To: BG Smith who wrote (338 ) 5/10/1999 11:26:00 PM From: wonk Respond to
BG:How to value a formerly private company coming out of a reverse merge - Part I. (i) effect, prior to the merger (the "Merger"), a reverse split of its issued and outstanding common stock and the common stock underlying all issued, outstanding and unexpired common stock purchase options, warrants and other rights to purchase its common stock in an approximate ratio of one share for each six to seven shares, options, warrants and rights so that the aggregate of the issued and outstanding shares and shares to be issued and outstanding upon exercise of such options, warrants and other rights will be 8.0 million shares; ii) transfer all of the Company's business, property and assets, tangible and intangible, to International Healthcare Solutions, Inc. ("IHSI"), a newly-formed wholly-owned subsidiary of the Company, in exchange for 20.0 million shares of IHSI's common stock; (v) transfer into an escrow or trust for the benefit of the Company's stockholders with a dividend record date of the business day next preceding the closing date of the Merger (the "Closing") of all of the 20.0 million shares of IHSI common stock referred to in (ii) above (the "Shares"), subject to as to delivery to such stockholders out of such escrow or trust to the effectiveness of a registration statement to be filed by IHSI under the Securities Act of 1933, as amended, covering the dividend distribution of the Shares to the Company's stockholders. Following the reorganization of the Company, as described in the preceding paragraph, Hitsgalore, a privately owned company, is to be merged into the Company in exchange for the conversion of all of the issued and outstanding stock of Hitsgalore into 37.675 million shares of the Company's common stock. The Reorganization and Merger Agreement also provides for the issuance of up to an additional 4.0 million shares of the Company's common stock to consultants and professionals rendering services in connection with the proposed reorganization and merger and for acquisition costs and fees. Following the Merger, the name of the Company is to be changed to Hitsgalore (hereinafter referred to as the Company or Hitsgalore) and assuming consummation of the Reorganization and Merger Agreement, the Company will have approximately 49.675 million shares of common stock issued and outstanding. Hitsgalore was organized in July 1998 and began beta operations in August 1998. It is engaged in the business as an internet search engine on the world wide web, has completed its beta testing and launched its website in November 1998. Hitsgalore reported revenues of less than $10,000 for the year ended December 31, 1998 and had revenues of $73,100 in January 1999. sec.gov
