Prospectus but no prospects?

The $8 million float of investment website has been given the red light by investment watchdog the Australian Securities and Investments Commission.

According to the commission's NSW director of regulation, Jennifer O'Donnell, the Sydney-based company's prospectus, issued on June 2, did not comply with Australian Corporations Law. MDS issued an enforceable undertaking (EU), accepted by ASIC, that it would not issue any securities as a result of that prospectus.

The EU prevents by law MDS from selling any securities based on that prospectus. MDS could be subject to an administrative court hearing if it fails to comply with the EU.

The MDS prospectus failed to provide punters with a satisfactory explanation of how $3 million of their money would be used by MDS subsidiary Trade Tech. It also did not disclose that most of the company's revenues were attracted through the sale of one product, and did not provide any basis for the company's "profit and loss" projections, she said.

ASIC believes this information would be of relevance and interest to potential investors.

O'Donnell stressed that ASIC did not interpret the prospectus's inadequate explanations of the company's ventures as either an oversight or as an attempt to protect company information potentially deemed to be unattractive to investors.

"We haven't suggested any deliberate act on the part of the company,"she said.

She said the prospectuses of many high-tech startups threatened to breach the Corporations Law because those companies were unable to substantiate details on forecast revenues.

It is expected that MDS will re-issue the prospectus with necessary alterations in"a couple of months". did not return IDG's calls or emails.

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