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Louis Doyle Vice-President, Montreal, Listed Issuer Services TSX Venture Exchange Going Public on TSX Venture Welcome & Overview of Public Capital.

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Presentation on theme: "Louis Doyle Vice-President, Montreal, Listed Issuer Services TSX Venture Exchange Going Public on TSX Venture Welcome & Overview of Public Capital."— Presentation transcript:

1 Louis Doyle Vice-President, Montreal, Listed Issuer Services TSX Venture Exchange Going Public on TSX Venture Welcome & Overview of Public Capital

2 2 Agenda 1:30 pm Welcome and Overview of Public Venture Capital Louis Doyle, TSX Venture Exchange 1:50 pmCase Study Keith Abriel, Immunovaccine Inc 2:15 pmBasics of Going Public Allan L. Jenkins, PricewaterhouseCoopers, LLC Glenn Jessome, Jessome Law Scott Urquhart, Jennings Capital Kevin G. Redden, Nova-Scotia Securities Commission 3:05 pmCoffee Break 3:20 pmCPC Workshop Richard Gordon, Oceanus Resources Corporation James D. Nicoll, PricewaterhouseCoopers, LLC 4:10 pmQuestions & Answers 4:30 pmNetworking Reception

3 3 Disclaimer This document is for information purposes only and is not an invitation to purchase securities listed on Toronto Stock Exchange and/or TSX Venture Exchange or Natural Gas Exchange. TMX Group Inc. and its affiliates do not endorse or recommend any securities referenced in this document. Please seek professional advice to evaluate specific securities. While the information herein is collected and compiled with care, neither TMX Group Inc. nor any of its affiliated companies represents, warrants or guarantees the accuracy or the completeness of the information. You agree not to rely on the information contained herein for any trading, business or financial purpose. This information is provided with the express condition, to which by making use thereof you expressly consent, that no liability shall be incurred by TMX Group Inc. and/or any of its affiliates as a result of any errors or inaccuracies herein or any use or reliance upon this information. © 2010 TMX Group Inc.

4 4 TMX Group is a Multi-Asset Class Market Leader (53% Ownership) (47% Ownership) (19.9% Ownership) Data Energy Derivatives Fixed Income Equities

5 5 State of the Public Capital Markets in Canada +128% New Listings on TSX (105 vs 46) +533% Number of IPOs on TSX (19 vs 3) +77% Value of IPOs on TSX ($5.2B vs $2.9B) +94% New Listings on TSXV (192 vs 99) $29B New equity financing raised on TSX & TSXV $832M New Clean Technology equity financing raised on TSX & TSXV All Data is YTD July and compares against YTD July

6 6 7 th largest exchange group By domestic market cap 1 1 st in North America 2 nd globally By number of issuers 1 TMX Group - Global Leader in Equities 6 th largest exchange group By equity capital raised 2 1 Issuers on TSX and TSXV (WFE, June 2010) 2 (WFE and Capital IQ, Dec 2009)

7 7 The North American Stock Markets Continuum OTC - Pink Sheets OTCBB NASDAQ NYSE Minimal/No listing standards Senior listing standards Disclosure rules Junior listing standards CNSX

8 8 TMX Group Lists Companies at all Stages of Growth

9 9 Market Snapshot: TSX and TSXV Market Data for June 30, 2010 (C$) As at June 30, 2010 *NASDAQ Information does not include secondary financings Source: TSX/TSXV Market Intelligence Group, AIM and Nasdaq Websites, WFE, Capital IQ

10 10 2,177 companies 20 graduates in First Half graduates in graduates in ,488 companies TSX Venture Exchange Access to capital for earlier stage companies or smaller financings Total market cap of $38 Billion & average market cap of $17.4MM Cost effective stepping stone for international companies looking to list on a quality North American market Exchange mandate to mentor management of newly public companies Streamlined graduation to TSX when senior market requirements are met 103 year history Toronto Stock Exchange Senior market for well established businesses and management teams with experience in public markets Total market cap of $1.8 Trillion & average market cap of $1.2B 30% of TSX issuers >$500M are interlisted on a US exchange Access to larger, more international institutional investors and greater analyst coverage Globally visible specialized indices 157 year history Unique Equity Market Structure

11 11 TMX Group Serves Companies at all Stages of Growth Market Capitalization Toronto Stock Exchange and TSX Venture Exchange Unique feeder system 471 graduates + 85 M&A* *From January 1, 2000 – June 30, Toronto Stock Exchange issuer base: 1,488 issuers, ~$1.8 trillion market cap TSX Venture Exchange issuer base (excludes NEX): 2,177 issuers, ~$37.7 billion market cap As at June 30, Issuers 498 Issuers 476 Issuers 2016 Issuers Issuers

12 12 TMX Group’s Equity Exchanges Support a Diverse Issuer Base Mining 1466 Oil & Gas & Energy Services 463 Diversified Industrials 415 Technology 198 Financial Services 124Structured Products 219Life Sciences 129CPC 181 Clean Technology 129 Real Estate 80 ETFs 158 Comm & Media 48 Utilities & Pipelines 31Forest Products 24 Number of Issuers by Sector Includes issuers on Toronto Stock Exchange and TSX Venture Exchange (100% = 3665) As at June

13 13 Why Companies Consider TSX and TSX Venture Exchange Unique Public Market for small to mid cap companies Access to Capital Liquidity Visibility

14 14 Benefits of Going Public Access capital and future financing opportunities Facilitate growth Increase visibility and prestige Provide liquidity for shareholders Create employee incentive mechanism

15 15 Access to Capital: 2009 was an all time record year for financing on TSX *TSX Venture Exchange commenced operations on November Toronto Stock Exchange and TSX Venture Exchange Total Financings (C$Billions) 1999 – 2010 June

16 16 Trends: TSXV Financings by Type

17 17 TSX and TSX Venture Exchange have shown consistent growth in liquidity Billions of Shares Toronto Stock Exchange Volume of Shares Traded Toronto Stock Exchange Volume of Shares Traded Billions of Shares TSX Venture Exchange Volume of Shares Traded TSX Venture Exchange Volume of Shares Traded

18 18 A TMX Group Listing can Provide Analyst Visibility 872 TSX Companies get Analyst Coverage Source: Capital IQ, December Average Number of Analysts Covering TSX Cos. 259 TSXV Companies get Analyst Coverage

19 19 Methods for Going Public on Toronto Stock Exchange or TSX Venture Exchange

20 Trends: New TSXV Listings by Type 155

21 21 Capital Pool Company™ (CPC) Program has a Strong Track Record Since inception: Over 2050 CPCs were created 80% have completed their QT – over 1600 companies 329 Graduates now trade on TSX 96 of the grads were CPCs

22 22 Advantages of Listing on TSX and TSX Venture Canada is the market of choice for resource and SME companies Top global player in energy and resource listings and financings Diverse cross-section of listed companies in a variety of sectors Standards-based exchanges that promote integrity for public SMEs Access to specialized products for TSX/TSXV listing (eg. Capital Pool Company Program) Sustained access to capital – steady growth of capital investment over past 5 years Strong equity culture – 50% of Canadians hold equities Strong trading liquidity – value traded has more than doubled over the past 5 years Lower trading impact costs on TSX Analyst coverage typically seen at an earlier stage Access to US capital without the higher cost of regulatory compliance Ease of access to US market with Multijurisdictional program Canadian regulatory commissions and exchanges are customer-focused Companies have recognized the benefits of listing or interlisting on TSX such as analyst coverage, access to institutional and retail investors, liquidity and an active secondary financing market TSX provides listed companies unparalleled product and service support

23 23 Key Considerations The ‘Team’ Internal – management and board of directors External – advisors (financial, legal, accounting, investor relations) Business Plan Clarity of goals / milestones Realistic and attainable Financial Plan Budget for costs of being public How much $ to raise, and why? Understand the drawbacks Disclosure, transparency and public scrutiny Costs Management time commitment away from core business. The ‘Story’ – growth potential and attracting investors Commitment to ‘Act Public’ early Timing – long term decision

24 24 Supporting Your Growth Our comprehensive portfolio of additional products and services IR ServicesVisibility/ Outreach Services Research Services/ Educational /Support Services Capital Market Intelligence  Equicom Group: Canada’s leading IR consulting firm and strategic communication experts  Thomson ONE Investor Relations: Advanced market data, First Call research, Ownership and Contacts, iTarget  TMX/Equicom “On the Radar”: Issuer showcases  TMX Group Annual General Meeting Services  TMX Group Annual Report Services  CNW: Canada’s premiere newswire service provider  S&P/TMX Market Access Program & Stock Reports: Increases US visibility  Investor Scorecards  Perception Audit: Investor Studies  Webinars / Webcasts / Research Papers  TSX Venture Mentorship Program  TSX Workshop Series  Exchange Filing Services  Market intelligence, IR analytics  Thomson Reuters Corporate Advisory Services – stock surveillance  Historical data  Shareholder reporting

25 25 Companies can capitalize on TMX Leadership

26 26 Case Study Immunovaccine Inc. Keith Abriel, CFO

27 27 Basics of Going Public Panel Allan L. Jenkins, PWC Glenn Jessome, Jessome Law Scott Urquhart, Jennings Capital Kevin G. Redden, NSSC

28 28 Capital Pool Company™ An alternative source of growth capital

29 29 Capital Pool Company Panel Richard Gordon, President, Oceanus Resources Corporation James D. Nicoll Vice-President, PWC

30 30 Going Public Transactions TMX Equity markets embrace multiple mechanisms for “go-public” transactions

31 31 Capital Pool Company™ (CPC) Program has a Strong Track Record Since inception: Over 2050 CPCs were created 80% have completed their QT – over 1600 companies 329 Graduates now trade on TSX 96 of the grads were CPCs

32 32 Seed Financing and Prospectus Public Offering Trade as CPC Announce QT File Disclosure Statement Trade as Venture Company CPC Acquires Business (QT) Public Financing and CPC Trades Prospectus Receipt Close Transaction Seed Identify Qualifying Transaction 24 Months Maximum Capital Pool Company: Process Aftermarket and Growth Execute Business Plan/Grow Company

33 33  Seed Financing –Minimum of $100,000 seed financing of the company by 3-5 Founders/Directors –Up to $500,000 can be discount seed  CPC IPO –a prospectus offering to create a corporate vehicle with public distribution (maximum that can be raised $5,000,000).  Qualifying Transaction (QT) –a target business is identified, disclosed and acquired  Aftermarket and Growth –company trades and executes its business plan Capital Pool Company: Milestones

34 34 Seed Financing and Prospectus Seed 1. Seed Financing 3-5 CPC Founders: Collectively invest $100,000 or more in seed funding Up to $500,000 can be discount seed Appoint CPC Board of Directors Seed investors do not have to be Directors $5,000 minimum investment / Director

35 35 Success Factors: Cohesive team with same level of commitment Reasonable timeline & budget agreement Strategic & institutional capital Board: dealflow network, business contacts, business and pubco experience Develop relationship with TSXV Potential Pitfalls: Observe structuring rules regarding $5,000 minimum per Director and $100,000 Director group minimum Consider this…

36 36 Seed Financing and Prospectus Public Offering Trade as CPC Public Financing and CPC Trades Prospectus Receipt Seed 2. CPC Initial Public Offering CPC IPO is completed: President’s list Broker’s list Stock options Agent(s) compensation

37 37 Success Factors: Broker commitment Selecting the right team of advisors with CPC experience TargetCo, CPC and Sponsor must all have representation Potential Pitfalls: Double check “agreement in principle” not yet established PIFs - timing and impact on prospectus Consider this…

38 38 Seed Financing and Prospectus Public Offering Trade as CPC Announce QT File Disclosure Statement CPC Acquires Business (QT) Public Financing and CPC Trades Prospectus Receipt Close Transaction Seed Identify Qualifying Transaction 3. Qualifying Transaction 24 Months Maximum

39 39 Considerations for a Qualifying Transaction: Significant growth opportunity & reason to be public Strong & coachable management Capital needs: $1 M to $20 M Close to commercialization Meets minimum listing and audit requirements Stock options and acquisition currency Strong market appetite 12 to 18 month cash requirements (can be financed) Selecting a QT Candidate

40 40 CPC Seed (Founder) = 10 M $0.05 IPO = 5 M $0.10 New TSX Venture Company Qualifying Transaction New Financing = $ 0.5 M Private Company/ Asset purchase $0.27 Anatomy of a Qualifying Transaction

41 41 SharesPrice Invested/ Valuation $0.25 Ownership Seed Investors*10,000,000$0.05$500,000$2.5 M59% CPC IPO*5,000,000$0.10$500,000$1.25 M30% Acquisition of QT250,000$0.27$225,000$0.2 M1% Financing1,666,665$0.30$500,000$0.42 M10% Totals16,916,665$4.23 M100% *CPCs shares were not consolidated on the QT which often happens. Closing price the first day of trading post QT: $0.25. Since then traded in the $ $0.35 range Resulting Share Structure

42 42 Seed Investment: $500,000 invested at $0.05 = 10,000,000 shares Post QT: 10,000,000 $0.25 = $2,500,000 ROI: 400% ROI for Founder

43 43 Success Factors: Lots of cash on closing Market interest and understanding Deliver in short term post closing Reasonable valuation – not always maximum valuation Potential Pitfalls: Listing requirements shortfalls Insufficient cash/working capital on closing Valuation versus escrow regime (TSXV Policy 5.4) PIFs - timing and impact on circular Consider this…

44 44 Seed Financing and Prospectus Public Offering Trade as CPC Announce QT File Disclosure Statement Trade as Venture Company CPC Acquires Business (QT) Public Financing and CPC Trades Prospectus Receipt Close Transaction Seed Identify Qualifying Transaction Aftermarket and Growth Execute Business Plan; IR Program 24 Months Maximum 4. Aftermarket and Growth

45 45 TargetCo post QT Investor relations program –Shortlist IR firms early on Consider CPC board members with capital market experience Execute business plan Private placements Acquisitions Governance/compliance with securities laws and Exchange policies Aftermarket

46 46 Success Factors: Press release clarity/ quality Broker management and support Timely disclosure against published milestones (good and bad) Potential Pitfalls: Orphan status Mistrust of management’s willingness to communicate Market fluctuations Consider this…

47 47 Why/When a CPC Alternative access to capital; Retain higher ownership Want to be public company (M&A currency, stock options, visibility) Greater flexibility, certainty and control in the process Going public risk reduced Management Long term strategy to grow as a public company Reasonable valuation = Viable share structure Investor support Appropriate advisors (lawyer, broker, investment banker) Company Wants/ Needs Critical Success Factors Company is too early stage for a broadly distributed regular IPO IPO market is not strong enough in general VC financing is not viable or management prefers not to use Market appears to reward growth business of target company’s sector Market Conditions

48 QTs 99 Capital Corporation Acro Energy Technologies AgriMarine Holdings Inc Alston Ventures Inc Ansell Capital Corp Antler Creek Energy Corp Argex Silver Capital Inc Armadillo Resources Ltd Ashburton Ventures Inc Astorius Resources Ltd Bassett Media Group Corp Blackbird Investments Inc Blackline GPS Corp Canada Fluorspar Inc Carbon2Green Corporation Caribou Copper Resources Ltd Cascade Resources Ltd Ceres Capital Corp Challenger Deep Capital Corp Changyu Medtech Ltd Cobalt Coal Corp Coltstar Ventures Inc Corbal Capital Corp Crown Minerals Inc CRS Electronics Inc Dee Three Exploration Inc Defiance Capital Corp Edgewater Exploration Ltd Ethos Capital Corp ForceLogix Technologies Inc Foundation Resources Inc. GFE Capital Corp Global Key Investment Limited Greenangel Energy Corp Hamilton Thorne Ltd Heatherdale Resources Ltd Hermes Financial Inc Immunovaccine Inc Innovative Composites International Inc ISG Capital Corporation Jiminex Inc Jiulian Resources Inc Kilo Goldmines Ltd Knick Exploration Inc Landen Capital Corp Lincoln Mining Corporation Liuyang Fireworks Limited Mega View Digital Entertainment Corp Morumbi Oil & Gas Inc Mosam Capital Corp. Natcore Technology Inc Northern Spirit Resources Inc NV Gold Corporation Paget Minerals Corp Parallel Capital Corp. Parta Sustainable Solutions Inc PetroKamchatka Plc Podium Capital Corporation Providence Capital Corp Rockridge Capital Corp Rugby Mining Limited Sandspring Resources Ltd Scorpio Gold Corporation Sila Industrial Group Ltd Sino Vanadium Inc Sirona Biochem Corp Spot Coffee (Canada) Ltd TAD Capital Corp Taipan Resources Inc Tasman Metals Ltd Theia Resources Ltd Toptent Inc Tosca Mining Corp Touchdown Capital Inc. TrueContext Mobile Solutions Corporation Unity Energy Corp Urastar Energy Inc Venture One Capital Corp Waterloo Resources Ltd Westcore Energy Ltd World Famous Pizza Company Ltd xRM Global Inc

49 49 Thank you to our partners

50 50 Disclaimer This document is for information purposes only and is not an invitation to purchase securities listed on Toronto Stock Exchange and/or TSX Venture Exchange or Natural Gas Exchange. TMX Group Inc. and its affiliates do not endorse or recommend any securities referenced in this document. Please seek professional advice to evaluate specific securities. While the information herein is collected and compiled with care, neither TMX Group Inc. nor any of its affiliated companies represents, warrants or guarantees the accuracy or the completeness of the information. You agree not to rely on the information contained herein for any trading, business or financial purpose. This information is provided with the express condition, to which by making use thereof you expressly consent, that no liability shall be incurred by TMX Group Inc. and/or any of its affiliates as a result of any errors or inaccuracies herein or any use or reliance upon this information. © 2010 TMX Group Inc. Louis Doyle Vice President, Listed Issuer Services TSX Venture Exchange T:


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