Harnessing the Potential of the North American Capital Markets The IPO in Canada – What Management Needs to Know Stock Exchange Listing In Canada

Why Go Public on the TSX? Some Notable Benefits for Israeli Tech Co’s  TSX is a senior market for well established businesses  Access to North American Capital

Why Go Public on the TSX? – (con’t)  Analyst Coverage of Technology Companies  Corporate Governance Meets North American Investor Standards  Straight Forward Listing Application Process and Lower Costs

Do You Have What it Takes General TSX Listing Criteria for Technology Companies  At least 300 shareholders and least 1 million shares in public float at a total value of Cdn$10M  Minimum market value of Cdn$50 million  Minimum of Cdn$10 million cash in treasury (raised via prospectus)  Funds to cover expenses, R&D and capital expenditures and requirements 1 year

Do You Have What it Takes – (con’t)  Adequate working capital to cover planned development  Product and services and operating history at an advanced stage  Management talent and expertise to develop the business  Less demanding requirements for a TSX Venture Exchange Listing

How to Get Started  Establish an Internal IPO Team  Keeping your eye on the ball  Interview and Retain Canadian External Advisors  Investment Bank  Audit Firm  Law Firm  Transfer Agent

 Is It Expensive?  Competitive (but costs should be considered relative to amount of dollars raised on the IPO)  Cdn$750,000 - Cdn$1,250,000 (includes audit, legal, translation and transfer agent costs but does not include underwriters’ fee)  How long does it take?  3 – 6 months How to Get Started – (con’t)

Other Key Items to Consider  Management  Management must have adequate experience and adequate public company experience  Officers, directors and holders of more than 10% of outstanding voting securities must provide details of their background, business experience and industry knowledge

Other Key Items to Consider – (con’t)  Regulators and TSX will perform background checks to help determine if there are any integrity or compliance issues (must file PIF’s)

Other Items to Consider (con’t)  Board of Directors  At least a majority of the directors of a public company should be independent directors  Ample time during the IPO process to recruit independent directors  One or more Canadian resident directors may be required

Other Items to Consider – (con’t)  Audit Committees  All Canadian public companies must have an audit committee comprised of at least three independent directors who are financially literate  Other Recommended Board Committees (for example, corporate governance and compensation committees)

The Prospectus  “full, true and plan” disclosure of all material facts  Minimum Disclosure – Canadian Legal Requirements  Description of the Business and Strategy for Success  A tell-all about your “secret sauce”  Audited Financial Statements for the past 3 years  US GAAP or IFRS are accepted by the TSX  Audited Financial Projections (Optional)  All financial projections must stem from Audited projections

The Prospectus – (con’t)  Minimum Disclosure – Canadian Legal Requirements  Risk Factors  Securities Laws requires the prospectus to provide an extensive list of risks that are relevant to the company about to go public and the industry  Due Diligence  The contents of the prospectus is supported by extensive due diligence which is time consuming and labour intensive

Ongoing Reporting Requirements  Unaudited Quarterly Financial Statements  Audited Annual Financial Statements  Annual Information Form (similar to Form 10-K in US)  Proxy Circular (Annual General Meeting)  Ongoing costs (Cdn$250,000 – Cdn$500,000)

Filing the Prospectus  Filing a Preliminary Prospectus with regulators  Receipt of comments from regulators within 15 business days  TSX has an open door policy when dealing with comments  Filing final prospectus  Escrow Requirements

Case Study of a Recent International Listing Harmony Asset Limited: Recent Success Story  HKSE listed investment company investing in both publicly listed and private companies  Successfully commenced trading on TSX on June 29, 2007  Funding: Satisfied by successfully completing an oversubscribed private placement in Canada  No practical difference between a Hong Kong and Israeli Company

Michael Melanson Partner Fraser Milner Casgrain LLP Toronto, Canada Andrew Elbaz Associate Fraser Milner Casgrain LLP Toronto, Canada Tom Houston Managing Partner Fraser Milner Casgrain LLP Ottawa, Canada FMC Key Contacts