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To: art slott who wrote (4112)	12/22/1998 11:35:00 AM
From: David	Read Replies (1) \| Respond to of 4676

Art, the dilution is the easiest thing to spot. Before this deal, NRID had 7.62 million shares (and convertible liability). Now, it will have 16.77 million shares. The extra shares only come with a $2 million payment to the corporation. If you had wanted to do a secondary, for instance, at $.625 (the price before the deal was announced), you would have had to issue only 3.2 million additional shares, instead of over 9 million. That means your interest was diluted by the extra 5.8 million "free" shares. Given the moving target nature of the Clearwater deal, it's hard to know whether this simply quantifies the Clearwater dilution, or adds to or subtracts from it. But as a pre-existing stockholder, the measurable equity that secures each share of your stock has decreased by, I think, 35% ([7.62 plus 3.2]/16.77 or 65% of previous equity). Since it appears that RMS and Santangelo already had almost a 10% stake in NRID from long before, they had to be losing big at this point. I think this deal gives them a chance to get closer to even. At your expense, of course. What I'd like to know is (a) Is there any relationship between Clearwater Fund and RMS/Santangelo, besides the fact that they are both from Clearwater and (b) What is the point of taking stock that will never be registered, and therefore never saleable in the US, unless your intention is to sell it outside the US? No one takes indefinitely unsaleable stock; that stock is by definition worthless to the owner.