Legal tips for your tech scale-ups (Part III): Financing strategies for growth

Tara:                Should we get started?

Aimee:             Mmhmm.

Tara:                Great. Okay. Hi, everyone. My name is Tara Amiri and I'm a partner in the Business Law group of Gowling WLG in Vancouver. I focus on corporate finance, securities, mergers and acquisitions and I'm going to pass it on to Aimee to introduce herself.

Aimee:             Hi, everyone. I'm a partner also in the Vancouver office, in the Business Law group. My practice focuses on primarily private company transactions, working with founder-led businesses and private equity firms. Next slide, please. So I just wanted to give everyone a little bit of a road map before we start in. Today we're going to be discussing financing strategies for growth for your tech company. The first portion we are going to talk from both the private and public company perspective about investment readiness. So we'll discuss financials, corporate governance and intended use of proceeds. Then we'll move on and talk a bit about fundraising and I'll talk about private equity and venture capital, things to expect, and then Tara's going to talk about going public transactions. Then we've set aside some time at the end for a Q&A period so if you do have questions please add them, I think there's a Q&A section, and we will try to address them at the end of this webinar. Next slide, please. Thanks.

                        So one of the first things, and this is assuming that you have a company set up, you have an operational business and you are getting ready for some form of a next level of financing. From a private company perspective, there's no financial specific reporting requirements and there's no requirement to publicly disclose your financial information. Which means that when an investor is, or if you're working with investors, they have to get this information from you. There's also the option for private companies to waive audit requirements, year over year, which a lot of companies do, especially while they're in the early stages and / or as their scaling up. During the process of working with an investor, and as you get to having those conversations, they're likely going to want to review 2 to 3 prior years of financial information and may expect some review of those financial statements. Presumably, at this stage, you have engaged an agent or a broker and certainly you probably have a relationship with an accountant who can direct you to someone who can provide that review. I don't think you have to do this but it's certainly something to be ready for in case questions arise. Companies, as I mentioned, companies preparing for financing should consider whether or not to engage accountants to prepare audited, or review engagement, or notice to reader financials that they can start distributing to investors as you get to that stage. Now Tara's going to talk about it from a public company perspective.

Tara:                Thank you. So generally speaking, to go public, 3 years of audited financial statements as well as reviewed interim financial statements, you'll see quarterly financial statements are required to be included in the disclosure documents that the company will file with the stock exchange and the Canadian Securities Administrators, CSA. There are exceptions. For example, if the company hasn't been around for three years you will need 3 years of audited financials. The statements must be prepared in accordance with International Financial Reporting Standards, or IFRS. There are, again, exceptions to permit preparation and audit in accordance with standards that apply in certain foreign jurisdictions, including United States, generally accepted accounting principles. As per Canadian securities laws, financial statements of public companies can only be audited by a firm that is a participating audit firm, and in compliance with any restrictions or sanctions that are imposed by the Canadian Public Accountability Board, CPAB. So this is something to think about when looking to engage an auditor. You need a CPAB registered auditors. Another thing to think about when you're looking to engage an auditor is whether they're familiar with, obviously in connection with going public, is whether they're familiar with financings and securities offerings. An auditor that is familiar with securities offerings will help all the accounting matters of the prospectus and can reduce the time spent by lawyers on the accounting matters of the prospectus. Another thing that's required is an annual and an interim management discussion and analysis document. Each of these would relate to the most recent annual and financial statements that are being included in the disclosure documents. These are documents that are based on forms that are prescribed by the Canadian securities regulators and accountants, while auditors and lawyers can help you with getting these documents together. Now to Aimee.

Aimee:             Thanks, Tara. So from a private company perspective, and one of the things you'll have to have your minute books and your other company records in order, if you're working with a law firm a law firm will have completed the annual returns, made sure that you've filed your, and recorded Director's Resolutions and Shareholder's Resolutions, but it's really important, especially as you're getting to that next stage of financing, to make sure that these are in order. In my experience I've seen a lot of, when we're getting to that financing stage, when books and records aren't up to date, it can sometimes be a little costly in order to fix it and get it ready for financing. So one of the things, if you're not working with a law firm who maintains your records, to make sure that every year you're keeping everything in the minute books and your doing everything that's required under the Act, under which you're incorporated. From a private company perspective there's a minimum of one director. Usually in founder-led businesses you may have just one director and then as the company matures you may add more directors to the roster. Sometimes those are more senior management, or executives on the group, or it may in fact be a consultant or someone else who has a particular area of expertise that aligns with your business objectives. Diversity of thought is great on boards. It's not necessarily required but it is something to think about as you're preparing yourself to take on financings. I think one other thing to think about is that a lot of investors, and we'll talk a bit about it later, will expect to have some role and so it's important to understand what those requirements are. There's also no requirements for officers, however, companies should have a President and a CEO and then any other executive team members as necessary. Often you'll have a CFO or a Director of Finance, someone in operations, someone in HR and really this is part of your story is that you have a strong team, that you have people in place who can take the business to the next step. So if you haven't yet, again, it's not suggesting that you go out and add people to the roster to fill those roles, but it is important to think about how people fit into your story and how you're going to sell that next stage of growth to a private equity fund.

Tara:                Thanks, Aimee. So from a public company perspective, corporate governance, at a minimum you need three directors. Now for a public company there's a certain number of directors who are independent, and that is persons who have no direct or indirect material relationship with the company, will need to be appointed to the board. Securities laws provides guidance on what securities regulators consider to be optimal standards of corporate governance for publicly listed companies, now generally regarded as good corporate governance to have majority of the directors on the board comprised of independent directors. Audit committees are required, except subject to certain exceptions, and compensation and nominating committees are recommended to be composed entirely of independent directors. It's almost recommended that a public company adopt a code of business conduct and ethics for its directors, officers and employees. Now in terms of stock exchanges, for the TSX, the board will need three independent directors who are financially literate to serve on the audit committee, while companies listed on the TSXV or the CSE that are considered more junior, require two independent directors who are financially literate. As a junior company you need at least then three directors, two independent, and at least three officers that are also included. So you need a CEO, CFO and a corporate secretary but you can have the corporate secretary be either the CEO or the CFO. So two individuals can fill these roles. It's also a listing requirement of all the exchanges that management and the board have adequate experience and technical expertise, relevant to the listed company's business and industry, as well as public company experience. So this is something to think about and keep in mind when you're looking to go public and are looking to expand your board and add members to your board of directors. Another requirement, when the company's going public, is that all the directors and officers and insiders are required to complete what is called a personal information form. Which is a form that's a list of detailed questions about the background of the directors and officers and insiders for the stock exchange and the Canadian Securities Administrators to be able to run background checks. So this is another thing to think about when you're looking at board members for your company. Next.

Aimee:             Thanks, Tara. So not every company has to have this but I think private companies and public companies want to incentivize people who are working with you. So employees, officers, directors and consultants. So often there'll be some sort of option plan or similar arrangement that's in place and really what this is, is when people are working with you, sort of the promise of the upside when the company's going public or is acquired by some other means. There's no market for these securities and usually there are restrictions on transfer in shareholders agreements. So these options often remain unexercised until liquidity. One of the important things about when you get an investment or investor on board, they'll likely have some restrictions about how much of the stock you can allocate towards an option plan. There may be some changes to it, and they'll also want to ensure that they can understand the cap table, so that if there is a future exit that there are some clear obligations and expectations with respect to an option plan that the company has in place.

Tara:                So as Aimee mentioned, most public companies do have a stock option plan. It's in fact one of the advantages of going public because now you can have as stock option plan to incentivize directors and officers and have a market for the options. Now these plans are generally put in place in advance of going public, but having in mind the requirements of the stock exchange, and the requirements specific to the stock option plans or various equity compensation management requirements by the stock exchange that you're looking to list on. Next.

Aimee:             So as part of the investment readiness it's understanding what the use of proceeds will be. So this is, again, part of your story to an investor, and investors we'll talk a little bit more about it on the next slides, but they expect the company to provide a description of the intended use. They don't want the funds to come into just sit in an account, not to be used, so they have to have long term growth plans, budgets, plans for acquisitions or other uses of these funds, and so it is important to be able to also support those plans. Which means if you have long term growth plans but you've never done any of these things as part of a company, so organic growth, or you have not acquired another company. It's not necessarily that you have done those, but to the extent that you have prior experience with them, it is helpful in telling the story to an investor, especially more mature private equity funds. Tara.

Tara:                Same as a public company, if you're ever going to complete any financing, you would need to disclose your use of proceeds in various disclosure documents. For example, in your press release, or if you're going public the prospectus will have to include use of proceeds, and will have to set out objectives and milestones for the company and the expected timeline for achieving those milestones. Stock exchanges will all want a budget, depending on the stock exchange some are for 12 to 18 or 24 months, that sets out exactly what the company's going to do with its use of proceeds as well.

Aimee:             Thanks, Tara. Okay, so now into the fundraising aspect. So if you're going the private direction you'll have private equity investments and typically this private equity fund is a group of institutional or other accredited investors who've established a fund to invest in companies. The targets of, especially more mature private equity funds, are usually companies that have shown strong financials with a continued opportunity for growth, and significant growth. There are some funds that are focused on acquiring distressed assets, and not planning on talking about this at this stage, because I think in this context everyone here is getting ready to continue to scale up their business. But there are funds available, if there are other, that aren't entirely focused on growth opportunities. One thing to understand is that  PE fund has an investment horizon and so what they expect is they're going to come in, put in funds and then there's going to be an exit with a set rate of return. Part of that is because these PE funds often have accountabilities to their own investors. PE funds that typically take a minority, or some other significant stake in a company through the issuance of shares through treasury, and then in some cases there will be a secondary sale that will allow for some liquidity by the founders. It really depends on the size of the business and what the agreement is between the parties. Venture capital is a form of private equity. Similar, you have accredited investors who have founded a fund and they are making investments of varying sizes in start ups and other smaller businesses, that may not have proven their financials but have an opportunity for potential for growth. A VC will typically come in after there has been some other type of financing. So whether it's seed capital, or angel investing, or you've exhausted your friends and family, this is where you'll typically see a venture capital coming in. A VC fund will typically take a minority stake through new shares issued for treasury in order to accelerate growth. So I think in those circumstances there's often less opportunity for liquidity for the founders but it's not impossible. It's also important to note that when you're going to seek financing, so you'll either going to be taking this to market on your own, in which case and I'm not going to get into these but you do have to comply with certain securities laws related to who you're marketing to, or you'll work with an agent or a broker who's going to go out to try and introduce you to these funds. One thing to be aware of is, and it goes back to your use of proceeds, but how much money and how much funding do you actually expect. Some funds have minimum investments, some funds have maximum investments, and it will really influence the nature of the financing and who your target market is. Next slide, please.

                        So one thing I wanted to talk about is sort of what to expect in the negotiation process. I think for clients who have never experienced a financing it can be a little bit overwhelming, because there's a lot of documents being processed, and there's a lot of questions being asked, and there's a lot of disclosures. One of the things to know is that a lot of PE funds negotiate definitive agreements based on a set of model legal documents that have been developed by the CVCA, which is the Canadian Venture Capital and Private Equity Association. There is a US similar association and so these documents have been vetted by law firms and a lot of PE funds. So they're typically, at least at some baseline, used as a precedent although again they are precedents so there's a lot of negotiation notwithstanding the fact that you start off with a document.

Some of the key documents to expect in this process include a term sheet and the term sheet really is the initial stage when you're having discussions and you're setting out price, expectations, maybe there's some unique payment terms or other things, and you really just get to this stage, it's non-binding, it's two to three pages and it's just making sure that there's a meeting of the minds before you go into more sophisticated negotiations on your investment agreements and other documents. Next there'll be an investment agreement. Some people call it a subscription agreement and typically what it will set out is a bunch of reps that the company is making and founders are making about the company. It will have a number of other covenants and it will set the terms for how the acquisition is going to take place. These are sometimes lengthy documents and often heavily negotiated. Another thing to expect are share terms. So typically when a fund is coming and making an investment, they will be issued their own set of shares, often preferred shares which will give them priority on a distribution and will also set out things such as the rate of return and they become part of the constating documents of the company. These also are heavily negotiated and depend on what the expectations are of the private equity fund. Next usually there's a shareholders agreement and this, again although everyone seems to have one, they are heavily negotiated and some of the terms that you'll expect to see in them are preemptive rights, so anti-dilution clauses. There will be right of first refusal on purchase. There may be some restrictions on sale for founders, which means that if this investment has come in, maybe in the first year or 2 to 3 years, no one can sell or the founders cannot sell. There will also be sometimes restrictions on certain decisions or types of business that can be had and then also drag rights, which are important to make sure that in an exit situation that there is a way to ensure that all shareholders, and the entire cap table, can be clean on a sale and avoid some other measures, statutory measures, that can get quite costly if you have to make applications to a sale. Lastly, a voting agreement. Sometimes you'll see this where instead of issuing options shares have been issued to employees or consultants, and essentially what will happen is it just means that the founder or someone has been given the right to vote those shares of those people, to make sure that the private equity fund understands who it is that they're working with.

Some of the more contentious issues in the negotiation process include due diligence. Again, this often starts out where someone will issue a sheet saying we want you to produce these documents and it can be quite lengthy. If you don't have them you answer that, and then if you're working with an agent or a law firm, you'll have a data room where you upload this information. Sometimes there are due diligence meetings and calls to discuss this, and sometimes the process can be long, and it really is important because it informs indemnities and certain other things that are going to end up in the investment agreement. The next thing is evaluation of the company. So likely if you've worked with a broker or an agent, or you're doing this on your own, you have some sense of the value of the company. That value may be slightly different than what the investor is going to give to it and so really what becomes part of this negotiation, even if it's set out in the term sheet, is how much money and what is the percentage ownership in the business. If the due diligence shows some things that were a surprise, because typically when you negotiate the term sheet no diligence has really been done, this can sometimes change the valuation. So this can continue to be a topic of discussion throughout the negotiation process. Then a couple of other things, the weight of return on investment. I talked a bit about this but it is in the share terms and there's usually some expected multiples. So if there's an exit that at a minimum the fund is going to get a certain rate of return on their investment, and then I'll talk more about this on the next slide, but is the role of the fund in the company.

So this is a new one for a lot of founders. You started a business, or a group of people have started a business and have made all of the key decisions and have gotten the business to a growth stage, and now you either need more capital or sometimes it's helpful to have other inputs in terms of taking the company to the next level. So depending on the size of the investment and the nature of the fund, the fund may want to have a board representation and in some cases secondees into the business to ensure their involvement in oversights so that they know what's happening. If the investor has board nominees, this may mean that if there's only one director now that more directors may be added on behalf of the company, to change the composition of the board. Then there'll be typically a requirement for more frequent meetings. So if you've been doing them annually you might have them monthly or quarterly and there'll be discussions around when and how those meetings will take place. A fund is really going to want some access to information and part of this is so that there's not a surprise if they're getting financials. Sometimes these are terms are negotiated in the shareholder agreement but often they'll want some sort of reporting requirement. So financial reporting, monthly, quarterly and annually and then potentially there will be some immediate reporting in the event that there is an incident of some sort. So whether or not there is something that's impacted the financials, or there's something else going on in the business, often there'll be some negotiation around how the investment fund gets information. Then approval of key decisions. I talked a bit about this in the shareholder agreement but there will typically be a list of things that the company cannot do without shareholder approval. Sometimes these are a very short list, sometimes there a bit longer, but they often relate to things like anchoring debt, issuing new shares, selling the business, doing something that isn't currently part of the business as is. I think it's also important, because this is a new team, just to understand when you're working with funds to make sure that there's an alignment on the direction of the business and where the growth is going to go. So if the plan is you really want to do organic growth, and then a fund really wants to do acquisitions, it's important to sort of get a sense of that and think about that long term because this relationship, once the money comes in, may continue for a long period of time. Next slide, please.

This is the lifecycle of a fund and an exit strategy. As I mentioned before, funds are accountable to their investors and are expected to provide a rate of return over the course of a certain term from the date of raising funds. So they get funds in, they have to deploy those funds and make money on them, which typically a fund will be maybe 10 years, maybe a bit shorter. There are evergreen funds which I don't really plan on talking about. So right now I'm focusing on funds where they have an exit plan. After deployment of capital they will want to exit various investments, potentially at different times, which means they might have a 3 to 7 year plan for your company. I think typically what this plan is will be apparent in the negotiation of the share terms and the shareholders agreement because there will be lots of key dates and other things in there so you should get a sense as to what the horizon is for another exit. From a private equity perspective, exit strategies include private M&A where the business, either the shares or through an asset sale, are sold to another fund or an operational business with strategic alliances, Tara's going to talk more about this now, and then going public transactions.

Tara:                Thank you, Aimee. So what is going public? I'll talk about going public and the various options of going public. Going public is initial listing of securities of the company on a stock exchange. Some of the Canadian stock exchanges are TSX, TSX Venture and the Canadian Securities Exchange. The American ones are NASDAQ or the New York Stock Exchange. We'll focus on TSX, TSX Venture and the CSE. So the TSX is the exchange for the more senior issuers. TSX Venture is the stock exchange for the more junior issuers. CSE is more recent. It's been around for a while but it's more recent than the TSXV and it's presented as a more modern alternative and more efficient stock exchange to the TSXV. The CSE offers more simplified reporting requirements and a streamlined regulatory model with no transactional approvals, including no sponsorship requirements. Oftentimes which stock exchange the company uses to go on will really depend on the stage of the company and whether it meets the initial listing requirements of the stock exchange that it's looking to list on. Next slide.

                        Typical methods of going public are doing an initial public offering, or an IPO, going public through a non-offering prospectus, completing a reverse take-over transaction, or an RTO, going public through a CPC, or capital pull company, or a SPAC, special purpose acquisition corporation, which is the TSX version of CPC, which is CPC is a TSXV, the investment vehicle, and then direct listing. Now to go public through any of these methods you have to make a listing application to the stock exchange you're looking to get listed on and the company has to demonstrate that it meets the initial minimum listing requirements of such exchange. As a supporting document to this listing application, the company will have to provide a disclosure document that contains detailed information about the transaction and the company, to what is referred to as prospectus level disclosure for the company and the transaction. For example, in an IPO this document will be a long form prospectus. In an RTO this document would be a proxy circular or in a CPC it will be a filing statement. Now going public can take anywhere between 3 to 6 months. It really depends on this method chosen and if there ever any issues that arise. Next slide, please.

                        So we'll talk briefly about each of these methods. The first one is IPO, or initial public offering. In an IPO going public is conducted through filing a long form prospectus with the Canadian Securities Administrators, or CSA. The prospectus will have to include full true and plain disclosure of all material facts relating to the securities that are being offered. Directors and officers of the company can be found liable for misrepresentation if that's not the case. The prospectus is reviewed by the Canadian Securities Administrators. So in BC that would be the BC Securities Commission. The CSA will review and provide comments, or what they refer to as deficiencies, in comment letters and the comments will have to be resolved before the company can go on to become a reporting issuer and then list on a stock exchange. The company, through legal counsel, will provide responses to these questions or deficiencies and they explain why the disclosure has to remain the same or the changed disclosure. After a few rounds of back and forth hopefully all the comments are resolved and then the company can file an updated document, or an updated prospectus, that's called a final prospectus that will have to be receipted by the Securities Commission and then the company can go on to list on the stock exchange it's looking to list on, obviously subject to meeting the minimum initial listing requirement of that exchange. An IPO also includes raising funds through issuance of securities from treasury. So it includes having underwriters and agents that will market and sell the securities of the company. They will complete due diligence on the company and they also sign the prospectus. So there's that extra layer of assurance done by underwriters on the company as well. The financing for the company, obviously provides company with funds for its operations, but it also helps the company obtain what is called public shareholders, which are shareholders that are not directors, officers or significant shareholders that are part of the public, to be able to meet distribution requirements of the stock exchange it's looking to list on. We'll talk about the listing requirements of stock exchanges in a little bit. Next slide, please.

                        The next way of going public is through a non-offering prospectus. When looking to go public through an non-offering prospectus, it is again conducted through filing a long form prospectus. The prospectus will have to include full true and plain disclosure of all material facts. The non-offering prospectus, however, doesn't include a fund raising component through issuance of securities from treasury. So there are no agents or underwriters involved to do due diligence or to sell securities. So in a non-offering prospectus, typically the company raises funds in the private stage before it is looking to go public. So it's done as a stage before filing the prospectus. The company will have to plan to obtain, through selling securities as a private company, enough public shareholders to be able to meet the distribution requirements of the desired stock exchange. Now this has become more popular recently, because it's lower costs so you don't have to engage underwriters or pay for another set of legal fees, and it's also more predictable. So you know once you have your share distribution, you've already raised funds, you just have to meet the listing requirements of the stock exchange and get through the filing of the prospectus with the CSA. Next.

                        Another method of going public is to completely get a reverse take-over transaction. There's typically a shell publicly listed company that acquires a private company that has a business, when that business becomes its primary business. So there's typically shareholder approval requirement for the transaction. There's no prospectus here. There's no Canadian Securities Regulators involved. Instead there's a proxy statement that includes prospectus level disclosure. It will have to include full true and plain disclosure of all facts. It is not reviewed by the Securities Regulators, so there's no review or comment by them, but the stock exchange will review it and they will provide comments on the proxy statement. There is usually a fundraising component as well but it's not necessary because distribution is typically already in the public shell. Next.

                        Another way of going public are capital pool companies, or a CPC. This is a TSXV investment vehicle. Basically it's a shell company that completes a small IPO and gets listed on the TSXV, with a sole purpose to complete what is a called a qualifying transaction, over a certain period of time. Which is essentially a reverse take-over transaction to vend in a business. There's no shareholder approval requirements, typically, for a CPC. The disclosure document is a filing statement that gets filed with the stock exchange. It needs to include full true and plain disclosure and there is no Securities Regulators review but the TSXV will review the filing statement. A SPAC is a similar concept but it's a TSX equivalent of this type of transaction. Next.

                        Direct listing means an issuer that's already listed on a stock exchange and may list directly on a different stock exchange if it's able to meet the applicable listing standards of the second stock exchange. So it's pretty straightforward. Next.

                        Now we'll just do an overview of the initial listing requirements of the various stock exchanges. All stock exchanges have initial listing requirements that relate to industry the business operates in. They look at the state of business; whether it's profitable or not. They look at how much property or assets the company has. They want to make sure the company has working capital for a certain period of time, for example, 12 or 18 months. They want unallocated financial resources. They'll also look for what they refer to as public distribution, which has three components. They want public float, which means the company having a certain number of shares held by public shareholders without resell restrictions. They're also wanting the company to have a number of public shareholders, each holding a board lot. Board lot is defined in relation to the price of shares that were issued at the time they were issued and then they'll also be looking for the company to have a specific percentage of its shares held by public shareholders. So to give you an example of TSXV would like at when they're looking to list a company. Let's think about, for example, a tech company. So they'll look at this industry. So a tech company and if the tech company wants to list as a tier two, which is the lower threshold for the TSXV, the TSXV will want the company to show that it has significant interest in the business or primary assets used to carry on business. So significant interest is having at least 50%25. They will want the company to show it has history of operations or validation of business. They want the company to have either $750,000.00 in net tangible assets, or $500,000.00 in revenue, or they would want the company to be able to raise $2,000,000.00 of arms length financing. They'll also be looking for working capital for 12 months. They want the company to provide a business plan and be able to demonstrate that they can meet the business plan for 12 months. They want $100,000.00 of unallocated funds and then in terms of public distribution, they want 500,000 shares that are held by public shareholders without resell restriction. They want 200 public shareholders, each holding a board lot, and then they want 20%25 of the issued and outstanding shares to be held by the public. Typically stock exchanges also implement escrow on directors and officers when the company's going public. So the escrow is placed initially at the time of going public, and the shares get released from escrow over a period of time, depending on the stock exchange. Next.

Aimee:             Thanks, Tara. So we're each going to just wrap it up a little bit and give you some highlights on the advantages and disadvantages of, in my case, private equity financing. So the advantages, you can get creative about negotiating the terms of investment, which can be great for founders and the investors. There's often continued control and then flexibility for the founders to be involved in the business go forward. There's potential mentorship and input in successfully scaling the business which is great. Again, I talked about it a bit, but if you've taken your business to a certain level, getting this expertise that you don't necessarily, you're paying for it to a certain degree on the rate of return, but you're also getting this relationship go forward as you grow and scale. Then it's often less expensive than going public from an advisor perspective, and working with your legal counsel and accountants, and there are no significant disclosure documents, other than of course the diligence that will be completed by the investors. Disadvantages can be fundraising can be a challenge. You need to find the right investors and often the right agent or someone who can connect you to the right investor. It may not result in liquidity for the founders and may include restrictions, hold periods, etcetera, for founders and restrict their ability to sell, at least in the near term after an investor investment. The disadvantages also include potentially, depending on how you look at it, external involvement in operational and strategic decisions. So if it's a founder led or a small managed company, and then having someone else get involved, what might otherwise be considered decisions that had been entirely within the control of those founders or that management team. Sometimes there's a bit of growing pains in developing that relationship and, of course, there's an expectation to have an exit strategy, again, at some future date.

Tara:                Thank you. So in terms of going public, some of the advantages are it's easier access to capital. You have the stock market. There's a liquidity event for the founders and shareholders. While there might be some escrow but that is short term. There's ability to use equity as compensation for management and you could also use equity for transactions. You could issue shares as purchase price for purchasing certain assets in other transactions. It is also a method of valuation through the stock markets. So you have much your company is worth. In terms of disadvantages, it is quite costly to go public. It's also quite costly to maintain all the public requirements with the various stock exchanges and the Canadian Securities Regulators. It is definitely decreased flexibility for founders. There are many more additional regulatory and compliance requirements they have to meet. There's more pressure on management regarding performance and profits. They'll have public shareholders that they will have to report to. There's potential for civil liability if the directors and officers can be found liable for misrepresentation in their public disclosure. That is all we have. I think there are a couple of questions I see.

Aimee:             If anyone has any questions you can add them to the Q&A. I think we have a couple here. One is for you, Tara. It's can a company be listed on multiple stock exchanges?

Tara:                In Canada you can only list on one stock exchange but a company can list on multiple stock exchanges, like one in Canada and one in different countries. So you can be listed on a Canadian stock exchange and on a US stock exchange at the same time, but you do have to meet the requirements of both companies, and it could get quite expensive and complicated. So it's really something to make sure that you get the right advisors before you do that.

Aimee:             We have another question for you, Tara. Why would a company go through an RTO versus a SPAC?

Tara:                Or you mean a CPC? So a CPC is a smaller version, more junior version of SPAC. In our view there is already a shell publicly listed company. It could've been listed for years. The company could have a history. There will need to be due diligence. There's a lot that could be going on with the company whereas a CPC or a SPAC is a clean, brand new shell that is created and has a timeframe to find a business to vend in. Then you'd have to work with the founders of this SPAC or the CPC or the shell company to do your RTO or to do your transaction. So it is cleaner to use a CPC. There are some restrictions placed by the various stock exchanges. So for the TSX, view the TSX on the kinds of transactions you can do in a CPC or a SPAC but you don't have those for an RTO, for example. So you really have to look at the transaction and see what might work best. That is, I think, all the questions that we have. Is it?

Aimee:             Yeah, I think so. Well, if there are no other questions for us we will close out the session.

Tara:                Okay. Well thank you very much, everyone, for joining us. We will be sending a very short survey that will take 30 seconds, so if you could please fill it out and send it back, we really appreciate the feedback.