Canada: Focus on Technology, September 2006 - Technology Initial Public Offerings - Part 2

Last Updated: October 10 2006
This article is part of a series: Click Focus on Technology, September 2006 - Technology Initial Public Offerings - Part 1 for the previous article.

To read Part 1 of this article please click here


Choice of Underwriter

One of the first and most important matters for an issuer to consider in preparing to make a public offering of shares is the selection of an underwriter. The underwriter plays the central role in actually selling the securities. Selecting an underwriter best suited for an issuer’s IPO begins with an evaluation of the issuer and its future plans. For example, where an issuer is part of a specialized industry, it is prudent to look for investment dealers with experience in that area. The size of the deal will also influence the selection of the underwriter.

Some of the larger underwriters are not really interested in acting on deals of less than a certain dollar amount. If so, there is no point in engaging them since they will not pay the same level of attention to the deal. The underwriter must be a proper match with the issuer. As noted above, many underwriters have a minimum offering size, often in the $20-40 million range.

Generally speaking, some of the more important criteria for an issuer to consider when selecting an underwriter are as follows:

1. reputation;

2. experience;

3. the underwriter’s level of interest in the company;

4. distribution capability;

5. aftermarket performance;

6. research department capability;

7. continuing financial advisory services; and

8. fees and cost reimbursement.

The first step before arranging meetings with prospective underwriters is for the issuer to formulate a business plan in a format that will be attractive to underwriters. The business plan serves both as a brief introduction to the issuer as well as a sales tool to entice underwriters. The plan should include a history of the issuer’s business, the products and services offered and their market, the manufacturing facilities (where applicable) and labour force, historical financial information, financial forecasts and a preliminary indication of how the funds to be raised from the IPO will be used. The overall objective of the business plan is to demonstrate that the issuer has been financially successful in the past and has the capability of sustaining strong future growth.

The issuer must take special care to ensure that the business plan is free of any misrepresentations as this could delay or result in the termination of the offering if the underwriter is misled.

While the issuer has the final say in who will be its underwriter, this is not to say that underwriters do not select issuers in their own way as well. Indeed, once an underwriter becomes interested in an issuer either before or after reviewing its business plan, the underwriter will want to interview senior executives and key management members, review financial statements, consider financial forecasts, meet with auditors, evaluate the issuer’s products and market share, and consider the proposed use of the proceeds from the IPO before deciding whether it is interested in negotiating the terms under which it would underwrite the offering.

Where an offering is large in terms of the overall dollar amounts involved, it is not unusual to have several underwriters, each of whom agrees to take up a certain number of shares under the offering for distribution to the public. Generally speaking, the underwriter who agrees to take up the greatest number of shares will assume the role of lead underwriter as it will have the most at stake in ensuring that the offering is a success.

The underwriter(s), once selected, assist in the promotion of the IPO and the preparation of the prospectus that must be filed with the applicable securities regulators. There are two main types of underwriting arrangements:

  • "Best Efforts" - in a "best efforts" underwriting arrangement, the underwriter only agrees to use its best efforts to sell the issuer’s shares under the IPO. Although some "best efforts" offerings are "all or nothing", it is more common that a minimum number of shares must be sold in order for the underwriter to complete the offering.
  • "Firm Commitment" - in a "firm commitment" underwriting arrangement, the underwriter agrees to purchase all of the issuer’s shares issued under the IPO and then resell them to the public. Shares not sold to the public are still paid for by the underwriter and held for its own account.

Two variations of the "firm commitment" have evolved, the "traditional underwriting" and the "bought deal". In a "traditional underwriting", while the underwriter commits to buy the shares, there remains a "market out" clause which permits the underwriter to back out if market conditions are weak. In a "bought deal", the "market out" clause is much narrower. IPOs are usually done on a "traditional underwriting" basis. Clearly, however, the "firm commitment" underwriting arrangement is a preferable alternative for the issuer to a "best efforts" offering.

In cases where the underwriter is given an "over-allotment option" (commonly referred to as a "green shoe" option), the underwriter is given the right to purchase additional shares from the issuer (up to 15% of the number of securities offered under the prospectus, if the option expires after the closing) where it sells more shares than are set out in the prospectus. If the underwriter is given such an option, it must be disclosed in the prospectus.

In addition to their primary role in the initial sales effort, underwriters typically play a significant role in maintaining a strong and stable aftermarket for the securities issued pursuant to the IPO by continuing to provide information to analysts and investors. In this respect, an underwriter’s record in connection with post-offering services should be an important criterion for an issuer to review when making its final underwriting decision. In addition, the extent to which the underwriter has analysts providing coverage in your area should be a significant factor in your choice of underwriter.

Underwriters are generally paid a commission of between 5% and 10% of the proceeds of the offering as a fee for their participation, although this figure varies depending on the size of the offering, the type of underwriting and the expected market for the shares. Where several underwriters are interested in an issuer, it may be possible to negotiate a lower commission because of competition between the dealers. It is also not uncommon for underwriters to request reimbursement from the issuer of all or a portion of the expenses incurred during the offering. This practice seems to vary widely.

It is important to select an underwriter who is interested in the deal, with whom you would work well and who can "do the deal".

Preliminary Pricing Discussions

Determining an appropriate offering price is probably one of the most difficult and subjective decisions that an issuer, in consultation with its underwriter, will have to make before going public. However, before the question of price is even reached, it is first necessary to decide on the type of security that will be offered pursuant to the IPO.

Almost all technology IPOs consist of common shares, while some consist of units that include both common shares and warrants to purchase additional numbers of common shares at a later date. In other more limited circumstances, an issuer may issue debt, preferred shares or securities that include common shares and convertible debentures (i.e. debt convertible into common shares).

Some of the factors to consider in determining the appropriate security to offer in an IPO include cash-flow consequences of interest for debt and dividend requirements for preferred shares, debt-to-equity ratio, potential dilution tied to warrants, and income tax considerations. Finally, although the foregoing issues are important, the most important determining factor with respect to the offering structure must always be projected market reaction.

Although the issuer and the underwriter may negotiate a general range for the price of the securities offered pursuant to the IPO, the final pricing decision is not made until just before the underwriting agreement is signed, usually the day before the final prospectus is filed. Offering prices are often referred to and compared on the basis of price-earning ratios. These ratios are a common benchmark used to compare the proposed offering price to other IPOs conducted by existing public companies in the same or similar industries. In some instances, pricing is based on multiples of revenues. Many other factors can impact pricing decisions including the anticipated impact of the funds raised from the IPO on the issuer’s earnings; past and projected rate of growth; quality of past earnings; potential dilution from the exercise of outstanding warrants and/or stock options; vulnerability to competitors and competing products; projected lifespan of the issuer’s product line and ability to adapt to changing market needs; management strength; planned acquisitions; size of the offering; and the type of industry in which the issuer operates.

From the outset, an issuer must realize that an underwriter will not guarantee an offering price. However, it is important in the engagement letter to tentatively set out an expected range within which the final price is likely to fall. In this way, a great discrepancy in expectations can be identified before moving forward.

The engagement letter also deals with the type of commitment ("best efforts" vs. "traditional underwriting"), type of security, number of shares, expected pricing range, secondary component, commission rate, underwriter’s expenses, timing, indemnities, etc. Immediately prior to filing the final prospectus, a formal underwriting agreement is signed. Careful review of the engagement letter will mean that much of the underwriting agreement, except for pricing, will be "boilerplate".

In the end, the underwriter’s experience is perhaps one of the most valuable tools to use in setting a final offering price. Although establishing as high a price as possible obviously holds considerable appeal, especially when a secondary offering of existing shareholders’ stock is planned, overpricing should be avoided. Underwriters typically advise an issuer to set a price that will ensure an active aftermarket in the securities issued pursuant to the IPO. Since overpricing tends to cause damage to investor confidence, which pushes down the price of shares, it is best to agree on a price that will allow for a price rise in the aftermarket which, in turn, will attract public interest.

Directly linked to pricing questions is the number of shares to be offered. This is an issue that varies from IPO to IPO and is dealt with as part of the other preparatory matters. The important consideration to keep in mind is that there must be enough shares sold in the IPO to ensure sufficiently wide distribution and a healthy aftermarket.


The final part of this guide is intended to provide an overview of the requirements for becoming a public company in Canada and listing shares on the TSX.

The following discussion is based on the assumption that the shares would be listed on the TSX, not the TSX Venture Exchange.

TSX Listing Requirements

Original listing on the TSX is accomplished by the preparation and submission of a listing application and the payment of applicable fees. The TSX has four basic listing criteria:

  • Public Distribution - To list on the TSX, a company must have at least one million freely tradable shares with an aggregate market value of $4 million, or $10 million for issuers qualifying under the Technology Company criteria. These shares must be held by at least 300 public shareholders, each with one or more board lots.
  • Management – Management must have adequate experience and technical expertise, as well as adequate public company experience. Officers, directors and holders of more than 10% of outstanding voting securities must provide details of their background, business experience and industry knowledge. Regulators will perform background checks to help determine if there are any integrity or compliance issues.
  • Sponsorship - All non-exempt companies1 are required to provide a sponsorship letter from a TSX Participating Organization, a group which includes most major Canadian investment banks.
  • Financial Requirements – A company will meet the TSX’s financial requirements if it qualifies under one of five sets of financial criteria. One of these sets of criteria is intended to apply only to "Technology Companies", that is, companies engaged in hardware, software, telecommunications, data communications, information technology and new technologies, that are not currently profitable nor able to forecast profitability. Table 1 attached to this article summarizes the financial criteria that the TSX will use to evaluate applicants.

Which Canadian Jurisdictions?

While securities legislation in Canada is regulated on a provincial basis, under the mutual reliance review system (MRRS), the issuer will generally deal directly with only one securities commission. This commission is determined in accordance with MRRS rules and is known as the "principal regulator". Other securities commissions are entitled to review the materials filed by the issuer and will advise the principal regulator of any material concerns. Note, however, that other securities commissions can opt out of the MRRS and deal directly with the issuer if they wish to do so.

In terms of deciding whether the offering should be made in multiple Canadian jurisdictions, it is important to determine whether the market for the shares in multiple jurisdictions warrants the additional work (including potential opt-outs from MRRS) necessary to qualify the IPO as well as ongoing compliance after the IPO. This is usually a matter for which the underwriter will be able to provide valuable insight.

Preparation of Preliminary Prospectus

Securities legislation requires that a prospectus contain "full, true and plain disclosure of all material facts relating to the securities" offered by the prospectus. In addition, a prospectus must not contain an untrue statement of a material fact or omit to state a material fact that is required to be stated or that is necessary to make a state- ment not misleading in light of the circumstances in which it was made. In Ontario, the term "material fact" is defined in the Securities Act to mean a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the securities being offered.

In most Canadian jurisdictions, the prospectus is prepared in two stages: a preliminary prospectus and a final prospectus. The main difference between the two stages is that information such as the final offering price, the net proceeds, the underwriting discount or commission, and the auditors’ report on the financial statements is excluded from the preliminary prospectus. Otherwise, all other information required by the securities regulators must be set out in the preliminary prospectus in the same manner required for the final prospectus. The form of prospectus must comply with National Instrument 41-101.

The first step in preparing a prospectus is generally the initial organizational meeting at which the issuer’s senior executives meet with the issuer’s lawyers, auditors, underwriter and underwriter’s counsel. At this meeting, responsibility for gathering information and preparing various parts of the prospectus are apportioned among the parties. Practice varies as to whether the issuer or underwriter will have principal drafting carriage of the prospectus, i.e. maintain the "master".

Prospectuses by technology issuers basically follow a similar format although the order in which the information is presented will vary. Before starting to draft, we recommend that management carefully review recent prospectuses from competitors and other companies in their sector. To the extent it is desirable to minimize the drafting time once the IPO is given a "go ahead", we suggest that management prepare a draft of the sections on the issuer’s business including an industry overview and discussion of its competition before formal drafting sessions are commenced. The section dealing with the industry overview and competition will require third party or industry publication corroboration and it is helpful to get that information sooner rather than later. Both your counsel and securities regulators will require you to "justify or delete" statements in the prospectus and it is best to be prepared to justify.

One of the problems in preparing a prospectus, in addition to the sheer amount of information that must be collected in order to make full and complete disclosure, is the fact that a prospectus serves two conflicting purposes.

First, it is used as a selling document by the underwriters to sell the securities. Therefore, at one end of the scale, there is incentive for the issuer and the underwriter to use the prospectus to present the issuer in the best light possible.

Second, and at the other end of the scale, the prospectus serves as a disclosure document prepared in accordance with applicable securities regulations as protection against misrepresentations and omitted material information on the part of the selling shareholders, underwriters, directors, experts and other persons or companies who sign the prospectus. As a result, all those concerned will want to ensure that any unfavourable factors relating to the offering and the issuer are given the same amount of attention as the positive factors.

Although balancing these conflicting purposes often results in a less "glowing" report on the issuer and its business than management may have intended, it is better to err on the safe side rather than include some statement or omit some qualifying information that may later be treated as a misrepresentation.

With respect to the financial statements contained in the prospectus, you will work closely with your auditors on the finalization of their presentation in the prospectus. We suggest that management meet with auditors at an early stage in order to discuss the process and to get an estimate of costs.

Due Diligence

Due diligence is a term an issuer hears throughout the IPO process and is especially important during the preparation of the prospectus. As implied by the term itself, due diligence relates to the responsibility of the issuer and its principals who are involved with the preparation of the prospectus to conduct reasonable investigations and to provide reasonable back-up for the statements made in the prospectus. As such, due diligence is used to test the support for the statements and the information contained in the prospectus and to make sure that there are no misrepresentations. Generally speaking, a misrepresentation means "an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made."

Under most of the provincial securities law statutes, an issuer and its selling shareholders are absolutely liable, regardless of due diligence, for any material misstatements or omissions in the prospectus. The only defence available to the issuer and its selling shareholders is to prove that the securities were purchased with knowledge of the misrepresentation. On the other hand, the underwriters, experts, corporate officers and others who sign the final prospectus may claim a due diligence defence in the event of such deficiencies.

As part of the due diligence process, the issuer’s lawyers and the underwriter’s lawyers will probe extensively into the issuer’s affairs. The issuer’s officers and directors must be prepared to respond frankly to questions regarding any aspect of the issuer. Much information is obtained through a directors’ and officers’ questionnaire which the issuer’s lawyers prepare as part of their involvement with the preparation of the prospectus. At an absolute minimum, every director, senior officer and any other person involved in preparing the prospectus should read the prospectus in its entirety and be satisfied with its contents prior to approval by the board.

As part of its own due diligence inquiries, the underwriter will request a comfort letter from the issuer’s auditors. The comfort letter details the procedures followed by the auditors with respect to certain financial information contained in the prospectus and also sets out the auditors’ findings.

In our experience, the drafting sessions throughout the prospectus preparation process cover many due diligence issues, since statements must be discussed and substantiated as part of the drafting process.

A due diligence session is generally held shortly before the date that the final prospectus is filed with the securities regulators. The purpose of this meeting is to bring together the underwriter and its counsel and the issuer’s senior officers, directors, lawyers and auditors in order to provide all of the interested parties a final opportunity to raise any questions about the issuer and follow up on any due diligence matters that may have not been resolved to everyone’s satisfaction.

Ontario securities legislation imposes a rigorous standard of responsibility and liability on issuers of securities. In summary, where a prospectus contains a "misrepresentation", each purchaser is deemed to have relied on the misrepresentation and has a remedy against the issuer either in damages or for rescission, and a remedy in damages against the directors of the issuer and each other person who signs the prospectus. As such, it is extremely important that the due diligence process is completed carefully and that the issuer and its principals keep nothing from those conducting the investigations.

Future Oriented Financial Information

Issuers may wish to include future-oriented financial information (FOFI) such as forecasts or projections in a prospectus even though it is not specifically required. A forecast is prepared using assumptions based on an issuer’s planned course of action using management’s estimate of the most probable future economic conditions under which the issuer will conduct business. A projection differs from a forecast in that it may include assumptions that are not necessarily the most likely in management’s judgment. Thus, a projection may be based on a best case scenario which may not have much chance of ever occurring.

Canadian securities regulators generally require that FOFIincluded in a prospectus must be in the form of a forecast. Under National Policy 48, the period covered by an issuer’s FOFIgenerally may not exceed 24 months. If FOFIis to be set out in an issuer’s prospectus, it must be approved by securities regulators before the preliminary prospectus is filed. In addition, the auditors are required to issue an audit report on any FOFIincluded in a prospectus. Finally, if an issuer includes FOFIin its prospectus, it is required to disclose any significant changes affecting such information during the forecasted period and to explain variances from forecast results in its subsequent quarterly and annual filings.

Use of FOFIis another issue that should be reviewed with the underwriter at the outset.

Filing of Preliminary Prospectus

Once the issuer, the underwriters and their respective advisers are satisfied with the contents of the preliminary prospectus, it is approved by the board of the issuer, and then filed and receipts are obtained from applicable regulators. A number of supporting materials will also be filed. As noted above, the preliminary prospectus is incomplete with respect to certain information but it can still be provided by the underwriters to prospective investors. In this regard, the underwriters will generally require that a sufficient number of commercial copies of the preliminary prospectus be printed. These are distributed through the underwriters’ offices to prospective investors.

If a material adverse change occurs during either the period between the filing of the preliminary prospectus and the filing of the final prospectus, or after a receipt for the final prospectus is obtained but before distribution of the shares has been completed, an amendment to the prospectus must be filed within 10 days of such change taking place.

The principal regulator generally assigns a lawyer and an accountant to review the prospectus. The principal regulator is required to use its best efforts to review the materials and issue a comment letter within 10 working days of the receipt of the preliminary prospectus. This "first comment letter" will be sent to the issuer and the non-principal regulators. The issuer’s counsel will then provide the principal regulator with a written response to the first comment letter and direct the issuer to deal directly with the regulator to resolve the comments.

The principal regulator will review all prospectuses for adequacy of disclosure in accordance with its regulations and policy statements. In this respect, lawyers, accountants and industry experts who are part of the regulators’ staff are able to put a prospectus "under the microscope". The purpose of the review is to ensure that the relevant form and regulations are complied with and that adequate disclosure is made. As a result, securities regulators may require that the disclosure of weaknesses or other facts detrimental to the offering be given special prominence. Securities regulators may also require additional evidence to support certain claims and/or statements or, if such evidence is not available, that such statements or claims be removed from the prospectus altogether.

Once all of the comments and deficiencies of the principal regulator (and any other regulator that has opted out of the MRRS) have been adequately addressed, and the issuer and its advisers are satisfied that no material change has taken place since the preliminary prospectus was filed, the final prospectus can be filed, receipts obtained and distribution of the securities can begin.

It is our experience that most comments can be resolved by letter and telephone. However, if a more difficult issue arises, it may be necessary to have a face to face meeting with the staff of the principal regulator.

In terms of timing, it normally takes 30 to 40 days to settle the form of final prospectus from the date of filing of the preliminary prospectus, although this time period will obviously vary depending on factors such as the complexity of the offering.

Road Shows

During the "waiting period" between the issuance of a receipt by the principal regulator for the preliminary prospectus and the issuance of a receipt for the final prospectus, the underwriter is not permitted to sell the securities in any province or territory of Canada. However, the underwriter is permitted to "solicit expressions of interest" from prospective purchasers. One method that underwriters generally employ to "solicit expressions of interest" is taking members of the issuer’s senior management on a "road show" to introduce prospective investors to the issuer and its business. The term "road show" means a series of meetings scheduled by the underwriter in different locations that allows prospective investors to ask company management factual questions relating to the issuer and the offering. Typically, representatives from the underwriter of the offering will also be present during the "road show" to assist with setting up meetings and with disseminating information to investors.

Underwriters may also distribute copies of the preliminary prospectus to prospective investors during the "waiting period". The sales literature that may be otherwise distributed during this period is extremely limited although the issuer should continue with its normal product advertising campaigns, reports to shareholders and press releases with respect to factual business and financial developments. However, out of caution, some of this material should be reviewed by counsel. In addition, the issuer should avoid launching a new advertising campaign during the waiting period.

Issuance of Receipt from Principal Regulator for Final Prospectus

The principal regulator will issue a MRRS decision document (or receipt) once the following conditions are satisfied:

  • the principal regulator is satisfied that all comments have been resolved; the principal regulator has received and reviewed a blacklined copy of the preliminary prospectus indicating the changes that have been made;
  • the principal regulator has received and reviewed a final prospectus signed by the appropriate officers and directors of the issuer together with other required filing materials; and
  • the regulator of each Canadian jurisdiction (other than the principal regulator’s jurisdiction) in which the issuer is offering securities under the MRRS has indicated that it is "clear for final".

The issuer will also have to obtain a receipt from any securities regulator that has opted out of the MRRS.

Once the final prospectus has been filed and the receipt has been issued, the underwriter may formally distribute the securities to the public. The underwriter will require sufficient numbers of copies of the final prospectus to be commercially printed. A person who agrees to buy securities must be given a copy of the final prospectus no later than two days after the date of the agreement. Once the final prospectus is delivered or deemed to be delivered to the purchaser, the purchaser has two days to withdraw from the purchase.


The final settlement or closing of the IPO typically occurs within two weeks after the issuance of the receipt for the final prospectus. At this time, the principals of the issuer, its lawyers and its auditors meet with the representatives of the underwriter and its counsel to exchange closing documents. At the closing, the issuer and any secondary

sellers receive their share of the proceeds from the IPO and the underwriter receives the share certificates representing the shares that have been sold under the offering. There are also numerous other closing documents that are tabled by the various parties at this time. The closing meeting is also normally attended by the issuer’s registrar and transfer agent.

Escrow Requirements

A statutory escrow requirement under National Policy 46-201 (NP 46- 201) will be triggered at the time of a Canadian IPO, or a cross-border IPO that includes a Canadian component. NP 46-201 can result in escrow for certain shareholders for up to eighteen months. Note, however, that shareholders of issuers that list on the TSX and have a market capitalization of more than $100 million post-IPO will generally not be subject to escrow. If there is an escrow requirement under NP 46-201, the following persons will be subject to escrow:

  • directors or senior officers of the issuer or any material operating subsidiary at the time of the IPO;
  • any person who has acted as a "promoter" of the issuer within two years preceding the IPO;
  • persons holding more than 20 percent of the voting rights attached to the issuer’s securities before and immediately after the IPO; and
  • persons holding between 10 and 20 percent of the voting rights attached to the issuer’s securities before and immediately after the IPO, if the holder also has a right to elect a director or senior officer of the issuer or any material operating subsidiary of the issuer.

NP 46-201 does allow for certain secondary offerings in Canada or in the U.S. (including firmly underwritten offerings) by holders who would otherwise be subject to escrow. The TSX also has the discretion to apply additional escrow requirements if it believes that it is in the public interest to do so.

Selection of Registrar and Transfer Agent

An issuer’s registrar and transfer agent coordinates the dissemination of corporate communications and other information to shareholders such as notices of meetings, annual reports and dividend cheques. In this respect, the registrar and transfer agent maintains an accurate list of shareholders (with the exception of shareholders who hold their shares through a nominee such as The Canadian Depository for Securities Limited (CDS)). The registrar and transfer agent also attends to the preparation of the necessary paper work involved in the transfer of shares. Therefore, where a multi-jurisdictional offering is staged, it is important that the issuer choose a registrar and transfer agent that is familiar with the procedures and requirements of each jurisdiction in which the securities are offered for sale.

Generally speaking, CIBC Mellon Trust Company Canada and Computershare Trust Company of Canada are used by larger public companies for registrar and transfer agent services. Equity Transfer Services also services a large number of companies with smaller market capitalization.


The IPO process is exciting, but complex and challenging to complete. We hope you will find this Focus informative and helpful in considering the IPO alternative as part of your growth plans.



Senior Companies

Profitable Companies

Companies Forecasting Profitability

Technology Companies

Research and Development Companies

Net Tangible Assets






Pre-Tax Earnings from On-Going Operations

$300,000 in the last fiscal year

$200,000 in the last fiscal year

$200,000 for current or next fiscal year



Pre-Tax Cash Flow from On-Going Operations

$700,000 in the last fiscal year; average of $500,00 in the last 2 fiscal years

$500,000 in the last fiscal year

$500,000 for current or next fiscal year



Cash or Equivalents in Treasury






Available Funds




Sufficient to cover planned development and capital expenditures, and general and administrative expenses for 1 year

Sufficient to cover planned research and development, expenditures, general and administrative expenses and capital expenditures for 2 years

Product Development/ Commercialization




Products or services at an advanced stage of development or commercialization

Two year operating history that includes R&D expenditures, evidence of technical expertise and resources to advance its R&D programs


1 Only companies that meet the following test will be exempt: (i) net tangible assets of $7.5 million; (ii) pre-tax earnings from on-going operations of at least $300,000 in the last fiscal year; and (iii) pre-tax cash flow from on-going operations of $700,000 in the last fiscal year and an average pre-tax cash flow from ongoing operations of $500,000 in the past two fiscal years.

This newsletter is designed to supply brief details of recent legislative or other initiatives of interest and some commentary. The summaries and comments provided are, of necessity, brief and should not be relied upon as legal advice. We encourage you to contact any member of this group at any of our offices for further details or advice in the context of a particular situation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Focus on Technology, September 2006 - Technology Initial Public Offerings - Part 1 for the previous article.
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    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions