Stock Market Presentation

June 2013

Forward-looking Statements

This presentation includes forward-looking statements, as defined in the 1968 Securities Law ( חוק

( 1968-ח"תשכ, ניירות ערך . Such statements may include, inter alia, forecasts, goals, evaluations and

estimates referring to future events and/or matters whose realization is not guaranteed and/or not in

the company’s sole control. Forward-looking statements does not constitute a proven fact and are

naturally subject to substantial risks of non-realization due to, among other things, risk factors

characterizing the company’s activities, the external factors affecting the company’s activities, which

are impossible to predict and are outside the company’s control.

In light of the aforementioned, readers of this presentation are hereby warned that the outcomes and

actual accomplishments of the company in the future may be substantially different from those

provided in the forward-looking statements included in this presentation.

In addition, forward-looking statements are based on information and data available to the company

at the time of the presentation’s release, and the company makes no commitment to update and/or

change any forecast and/or estimate to reflect events and/or circumstances which may occur after

the release date of this presentation.

This presentation was designed for overview and convenience purposes, and cannot replace

inspecting the reports the company has released and releases to the public, which include the

complete information about the company, before deciding about investing in the company’s shares

This presentation does not constitute an offer to purchase shares in the company, or an invitation to

receive such offers, and is meant to provide general information only, which is by nature partial, as

part of providing information about the company to institutional investors and analysts and/or third

parties.

WhiteSmoke – ID Card

• The Company was founded in 2002 to provide tools for correcting and improving texts in

English, as well as provide English learning aids to a wide variety of users. The

Company merged in January 2013 into WhiteSmoke Software Ltd. (formerly – Eldan

Tech Israel Ltd.), a publicly traded company on the Tel Aviv Stock Exchange Currently,

the Company employs about 26 people.

• The Company operates on the Internet market in two main areas:

- Software sales and services.

- Online marketing and advertising.

• The Company is operative and sells its products all over the world, particularly in North

America. Until the end of April, 2013, the Company has sold hundreds of thousands of

licenses for its software, and has performed over 20,000,000 installations of toolbars

into which applications developed by the Company are integrated.

• Main shareholders: Evolution Venture Capital Fund and Yair Goldfinger Assets Ltd.

Company Management

Itay Meroz - CEO

Laly Bar-Ilan - VP R&D and Product

Yariv Gilat, Chairman of the Board of Directors

Guy Harel - CFO

The Company seeks to establish its status as a world

leader in the field of translation and English text

correction, both by continuous development of its

products and by exposing new markets to its solutions.

In addition, The Company seeks to further integrate its

products by establishing new collaborations in the field of

online marketing and advertising.

Vision

Balance Sheets(thousands of ILS)

31/12/2012 31/3/2012 31/3/2013

5,432 818 2,007 Cash and Cash equivalent

4,491 3,183 13,993 Account Receivables

177 128 321 Other Current Assets

10,100 4,129 16,321 Total Current Assets

163 243 164 Non-Current Assets

10,263 4,372 16,485

9,438 7,997 13,762 Account Payables & other Short Term Liabilities

5,989 5,648 5,738 Short Term Deferred Revenues

11,611 7,512 - Loans and Embedded Derivatives

27,038 21,157 19,500 Total Short Term Liabilities

1,764 3,893 1,723 Long Term Liabilities

(18,539) (20,678) (4,738) Stockholder’s Deficiency

10,263 4,372 16,485

Income Statement (thousands of ILS)

2010 2011 2012

19,794 39,186 38,434 Revenues

Expenses:

1,940 2,134 999 Cost of Goods Sold

3,271 4,045 2,992 Research and Development Expenses

16,661 33,079 23,673 Sales and Marketing Expenses

1,857 5,774 2,935 General and Administrative Expenses

246 304 (72) Share-based Compensation

(4,181) (6,150) 7,907 Operating Profit (Loss)

- - 21% Operating Margin Ratio

2,445 3,530 6,720 Financial Expenses (Revenues), Net

(97) 385 21 Taxes on Income (Tax Benefit)

(6,529) (10,065) 1,166 Net Profit (Loss)

- - 3% Profit Ratio of Period Total

Selected Financial Data - thousands of ILS

2010

Income

19.8M

39.2M 38.4M

Operating Profit

2010

-4.2M

-6.1M

7.9M

2011 2012

Software

27%

Toolbars

73%

Software

31%

Toolbars

69%

Software

69%

Toolbars

31%

2011

2012

Net Profit

2010

-10.1M

1.2M

2011

2012

-6.5M

Operating Cash Flow

2010

-5.6M -4.4M

3.2M

2011

2012

Financial

exp.

(net)=

6.7M

due

to

merger

Income Statements – Quarterly (thousands of ILS)

Q1/12 Q2/12 Q3/12 Q4/12 Q1/13

6,771 7,040 12,649 11,974 19,182 Revenues

Expenses:

264 220 267 248 330 Cost of Goods Sold

677 741 674 900 891 Research and Development Expenses

4,636 3,570 9,057 6,410 13,701 Sales and Marketing Expenses

321 945 779 890 518 General and Administrative Expenses

(91) 19 (1) 1 2,391 Share-based Compensation

964 1,545 1,873 3,525 1,351 Operating Profit (Loss)

14% 22% 15% 29% 7% Operating Margin Ratio

2,216 787 419 3,298 (1,049) Financial Expenses (Revenues), Net

- - - - 474 Issuance Costs

(130) 69 72 10 102 Taxes on Income (Tax Benefit)

(1,122) 689 1,382 217 1,824 Net Profit (Loss)

- 10% 11% 2% 10% Profit Ratio of Period Total

Selected Financial Data

Thousands of ILS

Revenues

6.8M 7.0M

Q1/12 Q2/12

Software

29%

Toolbars

71%

Software

35%

Toolbars

65%

Q3/12

Software

15%

Toolbars

85%

Q4/12

Software

36%

Toolbars

64%

12.6M

12.0M

Operating Profit

Q1/12

1.0M

Q2/12

1.6M 1.9M

Q3/12

3.5M

Q4/12

Net Profit

Q2/12

0.7M

1.4M

Q3/12

0.2M

Q4/12

-1.1M

Q1/12

Q1/13

Software

12%

Toolbars

88%

19.1M

Stock

Based

Comp.=

2.4M

1.4M

Q1/13

Financial

exp.

(net)=

3.3M

due

to

merger

Q1/13

1.8M

Stock Based

Comp.=2.4M

and Issuance

Costs=0.5M.

Offset with

1.1M Fin.

Income Due

to Merger

Writer

Full-Text Translator Multilingual Dictionary Document Templates

Writing Review

Shows a detailed score of

users’ original texts along

with personalized writing

improvement tips.

A comprehensive solution

for improving the

grammar, spelling,

structure, and style of

English texts

Technology

WhiteSmoke’s products are based on NLP )Natural Language Processing( technology –

a subfield of Artificial Intelligence. WhiteSmoke’s text analyzing engine is based on

unique algorithms which can analyze the sentence structure of a text and detect spelling,

grammar, and style errors.

Online Sales

WhiteSmoke’s activity is directly affected by the volume of Internet activity and

usage, which is growing steadily.

Due to ongoing globalization and technological advancements across the world,

there is growing need for accurate and precise written communication

in English, both as part of the intra-organizational work of transnational

corporations, and for the relationship between companies and their customers

worldwide.

According to The Company’s estimate, the global market for English writing and

learning software is valued at billions of dollars per annum.

The growth trend of social networks, comprising hundreds of millions of

members, will promote marketing WhiteSmoke products to new users, and will

assist in distributing them to many customers and users who are already using the

Internet.

Customers

WhiteSmoke has a broad spectrum of clients, ranging from private users and

small businesses to large enterprises.

The Company sells its products through two channels:

(1) Selling software directly to users via sales representatives, and to

enterprises via B2B representatives.

(2) Distributors, providing free software after downloading the distributor’s

toolbar.

The Company increases its revenues by creating partnerships with search

engine providers and toolbar developers.

The Company's audience is large and focused, which increases its value in the

eyes of search engine providers, which in turn directly increases the Company's

income.

The Company maintains fruitful partnerships with Conduit’s Israel office and

other leading toolbar companies. After downloading the free version of

WhiteSmoke's software, these companies' toolbars are also installed.

Online Marketing

User Generation

Distribution

Monetization

• Search • Other Advertisements

• Media Buying • PPC Campaigns • Affiliates • Bundled Traffic

Licensing

Lead Conversion

• Call Center • Chat • Support • Email Campaigns • Popups

The Company's Online Marketing Structure

Company’s Website Visitors by Country

* Source: Alexa.com – updated for May 2013

The Company estimates that about 57% of content in the world is written in English.

However, only 27% of those who surf the Internet understand this language.

Companies that operate in similar markets to WhiteSmoke’s:

• Babylon

• StyleWriter

• Grammarly

• Ginger Software

• Microsoft Office’s spelling and grammar tools

• Translation tools by Google and others

Competitors

Competing Products:

Alternatives to WhiteSmoke’s products in the field of English grammar and

writing enhancements:

• Microsoft Word

• Babylon 10

• Ginger Software

• Grammarly

Focus on user-friendly and easy-to-use software, which is vital to the Company’s

branding as a world leader in the field of English writing and grammar

enhancement.

Continued improvement and development of the Company’s products and

various services – a new product to be launched in 2013.

Expanding our geographic coverage all over the world. Since the services are

Internet-based, they are available globally.

Creating additional collaborations in the field of online advertising and marketing.

Penetrating the Far Eastern market through distributors and resellers. The

demand for writing in English is growing daily in this area.

Acquiring new customers in the field of American education, while strengthening

the collaboration with U.S. giant Pearson.

Looking Ahead