1. Specialized Tax Credits Within Your Reach R&D (Manufacturer’s) Tax Credit Presentation for MFG.Com This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited.

2. Specialized Tax Credits Within Your Reach CORPORATE OVERVIEW This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Corporate Headquarters in Houston, Texas. Assisting CPA’s, Alliances, and their clients to recover millions in R&D Tax Credits. We specialize in legal, technical (engineering) and tax knowledge of the Internal Revenue Code (IRS) Section 41. Our Staff includes the industry’s most experienced IP Attorneys, R&D Engineers, Scientists, and IRS Audit Experts from national tax consulting firms.

3. Specialized Tax Credits Within Your Reach HISTORY - R&D TAX CREDIT – IRC § 41 This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. In December 2001, new tax regulations enabled small to mid-size companies to be eligible to take the R&D (wage-based) Tax Credits. Documentation and Discovery requirements were relaxed. The goal was to keep innovation and creativity in the U.S. and encourage economic growth. Small Business Jobs Act of 2010 Clients can now receive cash back and/or tax credit benefits for conducting technical activities and meeting the tax regulation requirements.

4. Specialized Tax Credits Within Your Reach IRS DEFINITION OF R&D This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Tax Definition 1.New or Improved Business Component Product, Process, Software (Internal or External), Technique, Formula, or Invention. 2.Technological in Nature 3.Elimination of Uncertainty 4.Process of Experimentation Traditional Definition

5. Specialized Tax Credits Within Your Reach Small Business Jobs Act of 2010 This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Made Three Critical Changes to this Credit: 1. Any company under 50M in Sales could now take the credit 2. The 2010 (and 2011) credit can be used to offset ANY TAXES PAID, including the Alternative Minimum Tax for up to 5 years prior. 3. “Qualified Research Expenditures” was changed to “Qualifying Activities”. Definition of what was Qualified Activity expanded New 12 point Test Established Even companies over 50M in Sales benefit from the new definitions established. Completely changed the audit paradigm for the IRS.

6. Specialized Tax Credits Within Your Reach 12 Point Test Established This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Does your enterprise perform any of the following technical activities: Manufacturing Fabrication Engineering New Product and Process Development or Improvement Developing New Concepts or Technologies Design – Layout, Schematics, AutoCAD Prototyping or Modeling Testing or Quality Assurance: ISO 900X, UL, Sigma Six, or other certifications Integration of new machinery (CNC, SLA, SLE, etc) into existing process Software Development or Improvement (internal use or for external sale) Automating or streamlining internal processes Developing tools, molds, dies If Yes to any of the above, then they qualify for the credit!

7. Specialized Tax Credits Within Your Reach QUALIFIED ACTIVITIES This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Wages Form W-2, Partnership Earnings subject to Self Employment Tax, Schedule C, bonuses paid to employees Excludes 401(k) & fringe benefits Supplies Cost to fabricate prototypes / items consumed in R&D process Any tangible property used in the conduct of qualified research other than land or improvements to land, and property subject to depreciation 65% of Contract Research Fees paid to non-employees, outside consultants / engineers / software developer Net Benefit is around 6.5% with Regular Credit Net Benefit is around 4% with Simplified Credit

8. Specialized Tax Credits Within Your Reach R&D STUDY PROVIDER OVERVIEW This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Other Providers Study conducted by non-engineers Technical Sampling Project by Project Methodology but stop with wage allocation spreadsheet Results Susceptible to substantial shrink backs Paradigm Partners Every employee in production is an IP Attorney with an engineering background or an engineer Comprehensive Project by Project Approach Wage allocation spreadsheet supported by detailed documentation by Employee, Hours, Project and Years R&D Audit defense included at no cost Results R&D Study that is able to withstand the most intense IRS scrutiny Retention of most or all credits

9. Specialized Tax Credits Within Your Reach PARADIGM’S APPROACH This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. Project by Project Methodology with established nexus (Only method now Recommended by IRS) versus Hybrid or Technical Sampling Flexible fee structure to minimize client risk in Phase I Offer 3:1, 4:1 or 5:1 ROI on the project Paradigm provides Audit Defense at Federal and State level at NO ADDITIONAL CHARGE Industry specific engineering team assigned to client

10. Specialized Tax Credits Within Your Reach This document and/or electronic file contains information that (a) is or may be LEGALLY PRIVILEGED, CONFIDENTIAL, PROPRIETARY IN NATURE, OR OTHERWISE PROTECTED BY LAW FROM DISCLOSURE, and (b) is intended only for the use of Paradigm Partners. You must have written authorization from Paradigm Partners to use, copy, or distribute any part of this document as it is strictly prohibited. So what is the next step? Contact Paradigm for Assistance Bob StabellEmrick Ensey Senior DirectorAccount Manager 281.558.7100 ext. 139281.558.7100 ext. 145 979.450.6408979.777.4746 rstabell@paradigmlp.comeensey@paradigmlp.com