4) Also, on page 10 of the prospectus is this statement that I don't quite understand, but it doesn't sound good. "You will experience an immediate and substantial dilution if you purchase common stock in this offering." The prospectus then goes on to explain that existing shareholders, in addition to a cash distribution of $2.39 per share, will receive an immediate dilution of $11.50 per share to new investors. (Does anyone know what this means?)

I partially understand it. I've probably mangled some details but this should basically be on track:

I searched the prospectus for the word "dilution", and part of what it is saying is that pre-IPO there were 9.5 million shares, and there are book value/share calculations that will be instantly inaccurate after the IPO when they create 3 million more shares -- although on the plus side the company gets the cash from the IPO which adds to the book value. Also, in any future offering obviously there will be more dilution.

The $11.50 figure relates to the above -- if you take $19 as the IPO price (which it wasn't) and subtract out the book value you're paying $11.50 over book.

The cash from the IPO is where the $2.39 comes in -- the book value for existing shares goes up by $2.39 because of the influx of cash.

The cash distribution is actually different from the $2.39 -- under uses for the IPO it says $7 million goes to existing shareholders as part of an earlier reorganization deal, which ammounts to less than a dollar per share.

Anyway, all in all it's nothing terrible.

My biggest problem with the IPO (other than the price) is that the point seems to have been to generate the $7 million, pay off some debts, and do some remodeling of existing stores. It's not going to contribute to the growth of the company in any real way.

Doug