Going Public In The United StatesBarry I. Grossman and Douglas S. EllenoffEllenoff 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 wasthe 6th most active IPO Firm in the U.S. Founded in 1992, the Firm specializes in manyareas of commercial law, including corporate and securities ('33 Act and '34 Actrepresentation – we represent nearly 35 public companies in various industries:biotechnology, medical devices, information technology, financial services, alternativeenergy, consumer products and business services throughout the world – includingChina, 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

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

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

Initial Public Offerings (IPOs)

Reverse Mergers (RTOs/APOs)

Special Purpose Acquisition Companies (SPACs)

Self Underwritings

Initial Public Offerings

Traditional IPO Structure Finding an Underwriter

- Business Plan/Projections

- Execution of Engagement Agreement Registration Statement Process – SEC Road Show

Corporate Responsibility

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

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

Reverse Mergers

Private Company Merges with Public Shell

- Locating a “Clean” Shell

No Underwriter, No Registration Statement, Etc.

- Reduced Expenses, More Certainty – Self-Control

Corporate Responsibility – Due Diligence

The Shell Corporation

Public Company No Operations or Liabilities How Did Shell Become a Shell? Limited Liquidity/Freely Trading Stock Due Diligence!! Types of Shells

(Form 10, Prior Operating Company)

Reverse Merger Process

Shell Acquires 100% of Private Company

Shell Shareholders Retain Percentage of Company

Private Company Becomes a Subsidiary of Public Company

Super 8-K Filed (Similar to Registration Statement)- Audited Financials – US GAAP/IFRS

Change Directors and Cap Structure (Forms 14F and 14C)

RTO vs. IPO

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

IPO for a Shell (Blind Pool)

Process Similar to an IPO

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

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

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

Going Public Without a Capital Raise

Form 10 – Register the Company

- Registration Statement Process

No Liquidity for Shareholders

Benefits to the Company

RTO vs. Self Registration

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

Qualifications

Advantages

- Reduced Reporting Requirements

- No Proxy Statements

- Reduced or No US Tax Obligation

- Reg. S Offering

Listing Alternatives

AMEX NASDAQ NYSE OTC Dual Listing Concurrent Listing on

US Market and TASE

- Disclosure Issues

- Business Reasons

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