Going Public In The United States Barry I

Going Public In The United States Barry I. Grossman and Douglas S. Ellenoff Grossman & Schole LLP

About EG&S Ellenoff Grossman & Schole LLP is a New York City-based law firm comprised of 40 professionals (20+ Securities Lawyers), offering its clients legal services in a broad range of business related corporate and litigation matters. In 2008 EG&S was the 6 th most active IPO Firm in the U. S. Founded in 1992, the Firm specializes in many areas of commercial law, including corporate and securities ('33 Act and '34 Act representation – we represent nearly 35 public companies in various industries: biotechnology, medical devices, information technology, financial services, alternative energy, consumer products and business services throughout the world – including China, India and Israel) Hedge Fund Formation and Regulation; Broker-Dealer Regulation, transactional Real Estate (leasing, financing and buy/sell); domestic corporate Taxation; Intellectual Property; Regulatory Defense and general Litigation.

Barry I. Grossman l Barry I. Grossman, a member of the Firm since its founding in 1992, is a corporate/tax attorney who specializes in business transactions as well as domestic tax matters. Mr. Grossman's practice focuses on representing U. S and non U. S. public and private companies and a wide variety of partnerships in transactional and financing activities as well as general corporate matters. Mr. Grossman's transactional experience includes public and private financings, structuring sales and acquisitions of companies; mergers and reorganizations; organizing partnerships and limited liability companies; and structuring the syndication of low-income housing tax credits. As a member of Ellenoff Grossman & Schole LLP, he has been involved in numerous public offerings (including blind pool offerings or SPACs), reverse mergers and alternative public offerings and over one hundred private placements, many into public companies (commonly referred to as PIPEs). In connection with public offerings Mr. Grossman has represented issuers and underwriters in initial public offerings, secondary public offerings and general corporate matters.

Douglas S. Ellenoff l Douglas S. Ellenoff, a member of the Firm since its founding in 1992, is a corporate and securities attorney with a specialty in business transactions and corporate financings. Mr. Ellenoff has represented public companies in connection with their initial public offerings, secondary public offerings, regulatory compliance as well as general corporate governance matters. During his career, he has represented numerous broker-dealers, venture capital investor groups and many corporations involved in the capital formation process. In the last several years, he has been involved at various stages in numerous registered public offerings, including 70 financings and, with other members of his firm, over 100 private placements into public companies (see PIPEs and Venture Capital), representing either the issuers of those securities or the registered broker-dealers acting as placement agent. Along with other members of his Firm, Mr. Ellenoff has been involved at various stages with over 50 registered blind pool offerings (commonly referred to as "SPACs"; 17 of which have consummated their IPO's raising over $1. 5 billion). He also provides counsel with regard to their respective ongoing (SEC, AMEX and NASD) regulatory compliance.

Methods to Become A Publicly Traded Company in the United States l Initial Public Offerings (IPOs) l Reverse Mergers (RTOs/APOs) l Special Purpose Acquisition Companies (SPACs) l Self Underwritings

Initial Public Offerings l l Traditional IPO Structure Finding an Underwriter - Business Plan/Projections - Execution of Engagement Agreement Registration Statement Process – SEC Road Show

Corporate Responsibility l l l Conduct Internal Due Diligence - Organization Documents - Material Contracts - Liabilities (Litigation, Product Liability) - Employment Agreements - Intellectual Property Corporate Governance Structure – Committees Capital Structure Management Lock Ups Accounting Issues - GAAP

Results Of An IPO l l l Capital Infusion Ability to List on National Exchange in the US Freely-Trading Shares Stock Price Supported by Underwriter Research Perception

Reverse Mergers l Private Company Merges with Public Shell - Locating a “Clean” Shell l No Underwriter, No Registration Statement, Etc. - Reduced Expenses, More Certainty – Self-Control l Corporate Responsibility – Due Diligence

The Shell Corporation Public Company No Operations or Liabilities l How Did Shell Become a Shell? l Limited Liquidity/Freely Trading Stock l Due Diligence!! l Types of Shells (Form 10, Prior Operating Company) l

Reverse Merger Process l Shell Acquires 100% of Private Company l Shell Shareholders Retain Percentage of Company l Private Company Becomes a Subsidiary of Public Company l Super 8 -K Filed (Similar to Registration Statement) - Audited Financials – US GAAP/IFRS Change Directors and Cap Structure (Forms 14 F and 14 C) l

RTO vs. IPO l l l l More Certainty of Closing Quicker to Complete - Merger Agreement - No Registration Statement No SEC Review Until Transaction Closes Lower Transaction Costs - Shell Purchase – Equity or Cash No Underwriter – Limited Liquidity Liability Issues – Due Diligence OTCBB vs. National Exchange Raising Capital - APO

Special Purpose Acquisition Company l IPO for a Shell (Blind Pool) l Process Similar to an IPO l Structure of a SPAC (Units) - Money Held in Trust - Limited Life of SPAC - Sponsor Interest – Warrants - Shareholder Vote – History - Acquisition of an Operating Company - FMV of Target - Deferred Fees

Advantages And Disadvantages of SPAC l l l l l Investor Capital Held in Trust Clean Shell With Cash Proven Management Team Freely Trading Shares Stock Price Supported by Underwriter Ability to List on National Exchange in the US Shareholder Vote/Right to Redeem SEC Review Compete With Private Equity

Self Registration l l Private Placement by Private Company - Register Shares After Private Placement - Registration Process Similar to IPO Raising Money without an Underwriter - Friends and Family Corporate Responsibilities Like and IPO Results Like an IPO Except: - No Underwriter Support - Perception

Form 10 l Going Public Without a Capital Raise l Form 10 – Register the Company - Registration Statement Process l No Liquidity for Shareholders l Benefits to the Company

RTO vs. Self Registration l l l Similar to RTO vs. IPO - Quicker to Complete - No SEC Review Until Transaction Closes - Liability Issues – Due Diligence Differs from IPO - Lower Transaction Costs - No Underwriter – Limited Liquidity - OTCBB vs. National Exchange Raising Capital - APO

Foreign Private Issuers l Qualifications l Advantages - Reduced Reporting Requirements - No Proxy Statements - Reduced or No US Tax Obligation - Reg. S Offering

Listing Alternatives l l l AMEX NASDAQ NYSE OTC Dual Listing Concurrent Listing on US Market and TASE l - Disclosure Issues - Business Reasons

Notices and Disclaimers • • • This information may answer some questions, but is not intended as a comprehensive analysis of the topic. In addition, this information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. This document and the information contained herein is confidential. This document has been furnished to you solely for your information and neither this document nor the information contained herein my be reproduced, disclosed or redistributed, in whole or in part, by mail, facsimile, electronic or computer transmission or by any other means to any other person, except with the prior written consent of the Ellenoff Grossman & Schole LLP. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. This presentation is made solely for the interest of friends and clients of Ellenoff Grossman & Schole LLP and should in no way be relied upon or construed as legal advice. For specific information on particular factual situations, an opinion of legal counsel should be sought. Prior results do not guarantee a similar outcome.