Hearts Essay Example for Free

subject matters EssayThis case is about a association named patrol wagon R Us. This comp whatever provides research and development for medical devices. According to the tuition provided the company is in its early stage and has no products in the market. They have developed a Heart Valve System that would be revolutionary in the market if is approved. Also theres another company called bionic Body that is a biological medical device company, they have another product that would flirt well with this new Heart Valve System. Therefore both companies decided to fuse by agreement. The agreement is as follows $3.5 million preferred stock shargons of Series A from Heart Company are sold to Bionics with a par value of $1 each. This transaction was completed on November 30, 2011, according to the info provided. This transaction gave Bionic specific even offs 1. Board Rights, 2. Mandatory Conversion right, 3. Contingent Redemption Rights.Additional Protective Rights, 5. Right of number one refusal and Co-Sale Rights. The $3.5 millions of shares would be convertible in common stock according to the agreement when the IPO reaches net reward of at least $50 millions. It is stated that if on year five of the agreement the FDA has not except approve the product to be in the market the shares could be redeemed at its par value. Hearts R Us is a company that reports on a year basis and its cooking to make an IPO soon. There are a couple of relinquishs surrounding this case. First is an early-stage company that doesnt have the financial stability and this susceptibility create trouble for further transactions. The only product that might be coming to the market still depends on a series of trials and the approval of the FDA. Since the company is barely starting all of its accounting transactions have being recorded to comply with the covenants of its outstanding debt. what is more they are not required to comply with SEC and are currently not doing so. Also theirs an issue of how to be done to register the Series A shares that have being sold to Bionic.Preferred breed A security measure that has preferential rights compared to common stock. Participation Rights contractual rights of security holders to receive dividends or returns from the security issuers profits, cash flows, or returns on investment. FASB has some guide lines of how companies should report or disclose information of their securities. 1.FASB addresses disclosure of information about capital arrangement is in the FASB Codification 505-10-50-3. 2.Participation Right is contractual right of security holders to receive dividends or returns from security issuers profits, cash flows or returns on investments. FASB Codification 505.An entity shall explain, in summary form within its financial statements, the pertinent rights and privileges of the various securities outstanding. Examples of information that shall be disclosed are dividend and liquidation preferences, parti cipation right, call prices and dates, conversion or exercise prices or rates and pertinent dates, sinking-fund requirements, ludicrous voting rights, and significant terms of contracts to issue additional shares. An entity shall disclose within its financial statements the number of shares issued upon conversion, exercise, or satisfaction of required conditions during at least the most recent annual fiscal period and any subsequent interim period presented.