To: The Ditchdigger (4687 )
From: Ellen G.
Sunday, Oct 12 1997 3:46PM EST
Reply # of 23169
"As of November 2, 1995 the Company, through a subsidiary, acquired all of the outstanding shares of Nelson International Corp. (Hialeah, Florida) and Baron's Internacional, S.A., a textile manufacturing business located in Managua, Nicaragua. The consideration for the acquisition was 300,000 shares, valued at $1,500,000. As part of the acquisition, the Company assumed part, but not all of the acquired companies' liabilities which aggregated approximately $253,000. The total purchase price of $1,753,000 was reflected as property, plant and equipment. As part of the agreement, the Company warranted that the issued shares (which are restricted under Rule 144) will have a value of $1,500,000 at the end of the holding period. If the value is less than $1,500,000, the Company, at its option, may pay the difference in cash or additional shares. The sellers warranted that the equipment in the two factories will appraise at a value of no less than $1,000,000 or the purchase price and warranty will be adjusted accordingly.
Current management questioned whether the share value was properly computed and therefore in January 1997 engaged an independent appraiser to determine whether amounts recorded in the financial statements properly reflected the fair value of the assets acquired.
In as much as there were detailed listings of the equipment acquired, the appraiser through study and inspection was able to provide a value for the equipment at about the time of the acquisition. The appraised value aggregated $741,085. The equipment acquired has been retroactively adjusted to that amount with an equivalent adjustment to goodwill.
As of June 30, 1996, management determined that the goodwill described above was significantly impaired and accordingly was charged to operations." |
