1. Public Venture Capital Introduction –Alternate manner in which to finance early-stage companies in the development phase of their corporate life cycle. Range: $500k - $20M –27.6% of venture capital is raised thru the public venture capital –Connects angels, wealthy individuals, investors with financial market experience to entrepreneurs –Program has existed for over 15 years –Program and process managed by TSX as of June 2002 –“a godsend for companies trying to raise cash in a tough VC market” –“the guy on the street is getting a chance to participate in high-growth opportunities …”

2. Public Venture Capital Overview/History –Capital Pool Corporation, since 1986 –Majority of venture capital raised thru PVC in W Canada –Open to Canadian and American firms and investors –Examples: Aastra Technologies & Boardwalk –No difference in the filing requirements: IPO & CPC –Over 1,100 business listed on TSX via CPC Program –Over 150 former CPCs have graduated to senior exchanges and have gone on to raise more than $3B –Reasons for Use: company is too early-stage for a “regular” IPO IPO market not currently strong VC financing is not viable or preferred

3. Public Venture Capital Sector Profile –Embedded Systems –Biotechnology –Software Applications –Application Service Providers –Wireless –Networks –System Design –Internet Service Providers –E-commerce Business –Content and Information Suppliers

4. Public Venture Capital Criteria/Issues –Track record –Customer traction, revenue stream, indication of market acceptance –Fair & equitable valuation –Large, growing target market –Domination of market within 12 months –Management team, board, advisory –Defensible differentiated value proposition i.e. Intellectual Property, barriers to entry –Current financing –Well developed business plan incl strategic marketing plan

5. Public Venture Capital Pros –Favorable valuations. Minimal dilution. Allows the current management team up to 80% ownership and control of company –Cash: immediate access to cash in CPC. Known result, similar to “bought deal” access to future capital: –secondary equity financings incl private placements –more favorable terms from lending financial institutions –Expertise: CPC management, already in place, are familiar with all the regulatory hoops re public co. These individuals frequently will remain with the new venture. –Permanent equity money –“Currency” for acquisitions

6. Public Venture Capital Pros cond –Credibility, marketing –Terms and conditions –Prestige –Attract & retain talent –Simple and clean. No stigma of RTO. –Liquidity –Benefits when graduating to senior exchange –Public company focused management team clear biz model transparent accounting procedures

7. Public Venture Capital Cons –Loss of privacy, public information, no secrets financial results, executive compensation etc –Shareholders, info requests –Fiduciary responsibility as officers of public co –Increased regulation and reporting with associated costs –Restrictions on seed stock/shares –Different tax treatment from private co

8. Public Venture Capital Process: Creation of CPC –Seasoned directors (3-6) with business and public company experience create shell by investing $100k to $500k in seed capital –Shell is incorporated (CPC) and issues shares in exchange of seed capital –Prospectus is prepared to raise between $200k to 1,900k by selling CPC shares at typically twice the issuance price of the seed shares. Use of proceeds to identify and evaluate acquisitions. –CPC applies for listing on TSX. –Broker sells CPC shares to a min of 200 arm’s length shareholders –CPC is listed on TSX Venture Exchange

9. Public Venture Capital Process: Amalgamation of OEM with CPC –Within 18 months, CPC identifies its “qualifying transaction” (operating company) –TSX reviews documents, shareholder vote –Qualifying transaction closes and business is acquired –Marketing, net based road show, web based seminars etc –Major transaction is usually accomplished thru a swap of shares. I.e. shares are issued from the treasury of the CPC in return for the shares of the OEM

10. Public Venture Capital CPC Involvement –Officers, Directors, creators: American or Canadian –Sponsor: iBank, “seat” on TSX Exchange –CPC Inc: incorporated in Canada –CPC IPO: – shareholders/investors from province where prospectus was qualified –Qualifying Transaction: OEM, operating company either American or Canadian –Private Placement: American or Canadian investors

11. Public Venture Capital Costs –prospectus preparation –audit & accounting –listing fees –printing costs –travel costs –due diligence –valuation –underwriters

12. Public Venture Capital Direct: (905) 873-7151 Fax: (905) 873-6560 Mobile: (647) 227-3637 Email: info@omni-rand.ca THANK YOU Prepared by: David Dods, Omni-Rand Inc