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Eric Ng

Q9 Technology Holdings chairman Mark Leung is shrugging off concerns that software piracy in its main markets could hamper sales.

'Even companies as successful as Microsoft face the same problem,' he said.

However, Mr Leung said his firm, a developer of Chinese character-inputting software, had technologies that were difficult to copy.

In addition, 'we have very strong patent protection', he said.

Q9 derives nearly all of its sales from Hong Kong but plans to expand in the mainland, which it expects to become a key market.

The Growth Enterprise Market candidate, which is due to list on May 18, said in its listing prospectus that it had received three short-term patents on its two-year-old Q9 Chinese inputting system (CIS) in Hong Kong, with 17 others pending in other countries.

The software allows users to input Chinese characters into computers and small hand-held devices such as mobile-phones, using a numeric pad.

No patent has been filed for its QCode inputting software launched in 1993, which requires the use of a conventional keyboard, limiting proliferation among hand-held devices.

Q9 warned investors that the patents gave only eight years' protection and were 'granted automatically upon compliance with certain procedures but without any examination process'.

'Registration of such patents are not deemed to be conclusive evidence of the validity of short-term patents,' it said.

The firm would need to establish the patents' validity in court if it wanted to challenge infringers, which would make enforcement 'complex and difficult'.

The Hong Kong patents were not binding overseas, where patent applications may also be opposed by third parties.

The company recorded a net loss of HK$19.03 million last year, compared with a HK$1.01 million loss in 1999.

Management attributed the increase to the substantial marketing and research and development expenses related to the launch of Q9 CIS.

Turnover fell to HK$6.69 million last year from HK$9.05 million in 1999.

Five mainland mobile-phone makers have signed contracts to license the firm's products.

However they are subject to testing of the products and approval from the Ministry of Foreign Trade and Economic Co-operation.

Q9 aims to raise HK$112.5 million by selling 250 million new shares at 45 HK cents.

Although the price is close to the low end of the intended range, according to sources, David Tsang, managing director at DBS Asia Capital - lead manager of the offering - said it would allow investors to make a profit.

Listed Asia Orient Holdings and Culturecom Holdings will see huge paper gains on investments of 400 million shares and 300 million shares at 11.4 HK cents and 6.4 HK cents respectively.



GEM listing candidate cites 'very strong patent protection' as deterrent