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Working capital

Out of the cash that we get for issuing stock we'll pay for equipment and the costs of setting up the corporation. This will leave us with enough money in the treasury to pay the very small expenses of the first few months, when we have no costs for salaries, rent, or advertising.

Once we have products to sell, we'll need much more money to carry us until we start getting enough income to cover current expenses. The number we've talked about is a total of $100,000 beyond the initial equipment purchases. To raise the money we expect to sell more stock during the first 12-18 months of operation.

The specific plan is to issue warrants along with the first issue of stock. A warrant does not convey any ownership share in the company, but entitles the holder to buy another share at a set price, namely $1.00. If it isn't exercised within a fixed time, it turns into wallpaper. It can be bought and sold on the same basis as stock.

The people who are expected to come up with additional financing (currently Marinchip Systems Ltd. and John Walker) will be issued warrants. In addition, everyone who is buying stock for cash will actually get a ``unit'' consisting of one share and one warrant, for $1.01; this is the extra goody, mentioned earlier, to encourage people to provide the company with cash. The warrants will probably expire in 18 months.

Editor: John Walker