Dilution

Dilution. A. Where registered securities are being offered publicly and there is no established market for those securities, the prospectus or offering memorandum must contain a paragraph entitled “DILUTION” showing the method used in arriving at the book value of all shares outstanding upon completion of the offering. B. To determine the book value of all shares outstanding upon completion of the offering, add the net proceeds of the public offering (the amount remaining after deducting commissions and expenses of the offering) to the net tangible book value of the company before the offering, and divide this resulting dollar amount by the total number of shares to be outstanding upon completion of the offering. C. Equity shares sold to the public shall not have dilution in excess of seventy-five percent (75%), or such offering may be subject to rejection by the Division.