Canada’s Public Venture Capital Market Kevan Cowan, Vice President, CDNX Angel Investor Summit

1. Canada’s Public Venture Capital Market Kevan Cowan, Vice President, CDNX Angel Investor Summit October 30, 2001

2. Overview • The Venture Financing Challenge • Canadian Market Response • CDNX Performance • CDNX Opportunity • Additional CDNX Services The Venture Financing Challenge

3. The Venture Financing Challenge The Canadian Challenge… • To provide entrepreneurs with access to capital to fuel economic growth.

4. US vs. CDN Investment Private Venture Capital Investment Ratios 35:1 25:1 13:1 Target 10:1

5. Venture Capital Patterns Private VC Public VC January 1 - December 31, 2000

6. Overview • The Venture Financing Challenge • Canadian Market Response • CDNX Performance • CDNX Opportunity • Additional CDNX Services Canadian Market Response

7. Venture Equities Canadian Venture Exchange - CDNX Senior Equities Toronto Stock Exchange -TSE Canadian Markets Venture Equities Canadian Venture Exchange - CDNX Derivatives Montreal Exchange - ME

8. Acquisition Benefits • clear graduation path • stronger image and profile • operational efficiencies • cost efficiencies • global competitiveness

9. CDNX Market NicheExchange Comparison

10. Successfully Meeting Market Needs Calgary Winnipeg Montreal Vancouver Toronto

11. Listed Company Geography Composition of new listed companies in 2001 January 1 - September 30, 2001

12. Overview • The Venture Financing Challenge • Canadian Market Response • CDNX Performance • CDNX Opportunity • Additional CDNX Services CDNX Performance

13. Financing Performance January - September 2001 Year 2000 Total equity financing = $882 M Total equity financing = $2.4 B

14. Total Grad Performance Growth one year prior to graduation

15. Overview • The Venture Financing Challenge • Canadian Market Response • CDNX Performance • CDNX Opportunity • Additional CDNX Services CDNX Opportunity

16. Why CDNX? • gaining liquidity for high growth companies • alternative financing strategies • vehicle for financing mergers and acquisitions • employee stock options • transparent market valuations • streamlined graduation path to the TSE

17. Private equity candidates CDNX candidates TSE candidates When CDNX Stable production stage Operating history Commercial stage Project or idea R&D or prototype

18. Tech Candidate Profile • working capital to fund operations 18 - 24 months • management team • key positions filled • experience in industry • public company background (000’s)

19. CDNX and Angels CDNX may provide Angels with: • early stage exit • early stage liquidity • additional investment options • opportunities to invest in and mentor undervalued public companies • information and financials are disclosed and publicly available • opportunities to diversify risk • no minimum investments for secondary market trading • new private placement rules present further opportunities

20. Capital Pool Company Program • unique way to list, introduced in 1987 • 1,327 listed since inception • 1,034 CPCs have completed qualifying transaction since 1987 • 90 new CPCs listed in 2001 raising nearly $445 million in seed capital IPOs • 141 former CPCs now on senior exchanges • 48% of CDNX grads to TSE YTD 2001 were CPC issuers As of September 30, 2001

21. CPCs in Ontario • Introduction of program published for comment by the OSC • Implementation details being finalized • review procedures • role of securities commission • Program launch in early 2002

22. Traditional IPO process Listing Qualifying transaction CPC Process CPC process

23. Overview of CPC Process Prospectus Receipt Announce Qualifying Transaction File Draft Info Circular Obtain Shareholder Approval Public Offering Seed Financing Trade as CPC Incorporate CPC CDNX Listed Company 18 Months Maximum

24. IPO vs. CPC • IPO preferred when: • transaction is certain • strong retail appetite • larger financings required • wider structuring parameters • CPC preferred when: • going public for reasons other than raising equity • market not conducive to an IPO • issuer prefers to go public prior to market window opening • issuer has financing sources that require a public vehicle

25. Graduate Case Studies • Jul. 99 - qualifying transaction • Mar. 00 - $9.5 million special warrant deal • Feb. 01 - grad to TSE • First Capital Management and Caledonia Investments • Jan. 97 - qualifying transaction • Dec. 97 - Jun. 00 - six rounds of financing • Oct. 00 - grad to TSE • Triax and Working Ventures

26. Overview • The Venture Financing Challenge • Canadian Market Response • CDNX Performance • CDNX Opportunity • Additional CDNX Services Additional CDNX Services

27. Regulatory Program • Focus on management and governance • Comprehensive listings policy • On-going listed company regulation

28. InfoCDNX

29. Contact Information • Main Office Number • (416) 365-2200 • Kevan Cowan • (416) 365-2207 • kcowan@cdnx.com • Business Development: Delilah Panio • (416) 365-2213 • dpanio@cdnx.com • Corporate Finance: Tom Graham • (416) 365-2209 • tgraham@cdnx.com Ungad Chadda • (416) 365-2206 • uchadda@cdnx.com

30. www.cdnx.com