USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of Notes offered by us of approximately $10,000,000 based upon an assumed offering price of $10,000 per unit.
The principal purposes of this offering are to increase our capitalization and financial flexibility, increase our visibility in the marketplace, allow us to acquire other entities with complementary technologies and markets, and create a public market for our common stock. As of the date of this offering circular, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. However, we currently intend to use the net proceeds to us from this offering primarily for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters, and capital expenditures. We expect to compensate officers and directors through operating cash flows following receipt of proceeds from the offering. We do not expect to repay loans from officers.
We may also use a portion of the net proceeds from this offering for the acquisition of, or investment in, technologies, solutions, or businesses that complement our business. At present, we have entered into a nonbinding letter of intent to acquire a target company. However, there are a number of open issues that may prevent completion of a transaction. We will have broad discretion over the uses of the net proceeds from this offering. Pending these uses, we intend to invest the net proceeds from this offering in short-term, investment-grade interest-bearing securities such as money market funds, certificates of deposit, commercial paper and obligations of the US government and government agencies.
DETERMINATION OF OFFERING PRICE
Since our shares are not listed or quoted on any exchange or quotation system, the offering price of the Convertible Promissory Notes was based on a determination by the management of the Company based on peer group pricing. The calculation of share price was based on a combination of a multiple of projected revenues plus the value of the underlying intellectual property owned by the Company. The offering price does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. Although our Notes are not listed on a public exchange, we anticipate that at a future date we will complete the filings necessary to obtain a listing on the Over the Counter Marketplace for our common stock. In order to be quoted on the OTCQB a market maker must file an application on our behalf in order to make a market for the shares of common stock underlying our Notes.
