going public in canada accessing north american capital markets

Going Public in CanadaAccessing North American Capital MarketsGoing Public Abroad Conference – June 28, 2010

Jeffrey Singer David Wismer Raymond KingStikeman Elliott LLP BMO Capital Markets TMX Group Inc.

Agenda1. Introductions

2. A Capital Opportunity for Israeli Growth Companies

3. Going Public in Canada

4. The IPO Process and Regulatory Regime

Introductions

BMO CAPITAL MARKETS | STIKEMAN ELLIOTT LLP | TMX GROUP INC.

8th largest exchange groupBy domestic market cap1

1st in North America

2nd

globally By number of issuers1

4

TMX Group - Global Leader in Equities

6th largest exchange group By equity capital raised2

1Issuers on TSX and TSXV (WFE, Dec 2009)2(WFE and Capital IQ, Dec 2009)


BMO Financial Group

Note: BMO financials as at January 31st, 2010; Market capitalization as at June 15th, 2010

Market Cap US$35 billion

Total Assets US$372 billion

2009 Revenue US$8.1 billion

Employees 36,200

Key Operating

Data

Organization

Canada's first bank established in 1817 Offers broad range of retail banking, wealth

management and investment banking services One of the largest diversified financial services

providers in North America

Tier 1 Capital Ratio 12.5%

BMO Capital Markets’ Capabilities

Global Banking Operations

ADVISORY SERVICES Mergers &

Acquisitions Strategic Advisory Fairness Opinions Takeover Defense Share Buybacks Valuation Analysis

TREASURY SERVICES Cash Management Risk Management Asset Management Foreign Exchange Trade Finance

DISTRIBUTION & TRADING

Institutional Sales Trading Equity Research Fixed Income Research Investor Marketing Investor Conferences Account Sponsorship Retail Distribution

CORPORATE FINANCE Initial Public Offerings Follow-on Offerings Convertible Securities Mezzanine Lending High-Yield Debt Investment-Grade Debt Corporate Lending Securitization Private Placements

AUSTRALIAMELBOURNE

ASIABEIJING | GUANGZHOU | HONG KONG | MUMBAI | SHANGHAI | TAIPEI

NORTH AMERICAATLANTA | BOSTON | CALGARY | CHICAGO | DALLAS | DENVER | HOUSTON |

LOS ANGELES | MEXICO CITY | MONTREALNEW YORK | SAN FRANCISCO | TORONTO | VANCOUVER

SOUTH AMERICARIO DE JANEIRO

EUROPE

DUBLIN | LONDON | ZURICH | PARIS

HIGHLIGHTS

209 equity transactions totalling over $40 billion in 2009

62 M&A transactions totalling over $15 billion in 2009

BMO Financial Group and BMO Capital Markets


Stikeman Elliott

Number of Lawyers: Over 500Offices: 8 Founded: 1952

Major Practice Areas:M&A • Securities/Corporate Finance • Tax • Banking Insolvency/Restructuring • Structured Finance • Energy Corporate/Commercial • Real Estate • Project Finance Infrastructure • Mining • Competition/Antitrust Intellectual Property • Insurance • Employment Technology/Outsourcing • Business Litigation

Involved in 9 of the Top 10 Corporate Deals in Canada for 2009, more than any other firm (selected by Lexpert)

#1 in Bloomberg’s league tables for Canadian equity offerings (2005-2009), debt offerings and global bond offerings (2009)

#1 in the Financial Post’s league tables for Canadian equity offerings and debt offerings (2009)

Top-ranked firm in corporate finance, capital markets and M&A practice in International Financial Law Review, Chambers Global and PLC Which Lawyer?

A Capital Opportunity for Israeli Growth CompaniesRaymond D. King, MBA

Senior Manager, Global Diversified IndustrialsListings Business Development

TMX Group Inc.


OTC - Pink Sheets

OTCBB

NASDAQ

NYSE

•Minimal/No listing standards

•Senior listing standards

• Disclosure rules• Junior listing

standards

CNQ

Understanding the North American Stock Markets Continuum


TSX TSX

VentureTSX and TSXV AIM Nasdaq

Number of Issuers Listed 1462 2178 3640 1293 2852

Quoted Market Value (C$ Billions) $1,771.9 $35.8 $1,807.7 $100.8 $3,699.4

Going Public Activity 100 202* 302 36 131

Equity Capital Raised (C$ Billions) $60.0 $4.8 $64.9 $9.8 $121.0

Volume Traded (Billions of Shares) 118.5 46.2 164.7 205.7 N/ A

Value Traded (C$ Billions) $1,398.4 $16.0 $1,414.4 $59.9 $33,061.8

Number of Trades (Millions) 191.3 5.3 196.6 4.0 3996.4

Market Comparison: TMX Group, AIM, NASDAQ

Market Data for 2009 (C$)

As at December 31, 2009Source: TSX/TSXV Market Intelligence Group, AIM and Nasdaq Websites, WFE, Capital IQ


32% 33%

93%

6%1%

35%

<$50 Million $50 - $250 Million >$250 Million

% of TSX Issuers

% of TSXV Issuers

TMX Group Serves Companies at all Stages of Growth

Market capitalization Toronto Stock Exchange and TSX Venture

ExchangeAs at December 31, 2009Unique feeder system

451 graduates

+ 73 M&A*

*From January 1, 2000 – December 31, 2009

512

Issuers

478

Issuers472

Issuers

Toronto Stock Exchange issuer base: 1,462 issuers, ~$1.8 trillion market capTSX Venture Exchange issuer base (excludes NEX): 2,178 issuers, ~$35.8 billion market cap

2036

Issuers

127

15 Issuers


International Investment Community Tradeson Toronto Stock Exchange

220.9 242.7 255.6326.9 382.1 435.2 473.2

2003 2004 2005 2006 2007 2008 2009

25 International Brokers including Barclays Capital Citigroup CSFB Deutsche Bank Goldman Sachs HSBC JP Morgan Macquarie Capital Markets Merrill Lynch Morgan Stanley Raymond James Thomas Weisel State Street UBS

80 Canadian Brokers including: BMO Nesbitt Burns Canaccord CIBC World Markets GMP Securities RBC DS Scotia Capital Markets TD Securities National Bank Financial

~35% of TSX daily trading originates from International brokers for their

institutional and retail clients

TSX Average Daily Volume (Millions of Shares Traded)

25.9

15.519.2

23.120.9

25.829.1 28.4

46.2

41.8

47.6

35.3

60.0

1.1 1.4

32.5

2.44.8

7.911.1

5.56.14.1

2.4

64.9

40.8

58.849.7

52.2

25.9

15.519.2

25.522.0

27.331.5

0

10

20

30

40

50

60

70

1997 1998 1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Toronto Stock Exchange TSX Venture Exchange

Access to Capital: All time record year for financing on TSX despite global market challenges

Equity Financing on Toronto Stock Exchange and TSX Venture Exchange 1997 to 2009

($ Billions)

*TSX Venture Exchange commenced operations on November 29 1999


94 9680

145

187

158165

199 208

31

63

197

233

81

2003 2004 2005 2006 2007 2008 2009

Canada USA

Canadian equity marketplace ideal for small to mid-cap IPOs

Average amount raised during IPO (2009)

U.S. markets: US$396.8 million

TSX: US$69.5 million

TSX Venture: US$4.0 million

Source: Hoovers IPO Central

Total IPOs in Canada and U.S.


64.2

82.0

96.1

109.2118.5

2005 2006 2007 2008 2009

TSX and TSX Venture Exchange have shown consistent growth in liquidity

Billions of Shares

21.1

37.1

52.6

43.646.2

2005 2006 2007 2008 2009

Toronto Stock ExchangeVolume of Shares Traded

Toronto Stock ExchangeVolume of Shares Traded

Billions of Shares

TSX Venture ExchangeVolume of Shares Traded

TSX Venture ExchangeVolume of Shares Traded


TMX Group Global Leadership Strengths

All data is as of or YTD Dec. 31, 2009. All amounts are in Canadian dollars.

236 issuers

2nd in the world by number of companies

8 new listings in 2009

$0.698 B equity raised

$46.9 B value traded

123 issuers



$6.5 B value traded

3640 issuers



Average Financing:

TSX $73.7 M

TSXV $2.2 M

136 issuers



$6.6 B value traded

Technology

Life Sciences

Clean Technology


Diversified Industries Sector includesa broad range of companies

1038 issuers

$940 B Market Cap



Forest Products, 24, 2%

Comm. & Media, 51, 5%

Utilities & Pipelines, 32, 3%

Real Estate, 78, 8%

Financial Services, 122,

12%

Cons. & Ind. Products &

Services, 513, 49%

CPC, 218, 21%

Number of Companies by Diversified Industries Sector


Advantages of Listing on TSX and TSX Venture

Canada is the market of choice for SME companies– Diverse cross-section of listed companies in a variety of sectors

Sustained access to capital – steady growth of capital investment over past 5 years

Access to US capital without the higher cost of regulatory compliance Ease of access to US market with Multijurisdictional program 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

Strong trading liquidity – value traded has more than doubled over the past 5 years

Lower trading impact costs on TSX Strong equity culture – 50% of Canadians hold equities Analyst coverage typically seen at an earlier stage Canadian regulatory commissions and exchanges are customer-focused Standards-based exchanges that promote integrity for public SMEs

– Access to specialized products for TSX/TSXV listing (eg. Capital Pool Company Program)

TSX provides listed companies unparalleled product and service support

Going Public in Canada David Wismer

Managing Director & Head of Technology Investment and Corporate Banking

BMO Capital Markets


Market Analysis

TSX has outperformed major global indices over past 5 years;IPO activity focused on Mining and Energy sectors

50

60

70

80

90

100

110

120

130

140

150

160

170

Jun-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10

Rel

ativ

e R

etu

rn (

%)

S&P/TSX Index S&P 500 MSCI World Index MSCI EAFE Index

20.5%

(9.6%)

(6.4%)

(7.5%)

Mining24%

Other40%

Energy30%

Technology6%

Mining17%

Other52%

Energy27%

Technology4%

Source: Bloomberg Source: BMO Capital Markets

By Value

5 Year Index PerformanceComposition of Canadian IPO’s – Last 5

Years

By Number


TSX Equity Issuance Breakdown

Marketed36%

Bought64%

Source: BMO Capital MarketsNote: Transactions from 2005-Present1. Excludes structured products

IPO vs. Follow-on Offerings ($ Value) (1)

Bought vs. Marketed ($ Value) (1) Type of Security ($ Value)

1. Includes Flow-Through Shares.

3,310 transactions in past 5 years raising over $226 billion

– 3,639 transactions including structured products raising over $248 billion

223 IPOs completed in past 5 years raising over $21 billion (excluding structured products) 1. Excludes structured products.

Follow -on90%

IPO10%

REIT / Trust Units19%

Structured Products9%

Preferred Shares11%

Convertible Debentures

9%

Common Shares (1)

51%

TSX provides issuers with access to various types of capital post-IPO;Follow-on bought deals provide issuers with pricing and execution

certainty


Bank-Owned Dealers Global Dealers Independents

BMO Capital Markets ABG Sundal Collier Canaccord FinancialCIBC Bank of America Merrill Lynch Cormark SecuritiesNational Bank Financial Citi Dundee SecuritiesRBC Capital Markets Credit Suisse FirstEnergy CapitalScotia Capital Deutsche Bank Genuity Capital MarketsTD Securities Goldman Sachs GMP Securities

HSBC Bank Hayw ood SecuritiesJefferies Group Jennings CapitalJP Morgan Paradigm CapitalMacquarie Group Peters & CoMorgan Stanley Raymond James & AssociatesThomas Weisel Partners Roth Capital PartnersUBS Wellington West Capital Markets

59%

20% 21%

Canadian bank-owned dealers have significant market share

Overview of Market Participants in Canadian Equity Capital Markets

2009 Market Share (based on $ volume, new equity and equity-linked issuances)


Key IPO Considerations

Success of offering dependent on a balance of several factors

Valu

ati

on M

ark

et

En

viro

nm

en

tS

tru

ctu

reIn

vesto

r Base

DEMAND

Investment Thesis Comparables Price IPO Discount

Offering size Use of proceeds Treasury vs. secondary Governance Capitalization Lock-ups

Market tone generally Flow of funds Perception of sector IPO activity and after-

market performance

U.S. and / or Canada SEC-registered vs.

144A Listing venue(s) Distribution strategy Syndicate structure


IPO Sizing Considerations

Appropriate IPO sizing required to successfully launch offering

--

20%

40%

60%

80%

100%

IPO Size as Percentage of Market Capitalization – TSX Issuers (1)

Source: Dealogic1. IPOs with market capitalization between $50MM – 1.0Bln, from 2005 - Present

IPO - Size of Offerings – TSX Issuers (1)

$-

$100

$200

$300

$400

$500

$600

$700

Issuers requires sufficient public float to:

– provide appropriate share trading liquidity

– maximize demand on the offering by appealing to largest group of investors

– attract research analyst coverage

– optimize valuation Treasury versus

secondary components to consider

Average IPO size on TSX over past 5 years is ~$95 million while median is ~$60 million(1)

Most IPOs sell approximately 25% to 50% of their market capitalization


Listing Considerations

Choice of listing will depend on numerous variables and considerations

Dual-ListedCross-Border

Offering

Considerations Issues

Optimizes North American demand Maximizes research coverage Expenses: ~US$2.5 - 3.0MM

(excluding underwriting fees)

Cumbersome and lengthy SEC regulatory process (approximately 12-14 weeks once filed)

SOX compliance Cost of managing and

coordinating two listings

Incremental benefits of dual listing but with additional costs and uncertain timetable

Issuer has to be sufficiently large to justify dual listing

Conclusion

Short and defined regulatory review process (~3 months)

Access to U.S. investors via private placements with qualified institutional buyers (governed by SEC Rule 144A)

Qualified issuers can use Multijurisdictional Disclosure System for future offerings; allows Canadian issuers to avoid SEC filings by using existing Canadian public disclosure documents to issue securities to the public in the U.S.

Quick on-going access to capital via bought deals

Expenses: ~US$1.0 - 2.0MM (excluding underwriting fees)

TSX Listing

Limited access to U.S. investor base due to SEC Rule 144A

Greater exposure and coverage following IPO for small and mid-cap issuers

A viable alternative given timing, cost and size considerations


Indicative Distribution Strategy

TSX IPO’s are marketed internationally, shares allocated seamlessly based on quality of demand

Distribution Strategy Allocation

Marketed to all major investors in North America, and key European investors

Allocation of shares based on quality of orders Generate maximum institutional and retail

demand through focused, comprehensive marketing schedule

– Comprehensive coverage through coordinated marketing by bookrunners

Position IPO’s as a compelling investment opportunity and differentiate from comparable public companies

Build deal tension to maximize demand

Institutional Investors: Approximately 80%-90% of offering Institutions form the foundation of demand and will drive

pricing North American geographic concentration

Retail Investors: Approximately 10%-20% of offering Generate secondary market trading and liquidity, creating

positive pricing tension

4 - 5 days

4 - 5 days 3 - 4 days (if desired)


Note: Canadian technology companies includes 20-20 Technologies, Aastra Technologies, Absolute Software, Axia NetMedia, Ballard Power Systems, Bridgewater Systems, CAE, CalianTechnologies, Celestica, CGI, COM DEV, Computer Modelling Group, Constellation Software, Cortex Business Solutions, Descartes Systems Group, DragonWave, Dynex Power, Electrovaya, Enghouse Systems, Evertz Technologies, EXFO, Fluid Music, Gennum, GuestLogix, Intermap Technologies, Macdonald Dettwiler & Associates, March Networks, Mediagrif Interactive Technologies, Miranda Technologies, MKS, MOSAID Technologies, Open Text, Peer 1 Network Enterprises, PNI Digital Media, Pure Technologies, Redknee Solutions, Research In Motion, RuggedCom, Sandvine, SENSIO Technologies, Sierra Wireless, SXC Health Solutions, Tranzeo Wireless Technologies, Vecima Networks, Webtech Wireless, Wi-LAN and Zarlink SemiconductorSource: Thomson, Capital IQ

Current Mar-09 Change

Top 30 Institutions Value# of Shares Held (mm)

HoldingsAvg.

Holding SizeValue

# of Shares Held (mm)

HoldingsAvg.

Holding Size# of Shares Held (mm)

Holdings

Fidelity $2,935 122.9 22 $133 $2,152 97.2 23 $94 25.7 (1)BlackRock $2,096 64.3 18 $116 $1,422 50.2 19 $75 14.2 (1)TD $1,755 39.5 18 $98 $2,185 63.9 13 $168 (24.4) 5Janus Capital Management $1,583 25.5 3 $528 $1,919 36.4 3 $640 (10.9) --Invesco $1,254 46.0 19 $66 $889 32.5 15 $59 13.5 4Greystone Managed Investments $1,184 52.7 6 $197 $15 0.9 12 $1 51.8 (6)RBC $1,117 28.9 12 $93 $684 19.7 12 $57 9.2 --Jarislowsky Fraser $990 47.2 4 $248 $476 42.6 15 $32 4.6 (11)Mackenzie Financial $932 78.3 17 $55 $481 55.3 16 $30 23.0 1McLean Budden $915 21.9 4 $229 $653 21.7 4 $163 0.1 --Caisse de Depot et Placement du Quebec $697 26.6 7 $100 $494 28.4 8 $62 (1.8) (1)BMO $630 19.8 13 $48 $441 17.5 11 $40 2.3 2BCIMC $626 23.4 23 $27 $467 23.4 23 $20 -- --PRIMECAP Management Company $569 13.1 2 $285 $466 13.2 2 $233 (0.1) --Wellington Management Company $565 17.2 8 $71 $197 5.9 8 $25 11.3 --Orbis Investment Management $495 7.2 1 $495 -- -- -- na 7.2 1I. G. International Management $490 21.2 15 $33 $332 16.3 13 $26 4.9 2Connor, Clark & Lunn $459 23.5 18 $25 $386 26.1 17 $23 (2.7) 1Gilder Gagnon Howe & Co. $453 8.7 2 $227 $429 7.6 2 $215 1.1 --Marsico Capital Management $448 6.5 2 $224 -- -- -- na 6.5 2CIBC $423 18.1 15 $28 $222 17.7 16 $14 0.4 (1)Edgewood Management $418 6.1 1 $418 $301 5.3 1 $301 0.8 --Montag & Caldwell $415 6.1 1 $415 $344 6.0 1 $344 0.0 --Columbia Management Advisors $380 11.3 8 $47 $269 12.8 9 $30 (1.5) (1)Jones Heward $377 17.5 16 $24 $211 17.6 13 $16 (0.1) 3OppenheimerFunds $373 6.2 4 $93 $483 8.6 2 $242 (2.4) 2GWL Investment Management $371 9.6 16 $23 $330 14.8 15 $22 (5.2) 1AllianceBernstein $365 5.3 3 $122 $117 2.2 4 $29 3.2 (1)UBS $354 14.8 17 $21 $277 17.7 16 $17 (3.0) 1Goodman & Company $353 15.3 12 $29 $208 8.7 9 $23 6.6 3Total / Average $24,022 804.6 307 $151 $16,851 670.2 302 $107 134.5 5

A global investor base, led by U.S. institutions

Key Investors in Canadian Technology Companies


Accessing Nasdaq Subsequent to a TSX IPO

Several successful companies have gone public on the TSX and subsequently listed on Nasdaq

Select Share Price Performance – 5-Years Post Listing

165% 154%120%

712%

6%

718%

104%

(12%)

TSX Nasdaq

Apr-2007Listing Date Oct-2009 Oct-1997 Feb-1999 May-1999 Sep-1999 Nov-1989 Oct-1992

(1)

(1)

Time Gap 30 months 16 months 4 months 35 months

1. Share price performance is from time of listing to June 15, 2010.


Research Analyst Coverage on the TSX

TSX-listed companies enjoy strong research coverage, irrespective of company size

10

7

6

5

43

$50 - $100 $100 - $200 $200 - $300 $300 - $400 $400 - $500 $500+

Market Capitalization (US$MM)

91 124 5183 33 294Number of Companies

Average Number of Analysts - TSX

Source: Bloomberg

The IPO Process and Regulatory Regime Jeff Singer

Partner

Stikeman Elliott


The Decision To Go Public

Typically common equity capital at more attractive multiples than private equity

Liquidity for existing shareholders Improved opportunities for future equity financings Equity represents liquid acquisition currency Broader opportunities for management equity incentive

arrangements Enhanced public profile


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


Securities Regulation in Canada

Regulation matter of provincial and territorial jurisdiction, although highly harmonized – Securities Acts & Regulations

– National Policies

– National Instruments

– Multilateral Policies & Instruments Ability for Israeli company to choose "principal regulator"

– Passport System Offerings in Quebec may be subject to certain additional

requirements, most notably French translation of offering documents


Steps Involved

Preparing the Story Select advisors & underwriters

Extensive discussions with management and shareholders to understand the company’s unique attributes and objectives Selection of independent directors

Prospectus drafting, crafting management presentation and marketing materials, develop marketing plan, review of existing contracts & incentive plans

Structuring the Offering Determine optimal issue size as well as pricing range and valuation Consideration of reporting & control systems and modifications to corporate / tax structure

Set timetable and marketing schedule

Syndicate Selection Syndicate developed to promote/ reward research, institutional and retail distribution

Institutional Investor Targeting

Comprehensive targeting effort to identify potential buyers identify investment criteria for each investor target sophisticated investors who have an understanding of the sector

Pre-Marketing Educate salesforce on the company’s key selling points Determine potential investor interest to help schedule one-on-one meetings

internal sales documents and conference calls, dry-run roadshow presentation

“Kick-Off” Roadshow “kick-off” with institutional sales forces of underwriting syndicate Address investor issues for roadshow discussion Maintain momentum of offering and increase awareness of offering

Roadshow Large majority of demand generated will come from one-on-one meetings with portfolio managers at targeted institutions

Group functions will enable lower priority investors to learn about the company and ask questions directly to management

Feedback and Communication

Timely follow-up with investor base to determine investor concerns and assess demand Daily feedback with management to update on status of offering and refine roadshow presentation On-going calls to co-managers to share information

Pricing and Allocation Develop detailed knowledge of book of demand to optimize pricing decision Allocate shares based on expressed interest in transaction, one-on-one meetings, past buying, after market demand,

pricing parameters and the company’s strategic objectives Retail allocations to syndicate to create a balanced offering

After Market Sponsorship

Active trading presence, on-going research coverage, investment banking advisory Provide advice regarding investor relations program

Offering Process


Process can be as fast as 12 – 13 weeksLargely depends on level of preparedness of issuer

Week 0 Week 6 Week 10 Week 12

MarketingPreparation ClosingPublic

Company

• Roadshow• Prepare underwriting

agreement• Settle comments with

Securities Commissions• TSX conditional listing

• Sign underwriting agreement• Finalize legal documents• Transfer of funds

• Prepare prospectus• Due diligence• Tax/structuring• Financial statement

preparation and analysis• Capital structure• Prepare marketing materials• Syndication

CompanyPreparation

The IPO Process

Pricing & FileFinal Prospectus

Deliver FundsFile Preliminary

Prospectus

InvestmentDealer

Engagement


The Prospectus

Principal disclosure document Must contain all material information concerning the

business and securities offered Financial information

– Audited financial statements 2 years of balance sheets 3 years of income statements, statements of retained

earnings and statements of changes in financial position

– Stub period unaudited interim financial statements

– Management's Discussion & Analysis

– Significant Acquisition Disclosure


On-going Disclosure Obligations

Financial Reporting – Annual audited financial statements (90 days TSX / 120 days

TSXV) – Interim unaudited financial statements (45 days TSX / 60 days

TSXV) – Management's discussion and analysis (MD&A) – CEO / CFO certification – Audit committee disclosure

Annual Information Forms Annual Meetings, Management Proxy Circulars & Corporate

Governance Disclosure Material Change Reports Business Acquisition Reports Documents Affecting Rights of Securityholders Material Contracts TSX Filings

QUESTIONS & ANSWERS

Jeffrey Singer, Partner

Stikeman Elliott LLP

Tel: +1 416 869 5656 [email protected]

David Wismer, Managing Director

BMO Capital Markets Corp.


Raymond King, Senior Manager

TMX Group Inc.


Appendix


TSX Original Listing Requirements

Minimum Listing Requirements

TSX Non-Exempt Issuers

Forecasting Profitability

TSX Non-Exempt Issuers

Profitable Issuers

TSX Exempt Issuers

Industrial Companies

Earnings or Revenue

Evidence of pre-tax earnings from on-going operations for the current or next fiscal year of at least $200,000

Pre-tax earnings from on-going operations of at least $200,000 in the last fiscal year

Pre-tax earnings from on-going operations of at least $300,000 in the last fiscal year

Cash Flow

Evidence of pre-tax cash flow from on-going operations for the current or next fiscal year of at least $500,000

Pre-tax cash flow of $500,000 in the last fiscal year

Pre-tax cash flow of $700,000 in the last fiscal year, and an average of $500,000 for the past 2 fiscal years

Net Tangible Assets $7,500,000 $2,000,000 $7,500,000

Adequate Working Capital and Capital

StructureWorking capital to carry on the business, and an appropriate capital structure

Management and Board of Directors

Management, including the board of directors, should have adequate experience and technical expertise relevant to the company’s business and industry as well as adequate public company experience. Companies are required to have at least two independent directors

Public Distribution and Market Capitalization

1,000,000 free trading public shares

$4,000,000 held by public shareholders

300 public shareholders each holding a board lot

Sponsorship Generally required Not required

Source: Stikeman Elliot LLP, “Going Public in Canada: Issues and Considerations Associated with an Initial Public Offering,” June 2009


IPO Treasury vs. Secondary Mix

Select US IPOs – Treasury/SecondarySelect Canadian Technology IPOs –

Treasury/Secondary

0% 20% 40% 60% 80% 100%

Bridgewater

Redline

TeraGo

RuggedCom

Dragonwave

Hostopia

Sandvine

JumpTV

Evertz

Corel

Constellation

Miranda

Vcom

Ascalade

March Networks

Treasury Secondary

Treasury Average: 74.7%

0% 20% 40% 60% 80% 100%

Archipelago Learning

Fortinet Inc

Ancestry.com

Shanda Games

Avago Technologies

CDC Software

LogMeIn

OpenTable

SolarWinds

DigitalGlobe

Rosetta Stone

Bridgepoint Education

Changyou.com

Treasury Secondary

Treasury Average: 49.0%

Meaningful amount of secondary offering possible to increase float / liquidity for investors

going public in canada accessing north american capital markets

Documents

capital ratio12

capital iq

equity capital raised21issuers

canadian equity offerings

debt offerings

global bond offerings

bmo financials

market capus