To: SCOOBEY-DO (2537 )
From: SCOOBEY-DO Thursday, Jun 10 1999 11:43AM ET
Reply # of 2553
This is an excerpt from the SB - 2/A regarding the 10,000,000:
USE OF PROCEEDS tc \l 1 USEOFPROCEEDS
Following the transfer of the 10,000,000 Shares offered by the Company pursuant to the debentures and warrants, this will represent gross proceeds to the Company of approximately $6,200,000 (less certain expenses of this offering). These proceeds, less the expenses of the offering, will be used to provide working capital for the Company.
The following table sets forth the use of proceeds from this
offering (based on the minimum and maximum offering amounts):
Use of Proceeds
Minimum Offering
Amount Percent
Maximum Offering
Amount Percent
Transfer Agent
Fee
$1,000 0.20%
$1,000 0.02%
Printing Costs
$1,000 0.20%
$1,000 0.02%
Legal Fees
$50,000 10.00%
$50,000 0.81%
Accounting Fees
$1,500 0.30%
$1,500 0.02%
Working Capital
$446,500 89.30%
$6,146,500 99.13%
Total
$500,000 100.00%
$6,200,000 100.00%
Management anticipates expending these funds for the purposes
indicated above. To the extent that expenditures are less than
projected, the resulting balances will be retained and used for general
working capital purposes or allocated according to the discretion of
the Board of Directors. Conversely, to the extent that such
expenditures require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other sources,
including, but not limited to, general working capital and/or external
financing. The net proceeds of this offering that are not expended
immediately may be deposited in interest or non-interest bearing
accounts, or invested in government obligations, certificates of
deposit, commercial paper, money market mutual funds, or similar
investments.
DETERMINATION OF OFFERING PRICE
tc \l 1 DILUTION
The offering price is not based upon the Companys net worth,
total asset value, or any other objective measure of value based upon
accounting measurements. The offering price was determined under
Securities and Exchange Commission Rule 457(g), which states that where
the securities to be offered pursuant to warrants or other rights to
purchase such securities the registration fee is to be calculated upon
the basis of the price at which the warrants or rights or securities
subject thereto are to be offered to the public. If such offering
price cannot be determined at the time of filing the registration
statement, the registration fee is to be calculated upon the basis of
the highest of the following: (1) the price at which the warrants or
rights may be exercised, if known at the time of filing the
registration statement; (2) the offering price of securities of the
same class included in the registration statement; or (3) the price of
securities of the same class, as determined in accordance with
paragraph (c) of that Rule. Since the offering price based on the
warrants and debentures cannot be determined based on (1) and (2), it was calculated under Rule 457(c) as the average of the bid and asked price as of a date within five (5) business days of the filing date
(May 25, 1999): $0.62 per Share.
DILUTION
Net tangible book value is the amount that results from
subtracting the total liabilities and intangible assets of an entity
from its total assets. Dilution is the difference between the public
offering price of a security and its net tangible book value per Share
immediately after the Offering, giving effect to the receipt of net
proceeds in the Offering. As of February 28, 1999 (the date of the
latest Form 10-Q for the Company, the net tangible book value of the
Company was $(350,775) or $(0.0245) per Share. Giving effect to the
issue by the Company of all offered Shares at the public offering
price, the pro forma net tangible book value of the Company would be
$5,849,225, or $0.4086 per Share, which would represent an immediate increase of $0.4331 in net tangible book value per Share and $0.0127 per Share dilution per share to new investors. Dilution of the book value of the Shares may result from future share offerings by the Company.
The following table illustrates the pro forma per Share dilution:
Assuming Maximum
Shares Sold
Offering Price (1)
$0.6200
Net tangible book value per
share before Offering (2)
$(0.0245)
Net tangible book value
Share after offering (3)
$0.2405
Increase attributable to
issue of stock to
new investors (4)
$0.2605
Dilution to new investors (5)
$0.3795
Percent Dilution to new
investors (6,7)
38.79%
(1) Offering price before deduction of offering expenses, calculated on a Common Share Equivalent basis.
(2) The net tangible book value per share before the offering
($0.0245) is determined by dividing the number of Shares outstanding
prior to this offering into the net tangible book value of the Company.
(3) The net tangible book value after the offering is determined by adding the net tangible book value before the offering to the estimated proceeds to the Corporation from the current offering (assuming all the Shares are issued), and dividing by the number of common shares to be outstanding. The net tangible book value per share after the offering ($0.2405) is determined by dividing the number of Shares that will be outstanding, assuming issue of all the Shares offered, after the offering into the net tangible book value after the offering as determined in note 3 above.
(4) The increase attributable to purchase of stock by new investors is derived by taking the net tangible book value per share after the offering $0.2405 and subtracting from it the net tangible book value per share before the offering ($0.0245) for an increase of $0.2650.
(6) The dilution to new investors is determined by subtracting the net tangible book value per share after the offering ($0.2405) from the offering price of the Shares in this offering ($0.6200), giving a
dilution value of ($0.3795).
(7) The Percent Dilution to new investors is determined by dividing
the Dilution to new investors ($0.3795) by the offering price per
Share ($0.6200) giving a dilution to new investors of 38.79%.
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