Question 8. Read the below case carefully and answer the questions at the end. For exhibit please refer the chapter 1 of the text book.

Question 8. Read the below case carefully and answer the questions at the end. For exhibit please refer the chapter 1 of the text book. Case 1-1 E-centives, Inc.Raising Capital in Switzerland On October 3, 2000, E-centives, incorpo- with promotional offers based on their rated in the United States, made an ini intereses. At the time of the publicatering tial public offering on the Swiss Stock E-centive maintained over 44 million Exchange's New Market. The company e-centives online accounts for members raised approximately US$40 million. The company does not charge members a E-centive's offering circular stated that fee for its service. Instead, the company no offers or sales of the company's.com generates revenue primarily from man mon stock would be made in the United keters whose marketing matter is del States, and that there would be no pub- vered to targeted groups of E-centives lic market for the common stock in the members. E-centives currently employs United States after the offering more than 100 people in is Bethesda, Maryland headquares, and its offices in The Swiss Exchange's Redwood Cry, New York and Los Angeles New Market As of the offering date, the ce pany had little revenue and had not been The Swiss Exchange launched the New profitable. Revenue for the year-ended Market in 1999. The New Market is December 31, 1999, was US$760,000, with designed to meet the financing needs a net loss of about US$16 million. As of of rapidly growing companies from June 30, 2000, the company had an acco Switzerland and abroad. It provides firms mulated deficit of about US$39 million with a simplified means of entry to the E-centives growth strategy is to expand Swiss capital markets. Listing requirements internationally. To date, the company has for the New Market are simple. For exam-focused on pursuing opportunities in the ple, companies must have an operating United States E-centives intends to track record of 12 months, the initial public expand into Europe and other countries listing must involve a capital increase, and The company is currently considering to ensure market liquidity, a bank must expanding into Switzerland, the United agree to make a market in the securities Kingdom, and Germany." E-centives Required E-centives, Inc. is a leading online direct 1. Refer to Exhibet 1-8, which lies fac marketing Infrastructure company. The to relevant for choosing an over company offers systems and technologies seas market for listing or raising that enable businesses to build large, rich capital. Which factors might have databases of consumer profiles and inter been relevant in Bentives decision ests. In return, consumers receive a free to raise capital and list on the Swiss personalized service that provides them Exchange's New Market? w centives' offering dimular dised Otsider 2,20 2. Why do you believe Ecentives chose not to raise public equity in the United States? What are the potential drawbacks related to E-centives' decision not to raise capital in the US public markets? 3. What are the advantages and dis- advantages to E-centives of using US GAAP? 4. Should the SWX Swiss Exchange require E-centives to prepare its financial statements using Swiss accounting standards? 5. Learn more about the New Market at the SWX Swiss Exchange's Web site (http://www.sex.com What are the listing requirements for the New Market? What are the financial reporting requirements? Does Ecentives appear to fit the profile of the typical New Market 2