included $578,845 of net non-cash expenses consisting of

amortization of deferred financing costs, deferred income taxes recovery, depreciation and amortization and a gain from discontinued

operations of $176,019.

The net earnings for the year ended March 31, 2012 of $911,296 included $1,348,411 of net non-cash expenses consisting of

amortization of deferred financing costs, deferred income taxes recovery, depreciation and amortization, share-based compensation,

interest and penalty on U.S. note payable converted to long term debt and a gain from discontinued operations of $615,088.

RESULTS OF OPERATIONS

The insurance industry continues to experience a stable market with increases in certain segments. The premiums are increasing in

certain business lines as the industry is affected by continued pressure on underwriting margins, low investment yields and thus low

return on capital and catastrophic losses. We have noticed some premium increases in property insurance, but commercial insurance

premiums are stable. In Alberta, we expect a rate increase of 10% in personal property insurance. The Company continues to review

and change its marketing strategies in line with the current purchasing trends and focusing its marketing program on the Internet;

buying Internet leads, using Search Engine Marketing (SEM) and Search Engine Optimization (SEO) campaigns. Economic recovery,

aided by monetary and fiscal stimulus, has yet to show any significant impact on the economy and jobs in the Tidewater area of

Virginia. The private label program in Virginia continues to perform to expectation. Management continues to monitor and make

changes to the Program as necessary. Management continually monitors the effects of changes in the insurance market and economy on

the business and prudently makes adjustments to its strategies and costs to address those changes and remain competitive in the market

place.

For the year ending March 31, 2014

Revenue

The Company’s revenue increased to $10,294,961 for the year ending March 31, 2014 from $9,886,810 for the year ending March 31,

2013, an increase of 4.1%, primarily due to increased revenue from organic growth in Canada, partially offset by decreased growth

incentive income in Canada. The insurance industry continues to experience a stable market with increases in certain segments. The

premiums are expected to increase in certain business lines as the industry is affected by continued pressure on underwriting margins,

low investment yields and thus low return on capital and catastrophic losses. As the Company’s revenue is commissions determined as

a percentage of premiums, an increase in premiums will result in higher revenue. Management believes that the impact of the economic

downturn on revenues has stabilized and we should see this continuing during the current fiscal year.

The Company’s revenue decreased to $9,886,810 for the year ended March 31, 2013 from $10,726,276 for the year ended March 31,

2012, a decrease of 7.82%, primarily due to reduced contingent growth incentive income in Canada partially offset by revenue from

organic growth in Canada. While property and casualty insurance rates remained soft, we expect premiums to increase as the insurers

experience high claim costs and reduced investment income. As the Company’s revenue is commissions determined as a percentage of

premiums, an increase in premiums will result in higher revenue. Management believes that the impact of the economic downturn on

revenues has stabilized and we should see this continuing during the current fiscal year.

Expenses

Salaries and wages increased to $4,996,935 for the year ending March 31, 2014 from $4,757,212 for the year ending March 31, 2013,

an increase of 5%, primarily related to increased costs in the Canada operations related to organic growth in revenue, partially offset by

no management bonus for the year ended March 31, 2014. The Company continuously monitors and proactively aligns its employee

levels with premium volumes and economic conditions.

Salaries and wages decreased to $4,757,212 for the year ended March 31, 2013 from $4,840,022 for the comparative year ended March

31, 2012, a decrease of 1.7%, primarily related to decreased management bonus partially offset by increased costs in Canada. The

Company continuously monitors and proactively aligns its employee levels with premium volumes and economic conditions.

General and administrative increased to $1,607,215 for the year ending March 31, 2014 from $1,473,698 for the year ending March 31,

2013, an increase of 9%, primarily due to increased legal fees related to the sale of all or substantially all the assets.

General and administrative decreased to $1,473,698 for the year ended March 31, 2013 from $1,524,052 for the comparative year

ended March 31, 2012, a decrease of 3.3%, primarily due to reduced professional fees and decreased costs resulting from combining

the Calgary locations into one new location in December 2011.

Rent expense increased to $246,689 for the year ending March 31, 2014 from $216,545 for the year ending March 31, 2013, an

increase of 14%, primarily due to rent incentives for the Calgary location in the prior period.

Rent expense decreased to $216,545 for the year ended March 31, 2013 from $334,636 for the comparative year ended March 31,

2012, a decrease of 35%, primarily due to combining the Calgary locations into one new location in December 2011.

EARNINGS FROM OPERATIONS BEFORE INTEREST, INCOME TAXES AND DEPRECIATION AND

AMORTIZATION (EBITDA)

The Company’s EBITDA increased to $3,444,122 for the year ended March 31, 2014 from $3,439,355 for the year ended March 31,

2013. EBITDA as a percentage of revenue has decreased to 33.4% for the year ended March 31, 2014 from 34.8% for the year ended

March 31, 2013. The net decrease resulted primarily from net increased revenue from organic growth in Canada, partially offset by

reduced growth incentive income in Canada, increased legal fees related to the sale of all or substantially all the assets, and increased

salaries and wages related to the organic growth, and no management bonus in the 2014 year end. Management has been focused on

increasing revenue levels by improving customer loyalty leading to longer retention and increased customer referrals, internet

marketing and lead generation. The Company’s cost base has been significantly reduced so that any increases in revenues will result in

higher EBITDA.

The Company’s EBITDA decreased to $3,439,355 for the year ended March 31, 2013 from $4,018,712 for the year ended March 31,

2012, a decrease of 14.4%. EBITDA as a percentage of revenue has decreased to 34.8% for the year ending March 31, 2013 from

37.5% for the year ending March 31, 2012. The decrease resulted primarily from the net effect of reduced contingent growth incentive

income in Canada partially offset by increased revenue due to organic growth in Canada and reduced management bonus and

professional fees. Management has been focused on increasing revenue levels by improving customer loyalty leading to longer

retention and increased customer referrals, internet marketing and lead generation. The Company’s cost base has been significantly

reduced so that any increases in revenues will result in higher EBITDA.

The net earnings (loss) for the year ended March 31, 2014 of ($1,742,091) included $3,512,002 of net non-cash expenses consisting of

amortization of deferred financing costs, deferred income taxes recovery, impairment of goodwill and depreciation and amortization

and loss from discontinued operations of $2,804,844.

The net earnings for the year ended March 31, 2013 of $1,163,020 included $578,845 of net non-cash expenses consisting of

amortization of deferred financing costs, deferred income taxes recovery, depreciation and amortization and a gain from discontinued

operations of $176,019.

EBITDA is discussed and presented here as a non-IFRS measure because it is management’s major performance indicator. EBITDA is

reconciled to Net earnings below.

Reconciliation of EBITDA to Net earnings

Year ending March 31, 2014 2013

Revenue $ 10,294,961 $ 9,886,810

Earnings before the following (EBITDA) 3,444,122 3,439,355

Interest and financing costs (863,676) (885,215)

Depreciation and amortization (711,078) (748,686)

Income tax expense (806,615) (818,453)

Net earnings (loss) from continuing operations 1,062,753 987,001

Gain (loss) from discontinued operations (2,804,844) 176,019

Net earnings (loss) for the year $ (1,742,091) $ 1,163,020

Non-Controlling Interest in Consolidated Subsidiary

On June 10, 2008, April 23, 2009 and July 14, 2010, the Company closed equity financings under which a non-controlling interest,

totaling 49% of a consolidated subsidiary of the Company which operates the Canadian operations, was sold. Under IFRS, transactions

with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-

controlling interests are computed and recorded in equity.

Within the unanimous shareholder agreement, there is a contingent put option with the non-controlling shareholder.

Distributions from the Canadian operations to the parent and non-controlling shareholder are paid as and when approved by the Board

of Directors of the Canadian subsidiary. The distributions are based on a formula in the unanimous shareholder agreement.

The non-controlling shareholder is the lender on the Senior notes.

Interest and Financing Costs

Depreciation and Amortization

Depreciation and amortization decreased to $711,078 for the year ended March 31, 2014 from $748,686 for the year ended March 31,

2013, primarily due to certain customer accounts in Canada being fully amortized.

Depreciation and amortization decreased to $748,686 for the year ended March 31, 2013 from $914,947 for the year ended March 31,

2012, primarily due to certain customer accounts in Canada being fully amortized.

Year ended March 31, 2014 2013

Interest on long-term debt 845,449 $ 869,169 $

Amortization of deferred financing costs and loan discount 12,865 12,865

Interest on obligations under capital lease 5,362 3,181

863,676 $ 885,215 $

Impairment test of goodwill

The Company performed its annual test for goodwill impairment as at March 31, 2014. The test results indicate that the recoverable amount of the Canada CGU exceeded its carrying value and no impairment loss for goodwill has been recognized for the year ended March 31, 2014.

Carrying amount of goodwill at

Cash Generating Unit March 31, 2014 March 31, 2013

Canada 7,317,360$ 7,317,360$

US - 5,073,931

Total Goodwill 7,317,360$ 12,391,291$

The U.S. CGU was assessed for impairment because of market indicators in the third quarter. The Company concluded that the

carrying value of the CGU exceeded the recoverable amount. As a result, the Company determined there was an impairment loss for

goodwill. The Company recorded a total goodwill impairment charge of $2,122,939 which was recognized in the third quarter ended

December 31, 2013. The valuation techniques, significant assumptions and sensitivities applied in the goodwill impairment test are described below. The selection and application of valuation techniques and the determination of significant assumptions requires judgment. Valuation technique The recoverable amount of the CGU was based on the fair value less cost to sell using a market approach. The market approach assumes that companies operating in the same industry will share similar characteristics and that company values will correlate to those characteristics. Therefore, a comparison of a CGU to similar companies whose financial information is publicly available may provide a reasonable basis to estimate the fair value. Under the market approach, fair value is calculated based on EBITDA multiples of benchmark companies comparable to the business in the CGU. The EBITDA multiples were also compared to internally calculated WACC. The WACC is an estimate of the overall required rate of return on an investment for both debt and equity owners and serves as the basis for developing an appropriate discount rate. Determination of the WACC requires separate analysis of the cost of equity and debt, and considers a risk premium based on an assessment of risks related to the projected cash flows of the unit. Assumptions The WACC used by the Company for testing ranged from 8% to 11% (March 31, 2013 - 8% to 19%). Normalized EBITDA was based on past performance and management expectations for the Company. The key assumptions described may change as economic and market conditions change. The fair value for the CGU was in excess of its carrying value. The Company is not aware of any reasonably possible change in any of the above key assumptions that would cause the carrying value of the Canada CGU to exceed its recoverable amount.

SUMMARY QUARTERLY INFORMATION

The following table summarizes the Company’s key consolidated financial information for the last eight quarters.

EBITDA is defined as Earnings before interest, income taxes, and depreciation and amortization.

EBITDA is discussed and presented here as a non-IFRS measure because it is management’s major performance indicator.

EBITDA is reconciled to Net earnings above.

The Revenue and EBITDA exclude the results of the discontinued operations.

EPS-Basic

Revenue EBITDA Net earnings and Diluted

Quarter ended ($) ($) ($) ($/share)

March 31, 2014 2,351,039 351,434 (555,913) (0.07)

December 31, 2013 2,576,245 966,123 (1,893,282) (0.22)

September 30, 2013 2,585,022 945,619 386,357 -

June 30, 2013 2,782,655 1,180,946 320,747 -

March 31, 2013 2,447,316 660,895 202,735 -

December 31, 2012 2,390,384 841,098 133,353 (0.01)

September 30, 2012 2,416,559 877,146 229,377 -

June 30, 2012 2,632,551 1,060,216 597,555 0.02

In the quarter ended December 31, 2013, the U.S.- Virginia CGU was assessed for impairment because of market indicators. The

Company concluded that the carrying value of the CGU exceeded the recoverable amount. As a result, the Company determined there

was an impairment loss for goodwill. The Company recorded a total goodwill impairment charge of $2,122,939 which was recognized

in the third quarter ended December 31, 2013 impacting the net earnings.

Fourth quarter 2014 results

Revenue decreased for the quarter ending March 31, 2014 compared to the quarter ending March 31, 2013 primarily due to reduced

contingent growth incentive income in Canada. EBITDA decreased for the quarter ending March 31, 2014 compared to the quarter

ending March 31, 2013 primarily due to reduced contingent growth incentive income in Canada and increased legal fees related to the

sale of all or substantially all the assets transaction, partially offset by no management bonus in the 2014 year end.

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

Comparing March 31, 2014 and March 31, 2013:

Working capital decreased $1,532,057.

Customer accounts decreased $276,029 due to amortization, partially offset by the acquisition of customer accounts in

Canada.

Goodwill decreased $5,073,931 mainly due to the impairment of goodwill in the Virginia operations and sale of the Virginia

operations, partially offset by the effect of the increase in the exchange rate.

Long-term debt decreased $3,880,688 primarily due to the principal repayments on the Canadian loans and payments on the

U.S. note payable, including the use of the sale proceeds from the sale of the Virginia operations to pay down the U.S. note

payable, partially offset by additional senior debt for acquisition of customer accounts in Canada and the effect of the increase

in the exchange rate.

Equity attributable to owners of the Company decreased by $2,770,331 primarily due to:

o net loss of $2,832,392;

o decrease in share capital of $(88,272) related to issuer bid purchases;

o increase in accumulated other comprehensive income of $ 72,363, and

o increase in contributed surplus of $77,970 related to issuer bid purchases.

FINANCIAL RESOURCES AND LIQUIDITY

As at March 31, 2014, the Company has a working capital deficiency of $1,592,657. The Company required capital in order to fund its

operations including debt service requirements. To address its capital requirements, the Company initiated a process to explore and

evaluate potential strategic alternatives with a view to enhancing shareholder value. Completion of a suitable transaction would be

subject to a number of conditions including potentially shareholder and regulatory approval. The Company’s ability to successfully

complete a transaction indicated the existence of a material uncertainty that may cast significant doubt about the Company’s ability to

continue as a going concern.


Brokers Ltd. held by the Company to an arm’s length third party for cash consideration of approximately $13,000,000, before







2014.



2014.

Canadian Debt

The Company had a principal repayment holiday on one Senior note ($6,067,347) totaling $182,927 from December 1, 2013 to March 1, 2014. The Senior notes are secured by the Canadian assets only with a guarantee provided by the Company. The Company is also subject to certain covenants on an ongoing basis, with failure to maintain compliance resulting in the loans becoming due on demand. The Company is in compliance with the covenants.

On August 1, 2013, the Company acquired customer accounts from an independent insurance broker in Calgary, Alberta for $176,707

which was funded through an expansion of the Company’s existing acquisition facility (Senior note).

U.S. Debt

On March 18, 2013, the Company and the U.S. lender agreed to the terms for restructuring the U.S. $1,200,000 note payable whereby

the existing note was cancelled and restructured for cash and a new note. Under the new promissory note, the Company made three

principal payments of U.S. $25,000; on April 15, 2013, September 1, 2013 and January 2, 2014 . In addition, the Company paid a U.S.

$25,000 fee to the lender related to this restructuring. In conjunction with the sale of the Virginia agency, the net proceeds of the sale

transaction were used to pay down the U.S. notes payable in the amount of $3,305,416 (US$2,980,000) on March 3, 2014. Interest only

payments at 6.75% per annum continue on the unpaid balance until maturity of the loan.


Contingencies

The Company may, from time to time, be involved in various claims, lawsuits, disputes with third parties, actions involving allegations

of discrimination, or breach of contract incidental to the operations of its business. The Company is not currently involved in any such

incidental litigation which it believes could have a materially adverse effect on its financial condition or results of operations.

As part of the unanimous shareholder agreement with the non-controlling interest, there is a contingent put option which if exercised

will require the Company to purchase the non-controlling interest. The contingent put option can only be exercised, within 60 days

written notice, if:

There is an arm’s length third party offer to purchase the consolidated subsidiary and the non-controlling shareholder wishes

to accept, but the Company does not, then the non-controlling shareholder can exercise the put option for the price set out in

the offer, or

There is a change of control in the consolidated subsidiary or the Company, the non-controlling shareholder can exercise the

put option for the higher of fair value formula in the unanimous shareholder agreement or the price set out in the change of

control transaction.

There is uncertainty as to the occurrence, timing and amount of the cash outflow since the put option is contingent on a third party offer

or purchase.

Commitments

The Company leases office premises under operating leases that expire at various dates during the 2015 through 2019

fiscal years. In addition, the Company has current obligations under certain advertising contracts.

The following table sets forth the Company’s future contractual and long-term obligations as at March 31, 2014:

Total Less than 1 Year 1 – 3 Years 3 – 5 Years

More than 5

years

Contractual Obligations

Operating Lease Obligations $ 1,183,225 $ 374,693 $ 455,720 $ 352,812 -

Long-Term Debt

Senior notes $ 13,175,867 $ 1,292,867 $ 2,825,418 $ 8,970,554 $ 87,028

U.S. Notes payable 712,919 - 712,919 - -

Obligations under capital leases 32,513 18,086

14,427 - -

SHARE CAPITAL

Authorized

Unlimited common shares without par value Unlimited class B voting preferred shares without par value Unlimited class C non-voting preferred shares without par value

Issued

All common shares issued are fully paid, carry one vote per share and carry a right to dividends

Changes in share capital during the year ended March 31, 2014 and March 31, 2013 are as follows:

Shares Amount

Balance, April 1, 2012 9,913,184 $ 9,777,222

Charge to capital on repurchase of shares through issuer bid (218,500) (215,503)

Balance, March 31, 2013 9,694,684 9,561,719


Balance, March 31, 2014 9,605,184 9,473,447$

Normal Course Issuer Bid The Company receives regulatory approval from the TSX Venture Exchange (the “Exchange”) to make a normal course issuer bid. Pursuant to the bid, the Company could purchase up to 10% of its common shares issued and outstanding at the time of the bid.

- 2014 - The bid commenced May 20, 2013 and will terminate on May 19, 2014 and pursuant to the bid, the Company has

approval to purchase up to 969,168 of its common shares. The Company has repurchased 85,000 common shares under the bid.

- 2013 - The bid commenced May 19, 2012 and terminated on May 18, 2013 and pursuant to the bid, the Company had approval to

purchase up to 1,022,447 of its common shares. The Company repurchased 220,000 common shares under the bid.

SHARE-BASED COMPENSATION

The Company has an incentive share option plan, which provides for the award of share options to directors, officers, employees and

consultants. A maximum 1,601,395 common shares remain reserved under the plan. The terms and exercise prices of all share option

awards are determined by the directors at the time of issue.

Changes in share options during the year ended March 31, 2014 and 2013 are as follows:

2014 2013

Number of Options Weighted average

exercise price Number of Options Weighted average

exercise price

Beginning of year 450,000 $ 0.36 450,000 $ 0.36

Expired (450,000) (0.36) - -

End of year - - 450,000 $ 0.36

The outstanding options expired unexercised on April 1, 2013.

RELATED PARTY TRANSACTIONS

The Company enters into transactions with related parties from time to time in the normal course of business, as well as key management personnel. During the year ended March 31, 2014, the Company incurred $nil (2013- $ 2,365) of consulting fees charged by a director.

Compensation of key management personnel

Key management personnel are comprised of all members of the Board of Directors and the Named Officers (as defined in Form 51-102F6 Statement of Executive compensation and disclosed in the Company’s Management Proxy Circular in connection with its annual meeting of shareholders). The summary of compensation of key management personnel for the year is as follows:

For the years ended March 31, 2014 2013 Salary and bonuses $ 426,153 $ 506,153 Short-term employee benefits 15,769 15,132 Total compensation of key management personnel $ 441,922 $ 521,285

CAPITAL RISK MANAGEMENT

The Company considers the capital it manages to be the amounts it has in cash, debt (long-term and short-term borrowings) and

equity attributable to owners of the Company.

The Company’s objectives when managing capital are to:

− safeguard the Company’s ability to continue as a going concern

− ensure sufficient liquidity to support its financial obligations and execute its operating and strategic plans

− optimize the cost of its capital at an acceptable level in light of current and future industry, market and economic risks and

conditions

− utilize the long-term funding sources to manage its working capital and restructure debt to minimize the cost of its capital

− acquire assets and dispose of non-performing assets

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk

characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new

shares, repurchase shares, issue debt, acquire or dispose of assets. The Company requires capital to repay existing obligations.

There can be no certainty of the Company’s ability to refinance its existing obligations. In order to facilitate the management of

the Company’s capital, the Company prepares annual cash flow forecasts that are updated as necessary depending on various

factors and general industry conditions. There were no changes in the Company’s approach to capital management.

The declaration and payment of dividends and the amount thereof are at the discretion of the Board. In order to maintain and

maximize growth, maintain sufficient liquidity to support its financial obligations and optimize the cost of capital, the Company

currently does not pay out dividends.

The Company is also subject to certain working capital covenants on an ongoing basis, which compliance with these covenants

has the effect of restricting the availability of cash from the Canadian operations to the other operations of the Company.

FINANCIAL INSTRUMENTS

a) Overview

The Company’s activities expose it to a variety of financial risks that arise as a result of its operating and financing activities

such as credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company manages its exposure to these

risks by operating in a manner that minimizes this exposure.

b) Fair value of financial instruments The Company’s financial instruments as at March 31, 2014 included cash, trust cash, trade receivables, trade payables and

accrued liabilities, and long-term debt. The carrying amounts for short term financial assets and liabilities, which includes

trade receivables and trade payables and accrued liabilities approximate fair values due to the immediate or short-term

maturities of these financial instruments. Cash and trust cash are classified as fair value through profit and loss and therefore

are recorded at fair value.

Management estimated the fair value of its long-term debt taking into account market rates of interest, the condition of any

related collateral and the current conditions in credit markets applicable to the Company based on recent transactions. The

estimated fair value of long-term debt approximates its carrying value.

For financial instruments measured at fair value, disclosure about the inputs to fair value measurements are required,

including their classification within a fair value hierarchy that prioritizes the significance of inputs used in making fair value

measurements.


Level 2 Fair Value Measurements inputs other than quoted prices included in Level 1 that are observable for the asset or

liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and

Level 3 Fair Value Measurements inputs for the asset or liability that are not based upon observable market data.

Cash and trust cash is based on Level 1 inputs of the fair value hierarchy.

c) Financial risk management

The Company’s financial instruments are exposed to certain financial risks, including credit risk, foreign currency risk,

interest rate risk and liquidity risk.

Credit risk

The Company is exposed to credit risk resulting from the possibility that counterparties may default on their financial

obligations, or if there is a concentration of transactions carried out with the same counterparty or of financial obligations

which have similar economic characteristics such that they could be similarly affected by changes in economic conditions.

The Company’s financial instruments that are exposed to concentrations of credit risk relate primarily to cash, trust cash

and trade receivables from clients and insurance carriers. Cash is in place with major financial institutions. Concentrations

of credit risk with respect to client and insurance carrier trade receivables are limited due to the large number of customers

and insurance carriers. The Company has evaluation and monitoring processes in place and writes off accounts when they

are determined to be uncollectible.

As at March 31, 2014, the Company’s maximum exposure to credit risk is through the following assets:

Trade receivables $ 1,162,656

Net credit risk $ 1,162,656

Foreign currency risk

The Company is exposed to the financial risk related to fluctuations of foreign exchange rates. The Company conducts

business operations in the United States and has U.S. dollar denominated indebtedness and is therefore exposed to cash

flow risks associated with fluctuations in the relative value of the Canadian and U.S. dollar. A significant change in the

currency exchange rate of the Canadian dollar relative to the U.S. dollar could have a material effect on the Company’s

results of operations, financial position and cash flows. The Company does not engage in hedging activities or use financial

instruments to reduce its risk exposure.

At March 31, 2014, the Company is exposed to currency risk through the following assets and liabilities denominated in

U.S. dollars:

Cash $ 138,843

Trade receivables 56,813

Trade payables and accrued liabilities (262,196)

Long-term debt (712,919)

Net exposure $ (779,459)

Based on the above net exposure at March 31, 2014, and assuming all other variables remain constant, a 10% depreciation

or appreciation of the Canadian dollar against the U.S. dollar would result in a decrease or increase of

$ 77,945 in the Company’s other comprehensive income (loss).

Interest rate risk

All of the Company’s indebtedness bears interest at fixed rates and as a result the Company is not exposed to significant

interest rate risk arising from long-term debt.

Liquidity risk Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its short and long-term obligations as they come due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. The Company manages its liquidity risk through cash and debt management. The Company’s objective in managing liquidity risk is to increase revenues, minimize operational costs and to maintain sufficient liquidity in order to meet these operational requirements at any point in time. The Company’s ability to obtain funding from external sources may be restricted if the Company’s financial performance and condition deteriorate. In addition, credit and capital markets are subject to inherent global risks that may negatively affect the Company’s access and ability to fund its short-term and long-term debt requirements. The Company mitigates these risks by actively monitoring market conditions and diversifying its sources of funding and debt maturity. The Company’s trade payables are generally due within 60 days. The current portion of long-term debt is due within 12 months.

ADOPTION OF NEW ACCOUNTING STANDARDS

The Company has adopted the following new accounting standards effective April 1, 2013. These changes were made in

accordance with the applicable transitional provisions and had no impact on the financial statements.

(i) IFRS 10 Consolidated Financial Statements. IFRS 10 defines a single concept of control as the determining factor in

whether an entity should be included within the consolidated financial statements of a parent company. The standard

provides additional guidance to assist in the determination of control where this is difficult to assess.

(ii) IFRS 11 Joint Arrangements. IFRS 11 focuses on the rights and obligations of an arrangement rather than its legal

form, as was previously the case. The standard distinguishes between joint operations, where the joint operator

accounts for the assets, liabilities, revenues, and expenses relating to its involvement, and joint ventures, which must

be accounted for using the equity method.

(iii) IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 is a new and comprehensive standard on disclosure

requirements for all forms of interests in other entities, including subsidiaries, joint operations, joint ventures,

associates and unconsolidated structured entities.

(iv) IFRS 13 Fair Value Measurement. IFRS 13 is a new standard that applies to both financial and non-financial items

measured at fair value. It defines fair value, sets out a single framework for measuring fair value and requires

disclosures about fair value measurements. Previously, a variety of fair value techniques and disclosures were

possible under the requirements of separate applicable IFRS.

Accounting standards and interpretations issued but not yet adopted As at the date of these consolidated financial statements, the following standard has not been applied in these consolidated

financial statements:

(i) IFRS 9 Financial Instruments; effective for annual periods beginning on or after January 1, 2018. IFRS 9 replaces the

multiple classification and measurement models in IAS 39 with a single model that has only two classification

categories: amortized cost and fair value. IFRS 9 prohibits reclassifications except in rare circumstances when the

entity’s business model changes. The new standard removes the requirement to separate embedded derivatives from

financial asset hosts. It requires a hybrid contract to be classified in its entirety at either amortized cost or fair value.

Management is currently assessing the impact of this new standard on the Company’s accounting policies and

financial statement presentation.

Use of Estimates and Judgments

The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions

that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual

results could differ from these estimates.

Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods

affected.

In preparing these consolidated financial statements, the significant judgments made by management in applying the Company’s

accounting policies and the key sources of estimation uncertainty are as follows:

Use of Judgments

Cash Generating Units

The determination of cash generating units (“CGUs”) requires judgment in defining the smallest identifiable group of

assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

CGUs are determined by geographical area, similar exposure to market risk and materiality.

Impairment of Customer Accounts

The assessment of customer accounts for any indications of impairment involves judgment. If an indication of impairment

exists, a formal estimate of recoverable amount is performed and an impairment loss is recognised to the extent that

carrying amount exceeds recoverable amount. The assessment requires judgment as to the economic and industry

conditions, the estimated future revenues to be generated by the customer accounts, operating costs and the discount rate

to be applied to such revenues and costs.

Income tax

Management exercises judgment in estimating the provision for income taxes. The Company is subject to income tax laws

in various jurisdictions where it operates. Various tax laws are potentially subject to different interpretations by the

taxpayer and the relevant tax authority. To the extent that the Company’s interpretations differ from those of tax

authorities or the timing of realization is not as expected, the provision for income taxes may increase or decrease in

future periods to reflect actual experience.

Use of Estimates

Impairment of Goodwill

Goodwill is assessed for impairment at the CGU level on an annual basis and more frequently if there are potential

indicators of impairment. An impairment loss is recognized if the carrying value of a CGU exceeds its recoverable

amount. The recoverable amount of a CGU is determined from the greater of fair value less costs to sell or “value in use”

calculations based on the net present value of discounted cash flows. Key assumptions used in the calculation of

recoverable amounts are normalized EBITDA (Earnings Before Interest, Taxes, and Depreciation and Amortization)

based on past performance and management expectations for the Company and industry and WACC (Weighted Average

Cost of Capital).

Amortization and Depreciation

Management is required to make certain estimates and assumptions when determining the amortization and depreciation

methods and rates and residual values of property and equipment and customer accounts. Useful lives are based on

historical experience with similar assets as well as anticipation of future events, which may impact their life. Management

reviews amortization and depreciation methods, rates, and residual values annually and adjusts amortization and

depreciation accordingly on a prospective basis.

RISK FACTORS

The securities of the Company are highly speculative. A prospective investor or other person reviewing the Company should not

consider an investment unless the investor is capable of sustaining an economic loss of the entire investment. Certain risks are

associated with the Company’s business including the following:

Future growth and expansion is dependent on ongoing acquisitions of General Insurance Brokerages

To a large extent, the Company’s growth and expansion plans depend upon the ongoing acquisition of independent General Insurance

Brokerages at reasonable prices. There can be no assurance that an adequate number of acquisition candidates will be available to the

Company to meet its expansion plans, or in the event that such independent General Insurance Brokerages are available for acquisition

that they will be available at a price which would allow the Company to operate on a profitable basis. The Company competes for

acquisition and expansion opportunities with entities that have substantially greater resources than the Company and these entities may

be able to outbid the Company for acquisition targets. If the Company fails to execute its acquisition strategy, the Company’s revenue

growth is likely to suffer and the Company may be unable to remain competitive.

The Company may be unable to successfully integrate its recent or future acquisitions

There can be no assurance that the Company’s recently acquired brokerages or any brokerages acquired by the Company in the future

will achieve acceptable levels of revenue and profitability or otherwise perform as expected. The Company may be unable to

successfully integrate other brokerages that the Company may acquire in the future, due to diversion of management attention, strains

on the Company’s infrastructure, difficulties in integrating operations and personnel, entry into unfamiliar markets, or unanticipated

legal liabilities or tax, accounting or other issues. A failure to integrate acquired brokerages may be disruptive to the Company’s

operations and negatively impact the Company’s revenue or increase the Company’s expenses.

The Company anticipates the need for additional financing, which it may not be successful in arranging

The Company has relied principally on debt financing to fund its recent acquisitions. The Company will require additional funds to

make future acquisitions of General Insurance Brokerages and may require additional funds to market and sell its products into the

marketplace. The ability of the Company to arrange such financing in the future, and to repay its existing debt, will depend in part upon

the prevailing capital market conditions as well as the business performance of the Company. In addition, the Company is subject to

certain financial and other covenants under its financing arrangements. If the Company is unable to or does not comply with these

covenants, the Company’s financing needs may be accelerated. There can be no assurance that the Company will be successful in its

efforts to arrange additional financing, when needed, on terms satisfactory to the Company. If additional financing is raised by the

issuance of shares from the treasury of the Company, control of the Company may change and shareholders may suffer additional

dilution. If additional financing is not available on terms favorable to the Company, the Company may be unable to grow or may be

required to limit or halt its expansion plans. In addition, the Company’s existing creditors, some of whom have security interests in the

Company’s assets, may exercise their rights to acquire or dispose of the Company’s assets.

Planned future growth is likely to place significant strains on the Company’s management, administrative, operational and

financial resources

Since its inception, the Company has experienced steady growth in revenue, number and complexity of products, personnel, and

customer base. The Company’s planned future growth is likely to place significant strains on the Company’s management,

administrative, operational and financial resources. Increased growth will require the Company to continue to add additional

management personnel, improve its financial and management controls, reporting systems and procedures on a timely basis, to

implement new systems as necessary, to expand, train, motivate and manage its sales and other personnel and to service the Company’s

customers effectively. There can be no assurance that the Company will be able to attract qualified personnel or improve its financial

and management controls or implement new systems as necessary and the failure to do so may result in increased costs or a decline in

revenue or both.

The Company’s performance and future operating results and success are dependent on the effectiveness of the Company’s

management team and key personnel

The Company’s performance and future operating results and success are substantially dependent on how effective the management

team and key personnel are at organizing and implementing the Company’s growth strategy and integrating acquired General Insurance

Brokerages into the Company’s overall organization. Shareholders will be relying on the judgment and expertise of the management of

the Company.

The senior management and some key personnel are employed under employment contracts, while other key personnel of the Company

are employed on a month to month basis and are not under an employment contract with the Company. Although the Company is in an

industry in which there is not high employee turnover, the unexpected loss or departure of any of the Company’s key management

personnel, Mr. Tony Consalvo, the President and Chief Executive Officer, Mr. Mahesh Bhatia, the VP Finance and Chief Financial

Officer and the Corporate Controller, Ms. Shelley Samec could be detrimental to the future operations of the Company.

There can be no assurance that the Company can retain its key personnel and managerial employees or that it will be able to attract or

retain highly qualified personnel in the future. The Company believes that the compensation to its key management personnel is

competitive with what other companies pay its key management personnel in the insurance brokerage industry. Although the Company

plans to compensate its senior management and other key personnel at compensation levels that are competitive within the industry,

there is no assurance that it will continue to be able to do so in the future and this may result in a departure of some if its senior

management or other personnel.

The Company maintains keyman life insurance policies of $100,000 on Mr. Consalvo and $675,000 on Mr. Bhatia and has no other

keyman life insurance on any other senior management or other personnel. The loss of the services of any of the Company’s senior

management or other key personnel or the inability to attract and retain the necessary technical, sales and managerial personnel could

have a material adverse effect upon the Company’s business, operating results and financial condition.

The Company faces intense competition in the insurance industry

The Company is in an industry in which intense competition exists. The Company competes with other General Insurance Brokerages,

as well as Insurance Companies that sell insurance directly to consumers and do not pay commissions to agents and brokers. Some

competitors have substantially more financial resources and other assets available than the Company does and are larger and better

established than the Company. Such competitors have existing distribution facilities and channels, customer recognition, customer lists,

and greater research and development capabilities and sales marketing staff than does the Company. There can be no assurance that the

Company will be able to compete successfully against current and future competitors, or that competitive pressure faced by the

Company will not have a material adverse effect on its business, financial condition and results of operation.

Incursion of government, banks or other financial institutions

The Company is susceptible to an incursion in the general insurance industry by government or banks or other financial institutions. A

government takeover of the general insurance business (or parts thereof) could affect the profitability of the Company. In addition,

banks with greater financial resources and a larger customer base than the Company may enter (or are currently entering) the general

insurance business. While management believes that the Company’s representation of a large and diverse number of Insurance

Companies will allow it to remain competitive against any such incursion by the banks, there is a possibility that their entrance into this

market could affect the profitability of the Company.

The Company cannot accurately forecast commission revenue because commissions depend on premium rates charged by

Insurance Companies, which historically have varied and are difficult to predict. Any declines in premiums or reduction in

commission rates may adversely impact profitability

Revenue from commissions fluctuates with premiums charged by insurers, as commissions typically are determined as a percentage of

premiums. When premiums decline, the Company experiences downward pressure on revenue and earnings. Historically, property and

casualty premiums have been cyclical in nature and have varied widely based on market conditions. Because we cannot determine the

timing and extent of premium pricing changes, we cannot accurately forecast our commission revenue, including whether it will

significantly decline. If premiums decline or commission rates are reduced, our revenue, earnings and cash flow could decline. In

addition, our budgets for future acquisitions, capital expenditures, dividend payments, loan repayments and other expenditures may

have to be adjusted to account for unexpected changes in revenue.

Insurance Company contingent commissions and volume overrides are less predictable than normal commissions, which

impairs the Company’s ability to forecast the amount of such revenue that will be received and may negatively impact our

operating results

A portion of the Company’s revenue is derived from contingent commissions and volume overrides. The aggregate of these sources of

revenue generally has accounted for approximately 2-6% of our total revenue. Contingent commissions may be paid by an Insurance

Company based on the profit it makes on the overall volume of business that we place with it. Volume overrides and contingent

commissions are typically calculated in the first or second quarter of the following calendar year by the Insurance Companies and are

paid once calculated. Further, we have no control over the process by which Insurance Companies estimate their own loss reserves,

which affects our ability to forecast contingent commissions. Because these contingent commissions affect our revenue, any decrease in

their payment to us could adversely affect our results of operations. Recently, legal proceedings challenging the appropriateness of

revenue sharing arrangements between Insurance Companies and brokerages, including contingent profit and volume override

arrangements, have been commenced against certain insurance brokerages. These proceedings allege that such revenue sharing

arrangements conflict with a broker’s duty to its clients. While we have not been named as a defendant in any such proceeding, and

disagree with the underlying premise that these revenue sharing arrangements create a conflict of interest, we could be the subject of a

similar action in the future. A finding that such arrangements conflict with a broker’s duty to its clients could have a material adverse

affect on our revenue and profitability.

Proposed tort reform legislation in the United States, if enacted, could decrease demand for liability insurance, thereby

reducing commission revenue

Legislation concerning tort reform is currently being considered in the United States Congress and in several states. Among the

provisions being considered for inclusion on such legislation are limitations on damage awards, including punitive damages, and

various restrictions applicable to class action lawsuits, including lawsuits asserting professional liability of the kind of which insurance

is offered under certain policies we sell. Enactment of these or similar provision by Congress, or by states or countries in which we sell

insurance, could result in a reduction in the demand for liability insurance policies or a decrease in policy limits of such policies sold,

thereby reducing our commission revenue.

Privacy legislation may impede the Company’s ability to utilize the customer database as a means to generate new sales

The Company intends to utilize its extensive customer databases for marketing and sales purposes, which it believes would enhance the

Company’s ability to meet its organic growth targets. However, privacy legislation, such as the Gramm-Leach-Bailey Act and the

Health Insurance Portability and Accountability Act of 1996 in the United States and the Personal Information Protection and

Electronic Documents Act (PIPEDA) in Canada, as well other regulatory changes, may restrict the Company’s ability to utilize

personal information that we have collected in the normal course of operations to generate new sales. If the Company becomes subject

to new restrictions, or other regulatory restrictions, which we are not aware of, the Company’s ability to grow the business may be

adversely affected.

If the Company fails to comply with regulatory requirements for insurance brokerages, the Company may not be able to

conduct business

The Company is subject to legal requirements and governmental regulatory supervision in the jurisdictions in which it operates. These

requirements are designed to protect our clients by establishing minimum standards of conduct particularly regarding the provision of

advice and product information as well as financial criteria.

Our activities in the United States and Canada are subject to regulation and supervision by state and provincial authorities. Although

the scope of regulation and form of supervision by state and provincial authorities may vary from jurisdiction to jurisdiction, insurance

laws in the United States and Canada are often complex and generally grant broad discretion to supervisory authorities in adopting

regulations and supervising regulated activities. This supervision generally includes the licensing of insurance brokers and agents and

the regulation of the handling and investment of client funds held in fiduciary capacity. Our ability to conduct our business in the

jurisdictions in which we currently operate depends on our compliance with the rules and regulations promulgated from time to time by

the regulatory authorities in each of these jurisdictions.

Our clients have the right to file complaints with the regulators about our services, and the regulators may investigate and require us to

address these complaints. Our failure to satisfy the regulators that we are in compliance with their requirements or the legal

requirements governing our activities can result in a disciplinary action, fines, reputation damage and financial harm.

In addition, changes in legislation or regulation and actions by regulators, including changes in administration and enforcement

policies, could from time to time require operational improvements or modifications at various locations which could result in higher

costs or hinder our ability to operate our business.

The Company’s success is dependent on its ability to represent quality Insurance Companies

The Company’s success is dependent upon its continued representation of quality Insurance Companies in order to sell insurance

policies to customers. The Company’s existing brokerage contracts with certain Insurance Companies do not have a set term or expiry

date but may be terminated by either the Company or the Insurance Company on between 90-120 days’ written notice of termination

depending on the terms of the specific contract. In the event of termination on any of its contracts with Insurance Companies, there are

no penalties to the Company but following termination; the Company is no longer able to represent the applicable Insurance Company

as agent on the future placement or renewal of insurance policies. If the Company loses Insurance Company representation then this

will have a negative impact on its ability to service its customers and provide alternative competitive insurance products.

Dilution and sales of additional Common Shares and the exercise of options

The number of outstanding Common Shares held by shareholders who are not affiliates of the Company and the number of Common

Shares underlying outstanding share options is large relative to the trading volume of the Company’s Common Shares. Any substantial

sale of the Common Shares, including Common Shares underlying share options, or even the possibility of such sales occurring may

have an adverse effect on the market price of the Common Shares.

The Company has significant costs and lower productivity could result in operating losses

Fixed costs including costs associated with salaries and employee benefits, depreciation and amortization, rent, and interest and

financing costs account for a significant portion of the Company’s costs and expenses. As a result, downtime or low productivity from

its sales representatives, lower demand for insurance products, loss of the Company’s customers, any significant decrease in the

premium rates, volume and commission paid in the different segments of the general insurance industry, or other factors could result in

operating losses and adversely impact on the Company.

No intention to declare dividends

The Company has a recent history of losses and has not declared or paid any cash dividends on its Common Shares. The Company

currently intends to retain any future earnings to fund growth and operations and it is unlikely to pay any dividends in the immediate or

foreseeable future. Any decision to pay dividends on its Common Shares in the future will be made by the board of directors on the

basis of the Company’s earnings, financial requirements and other conditions at such time.

Conflicts of directors and officers who serve as directors or officers or are significant shareholders of other companies

Directors and officers of the Company may serve as directors or officers of, or have significant shareholdings in other companies, or be

or become engaged in business and activities in other fields, on their own behalf and on the behalf of other companies and entities. To

the extent that such other companies or entities may participate in industries or ventures in which the Company may participate, the

directors and officers of the Company may have a conflict of interest. Conflicts, if any, will be subject to the procedures and remedies

under the Business Companies Act (Alberta).

Investors may not be able to secure foreign enforcement of civil liabilities against the Company’s management

The enforcement by investors of civil liabilities under the federal securities laws of the United States may be adversely affected by the

fact that the Company is amalgamated under the laws of Canada, that all of its officers and directors are residents of a foreign country

and a substantial portion of its assets and such person’s assets are located outside of the United States. As a result, it may be difficult

for holders of the Common Shares to affect service of process on such persons within the United States or to realize in the United

States upon judgments rendered against them.





FOR THE NINE MONTHS ENDED

DECEMBER 31, 2014

February 27, 2015


FORWARD LOOKING STATEMENTS

Certain of the statements in this MD&A about the Company’s current and future plans, expectations and intentions, results, levels of

activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The

words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”,

“believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other similar or

comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and

perception of historical trends, current conditions and expected future developments, as well as other factors that management believes

are appropriate in the circumstances. Many factors could cause the Company’s actual results, performance or achievements or future

events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without

limitation, the following factors: the Company’s ability to implement its strategy or operate its business as management currently

expects; unfavorable capital market developments or other factors which may affect the Company’s capital and debt obligations;

government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense

competition; the Company’s reliance on information technology and telecommunications systems; the Company’s dependence on key

employees; general economic, financial and political conditions; the Company’s dependence on the results of operations of its

subsidiaries; the volatility of the stock market and other factors affecting the Company’s share price.

All of the forward-looking statements included in this MD&A are qualified by these cautionary statements for the year ended March

31, 2014. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these

factors should be considered carefully, and readers should not place undue reliance on forward-looking statements made herein. The

Company and management have no intention and undertake no obligation to update or revise any forward-looking statements, whether

as a result of new information, future events or otherwise, except as required by law.

This MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements for the nine months

ended December 31, 2014 and the audited consolidated financial statements for the year ended March 31, 2014 which are prepared in

accordance with IFRS (International Financial Reporting Standards). These filings are available at www.sedar.com.

All amounts are in Canadian Dollars unless otherwise indicated.

OVERVIEW

ACL International Ltd. (formerly Anthony Clark International Insurance Brokers Ltd.) (the “Company”) primary business activity

involved the operation of general insurance brokerages in Canada and the United States. Shares of the Company traded on the TSX

Venture Exchange under the symbol “ACL”. The Company voluntarily delisted from the OTCQX due to low trading volume. The last

day of trading on the OTCQX was December 31, 2013. The Company, founded in 1989, expanded through internal growth and

acquisitions. The Company operated in two economic environments and revenues were attributed to geographic areas based on the

location of resources producing the revenues.









2014.



2014.

On July 2, 2014, the Company received $2,008,240 being the payment for the balance of the purchase price payable for the sale of all

of the shares of Anthony Clark Insurance Brokers Ltd.

The management and the Board of Directors will continue to identify and evaluate businesses and assets with a view to completing a

Qualifying Transaction.

DISCONTINUED OPERATIONS

On March 3, 2014 the Company sold the property and equipment and customer accounts of its U.S. operations for net sales proceeds of

$ 3,204,664 including transaction costs of $ 178,396. The Company realized a loss from discontinued operations of $ 2,804,844.

On May 1, 2014, the Company completed the sale of all of its shares (51%) in the Canadian subsidiary Anthony Clark Insurance





$277,221 and severance and outstanding compensation of $1,564,275. The transaction resulted in a gain on sale of discontinued

operations of $12,095,558

The gain (loss) from discontinued operations for the three month period ended December 31, 2014 and 2013 is summarized below:


Revenue from discontinued operations -$ 42,977$ 42,977$ 2,576,133$ 675,568$ 3,251,701$

Expenses of discontinued operations - (83,239) (83,239) (1,907,919) (827,163) (2,735,082)

Earnings (loss) from discontinued operations - (40,262) (40,262) 668,214 (151,595) 516,619

Gain (loss) on sale of discontinued operations - - - - - -

Gain (loss) from discontinued operations -$ (40,262)$ (40,262)$ 668,214$ (151,595)$ 516,619$

Three month period ended December 31, 2014 Three month period ended December 31, 2013

The gain (loss) from discontinued operations for the nine month period ended December 31, 2014 and 2013 is summarized below:


Revenue from discontinued operations 455,290$ 144,460$ 599,750$ 7,943,628$ 2,012,541$ 9,956,169$

Expenses of discontinued operations (425,162) (155,479) (580,641) (5,727,847) (2,330,191) (8,058,038)

Earnings (loss) from discontinued operations 30,128 (11,019) 19,109 2,215,781 (317,650) 1,898,131

Gain (loss) on sale of discontinued operations 12,065,430 - 12,065,430 - - -

Gain (loss) from discontinued operations 12,095,558$ (11,019)$ 12,084,539$ 2,215,781$ (317,650)$ 1,898,131$

Nine month period ended December 31, 2014 Nine month period ended December 31, 2013

2014 OPERATIONAL HIGHLIGHTS

The Company successfully closed the sale of all its assets on May 1, 2014

The Company made an initial distribution of $0.28 per common share to its shareholders on June 18, 2014

RESULTS OF OPERATIONS

The Company sold all its operations effective May 1, 2014. All the numbers relating to discontinued operations have been reclassified

to discontinued operations.

For the nine month ending December 31, 2014

The expenses for the nine months ending December 2014 relate to the salaries and wages and severance and other payments outlined in

the information circular and as approved by the shareholders at the special meeting on April 14, 2014. The increase in general and

administration expenses mainly relate to the legal fees related to the sale all or substantially all the assets and expenses related to the

proposed transaction with Fulucai Productions Ltd.

For the nine month ending December 31, 2013

The expenses for the nine months ending December 2013 relate to the salaries and wages and general and administration expenses

mainly relate to the professional fees and expenses related to being public.

NON-CONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY

On June 10, 2008, April 23, 2009 and July 14, 2010, the Company closed equity financings under which a non-controlling interest,

totaling 49% of a consolidated subsidiary of the Company which operates the Canadian operations, was sold. Under IFRS, transactions

with non-controlling interests are treated as transactions with equity owners of the Company. Gains or losses on disposals to non-

controlling interests are computed and recorded in equity.

Within the unanimous shareholder agreement, there is a contingent put option with the non-controlling shareholder.

Distributions from the Canadian operations to the parent and non-controlling shareholder are paid as and when approved by the Board

of Directors of the Canadian subsidiary. The distributions are based on a formula in the unanimous shareholder agreement.

The non-controlling shareholder is the lender on the Senior notes.

The balance of the non-controlling interest was eliminated upon the sale of the Canadian subsidiary

INTEREST AND FINANCING COSTS

Three months ending

December 31, 2014

Three months ending

December 31, 2013

Nine months ending

December 31, 2014

Nine months ending

December 31, 2013

Canadian operations

Interest on long-term debt -$ 102,640$ 34,129$ 314,183$

Amortization of deferred financing costs and loan discount - 2,987 50,281 8,961

- 105,627 84,410 323,144

U.S. operations

Interest on long-term debt 12,362$ -$ 36,397$ -$

12,362 - 36,397 -

12,362$ 105,627$ 120,807$ 323,144$

SUMMARY QUARTERLY INFORMATION

The following table summarizes the Company’s key consolidated financial information for the last eight quarters.

EPS-Basic

Revenue EBITDA Net earnings and Diluted

Quarter ended ($) ($) ($) ($/share)

December 31, 2014 - (147,306) (200,102) -

September 30, 2014 - (40,997) (41,253) -

June 30, 2014 - (1,581,449) 10,447,503 1.09

March 31, 2014 - (494,763) (555,913) (0.07)

December 31, 2013 - (181,972) (1,893,282) (0.22)

September 30, 2013 - (254,705) 386,357 -

June 30, 2013 - (203,496) 320,747 -

March 31, 2013 - (399,017) 202,735 -

EBITDA is defined as Earnings before interest, income taxes, and depreciation and amortization.

EBITDA is discussed and presented here as a non-IFRS measure because it is management’s major performance indicator.

EBITDA is reconciled to Net earnings above.

The Revenue and EBITDA exclude the results of the discontinued operations.

The results reflect the sale of all its operating assets

In the quarter ended June 30, 2014, the Company completed the sale of all of its shares (51%) in the Canadian subsidiary Anthony

Clark Insurance Brokers Ltd. held by the Company, to an arm’s length third party for cash consideration of approximately $13,000,000,

before repayment of certain senior debt and adjustments. As the transaction contemplated the sale of all or substantially all of the

Company’s assets shareholder approval was obtained on April 14, 2014 and TSX Venture Exchange approval on April 22, 2014. The

Company paid certain liabilities in the amount of $7,942,971 from the sale proceeds including debt settlement $6,101,475, legal

expenses $277,221 and severance and outstanding compensation of $1,564,275. The transaction resulted in a gain on sale of

discontinued operations of $12,095,558

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

Comparing December 31, 2014 and March 31, 2014:

Working capital increased $3,490,320 as a result of the sale of the Company’s Canadian subsidiary

Customer accounts decreased $1,097,379 following the sale of the Company’s Canadian operations.

Goodwill decreased $7,317,360 following the sale of the Company’s Canadian operations.

Long-term debt decreased $13,144,055 primarily due to the pay down of all the Company’s Canadian debt from the sale

proceeds received on sale of it’s Canadian operations and assumption of debt by the purchaser and the effect of the exchange

rate.

Equity attributable to owners of the Company increased by $7,481,482 primarily due to:

o net earnings of $10,206,148;

o decrease in share capital of $2,689,452 resulting from the capital distribution;

FINANCIAL RESOURCES AND LIQUIDITY

As at December 31, 2014, the Company has a working capital $1,897,663.


Brokers Ltd. held by the Company to an arm’s length third party for cash consideration of approximately $13,000,000, before







2014.



2014.

On July 2, 2014, the Company received $2,008,240 being the payment for the balance of the purchase price payable for the sale of all

of the shares of Anthony Clark Insurance Brokers Ltd.

On October 31, 2014, the Company executed a non-binding letter of intent (“LOI”) with Fulucai Productions Ltd. (FCPS:OTC US),

pursuant to which Fulucai had agreed to sell to the Corporation, on an arm’s length basis, a 5% interest in a Technical Assistance

Contract for a block referred to as “Langsa TAC” located offshore, North Sumatra in exchange for shares of the Corporation. The

purchase price would have been negotiated based on information provided in an Independent Reserves Evaluation to be prepared in

accordance with the Standards of Disclosure for Oil and Gas Activities National Instrument 51-101 report. The reserve report was

received in January 2015.

The Proposed Transaction was intended to constitute a reactivation transaction of the Corporation to enable it to list on the TSX

Venture Exchange. It was anticipated that the Proposed Transaction will constitute a Change of Business and/or a Reverse Takeover

under the policies of the Exchange.

It was anticipated that upon completion of the Proposed Transaction, the current board of directors and the officers of the Corporation

would resign and new officers and a board would be appointed. The new board would have comprised of at least four members with

such directors being the nominees of Fulucai, subject to the policies of the Exchange and securities laws.

The Corporation terminated the LOI with Fulucai on February 15, 2015.

On January 26, 2015, the Corporation entered into another letter of intent with Blue Sky International Holdings, Inc. with regard to an

acquisition of additional interests in the Langsa TAC.

Under the terms of the LOI, the Corporation will acquire 100% of the issued and outstanding shares of Blue Sky Langsa Ltd. (“BSL”),

effective January 1, 2015, from Blue Sky International Holdings. The BSL shares will be acquired through the issuance of shares of the

Corporation at a price based upon the valuation of the additional Langsa TAC interests as determined in the final independent reserves

evaluation report being prepared by McDaniel & Associates Consultants Ltd., as previously announced.

BSL was incorporated in Mauritius in March 2003 and is the operator approved by Pertamina, the Indonesian state-owned oil and natural gas corporation, under the Langsa TAC. BSL’s assets include ownership of a 47% interest in oil and gas properties, equipment located in Balawan, Sumatra and historic sunk costs on the Langsa TAC of approximately US $29.61 million. The Blue Sky International Holdings, Inc. LOI recognizes that the Corporation had entered into the LOI with Fulucai and that it might be in the best interests of all parties for the Fulucai Interest to be acquired by BSL (rather than by the Corporation) prior to completion of the transaction. If BSL does acquire the Fulucai Interest, the Corporation and Blue Sky International Holdings, Inc. will sign and deliver such further documents as may be required. The Corporation has agreed to pay a refundable deposit of $100,000 as a good faith gesture to be credited towards the final purchase price. If the Transaction does not close for any reason, the deposit will be fully refunded to the Corporation.

http://en.wikipedia.org/wiki/State-owned

http://en.wikipedia.org/wiki/Oil

http://en.wikipedia.org/wiki/Natural_gas

Canadian Debt

All of the Company’s Canadian debt was paid down from the proceeds received from sale of the Company’s Canadian assets and

assumption of debt by the buyer of the Canadian operations.

U.S. Debt

The US debt is interest only and interest payments at 6.75% per annum continue on the unpaid balance until maturity of the loan.


Contingencies

The Company may, from time to time, be involved in various claims, lawsuits, disputes with third parties, actions involving allegations

of discrimination, or breach of contract incidental to the operations of its business. The Company is not currently involved in any such

incidental litigation which it believes could have a materially adverse effect on its financial condition or results of operations.

As part of the unanimous shareholder agreement with the non-controlling interest, there is a contingent put option which if exercised

will require the Company to purchase the non-controlling interest. The contingent put option can only be exercised, within 60 days

written notice, if:

There is an arm’s length third party offer to purchase the consolidated subsidiary and the non-controlling shareholder wishes

to accept, but the Company does not, then the non-controlling shareholder can exercise the put option for the price set out in

the offer, or

There is a change of control in the consolidated subsidiary or the Company, the non-controlling shareholder can exercise the

put option for the higher of fair value formula in the unanimous shareholder agreement or the price set out in the change of

control transaction.

There is uncertainty as to the occurrence, timing and amount of the cash outflow since the put option is contingent on a third party offer

or purchase.

Commitments

The Company leases office premises under operating leases that expire at various dates during the 2015 through 2019

fiscal years. In addition, the Company has current obligations under certain advertising contracts.

The following table sets forth the Company’s future contractual and long-term obligations as at December 31, 2014:

Total Less than 1 Year 1 – 3 Years 3 – 5 Years

More than 5

years

Contractual Obligations

Operating Lease Obligations $ - $ - $ - $ - $ -

Long-Term Debt

U.S. Notes payable $ 748,265 - $ 748,265 $ - $ -

SHARE CAPITAL

Authorized

Unlimited common shares without par value Unlimited class B voting preferred shares without par value Unlimited class C non-voting preferred shares without par value

Issued

All common shares issued are fully paid, carry one vote per share and carry a right to dividends

Changes in share capital during the nine month period ended December 31, 2014 and the year ended March 31, 2014 are as follows:

Shares Amount

Balance, April 1, 2013 9,694,684 $ 9,561,719


Balance, March 31, 2014 9,605,184 9,473,447

Distribution to shareholders - (2,689,452)

Balance, December 31, 2014 9,605,184 6,783,995$

Normal Course Issuer Bid

The Company receives regulatory approval from the TSX Venture Exchange (the “Exchange”) to make a normal course issuer bid. Pursuant to the bid, the Company could purchase up to 10% of its common shares issued and outstanding at the time of the bid.

2014 - The bid commenced May 20, 2013 and terminated on May 19, 2014 and pursuant to the bid, the Company had approval to

purchase up to 969,168 of its common shares. The Company had repurchased 37,500 common shares under the bid.

2013 - The bid commenced May 19, 2012 and terminated on May 18, 2013 and pursuant to the bid, the Company had approval to purchase up to 1,022,447 of its common shares. The Company repurchased 220,000 common shares under the bid.

SHARE-BASED COMPENSATION

The Company has an incentive share option plan, which provides for the award of share options to directors, officers, employees and

consultants. A maximum 1,601,395 common shares remain reserved under the plan. The terms and exercise prices of all share option

awards are determined by the directors at the time of issue.

Changes in share options during the nine month periods ended December 31, 2014 and the year ended March 31,

2014 are as follows :

Number of

options

Weighted average

exercise price

Number of

options

Weighted average

exercise price

Outstanding, beginning of period - -$ 450,000 0.36$

Expired - - (450,000) (0.36)

Outstanding, end of period - $ - - -$

December 31, 2014 March 31, 2014

RELATED PARTY TRANSACTIONS

The Company enters into transactions with related parties from time to time in the normal course of business, as well as key management personnel. During the period ended December 31, 2014, 2014, the Company incurred $nil (2013- $nil) of consulting fees charged by a director.

Summary Compensation Table of Amounts Paid or Payable to Directors and Officers during the quarter ended December 31,

2014:

The following table sets forth details regarding compensation of officers for the quarter ended December 31, 2014:

On May 1, 2014 the Corporation sold substantially all of its assets to a third party. That sale and other transactions were approved by

the shareholders at a special meeting of shareholders held on April 14, 2014. Concurrent with the sale of substantially all of the assets,

certain employees, consultants and officers including Messrs. Consalvo and Bhatia terminated their employment with the Corporation.

Effective May 1, 2014 the Board of Directors of the Corporation determined to disband the Compensation Committee and all decisions

as to compensation subsequent to May 1, 2014 were made by decision of the Board of Directors.

Effective May 1, 2014, the Board approved a resolution to reappoint Tony Consalvo as the Corporation’s President and Chief

Executive Officer on a volunteer basis and for no monetary compensation. The Board also approved the employment of Mahesh

Bhatia in the capacity of the Corporation’s Chief Financial Officer and V.P Finance at a fixed compensation of $14,500 per month for

May 2014 and June 2014; thereafter, the compensation will be fixed at $3,000 per month.

The following table sets forth details regarding compensation of directors for the quarter ended December 31, 2014:

Name Position Compensation paid or payable for the

quarter ended December 31, 2014

Douglas Farmer Director $ -

Robert Sadleir Director $ -

Norm Cournoyer Director $ -

Compensation of Directors

Each director that is not a full-time employee or officer of the Corporation receives the amount of $15,000 per year. This amount is

paid quarterly in arrears over the Corporation's fiscal year and is pro-rated if an individual resigns or is not re-elected. There are no

other arrangements in addition to or in lieu of the above described fees under which directors of the Corporation were compensated by

the Corporation during the most recently completed financial year for their services in their capacity as directors. The Corporation's

directors who are also senior officers do not receive any cash payments for their services as directors.

Effective July 1, 2014, there will be no compensation payable for an individual’s services as a director. The Corporation's directors

who are also senior officers do not receive any cash payments for their services as directors.

CAPITAL RISK MANAGEMENT

The Company considers the capital it manages to be the amounts it has in cash, debt (long-term and short-term borrowings) and

equity attributable to owners of the Company.

The Company’s objectives when managing capital are to:

− safeguard the Company’s ability to continue as a going concern

Name and Principal

Position Salary

Bonus

All Other

Compensation

Tony Consalvo $ - $ - $ -

Chairman, President and

C.E.O.

Mahesh Bhatia $ 9,000 $ - $ -

V.P. Finance and C.F.O.

− ensure sufficient liquidity to support its financial obligations and execute its operating and strategic plans

− optimize the cost of its capital at an acceptable level in light of current and future industry, market and economic risks and

conditions

− utilize the long-term funding sources to manage its working capital and restructure debt to minimize the cost of its capital

− acquire assets and dispose of non-performing assets

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk

characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new

shares, repurchase shares, issue debt, acquire or dispose of assets. The Company requires capital to repay existing obligations.

There can be no certainty of the Company’s ability to refinance its existing obligations. In order to facilitate the management of

the Company’s capital, the Company prepares annual cash flow forecasts that are updated as necessary depending on various

factors and general industry conditions. There were no changes in the Company’s approach to capital management.

The declaration and payment of dividends and the amount thereof are at the discretion of the Board. In order to maintain and

maximize growth, maintain sufficient liquidity to support its financial obligations and optimize the cost of capital, the Company

currently does not pay out dividends.

The Company is also subject to certain working capital covenants on an ongoing basis, which compliance with these covenants

has the effect of restricting the availability of cash from the Canadian operations to the other operations of the Company.

FINANCIAL INSTRUMENTS

a) Overview

The Company’s activities expose it to a variety of financial risks that arise as a result of its operating and financing activities

such as credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company manages its exposure to these

risks by operating in a manner that minimizes this exposure.


The Company’s financial instruments as at March 31, 2014 included cash, trust cash, trade receivables, trade payables and

accrued liabilities, and long-term debt. The carrying amounts for short term financial assets and liabilities, which includes

trade receivables and trade payables and accrued liabilities approximate fair values due to the immediate or short-term

maturities of these financial instruments. Cash and trust cash are classified as fair value through profit and loss and therefore

are recorded at fair value.

Management estimated the fair value of its long-term debt taking into account market rates of interest, the condition of any

related collateral and the current conditions in credit markets applicable to the Company based on recent transactions. The

estimated fair value of long-term debt approximates its carrying value.

For financial instruments measured at fair value, disclosure about the inputs to fair value measurements are required,

including their classification within a fair value hierarchy that prioritizes the significance of inputs used in making fair value

measurements.


Level 2 Fair Value Measurements inputs other than quoted prices included in Level 1 that are observable for the asset or

liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and

Level 3 Fair Value Measurements inputs for the asset or liability that are not based upon observable market data.

Cash and trust cash is based on Level 1 inputs of the fair value hierarchy.

c) Financial risk management

The Company’s financial instruments are exposed to certain financial risks, including credit risk, foreign currency risk,

interest rate risk and liquidity risk.

Credit risk

The Company is exposed to credit risk resulting from the possibility that counterparties may default on their financial

obligations, or if there is a concentration of transactions carried out with the same counterparty or of financial obligations

which have similar economic characteristics such that they could be similarly affected by changes in economic conditions.

The Company’s financial instruments that are exposed to concentrations of credit risk relate primarily to cash, trust cash

and trade receivables from clients and insurance carriers. Cash is in place with major financial institutions. Concentrations

of credit risk with respect to client and insurance carrier trade receivables are limited due to the large number of customers

and insurance carriers. The Company has evaluation and monitoring processes in place and writes off accounts when they

are determined to be uncollectible.

As at December 31, 2014, the Company’s maximum exposure to credit risk is through the following assets:

Receivables $ 4,130

Net credit risk $ 4,130

Foreign currency risk

The Company is exposed to the financial risk related to fluctuations of foreign exchange rates. The Company conducts

business operations in the United States and has U.S. dollar denominated indebtedness and is therefore exposed to cash

flow risks associated with fluctuations in the relative value of the Canadian and U.S. dollar. A significant change in the

currency exchange rate of the Canadian dollar relative to the U.S. dollar could have a material effect on the Company’s

results of operations, financial position and cash flows. The Company does not engage in hedging activities or use financial

instruments to reduce its risk exposure.

At December 31, 2014, the Company is exposed to currency risk through the following assets and liabilities denominated in

U.S. dollars:

Cash $ 8,222

Trade receivables 4,118

Trade payables and accrued liabilities (72,335)

Long-term debt (748,265)

Net exposure $ (808,259)

Based on the above net exposure at December 31, 2014, and assuming all other variables remain constant, a 10%

depreciation or appreciation of the Canadian dollar against the U.S. dollar would result in a decrease or increase of

$ 80,825 in the Company’s other comprehensive income (loss).

Interest rate risk

All of the Company’s indebtedness bears interest at fixed rates and as a result the Company is not exposed to significant

interest rate risk arising from long-term debt.

Liquidity risk Liquidity risk is the risk that the Company cannot meet a demand for cash or fund its short and long-term obligations as they come due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. The Company manages its liquidity risk through cash and debt management. The Company’s objective in managing liquidity risk is to increase revenues, minimize operational costs and to maintain sufficient liquidity in order to meet these operational requirements at any point in time. The Company’s ability to obtain funding from external sources may be restricted if the Company’s financial performance and condition deteriorate. In addition, credit and capital markets are subject to inherent global risks that may negatively affect the Company’s access and ability to fund its short-term and long-term debt requirements. The Company mitigates these risks by actively monitoring market conditions and diversifying its sources of funding and debt maturity. The Company’s trade payables are generally due within 60 days.

ADOPTION OF NEW ACCOUNTING STANDARDS

The Company has adopted the following new accounting standards effective April 1, 2013. These changes were made in

accordance with the applicable transitional provisions and had no impact on the financial statements.

(i) IFRS 10 Consolidated Financial Statements. IFRS 10 defines a single concept of control as the determining factor in

whether an entity should be included within the consolidated financial statements of a parent company. The standard

provides additional guidance to assist in the determination of control where this is difficult to assess.

(ii) IFRS 11 Joint Arrangements. IFRS 11 focuses on the rights and obligations of an arrangement rather than its legal

form, as was previously the case. The standard distinguishes between joint operations, where the joint operator

accounts for the assets, liabilities, revenues, and expenses relating to its involvement, and joint ventures, which must

be accounted for using the equity method.

(iii) IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 is a new and comprehensive standard on disclosure

requirements for all forms of interests in other entities, including subsidiaries, joint operations, joint ventures,

associates and unconsolidated structured entities.

(iv) IFRS 13 Fair Value Measurement. IFRS 13 is a new standard that applies to both financial and non-financial items

measured at fair value. It defines fair value, sets out a single framework for measuring fair value and requires

disclosures about fair value measurements. Previously, a variety of fair value techniques and disclosures were

possible under the requirements of separate applicable IFRS.

Accounting standards and interpretations issued but not yet adopted As at the date of these consolidated financial statements, the following standard has not been applied in these consolidated

financial statements:

(i) IFRS 9 Financial Instruments; effective for annual periods beginning on or after January 1, 2018. IFRS 9 replaces the

multiple classification and measurement models in IAS 39 with a single model that has only two classification

categories: amortized cost and fair value. IFRS 9 prohibits reclassifications except in rare circumstances when the

entity’s business model changes. The new standard removes the requirement to separate embedded derivatives from

financial asset hosts. It requires a hybrid contract to be classified in its entirety at either amortized cost or fair value.

Management is currently assessing the impact of this new standard on the Company’s accounting policies and

financial statement presentation.

Use of Estimates and Judgments

The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions

that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual

results could differ from these estimates.

Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods

affected.

In preparing these consolidated financial statements, the significant judgments made by management in applying the Company’s

accounting policies and the key sources of estimation uncertainty are as follows:

Use of Judgments

Cash Generating Units

The determination of cash generating units (“CGUs”) requires judgment in defining the smallest identifiable group of

assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

CGUs are determined by geographical area, similar exposure to market risk and materiality.

Impairment of Customer Accounts

The assessment of customer accounts for any indications of impairment involves judgment. If an indication of impairment

exists, a formal estimate of recoverable amount is performed and an impairment loss is recognised to the extent that

carrying amount exceeds recoverable amount. The assessment requires judgment as to the economic and industry

conditions, the estimated future revenues to be generated by the customer accounts, operating costs and the discount rate

to be applied to such revenues and costs.

Income tax

Management exercises judgment in estimating the provision for income taxes. The Company is subject to income tax laws

in various jurisdictions where it operates. Various tax laws are potentially subject to different interpretations by the

taxpayer and the relevant tax authority. To the extent that the Company’s interpretations differ from those of tax

authorities or the timing of realization is not as expected, the provision for income taxes may increase or decrease in

future periods to reflect actual experience.

Use of Estimates

Impairment of Goodwill

Goodwill is assessed for impairment at the CGU level on an annual basis and more frequently if there are potential

indicators of impairment. An impairment loss is recognized if the carrying value of a CGU exceeds its recoverable

amount. The recoverable amount of a CGU is determined from the greater of fair value less costs to sell or “value in use”

calculations based on the net present value of discounted cash flows. Key assumptions used in the calculation of

recoverable amounts are normalized EBITDA (Earnings Before Interest, Taxes, and Depreciation and Amortization)

based on past performance and management expectations for the Company and industry and WACC (Weighted Average

Cost of Capital).

Amortization and Depreciation

Management is required to make certain estimates and assumptions when determining the amortization and depreciation

methods and rates and residual values of property and equipment and customer accounts. Useful lives are based on

historical experience with similar assets as well as anticipation of future events, which may impact their life. Management

reviews amortization and depreciation methods, rates, and residual values annually and adjusts amortization and

depreciation accordingly on a prospective basis.

RISK FACTORS

The securities of the Company are highly speculative. A prospective investor or other person reviewing the Company should not

consider an investment unless the investor is capable of sustaining an economic loss of the entire investment. Certain risks are

associated with the Company’s business including the following:

Future growth and expansion is dependent on ongoing acquisitions of General Insurance Brokerages

To a large extent, the Company’s growth and expansion plans depend upon the ongoing acquisition of independent General Insurance

Brokerages at reasonable prices. There can be no assurance that an adequate number of acquisition candidates will be available to the

Company to meet its expansion plans, or in the event that such independent General Insurance Brokerages are available for acquisition

that they will be available at a price which would allow the Company to operate on a profitable basis. The Company competes for

acquisition and expansion opportunities with entities that have substantially greater resources than the Company and these entities may

be able to outbid the Company for acquisition targets. If the Company fails to execute its acquisition strategy, the Company’s revenue

growth is likely to suffer and the Company may be unable to remain competitive.

The Company may be unable to successfully integrate its recent or future acquisitions

There can be no assurance that the Company’s recently acquired brokerages or any brokerages acquired by the Company in the future

will achieve acceptable levels of revenue and profitability or otherwise perform as expected. The Company may be unable to

successfully integrate other brokerages that the Company may acquire in the future, due to diversion of management attention, strains

on the Company’s infrastructure, difficulties in integrating operations and personnel, entry into unfamiliar markets, or unanticipated

legal liabilities or tax, accounting or other issues. A failure to integrate acquired brokerages may be disruptive to the Company’s

operations and negatively impact the Company’s revenue or increase the Company’s expenses.

The Company anticipates the need for additional financing, which it may not be successful in arranging

The Company has relied principally on debt financing to fund its recent acquisitions. The Company will require additional funds to

make future acquisitions of General Insurance Brokerages and may require additional funds to market and sell its products into the

marketplace. The ability of the Company to arrange such financing in the future, and to repay its existing debt, will depend in part upon

the prevailing capital market conditions as well as the business performance of the Company. In addition, the Company is subject to

certain financial and other covenants under its financing arrangements. If the Company is unable to or does not comply with these

covenants, the Company’s financing needs may be accelerated. There can be no assurance that the Company will be successful in its

efforts to arrange additional financing, when needed, on terms satisfactory to the Company. If additional financing is raised by the

issuance of shares from the treasury of the Company, control of the Company may change and shareholders may suffer additional

dilution. If additional financing is not available on terms favorable to the Company, the Company may be unable to grow or may be

required to limit or halt its expansion plans. In addition, the Company’s existing creditors, some of whom have security interests in the

Company’s assets, may exercise their rights to acquire or dispose of the Company’s assets.

Planned future growth is likely to place significant strains on the Company’s management, administrative, operational and

financial resources

Since its inception, the Company has experienced steady growth in revenue, number and complexity of products, personnel, and

customer base. The Company’s planned future growth is likely to place significant strains on the Company’s management,

administrative, operational and financial resources. Increased growth will require the Company to continue to add additional

management personnel, improve its financial and management controls, reporting systems and procedures on a timely basis, to

implement new systems as necessary, to expand, train, motivate and manage its sales and other personnel and to service the Company’s

customers effectively. There can be no assurance that the Company will be able to attract qualified personnel or improve its financial

and management controls or implement new systems as necessary and the failure to do so may result in increased costs or a decline in

revenue or both.

The Company’s performance and future operating results and success are dependent on the effectiveness of the Company’s

management team and key personnel

The Company’s performance and future operating results and success are substantially dependent on how effective the management

team and key personnel are at organizing and implementing the Company’s growth strategy and integrating acquired General Insurance

Brokerages into the Company’s overall organization. Shareholders will be relying on the judgment and expertise of the management of

the Company.

The senior management and some key personnel are employed under employment contracts, while other key personnel of the Company

are employed on a month to month basis and are not under an employment contract with the Company. Although the Company is in an

industry in which there is not high employee turnover, the unexpected loss or departure of any of the Company’s key management

personnel, Mr. Tony Consalvo, the President and Chief Executive Officer, Mr. Mahesh Bhatia, the VP Finance and Chief Financial

Officer and the Corporate Controller, Ms. Shelley Samec could be detrimental to the future operations of the Company.

There can be no assurance that the Company can retain its key personnel and managerial employees or that it will be able to attract or

retain highly qualified personnel in the future. The Company believes that the compensation to its key management personnel is

competitive with what other companies pay its key management personnel in the insurance brokerage industry. Although the Company

plans to compensate its senior management and other key personnel at compensation levels that are competitive within the industry,

there is no assurance that it will continue to be able to do so in the future and this may result in a departure of some if its senior

management or other personnel.

The Company maintains keyman life insurance policies of $100,000 on Mr. Consalvo and $675,000 on Mr. Bhatia and has no other

keyman life insurance on any other senior management or other personnel. The loss of the services of any of the Company’s senior

management or other key personnel or the inability to attract and retain the necessary technical, sales and managerial personnel could

have a material adverse effect upon the Company’s business, operating results and financial condition.

The Company faces intense competition in the insurance industry

The Company is in an industry in which intense competition exists. The Company competes with other General Insurance Brokerages,

as well as Insurance Companies that sell insurance directly to consumers and do not pay commissions to agents and brokers. Some

competitors have substantially more financial resources and other assets available than the Company does and are larger and better

established than the Company. Such competitors have existing distribution facilities and channels, customer recognition, customer lists,

and greater research and development capabilities and sales marketing staff than does the Company. There can be no assurance that the

Company will be able to compete successfully against current and future competitors, or that competitive pressure faced by the

Company will not have a material adverse effect on its business, financial condition and results of operation.

Incursion of government, banks or other financial institutions

The Company is susceptible to an incursion in the general insurance industry by government or banks or other financial institutions. A

government takeover of the general insurance business (or parts thereof) could affect the profitability of the Company. In addition,

banks with greater financial resources and a larger customer base than the Company may enter (or are currently entering) the general

insurance business. While management believes that the Company’s representation of a large and diverse number of Insurance

Companies will allow it to remain competitive against any such incursion by the banks, there is a possibility that their entrance into this

market could affect the profitability of the Company.

The Company cannot accurately forecast commission revenue because commissions depend on premium rates charged by

Insurance Companies, which historically have varied and are difficult to predict. Any declines in premiums or reduction in

commission rates may adversely impact profitability

Revenue from commissions fluctuates with premiums charged by insurers, as commissions typically are determined as a percentage of

premiums. When premiums decline, the Company experiences downward pressure on revenue and earnings. Historically, property and

casualty premiums have been cyclical in nature and have varied widely based on market conditions. Because we cannot determine the

timing and extent of premium pricing changes, we cannot accurately forecast our commission revenue, including whether it will

significantly decline. If premiums decline or commission rates are reduced, our revenue, earnings and cash flow could decline. In

addition, our budgets for future acquisitions, capital expenditures, dividend payments, loan repayments and other expenditures may

have to be adjusted to account for unexpected changes in revenue.

Insurance Company contingent commissions and volume overrides are less predictable than normal commissions, which

impairs the Company’s ability to forecast the amount of such revenue that will be received and may negatively impact our

operating results

A portion of the Company’s revenue is derived from contingent commissions and volume overrides. The aggregate of these sources of

revenue generally has accounted for approximately 2-6% of our total revenue. Contingent commissions may be paid by an Insurance

Company based on the profit it makes on the overall volume of business that we place with it. Volume overrides and contingent

commissions are typically calculated in the first or second quarter of the following calendar year by the Insurance Companies and are

paid once calculated. Further, we have no control over the process by which Insurance Companies estimate their own loss reserves,

which affects our ability to forecast contingent commissions. Because these contingent commissions affect our revenue, any decrease in

their payment to us could adversely affect our results of operations. Recently, legal proceedings challenging the appropriateness of

revenue sharing arrangements between Insurance Companies and brokerages, including contingent profit and volume override

arrangements, have been commenced against certain insurance brokerages. These proceedings allege that such revenue sharing

arrangements conflict with a broker’s duty to its clients. While we have not been named as a defendant in any such proceeding, and

disagree with the underlying premise that these revenue sharing arrangements create a conflict of interest, we could be the subject of a

similar action in the future. A finding that such arrangements conflict with a broker’s duty to its clients could have a material adverse

affect on our revenue and profitability.

Proposed tort reform legislation in the United States, if enacted, could decrease demand for liability insurance, thereby

reducing commission revenue

Legislation concerning tort reform is currently being considered in the United States Congress and in several states. Among the

provisions being considered for inclusion on such legislation are limitations on damage awards, including punitive damages, and

various restrictions applicable to class action lawsuits, including lawsuits asserting professional liability of the kind of which insurance

is offered under certain policies we sell. Enactment of these or similar provision by Congress, or by states or countries in which we sell

insurance, could result in a reduction in the demand for liability insurance policies or a decrease in policy limits of such policies sold,

thereby reducing our commission revenue.

Privacy legislation may impede the Company’s ability to utilize the customer database as a means to generate new sales

The Company intends to utilize its extensive customer databases for marketing and sales purposes, which it believes would enhance the

Company’s ability to meet its organic growth targets. However, privacy legislation, such as the Gramm-Leach-Bailey Act and the

Health Insurance Portability and Accountability Act of 1996 in the United States and the Personal Information Protection and

Electronic Documents Act (PIPEDA) in Canada, as well other regulatory changes, may restrict the Company’s ability to utilize

personal information that we have collected in the normal course of operations to generate new sales. If the Company becomes subject

to new restrictions, or other regulatory restrictions, which we are not aware of, the Company’s ability to grow the business may be

adversely affected.

If the Company fails to comply with regulatory requirements for insurance brokerages, the Company may not be able to

conduct business

The Company is subject to legal requirements and governmental regulatory supervision in the jurisdictions in which it operates. These

requirements are designed to protect our clients by establishing minimum standards of conduct particularly regarding the provision of

advice and product information as well as financial criteria.

Our activities in the United States and Canada are subject to regulation and supervision by state and provincial authorities. Although

the scope of regulation and form of supervision by state and provincial authorities may vary from jurisdiction to jurisdiction, insurance

laws in the United States and Canada are often complex and generally grant broad discretion to supervisory authorities in adopting

regulations and supervising regulated activities. This supervision generally includes the licensing of insurance brokers and agents and

the regulation of the handling and investment of client funds held in fiduciary capacity. Our ability to conduct our business in the

jurisdictions in which we currently operate depends on our compliance with the rules and regulations promulgated from time to time by

the regulatory authorities in each of these jurisdictions.

Our clients have the right to file complaints with the regulators about our services, and the regulators may investigate and require us to

address these complaints. Our failure to satisfy the regulators that we are in compliance with their requirements or the legal

requirements governing our activities can result in a disciplinary action, fines, reputation damage and financial harm.

In addition, changes in legislation or regulation and actions by regulators, including changes in administration and enforcement

policies, could from time to time require operational improvements or modifications at various locations which could result in higher

costs or hinder our ability to operate our business.

The Company’s success is dependent on its ability to represent quality Insurance Companies

The Company’s success is dependent upon its continued representation of quality Insurance Companies in order to sell insurance

policies to customers. The Company’s existing brokerage contracts with certain Insurance Companies do not have a set term or expiry

date but may be terminated by either the Company or the Insurance Company on between 90-120 days’ written notice of termination

depending on the terms of the specific contract. In the event of termination on any of its contracts with Insurance Companies, there are

no penalties to the Company but following termination; the Company is no longer able to represent the applicable Insurance Company

as agent on the future placement or renewal of insurance policies. If the Company loses Insurance Company representation then this

will have a negative impact on its ability to service its customers and provide alternative competitive insurance products.

Dilution and sales of additional Common Shares and the exercise of options

The number of outstanding Common Shares held by shareholders who are not affiliates of the Company and the number of Common

Shares underlying outstanding share options is large relative to the trading volume of the Company’s Common Shares. Any substantial

sale of the Common Shares, including Common Shares underlying share options, or even the possibility of such sales occurring may

have an adverse effect on the market price of the Common Shares.

The Company has significant costs and lower productivity could result in operating losses

Fixed costs including costs associated with salaries and employee benefits, depreciation and amortization, rent, and interest and

financing costs account for a significant portion of the Company’s costs and expenses. As a result, downtime or low productivity from

its sales representatives, lower demand for insurance products, loss of the Company’s customers, any significant decrease in the

premium rates, volume and commission paid in the different segments of the general insurance industry, or other factors could result in

operating losses and adversely impact on the Company.

No intention to declare dividends

The Company has a recent history of losses and has not declared or paid any cash dividends on its Common Shares. The Company

currently intends to retain any future earnings to fund growth and operations and it is unlikely to pay any dividends in the immediate or

foreseeable future. Any decision to pay dividends on its Common Shares in the future will be made by the board of directors on the

basis of the Company’s earnings, financial requirements and other conditions at such time.

Conflicts of directors and officers who serve as directors or officers or are significant shareholders of other companies

Directors and officers of the Company may serve as directors or officers of, or have significant shareholdings in other companies, or be

or become engaged in business and activities in other fields, on their own behalf and on the behalf of other companies and entities. To

the extent that such other companies or entities may participate in industries or ventures in which the Company may participate, the

directors and officers of the Company may have a conflict of interest. Conflicts, if any, will be subject to the procedures and remedies

under the Business Companies Act (Alberta).

Investors may not be able to secure foreign enforcement of civil liabilities against the Company’s management

The enforcement by investors of civil liabilities under the federal securities laws of the United States may be adversely affected by the

fact that the Company is amalgamated under the laws of Canada, that all of its officers and directors are residents of a foreign country

and a substantial portion of its assets and such person’s assets are located outside of the United States. As a result, it may be difficult

for holders of the Common Shares to affect service of process on such persons within the United States or to realize in the United

States upon judgments rendered against them.

C-1

APPENDIX “C”


PRO FORMA STATEMENT OF FINANCIAL POSITION

December 31, 2014

Unaudited

(attached)

ACL International Ltd. Pro-forma Statement of Financial Position

As at December 31, 2014 (Unaudited)

ACL International Ltd. Pro-forma Statement of Financial Position

As at December 31, 2014 Amounts are presented in accordance with IFRS and are in Canadian dollars

(unaudited)

ACL

Langsa Property (Note 1)

Pro-Forma Adjustments

(Note 1)

Pro-Forma Results

Issuer

Assets

Current assets

Cash 2,118,703 (100,000) (335,000) 1,683,703

Trade receivables 4,130 - - 4,130

Prepaid expenses 474 - - 474

2,123,307 (100,000) (335,000) 1,688,307

Property and equipment 4,189 9,924,600 - 9,928,789

Total assets 2,127,496 9,824,600 (335,000) 11,617,096

Liabilities

Current liabilities

Trade payables and accrued liabilities 225,644 - (100,000) 125,644

Long-term debt 748,265 - - 748,265

Total liabilities 973,909 - (100,000) 873,909

Equity

Share capital 6,783,995 9,824,600 528,730 17,137,325

Contributed Surplus 2,780,994 - - 2,780,994

Deficit (8,411,402) - (763,730) (9,175,132)

Total equity 1,153,587 9,824,600 (235,000) 10,743,187

Total liabilities and equity 2,127,496 9,824,600 (335,000) 11,617,096

ACL International Ltd. Notes to the Pro-forma Statement of Financial Position

As at December 31, 2014

2

1. Basis of presentation

On On March 13, 2015, ACL International Ltd. (“ACL”) entered into a purchase and sale agreement (the “Transaction”) to acquire a 50% interest in the Technical Assistance Contract for a block referred to as “Langsa TAC” (“Langsa Property”) located offshore, North Sumatra, Indonesia, from Blue Sky Langsa Ltd. (“BSL”). The total consideration to be paid for the Langsa Property is through the payment to BSL of $100,000 in cash and the issuance of an aggregate of 81,871,667 Common Shares, to certain nominees of BSL, with a value of $0.12 per common share based on the current trading price of ACL. In connection with the Transaction the following will occur:

Costs to be paid with closing the Transaction are estimated to be $235,000, including professional fees of $175,000 and sponsorship fees of $60,000;

Issuance of 4,406,083 common shares at a deemed value of $0.12 as a finder’s fee; and Cash settlement of $100,000 bonus payable.

Upon completion of the Transaction, the nominees of BSL will own, collectively, approximately 85.39% of the then issued and outstanding Common Shares of the Resulting Issuer. Upon completion of the Transaction, ACL will immediately transfer the Langsa Property to Blue Sky BVI (ACL’s wholly-owned subsidiary registered in the British Virgin Islands) and Blue Sky BVI will become the owner of the Blue Sky Assets.

The unaudited pro-forma statement of financial position has been prepared in accordance with the accounting policies that are permitted by the International Financial Reporting Standards (“IFRS”) and the financial reporting framework specified in subsection 3.14 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards for acceptable accounting policies for pro-forma financial statements. The unaudited pro-forma statement of financial position give effect to the Transaction as if occurred on December 31, 2014. The unaudited pro-forma statement of financial position may not be indicative of the financial position that actually would exist if the events reflected therein had been in effect on the dates indicated or of the results which may be obtained in the future.

The pro-forma statement of financial position has been prepared by management in accordance with the principles of IFRS issued and outstanding as of April 14, 2015, the date this pro-forma statement of financial position was compiled. However, this statement of financial position is not in compliance with IFRS as certain notes and information have been omitted or condensed for the purpose of the pro-forma statement of financial position. In the opinion of management, the unaudited pro-forma statement of financial position include all the necessary adjustments for the fair presentation of the ongoing entity.

The pro-forma statement of financial position do not include any provision for depletion and depreciation, accretion of decommissioning obligations, capital costs, impairment of properties, general and administrative costs and income taxes as these amounts are based on the operations of BSL of which the Langsa Property form only a part.

2. Significant accounting policies

The unaudited pro forma statement of financial position has been compiled using the significant accounting policies as set out in the audited financial statements of ACL for the year ended March 31, 2014.

Subsequent to the acquisition, the following significant accounting policies will be adopted:

Exploration and Evaluation

All costs directly associated with the exploration and evaluation of oil reserves are initially capitalized. Exploration and evaluation costs are those expenditures for an area where technical feasibility and commercial viability has not yet been determined. These costs include unproved property acquisition costs, geological and geophysical costs, asset retirement costs, exploration and evaluation drilling, sampling and appraisals. Costs incurred prior to acquiring the legal rights to explore an area are charged directly to net earnings as exploration and evaluation expense.



3

2. Significant accounting policies (continued)

When an area is determined to be technically feasible and commercially viable, the accumulated costs are transferred to property, plant and equipment. When an area is determined not to be technically feasible and commercially viable or the Corporation decides not to continue with its activity, the unrecoverable costs are charged to net earnings as exploration and evaluation expense.

Property, Plant and Equipment

All costs directly associated with the development of oil reserves are capitalized on an area-by-area basis. Development costs include expenditures for areas where technical feasibility and commercial viability has been determined. These costs include proved property acquisitions, development drilling, completions, gathering and infrastructure, asset retirement costs and transfers of exploration and evaluation assets, less impairments recognized.

Costs accumulated within each area are depleted using the unit-of-production method based on proved reserves using estimated future prices and costs. Costs subject to depletion include estimated future costs to be incurred in developing proved reserves. Costs of major development projects are excluded from the costs subject to depletion until they are available for use.

Impairment of Long-term Assets

The carrying value of long-term assets, excluding goodwill, is reviewed quarterly for indicators that the carrying value of an asset or cash-generating unit may not be recoverable. If indicators of impairment exist, the recoverable amount of the asset or cash-generating unit is estimated. If the carrying value of the asset or cash generating unit exceeds the recoverable amount, the asset or cash-generating unit is written down with an impairment recognized in net earnings.

Reversals of impairments are recognized when there has been a subsequent increase in the recoverable amount. In this event, the carrying amount of the asset or cash-generating unit is increased to its revised recoverable amount with an impairment reversal recognized in net earnings. The recoverable amount is limited to the original carrying amount less depreciation, depletion and amortization as if no impairment had been recognized for the asset or cash-generating unit for prior periods.

Decommissioning Liabilities

Legal obligations associated with site restoration on the decommissioning of liabilities with determinable useful lives are recognized when they are incurred, which is typically at the time the assets are installed. The obligations are initially measured at fair value and discounted to present value. Over time, the discounted decommissioned liabilities amount will be accreted for the change in its present value.

Decommissioned liabilities are not recognized for assets with an indeterminate useful life. Decommissioned liabilities for these facilities generally become firm at the time the facilities are permanently shut down and dismantled. These obligations may include the costs of asset disposal and additional soil remediation. However, these sites have indeterminate lives based on plans for continued operations, and as such, the fair value of the conditional legal obligations cannot be measured, since it is impossible to estimate the future settlement dates of such obligations. For these and non-operating assets, ACL accrues provisions for environmental liabilities when it is probable that obligations have been incurred and the amount can be reasonably estimated.



4

3. Pro Forma Share Capital

After giving effect to the pro forma assumptions in Note 1, the issued and fully paid share capital ACL would be as follows:

Common Shares Number Amount

Balance, ACL, December 31, 2014 9,605,184 $ 6,783,995Proposed acquisition of Langsa Property 81,871,667 9,824,600Finder’s fee 4,406,083 528,730

Pro forma balance, December 31, 2014 95,882,934 $ 17,137,325

4. Taxes

The pro-forma effective income tax rate applicable to the consolidated operations is approximately 25%.


PRO FORMA OPERATING STATEMENTS

December 31, 2014

Unaudited

(attached)

ACL International Ltd. Pro-forma Operating Statements

For the year ended March 31, 2014 and the nine months ended December 31, 2014 (Unaudited)

ACL International Ltd. Pro-forma Operating Statement

For the year ended March 31, 2014 Amounts are presented in accordance with IFRS and are in Canadian dollars

(unaudited)

ACL International

Ltd. Langsa

Property Pro-forma

Revenue

Petroleum and natural gas $ - $ 4,107,480 $ 4,107,480

Production costs - 5,054,566 5,054,566

Operating loss $ - $ (947,086) $ (947,086)

ACL International Ltd. Pro-forma Operating Statement

For the nine months ending December 31, 2014 Amounts are presented in accordance with IFRS and are in Canadian dollars

(unaudited)

The accompanying notes are an integral part of the pro-forma operating statements

2

ACL International

Ltd. Laguna

Property Pro-forma

Revenue

Petroleum and natural gas $ - $ 8,332,212 $ 8,332,212

Production costs - 7,767,027 7,767,027

Operating income $ - $ 565,185 $ 565,185

ACL International Ltd. Notes to the Pro-forma Operating Statements

For the year ended December 31, 2014

3

1. Basis of presentation

On March 13, 2015, ACL International Ltd. (“ACL”) entered into a purchase and sale agreement (the “Transaction”) to acquire a 50% interest in the Technical Assistance Contract for a block referred to as “Langsa TAC” (“Langsa Property” located offshore, North Sumatra, Indonesia, from Blue Sky Langsa Ltd. (“BSL”).

The unaudited pro-forma operating statements for the year ended March 31, 2014 have been prepared from information derived from the following:

The audited financial statements of ACL for the year ended March 31, 2014 reflecting only ACL’s oil and gas related activities of which there was $nil; and,

Management prepared operating statement of the revenue and production expenses of the Langsa Property for the twelve months ended March 31, 2014.

The unaudited pro-forma operating statements for the nine months ended December 31, 2014 have been prepared from information derived from the following:

The unaudited condensed interim financial statements of ACL for the nine months ended December 31, 2014 reflecting only ACL’s oil and gas related activities of which there was $nil; and,

Management prepared operating statement of the revenue and production expenses of the Langsa Property for the nine months ended December 31, 2014.

The unaudited pro-forma operating statements have been prepared in accordance with the accounting policies that are permitted by the International Financial Reporting Standards (“IFRS”) and the financial reporting framework specified in subsection 3.14 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards for acceptable accounting policies for pro-forma financial statements. The unaudited pro-forma operating statements give effect to the Transaction as if occurred on April 1, 2013. The unaudited pro-forma operating statements may not be indicative of the results that actually would have occurred if the events reflected therein had been in effect on the dates indicated or of the results which may be obtained in the future.

These pro-forma operating statements have been prepared by management in accordance with the principles of IFRS issued and outstanding as of April 14, 2015, the date these pro-forma operating statements were compiled. However, these operating statements are not in compliance with IFRS as certain notes and information have been omitted or condensed for the purpose of the pro-forma operating statements. In the opinion of management, the unaudited pro-forma operating statements include all the necessary adjustments for the fair presentation of the ongoing entity.

The pro-forma operating statements do not include any provision for depletion and depreciation, accretion of decommissioning obligations, capital costs, impairment of properties, general and administrative costs and income taxes as these amounts are based on the operations of BSL of which the Langsa Property form only a part.

2. Significant accounting policies

a) Petroleum sales – Petroleum sales associated with the sale of crude oil is recognized upon transfer of title, which is when the risk of ownership passes to the purchaser and physical delivery occurs.

b) Production costs – Production costs are costs incurred at the well head along with costs associated with the gathering, processing and delivery of the oil. Costs classified as production costs include field labor, equipment rental, insurance, maintenance repairs, utilities, and other costs that relate to the operations of the wells and the delivery of the oil.

c) Joint Operations – A portion of the properties are jointly owned and the pro-forma operating statements only reflect BSL’s proportionate interest.

D-1

APPENDIX “D” SUMMARY OF PRICE FORECASTS - MCDANIELS

Year Brent Crude Oil

Price

Langsa Field Oil

Price

Inflation

$US/bbl $US/bbl %

2014 72.50 71.03 2.0

2015 80.00 78.50 2.0

2016 82.60 81.07 2.0

2017 87.60 86.04 2.0

2018 92.70 91.11 2.0

2019 100.10 98.48 2.0

2020 102.20 100.54 2.0

2021 104.20 102.51 2.0

2022 106.30 104.58 2.0

2023 108.30 106.54 2.0

2024 110.60 108.81 2.0

2025 112.70 110.87 2.0

2026 115.00 113.14 2.0

2027 117.30 115.40 2.0

2028 119.60 117.66 2.0

2029 121.99 120.01 2.0

2030 124.43 122.41 2.0

2031 126.92 124.86 2.0

2032 129.46 127.36 2.0

2033 132.05 129.91 2.0

E-1

APPENDIX “E” FORM 51-101F2

REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR

(attached)

2200, Bow Valley Square 3, 255 - 5 Avenue SW, Calgary AB T2P 3G6 Tel: (403) 262-5506 Fax: (403) 233-2744 www.mcdan.com

April 9, 2015 ACL International Ltd. Suite 500, 5940 Macleod Trail SW Calgary, Alberta T2H 2G4 Attention: The Board of Directors of ACL International Ltd. Re: Form 51-101F2 Report on Reserves Data by an Independent Qualified Reserves Evaluator of ACL International Ltd. (the “Company”) To the Board of Directors of ACL International Ltd. (the “Company”): 1. We have evaluated the Company’s reserves data as at December 1, 2014. The reserves

data are estimates of proved reserves and probable reserves and related future net revenue as at December 1, 2014 estimated using forecast prices and costs.

2. The reserves data are the responsibility of the Company’s management. Our responsibility is to express an opinion on the reserves data based on our evaluation.

We carried out our evaluation in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”) prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).

3. Those standards require that we plan and perform an evaluation to obtain reasonable assurance as to whether the reserves data are free of material misstatement. An evaluation also includes assessing whether the reserves data are in accordance with principles and definitions presented in the COGE Handbook.

4. The following table sets forth the estimated future net revenue (before deduction of income taxes) attributed to proved plus probable reserves, estimated using forecast prices and costs and calculated using a discount rate of 10 percent, included in the reserves data of the Company evaluated by us, for the year ended December 1, 2014, and identifies the respective portions thereof that we have evaluated and reported on to the Company’s management:

ACL International Ltd. April 9, 2015 Page 2

Net Present Value of Future Net Revenue $M US (before income taxes, 10% discount rate)

Preparation Date of Evaluation Report

Location of Reserves

Audited

Evaluated

Reviewed

Total

April 9, 2015 Indonesia - 10,442 - 10,442

5. In our opinion, the reserves data respectively evaluated by us have, in all material respects, been determined and are in accordance with the COGE Handbook, consistently applied. We express no opinion on the reserves data that we reviewed but did not audit or evaluate.

6. We have no responsibility to update our report referred to in paragraph 4 for events and circumstances occurring after the preparation date.

7. Because the reserves data are based on judgments regarding future events, actual results will vary and the variations may be material.

Executed as to our report referred to above: MCDANIEL & ASSOCIATES CONSULTANTS LTD. _________________________ P. M. Taylor, C.Eng. MEI, P. Eng. Calgary, Alberta April 9, 2015

F-1

APPENDIX “F” FORM 51-101F3

REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE

Management of ACL International Ltd. (the “Corporation”) is responsible for the preparation and disclosure of information with respect to ACL’s oil and gas activities in accordance with securities regulatory requirements. This information includes reserves data, which are estimates of proved reserves and probable reserves and related future net revenue as at December 1, 2014, estimated using forecast prices and costs.

An independent qualified reserves evaluator has evaluated ACL’s reserves data. The report of the independent qualified reserves evaluator is presented above in Appendix “E”.

The board of directors of ACL has

(a) reviewed ACL’s procedures for providing information to the independent qualified reserves evaluator;

(b) met with the independent qualified reserves evaluator to determine whether any restrictions affected the ability of the independent qualified reserves evaluator to report without reservation; and

(c) reviewed the reserves data with management and the independent qualified reserves evaluator.

The of board of directors of ACL has reviewed ACL’s procedures for assembling and reporting other information associated with oil and gas activities and has reviewed that information with management. The board of directors has, approved

(a) the content and filing with securities regulatory authorities of the reserves data and other oil and gas information;

(b) the filing of Form 51-101F2, which is the report of the independent qualified reserves evaluator on the reserves data; and

(c) the content and filing of this report.

Because the reserves data are based on judgments regarding future events, actual results will vary and the variations may be material.

(Signed) (Signed) TONY CONSALVO MAHESH BHATIA Chief Executive Officer Chief Financial Officer (Signed) (Signed) NORMAND COURNOYER ROBERT SADLEIR Director Director

June 1, 2015

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APPENDIX “G”

NEW OPTION PLAN

(2015-2016)

1. Purpose

The purpose of the Stock Option Plan (the “Plan”) of ACL International Ltd. (the “Corporation”) is to advance the interests of the Corporation and each Affiliate of the Corporation by encouraging the Directors, Consultants and Employees of the Corporation and its Affiliates to acquire shares in the Corporation, thereby increasing their proprietary interest in the Corporation, encouraging them to remain associated with the Corporation and its Affiliates and furnishing them with additional incentive in their efforts on behalf of the Corporation and its Affiliates.

2. Definitions

Unless otherwise defined in this Plan, all capitalized words shall have the meanings ascribed thereto in the policies of the TSX Venture Exchange Inc. (the “Exchange”), as such policies are from time to time amended or varied (the “Policies”).

3. Administration

The Plan shall be administered by the board of directors of the Corporation. A majority of the board of directors shall constitute a quorum, and the acts of a majority of the directors present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the directors.

Subject to the provisions of the Plan, the board of directors shall have authority to construe and interpret the Plan and all option agreements entered into thereunder, to define the terms used in the Plan and in all option agreements entered into thereunder, to prescribe, amend and rescind rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan. All determinations and interpretations made by the board of directors shall be binding and conclusive on the Optionees and on their legal personal representatives and beneficiaries.

Notwithstanding the foregoing or any other provision contained herein, the board of directors shall have the right to delegate the administration and operation of the Plan, in whole or in part, to a committee of the board of directors or to the President or any other officer of the Corporation. Whenever used herein, the term “board of directors” shall be deemed to include any committee or officer to which the board of directors has, fully or partially, delegated responsibility and/or authority relating to the Plan or the administration and operation of the Plan pursuant to this Section 3.

Each option granted hereunder shall be evidenced by an agreement, signed on behalf of the Corporation and by the Optionee, in such form as the directors shall approve. Each such agreement shall recite that it is subject to the provisions of the Plan.

4. Shares Subject to Plan

Subject to adjustment as provided in Section 15 hereof, the shares to be offered under the Plan shall consist of shares of the Corporation's authorized but unissued common shares (the “Shares”). The aggregate number of Shares to be delivered upon the exercise of all options granted under the Plan shall not exceed 10% of the issued Shares of the Corporation as at time of granting of options. If any option granted hereunder shall expire or terminate for any reason without having been exercised in full, the unpurchased Shares subject thereto shall again be available for the purpose of the Plan.

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5. Maintenance of Sufficient Capital

The Corporation shall at all times during the term of the Plan reserve and keep available such numbers of Shares as will be sufficient to satisfy the requirements of the Plan.

6. Eligibility and Participation

Directors, Employees and Consultants of the Corporation and its Affiliates shall be eligible for selection to participate in the Plan. The board of directors shall determine to whom options shall be granted, the terms and provisions of the respective option agreements, the time or times at which such options shall be granted, and the number of Shares to be subject to each option. An Optionee may, if he is otherwise eligible, and if permitted under the Policies, be granted an additional option or options if the directors shall so determine.

For options granted to Employees, Consultants or Management Company Employees, the Corporation shall represent in the agreement granting the option that the Optionee is a bona fide Employee, Consultant or Management Company Employee, as the case may be.

7. Exercise Price

The exercise price of the Shares covered by each option shall be determined by the directors. The exercise price shall be not less than the price permitted by the Policies.

8. Number of Optioned Shares

The number of Shares subject to an option to an Optionee shall be determined in the resolution of the board of directors, provided that:

(a) unless the Corporation has obtained disinterested shareholder approval as provided for in the Policies, no Optionee shall, during any 12 month period, be granted an option which exceeds 5% of the issued and outstanding Shares of the Corporation at the time of granting of the option, calculated at the date an option is granted to any such person;

(b) no one Consultant shall, during any 12 month period, be granted an option which exceeds 2% of the issued and outstanding Shares of the Corporation at the time of granting of the option;

(c) the aggregate number of options granted to all persons retained to provide Investor Relations Activities, including any Consultant that performs Investor Relations Activities and any Employee or Director whose role and duties primarily consist of Investor Relations Activities (each such person being referred to herein as an “Investor Relations Provider”), must not exceed 2% of the issued and outstanding Shares of the Corporation, during any 12 month period, calculated at the date an option is granted to any such person. In addition, options issued to Investor Relations Providers must vest in stages over a period of not less than 12 months with no more than ¼ of the options vesting in any three month period; and

(d) unless the Corporation has obtained disinterested shareholder approval and meets applicable Exchange requirements, no options shall be granted to Insiders, as defined in the Exchange policies, if such grant could result in the Insiders, as a group, being granted, within a 12 month period, options to purchase a number of common shares exceeding 10% of the issued common shares of the Corporation, calculated at the date an option is granted to any Insider.

G-3

9. Duration of Option

Each option and all rights thereunder shall be expressed to expire on the date set out in the option agreements and shall be subject to earlier termination as provided in Sections 11, 12 and 15.

10. Option Period, Consideration and Payment

(a) The period within which such option shall be exercised (the “Option Period”) shall be a period of time fixed by the board of directors, not to exceed ten (10) years from the date the option is granted, provided that the Option Period shall be reduced with respect to any option as provided in Sections 11, 12 and 15.

(b) An option shall vest and may be exercised (in each case to the nearest full share) during the Option Period in such manner as the board of directors may fix by resolution. Options which have vested may be exercised in whole or in part at any time and from time to time during the Option Period.

(c) The exercise of any option shall be contingent upon receipt by the Corporation at its head office of a written notice of exercise, specifying the number of Shares with respect to which the option is being exercised, accompanied by cash payment, certified cheque, bank draft, or such other form of payment as shall be accepted by the Corporation, for the full purchase price of such Shares with respect to which the option is exercised. No Optionee or his legal representatives, legatees or distributees shall be, or shall be deemed to be, a holder of any Shares subject to an option under the Plan, unless and until the certificates for such Shares are issued to him or them under the terms of the Plan.

11. Ceasing To Be a Director, Employee or Consultant

(a) If an Optionee ceases to be a Director, Employee, Consultant or Management Company Employee of the Corporation or any of its Affiliates for any reason (other than death), the Optionee may, but only within a reasonable period, as fixed by the board of directors, next succeeding the Optionee's ceasing to be in at least one of the foregoing categories, exercise the Optionee's option to the extent that the Optionee was entitled to exercise such option at the date of such cessation.

(b) If the Optionee who has been engaged in Investor Relations Activities shall cease to be employed to provide Investor Relations Activities for any reason (other than death), the Optionee may, but only within a reasonable period, as fixed by the board of directors, next succeeding the Optionee's ceasing to be employed to provide Investor Relations Activities, exercise the Optionee's option to the extent that the Optionee was entitled to exercise such option at the date of such cessation.

(c) Nothing contained in the Plan, nor in any option granted pursuant to the Plan, shall as such confer upon any Optionee any right with respect to continuance as a Director, Employee, Consultant or Management Company Employee of the Corporation or of any of its Affiliates.

12. Death of Optionee

In the event of the death of an Optionee, the Optionee's option shall be exercisable only within one year next succeeding such death and then only:

(a) by the person or persons to whom the Optionee's rights under the option shall pass by the Optionee's will or the laws of descent and distribution; and

(b) to the extent that the Optionee was entitled to exercise the option at the date of the Optionee's death.

G-4

13. Rights of Optionee

No person entitled to exercise any option granted under the Plan shall have any of the rights or privileges of a shareholder of the Corporation in respect of any Shares issuable upon exercise of such option until certificates representing such Shares shall have been issued.

14. Proceeds from Sale of Shares

The proceeds from sale of Shares issued upon the exercise of options shall be added to the general funds of the Corporation and shall thereafter be used from time to time for such corporate purposes as the board of directors may determine and direct.

15. Adjustments

In the event that the outstanding Shares of the Corporation are changed into or exchanged for a different number or kind of shares or other securities of the Corporation, or in the event that there is a reorganization, amalgamation, consolidation, subdivision, reclassification, dividend payable in capital stock or other change in the capital stock of the Corporation, then each Optionee shall thereafter upon the exercise of the option granted to him, be entitled to receive, in lieu of the number of Shares to which the Optionee was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which the Optionee would have been entitled to receive as a result of any such event if, on the effective date thereof, the Optionee had been the holder of the Shares to which he was theretofore entitled upon such exercise.

In the event the Corporation proposes to amalgamate, merge or consolidate with any other corporation (other than with a wholly-owned subsidiary of the Corporation) or to liquidate, dissolve or wind-up, or in the event an offer to purchase the Shares of the Corporation or any part thereof shall be made to all holders of Shares of the Corporation, the Corporation shall have the right, upon written notice thereof to each Optionee, to require the exercise of the option granted within the thirty (30) day period next following the date of such notice and to determine that upon the expiry of such thirty (30) day period, all rights of the Optionee to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have any further force or effect whatsoever.

16. Transferability

All benefits, rights and options accruing to any Optionee in accordance with the terms and conditions of the Plan shall not be transferable or assignable unless specifically provided herein. During the lifetime of an Optionee any benefits, rights and options may only be exercised by the Optionee.

17. Amendment and Termination of Plan

The board of directors may, at any time, suspend or terminate the Plan. The board may also at any time amend or revise the terms of the Plan subject to the Policies; provided that no such amendment or revision shall alter the terms of any options theretofore granted under the Plan.

18. Reduction of Exercise Price

If the Corporation agrees to amend any option agreement by reduction of the exercise price of an option, and if the Optionee is an Insider at the time of the amendment, such amendment shall be subject to disinterested shareholder approval in accordance with the Policies.

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19. Necessary Approvals

The obligation of the Corporation to issue and deliver Shares in accordance with the Plan is subject to any approvals which may be required from any regulatory authority or stock exchange having jurisdiction over the securities of the Corporation. If any Shares cannot be issued to any Optionee for whatever reason, the obligation of the Corporation to issue such Shares shall terminate and any option exercise price paid to the Corporation will be returned to the Optionee.

20. Effective Date of Plan

The Plan has been adopted by the board of directors of the Corporation subject to the approval of the TSX Venture Exchange and, if so approved, the Plan shall become effective upon such approval being obtained, subject to disinterested shareholder approval being obtained in accordance with the Policies.

21. Interpretation

The Plan will be governed by and construed in accordance with the laws of Canada and of the Province of Alberta.

CC-1

CERTIFICATE OF ACL INTERNATIONAL LTD.

Dated: June 1, 2015

The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities of ACL International Ltd. assuming completion of the Acquisition.

(Signed) (Signed) Tony Consalvo Mahesh Bhatia President and Chief Executive Officer Chief Financial Officer

ON BEHALF OF THE BOARD OF DIRECTORS (Signed) (Signed) Normand Cournoyer Robert Sadleir Director Director

ACKNOWLEDGEMENT – PERSONAL INFORMATION

The undersigned hereby acknowledges and agrees that it has obtained the express written consent of each individual to:

(a) the disclosure of Personal Information by the undersigned to the Exchange (as defined in TSX Venture – Appendix 6B) pursuant to this Filing Statement; and

(b) the collection, use and disclosure of Personal Information by the Exchange for the purposes described in Appendix 6B or as otherwise identified by the Exchange, from time to time.

DATED this 1st day of June 2015

(Signed) Tony Consalvo President and Chief Executive Officer

CC-2

CERTIFICATE OF BLUE SKY LANGSA LTD.

Dated: June 1, 2015

The foregoing as it relates to Blue Sky Langsa Ltd. constitutes full, true and plain disclosure of all material facts relating to the Blue Sky Assets.

(Signed)

Mohammad Fazil President, Chief Executive Officer and Chief Financial Officer

ON BEHALF OF THE BOARD OF DIRECTORS (Signed) (Signed) Aqeel Virk Savinilorna Payandi-Pillay-Ramen Director Director

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