In the EDGAR system, Item 16: Use of Proceeds is a specific disclosure where you must report if any of the money being raised is being paid directly to the “Related Persons” you listed earlier (officers, directors, or promoters).

​The SEC wants to know if the capital is going toward “growing the business” or “paying the bosses.”

​What to Report in Item 16

​You are required to provide the dollar amount of gross proceeds that have been or are proposed to be used for payments to any of the persons named in Item 3 (Related Persons).

  • ​Type of Payments: This includes salaries, bonuses, deferred compensation, or even the purchase of assets from an officer.
  • ​Estimates: If you don’t know the exact amount yet (e.g., the offering just started), you must provide a reasonable estimate and check the “Estimate” box in the digital form.
  • ​Clarification Space: There is a text box for “Clarification of Response.” If the payments are just standard executive salaries, you should state that clearly (e.g., “Proceeds will be used for general corporate purposes, including the payment of standard executive officer salaries.”).

​Why This Matters (The Transparency Factor)

​Investors and regulators look at this section to determine the “quality” of the offering.

  • ​Low/Zero Amount: Suggests most of the capital is going toward product development, marketing, or scaling.
  • ​High Amount: If 50% of the raise is going to pay off back-wages for the CEO, it’s not illegal, but it must be disclosed so investors can make an informed decision.

​Item 15: Sales Commissions & Finders’ Fees

​Directly before the Use of Proceeds is Item 15, which covers the “Cost of Raising Capital.” You must break down:

  1. ​Sales Commissions: What you pay to registered Broker-Dealers.
  1. ​Finders’ Fees: What you pay to any other person for introducing investors.

​Note: If these amounts are unknown at the time of filing, you must provide an estimate. The SEC uses this to ensure that the “Net Proceeds” (the money actually left for the company) is clear.

​The Final Step: Signature and Submission

​Once you complete these sections, the EDGAR system will ask you to “Sign” the form digitally.

  • ​By signing, you are certifying that the issuer is not disqualified under the “Bad Actor” rules.
  • ​You are also agreeing to provide the SEC (upon request) any offering materials you gave to investors.
  • ​[ ] Did you check the “Estimate” box if the numbers aren’t final?
  • ​[ ] Is your Login.gov MFA device handy? (The session will expire if you take too long to find it).

​[!CHECKLIST]

Before you hit “Submit”: > * [ ] Do the numbers in Item 13 (Offering Amount) minus Item 15 (Commissions) make sense with Item 16 (Payments to Officers)?

  • ​[ ] Did you check the “Estimate” box if the numbers aren’t final?
  • ​[ ] Is your Login.gov MFA device handy? (The session will expire if you take too long to find it).
GONEN CORP FUNDS