Dr. Cookie Expanding With Public Offering

BOTHELL

After years of expanding with mostly internally generated funds, Dr. Cookie Inc. in Bothell is in the market for $1 million.

To finance the company's latest expansion plans, which include a heavier concentration on mail order, the company is making a public offering through Washington State's Uniform Limited Offering Registrations Act (ULOR), says Gail Yarnall, Dr. Cookie's president and chief executive.

The act provides a way for small companies like Dr. Cookie to raise modest amounts every 12 months by selling securities to the public. Potential Dr. Cookie investors may buy blocks of 100 shares of stock for a minimum investment of $500, Yarnall says. Dr. Cookie just began marketing its ULOR offering but there has been strong interest so far, she says.

The company is holding an open house Feb. 10 to make a presentation to interested investors, Yarnall says.

Within about four to five years, Dr. Cookie's management expects to sell the company to a larger organization, Yarnall says. At that point in its growth cycle, the company will need the resources a large organization can offer. The sale would also let investors get their money out of the company, Yarnall says.

Dr. Cookie made a ULOR offering in 1989 raising $185,000, Yarnall says. As a result, the company already has about 40 investors, most of which came from that offering, Yarnall says. "We stopped the first offering at $185,000 because the company did not really need the money. It was mostly a cushion," Yarnall says.

In the past, Dr. Cookie has been featured on a number of airlines and the profits from those contracts were good. However, hard times for the airline industry has caused problems for Dr. Cookie and the firm can no longer easily finance its growth internally. Although the company's cookies are still served by a number of airlines, including United Airlines, the margins are gone, Yarnall says.

For example, the company lost the bid for a Northwest Airlines contract because Dr. Cookie's bid was two-tenths of one cent per cookie higher than the competition's bid, Yarnall says.

Despite the slim margins, the airline accounts are invaluable to Dr. Cookie, Yarnall says. The promotional opportunities cannot be duplicated. Flying consumers are essentially being offered a free sample of Dr. Cookie's products, Yarnall explains. The company gets lots of mail-order sales from consumers who have tasted the cookies on an airplane.

Dr. Cookie plans to use the $1 million it hopes to raise from ULOR to expand its mail-order efforts. The company also is improving the professionalism of its telemarketing department.

The company has also expanded its offerings. In response to consumer requests, Dr. Cookie recently introduced two new cookie styles. Now in addition to Dr. Cookie's Gourmet Cookies, which are low in cholesterol, the company sells Dr. Cookie Extra and Dr. Cookie DeLites. Extras are similar to the original cookie but include vitamins and extra fiber. DeLites are a fat-reduced version of the original Dr. Cookies. DeLite cookies range from about 88 calories to 98 calories each, with only 12 percent to 23 percent of those calories coming from fat. The company recently reduced one DeLite cookie to just a half gram of fat, Yarnall says.

Dr. Cookie is also exploring retail options. It recently signed an agreement with TCBY yogurt shops. The company sends frozen cookie dough to the shops and the cookies are baked on the premises, Yarnall says. Already about 50 TCBY franchises have begun selling the cookies, she says.

In addition, a national health food retailer is talking to Dr. Cookie about selling its Extra and DeLites cookies in stores, Yarnall says. The details of that arrangement have not been finalized, she says.

Dr. Cookie, co-owned by Drs. Stephen Yarnall, Gail's father-in-law, and Marvin Wayne, was established in 1985 in Edmonds and moved to Bothell in 1987. Dr. Cookie specializes in "heart-healthy" cookies, originally developed by Wayne, who suffered from the same cholesterol problems that contributed to his father's death.

The two partners are currently writing a cookbook featuring healthful, tasty desserts. The book will be in bookstores in October 1993, Yarnall says.