Formed in 1984, Middlefield Capital Fund ("MCF") is managed by Middlefield Ventures Limited. Investors include pension funds, insurance companies and other major financial institutions. Since inception, MCF has focused on identifying and investing in early stage companies with excellent earnings growth potential. By definition, investments of this nature entail a greater degree of risk and therefore not all have achieved expectations. However, MCF has made several very successful investments, some of which have been realized and some of which are nearing the point of realization. As a result, we anticipate that prospective near-term gains will substantially augment those realized to date.

Examples of successful investments include Gravure International Corporation ("GIC") and Morrison Middlefield Resources Limited ("MMRL"). GIC is a major producer of flexible packaging headquartered in Charlotte, N. C. At the time of MCF's initial investment, the proceeds of which were used to purchase a state of the art printing press, the company had a single plant located in Winnipeg. Over several years, the company grew substantially, both internally and through the acquisition of additional plants in Toronto, Vancouver and Charlotte. In 1994, MCF, which was the largest institutional investor, and the other shareholders sold the company to ACX Technologies Inc., an affiliate of Adolph Coors Brewing Company, for $66 million (U.S.).

MMRL was founded by the Middlefield Group and Morrison Petroleums Ltd. in 1993 and raised $40 million through an IPO in August of that year. MCF invested at the time of the IPO and subsequently increased its investment through a combination of open market purchases and the exercise of warrants. MMRL has become a very successful oil and gas company with production and exploration activities in Alberta and the United Kingdom, where it is the second largest onshore oil producer. Reflecting the substantial growth of cash flow, earnings and exploration prospects since inception, MCF's investment in MMRL has appreciated very significantly and the market capitalization of the company is currently in excess of $200 million.