C A N A D I A N V E N T U R E E X C H A N G E Canadas Public Venture Capital Market Kevan Cowan, Vice President, CDNX Angel Investor Summit October 30, 2001

Overview The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge

The Canadian Challenge… To provide entrepreneurs with access to capital to fuel economic growth.

US vs. CDN Investment 35:1 25:1 Private Venture Capital Investment Ratios Target 10:1 13:1

Venture Capital Patterns Public VC Private VC January 1 - December 31, 2000

Overview The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services Canadian Market Response

Canadian Markets Senior Equities Toronto Stock Exchange -TSE Senior Equities Toronto Stock Exchange -TSE Venture Equities Canadian Venture Exchange - CDNX Venture Equities Canadian Venture Exchange - CDNX Derivatives Montreal Exchange - ME Derivatives Venture Equities Canadian Venture Exchange - CDNX Venture Equities Canadian Venture Exchange - CDNX

Acquisition Benefits clear graduation path stronger image and profile operational efficiencies cost efficiencies global competitiveness clear graduation path stronger image and profile operational efficiencies cost efficiencies global competitiveness

CDNX Market Niche Exchange Comparison

Successfully Meeting Market NeedsVancouver Calgary Winnipeg Toronto Montreal

Listed Company Geography Composition of new listed companies in 2001 January 1 - September 30, 2001

Overview The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services CDNX Performance

Financing Performance Year 2000 January - September 2001 Total equity financing = $2.4 B Total equity financing = $882 M

Total Grad Performance Growth one year prior to graduation

Overview The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services CDNX Opportunity

Why CDNX? gaining liquidity for high growth companies alternative financing strategies vehicle for financing mergers and acquisitions employee stock options transparent market valuations streamlined graduation path to the TSE gaining liquidity for high growth companies alternative financing strategies vehicle for financing mergers and acquisitions employee stock options transparent market valuations streamlined graduation path to the TSE

When CDNX Project or idea R&D or prototype Commercial stage stage Stableproductionstage Operatinghistory CDNX candidates Private equity candidates TSE candidates

Tech Candidate Profile working capital to fund operations months management team –key positions filled –experience in industry –public company background working capital to fund operations months management team –key positions filled –experience in industry –public company background (000s)

CDNX and Angels CDNX may provide Angels with: early stage exit early stage exit early stage liquidity early stage liquidity additional investment options additional investment options –opportunities to invest in and mentor undervalued public companies –information and financials are disclosed and publicly available opportunities to diversify risk opportunities to diversify risk –no minimum investments for secondary market trading –new private placement rules present further opportunities CDNX may provide Angels with: early stage exit early stage exit early stage liquidity early stage liquidity additional investment options additional investment options –opportunities to invest in and mentor undervalued public companies –information and financials are disclosed and publicly available opportunities to diversify risk opportunities to diversify risk –no minimum investments for secondary market trading –new private placement rules present further opportunities

Capital Pool Company Program unique way to list, introduced in 1987 unique way to list, introduced in ,327 listed since inception 1,327 listed since inception 1,034 CPCs have completed qualifying transaction since ,034 CPCs have completed qualifying transaction since new CPCs listed in 2001 raising nearly $445 million in seed capital IPOs 90 new CPCs listed in 2001 raising nearly $445 million in seed capital IPOs 141 former CPCs now on senior exchanges 141 former CPCs now on senior exchanges 48% of CDNX grads to TSE YTD 2001 were CPC issuers 48% of CDNX grads to TSE YTD 2001 were CPC issuers unique way to list, introduced in 1987 unique way to list, introduced in ,327 listed since inception 1,327 listed since inception 1,034 CPCs have completed qualifying transaction since ,034 CPCs have completed qualifying transaction since new CPCs listed in 2001 raising nearly $445 million in seed capital IPOs 90 new CPCs listed in 2001 raising nearly $445 million in seed capital IPOs 141 former CPCs now on senior exchanges 141 former CPCs now on senior exchanges 48% of CDNX grads to TSE YTD 2001 were CPC issuers 48% of CDNX grads to TSE YTD 2001 were CPC issuers As of September 30, 2001

CPCs in Ontario Introduction of program published for comment by the OSC Introduction of program published for comment by the OSC Implementation details being finalized Implementation details being finalized –review procedures –role of securities commission Program launch in early 2002 Program launch in early 2002 Introduction of program published for comment by the OSC Introduction of program published for comment by the OSC Implementation details being finalized Implementation details being finalized –review procedures –role of securities commission Program launch in early 2002 Program launch in early 2002

CPC Process Traditional IPO process Qualifying transaction Listing CPC process

Overview of CPC Process Seed Financing Public Offering Trade as CPC Prospectus Receipt Announce Qualifying Transaction File Draft Info Circular Obtain Shareholder Approval CDNX Listed Company Incorporate CPC 18 Months Maximum

IPO vs. CPC IPO preferred when: –transaction is certain –strong retail appetite –larger financings required –wider structuring parameters IPO preferred when: –transaction is certain –strong retail appetite –larger financings required –wider structuring parameters CPC preferred when: –going public for reasons other than raising equity –market not conducive to an IPO –issuer prefers to go public prior to market window opening –issuer has financing sources that require a public vehicle CPC preferred when: –going public for reasons other than raising equity –market not conducive to an IPO –issuer prefers to go public prior to market window opening –issuer has financing sources that require a public vehicle

Graduate Case Studies Jul qualifying transaction Mar $9.5 million special warrant deal Feb grad to TSE First Capital Management and Caledonia Investments Jul qualifying transaction Mar $9.5 million special warrant deal Feb grad to TSE First Capital Management and Caledonia Investments Jan qualifying transaction Dec Jun six rounds of financing Oct grad to TSE Triax and Working Ventures Jan qualifying transaction Dec Jun six rounds of financing Oct grad to TSE Triax and Working Ventures

Overview The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services The Venture Financing Challenge The Venture Financing Challenge Canadian Market Response Canadian Market Response CDNX Performance CDNX Performance CDNX Opportunity CDNX Opportunity Additional CDNX Services Additional CDNX Services Additional CDNX Services

Focus on management and governance Comprehensive listings policy On-going listed company regulation Focus on management and governance Comprehensive listings policy On-going listed company regulation Regulatory Program

InfoCDNX

Contact Information Main Office Number –(416) Kevan Cowan –(416) Business Development: Delilah Panio –(416) Main Office Number –(416) Kevan Cowan –(416) Business Development: Delilah Panio –(416) Corporate Finance: Tom Graham –(416) Ungad Chadda –(416) Corporate Finance: Tom Graham –(416) Ungad Chadda –(416)

C A N A D I A N V E N T U R E E X C H A N G E