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Re: None

Wednesday, 03/28/2007 4:22:49 PM

Wednesday, March 28, 2007 4:22:49 PM

Post# of 86824
Allie and board, due to the confusion of some people today,

regarding Paul's announcement of the common share reduction, I emailed him this morning and asked him to clarify the situation for me; Here is my question and his reply:




From: Wing
Sent: Wednesday, March 28, 2007 1:21 PM
To: Paul Strickland
Subject: Common share reduction.

Hello Paul,

I wonder if perhaps you could help settle an argument by shedding some light on just what the most recent PR really means to us lay people. There seems to be some conflicting ideas on whether or not the exchange of shares actually helps out the shareholder and of course the detractors have put a negative spin on the news.

I understand you are very busy with your schedule and therefore I appreciate any information you may be able to pass along so we can settle the argument.

Thank you very much.

Wing Walker




Wing,

As you know, I do read the boards from time-to-time because the practice provides me with perspective. I have learned that some experienced small investors are immersed in skepticism, if not outright negativity. What I find incredible, judging by the degree of skepticism expressed by some, is the extent to which some public companies materially mislead their shareholders. This is unfortunate for the good guys because every gift horse is shot before experiencing the privilege of being looked in the mouth. The problem here is that skeptical speculation as to the meaning of any press release leads to some of the most amusingly outrageous and negative assumptions. If I were trying to interpret the press release from a shareholder’s perspective in order to assess its ramifications with respect to my position, I would do as you have done, communicate with the company. Anything else is simply guesswork.

The stock swap helps the shareholder in some substantive ways. In fact, I can not imagine one negative aspect of this swap from a shareholder’s perspective:

All of the insiders, including myself, held restricted shares that could have been (until yesterday) sold under Rule 144. Due to the stock swap, there is no longer any question with respect to insider sales. They are simply “locked up” until some time in the future. The certificates for the restricted common are being cancelled with our transfer agent. What was not in the press release is that 242,147,471 options (of which 162,983,876 were issued in my name) have also been cancelled. As of this date, no insider retains a single option. This begs the question, “Why would Spooz insiders do this?” The answer is not that we are particularly benevolent. The answers simply make great business sense:
We wanted to send a message to current and futures investors that management is in for the long-haul.
We wanted to convey to our shareholders that the insiders totally reject the market’s valuation of our company and that not a single one of us would consider selling at these prices. Our market cap is less than our development costs and significantly less than our NOL. We wouldn’t consider selling our proprietary trading models for $20 million, but we may give them away to our customers over time. So if we have absolutely no interest in selling at our current valuation then why not reduce the market cap further in order to increase upside potential and good will?
The stock swap terminates insider non-dilution. As insiders, we have had the benefit of anti-dilution language in our contracts since we went public in May 2004. Why would we terminate this enormous benefit now? Because it conveys to our shareholders that dilution is almost at an end and that any further dilution hurts the insiders on an equal basis with our shareholders. We have implied in our message that what dilution remains will not have a material adverse effect on our positions; that the dilution that remains is quite manageable.
We wanted to reward those shareholders that have stuck with us faithfully and been loyal, even through some of the mistakes we have made during the course of our development.

Sometimes things are as simple as they appear. Sometimes there are nice surprises in life. We set the benchmark for relations with our shareholders yesterday. We believe we have acted in beneficial good faith by showing respect. We will continue to provide our shareholders with growing value as Spooz moves forward to accomplish its mission.

Best Regards,


Paul D. Strickland, Jr.
Chief Executive Officer
Spooz, Inc.
312-379-3166
312-223-0110 Fax

"What we see depends mainly on what we look for" John Lubbock

My statements are my opinion only. Good luck!