INTERIMREPORTTOTHECREDITORSOF

SEAQUESTCORPORATION
AND
SEAQUESTCAPITALCORPORATION
(HereinreferredtocollectivelyasSeaquest)

November16,2011

Asyouareaware,onOctober24,2011,SeaquestfiledaNoticeofIntenttoFileaProposal(theNOI)
pursuanttotheBankruptcyandInsolvencyAct,puttingintoeffectastayofproceedingsforaperiodof
30daystoenableSeaquesttoformulateaproposalforthesettlementofitsliabilities.
Subsequently,alloftheemployeesofSeaquestwereterminatedbymanagementandthedirectors
resigned.OnNovember3,2011byOrder(theReceivershipOrder)oftheOntarioSuperiorCourtof
Justice,BDOCanadaLimited(BDO)wasappointedasInterimReceivertotakepossessionandcontrol
ofthebooksandrecordsandassetsofSeaquestandGregS.MacLeodwasappointedasChief
RestructuringOfficer(CRO)toworkwiththeInterimReceiverandSeaquestsstakeholderstomakea
determinationastowhetheraviablerestructuringproposalcanbedeveloped.
IfSeaquestexpectstobringforwardaviablerestructuringproposalandrequiresmoretimetodoso,it
canasktheCourttoextendthestayofproceedingsforupto45days.Sucharequestmustbemade
beforetheexpirationoftheinitial30daystayperiodonNovember23,2011.Iftherequestisnotmade
orifSeaquestsrequestisdeniedbytheCourt,thenSeaquestwillbedeemedbankrupteffective
November24,2011,andBDOwillassumethedutiesofTrusteeinBankruptcy,andtheproposalprocess
andtheinterimreceivershipwillbecomplete.Thisinterimreportistoupdateallcreditorsonthestatus
oftheCROsconsiderationsinrespectofextendingtheNOI.
ImmediatelyfollowingtheissuingoftheReceivershipOrder,BDOandtheCROrelocatedSeaquests
booksandrecords,computersandserverstoBDOsoffices.Significanttimewasspentorganizingthe
records,includingaccessingelectronicaccountingrecords,tofacilitateareview.Aswell,BDOandthe
CROhaveconductedmanyhoursofinterviewsofpersonsincludingtheformerCEOanddirector,
managers,employees,investors,advisorsandotherpartiesinvolvedwithSeaquest,connected
companiesandinvestmenttransactions.Asaresultofthereviewoftheavailableinformationandthese
meetings,significantprogresshasbeenmadetowardsformingapreliminaryassessmentofthe
existenceandtheestimatedvalueofSeaquestsassetsincludingrealproperty,personalpropertyand
theloanandinvestmentportfolio.
Atahighlevel,Seaquestssituationcanbebroadlysummarizedasfollows:

Theinvestmentportfolioiscomprisedofalargenumberofhighlyspeculativeandilliquidloans
andshareholdings,themajorityofwhichconsistofloansandadvancestononarmslength
companies,indirectsubsidiariesandaffiliatedcompanies.Mostoftheloansareunsecured.
Thefewsecuredloansaretocompaniesthatarethemselvesunderperforming,inactiveor
insolvent.Noneoftheportfolioinvestmentsisbeingservicedatthepresenttime.In
summary,thereislittleornoprospectformeaningfulrecoveryintheshortterm,oroverthe
longtermoftheinvestmentportfolio,withoutadditionalfunding.
Seaquestownsaresidentialcondominiumandanexecutiveaircraft.BDOhasobtained
preliminaryvalueassessmentsoftheseassetsandnetofexistingmortgagesandencumbrances
thereisverylittle,ifany,netrealizablevalueineitheroftheseassets.
Seaquestappearstohaveincurredsubstantialoperatinglossesthathavebeenfunded,atleast
inpart,byportfolioinvestors.
Thebooksandrecordshavebeenpoorlymaintainedandarenotadequateforanenterpriseof
thisnature.
Seaquestsinternalcontrolandgovernancesystemswereinadequate.
Seaquestisnotoperationalandhasnorecurringrevenueorcashflowstreamsatthepresent
time.
Therearenodirectorsormanagementteam.
Therearenocommittedfundingsourcesatpresent.

Thatsaid,overthenextcoupleofdays,theCROandBDOarecontinuingtoengagepartiestodiscussthe
possibilityofcontinuingwithrestructuringoptions.SinceSeaquesthasnoabilitytoselffund,itisclear
thatasignificantfundingcommitmentwillbenecessarytocarryouttherestructuringplan,including
shorttermfundingtosupportSeaquestthroughanNOIextensionasdiscussedabove.Werecognize
thatthesituationisverycriticalandtimeisveryshort.Wearecontinuingtoworkdiligently;however,
absentsatisfactoryfundingcommitmentstosupportarestructuringplan,itwillbedifficultfortheCRO
orBDOtosupportanextension.
Wehavespokenwithmanyofyouoverthepast12daysandyouwillappreciatethatthesituationis
veryfastpaced.Wecertainlyacknowledgeyourconcernsandweappreciateyourcontinuedpatience
andsupport.Wewilldoourbesttokeepyouabreastofeventsastheyunfoldandparticularlyin
respectoftheextensiondeadlinenextweek.

GregS.MacLeod,
ChiefRestructuringOfficer