Going Public in the United States

1. Going Public in the United States

2. How to Become Publicly Traded in the United States • IPOs • Reverse merger • SPACs • Public spin-off

3. IPOs • Expense • Time • Underwriting Agreement • When executed • SEC involvement • Financial statements/U.S. GAAP

4. General Process • Retain experts • Employee incentives • Proper ownership mix • Be early • Cheap stock issue • Conduct internal due diligence: • Charter documents • Loans/other financings • Material contracts

5. D&O Insurance • Corporate law audit • Capital structure • Underwriters • Management • Gun-jumping

6. Reverse Merger with a Shell Corporation • Private company merges with public entity without a business • Less expense, more certainty • No underwriter/maybe fairness opinion • Limited liquidity usually • Locating shell של

7. The Shell Corporation • Legally-existing public company • No present operating business • Shares registered with SEC • Intrinsic value of being public; possibly cash • Sometimes created by promoters.

8. Reverse Merger Process • Acquire 100% of private company shares • Pre-existing shell shareholders retain equity interest in surviving entity • Usually some credit for public entity • Formerly private company now a public company or subsidiary thereof • 8K — filed after closing

9. Reverse Merger Benefits • Lower cost • Less time • Israel — merger approval; tax issues • Contract negotiation • Exchange listing • Name change • Executive compensation • Currency for transactions • Public exposure • Sometimes liquidity

10. Reverse Merger Cautions • Liability issues • Limited liquidity • Somewhat ineffective at raising capital • Exceptions: Turner, Occidental, Ivax, Elvis • Costs of continuing compliance

11. Form 8K • 4 days to file • Same information as in registration statement. • Not reviewed by SEC until after transaction closes • Needed to register on exchange. • Financials conforming to US GAAP must be completed prior to closing.

12. Special Purpose Acquisition Company (SPAC) • Shell formed to raise capital via an IPO • Used to acquire existing company • Limited time to make acquisition: • 18 months or 24 months if LOI signed in 18 months • Failure to consummate an acquisition within specified time requires winding up and returning net assets

13. SPAC Process • Form entity • Founding shareholders acquire shares for nominal consideration • Management commits to purchase warrants in secondary market • Same form registration statement as IPO • Units pricing $6 - $8 • Units — Common stock and warrants • Warrants exercisable upon completion of acquisition or after one year

14. Trust account for funds to be used for acquisition • Some to all of underwriter compensation may remain in trust • Invested in short-term government securities • Shareholders entitled to vote on acquisition • Proxy statement required • Shareholder may vote against the acquisition/ affirmatively elect to convert his/her shares • Investors entitled to return of shares pro rata • Acquisition blocked — 20% or more elect to convert • The fair market value of the target business — at least 80% of SPAC net assets • Need not be cash • Net assets exclude deferred underwriters’ commissions or discounts in trust

15. SPAC Benefits • Raising capital • Clean shell • Target may accept SPAC shares in lieu of cash • Limited downside for investor • Financial statements easier

16. SPAC Cautions • Expense of filing S-1, engaging underwriter • Required shareholder vote for acquisition • Directors/management not paid • Close SEC scrutiny • Takes longer to get through SEC • Registration statement easier to prepare • Competition • Well-established private equity funds, others

17. SPAC Statistics • More than 60 registration statements filed — 2005 • 14 filings — 2004 • 41 SPACs began trading 2004 and 2005 • 20 additional SPACs filed registration statements

18. Listing Alternatives • AMEX • NASDAQ • NYSE • OTC

19. Dual Listing • Concurrent listing on US market and TASE • Timing of disclosure • Exposure issues • Business reasons

20. All Public companies • Evaluate and disclose internal controls • Time to comply • Financial reports certified by CEO/CFO • Auditor independence • Disclosure of related party transactions • Prohibited loans to insiders

21. Greenberg Traurig-An International Network of More than 1600 Attorneys & Governmental Affairs Professionals ● Greenberg Traurig Office ■Strategic Alliance ▲Greenberg Traurig Office/Strategic Alliance ● Greenberg Traurig Office ■Strategic Alliance ▲Greenberg Traurig Office/Strategic Alliance Strategic Alliances With Independent Law Firms* ALBANY AMSTERDAM ATLANTA BOCA RATON BOSTON CHICAGO DALLAS DELAWARE DENVER FORT LAUDERDALE HOUSTON LAS VEGAS LOS ANGELES MIAMI NEW JERSEY NEW YORK ORANGE COUNTY ORLANDO PHILADELPHIA PHOENIX SACRAMENTO SILICON VALLEY TALLAHASSEE TAMPA TOKYO▲ TYSONS CORNER WASHINGTON, D.C. WEST PALM BEACH ZURICH BRUSSELS■ LONDON■ MILAN■ ROME■ TOKYO▲ *Greenberg Traurig has entered into Strategic Alliances with the following independent law firms: Olswang in London and Brussels, Studio Santa Maria in Milan and Rome, and the Hayabusa Kokusai Law Offices in Tokyo. Greenberg Traurig is not responsible for any legal or other services rendered by attorneys employed by the Strategic Alliance firms.

22. Connecting Israel to Major Commercial CentersThroughout the World ● Greenberg Traurig Office ■Strategic Alliance ▲Greenberg Traurig Office/Strategic Alliance *Greenberg Traurig has entered into Strategic Alliances with the following independent law firms, where Greenberg Traurig attorneys are available for consultation by appointment only: Olswang in London and Brussels, Studio Santa Maria in Milan and Rome, and the Hayabusa Kokusai Law Offices in Tokyo. Greenberg Traurig is not responsible for any legal or other services rendered by attorneys employed by the Strategic Alliance firms.

23. You may also contact Gary Epstein 305-579-0894 (office) 305-439-1963 (cell epsteing@gtlaw.com Or Meital Stavinsky 305-579-0518 stavinskym@gtlaw.com Contact Bob Grossman grossmanb@gtlaw.com 305-579-0756 (office) 305-725-1600 (cell) Thank you! Greenberg Traurig, P.A.1221 Brickell AvenueMiami, Florida 33133 179451780