What's the matter inchingup, don't you like it when one of your "SURE WINNERS" is analyzed.
I'd say right now LBWR is looking a lot better than TOVC.
For future reference re Enterprise Value
Preferreds.
Class A Preferred stock:
In January 2002, the company authorized the sale of up to 2,000,000 shares of its Class A Non-Voting Cumulative Convertible Preferred Stock (“Class A Preferred”). During 2002, the company sold 38,500 shares at $4.00 per share of its Class A Preferred in a private placement for approximately $142,000 in net proceeds. Each share of Class A Preferred is convertible into one share of voting common stock and entitles the holder to dividends, at $.40 per share per annum. The holder has the right to convert after one year subject to Board approval.
In connection with this offering the company granted the placement agent 5,000 Class A Warrants, exercisable for five years at an exercise price of $1.52 per share into common stock. The company also granted to these investors 2,500 Class A Warrants, exercisable for five years at an exercise price of $0.01 per share. Such warrants were treated as a cost of the offering. Also, the placement agent was granted 10,000 warrants for providing certain financial analysis for the company. The warrants are immediately exercisable at $.30 per share for five years. The warrant contains a cashless exercise feature. The company valued the warrant at $8,000 using the Black-Scholes option-pricing model and charged operations. On July 8, August 14, September 11, 2003 and August 4, 2006, the company issued 2,500, 7,480, 1,200 and 2,500 common shares, respectively, to the placement agent upon the exercise of warrants issued in connection with this offering.
Note F — Stockholders’ (Deficiency) Equity (continued)
[1] Class A Preferred stock: (continued)
During 2005, the company sold 200,000 Class A Preferred for $800,000 and issued 62,500 associated common stock warrants with an exercise price of $.01 per share. Such warrants are convertible immediately and are exercisable for ten years.
During the three and nine month periods ended September 30, 2006, the company sold 78,750 and 162,000 Class A Preferred to investors for proceeds of $315,000 and $648,000, respectively. One investor also purchased 20,500 common stock warrants for a purchase price of $2,000 for the period ended March 31, 2006. The company issued 77,515 and 121,265 additional common stock warrants to investors in connection with the purchase of Class A Preferred for the three and nine month periods ended September 30, 2006. All such warrants are exercisable at $.01 per common share. For the three and nine month periods ended September 30, 2006, 35,000 and 47,500 of these warrants were exercised for proceeds of $350 and $475 respectively.
At September 30, 2006 and 2005, dividends in arrears amounted to approximately $409,000 and $208,000, respectively.
[2] Class B Preferred stock:
On October 21, 2004, the company authorized the sale of up to 300,000 shares of its Class B Non-Voting Cumulative Convertible Preferred Stock (“Class B Preferred”). During 2004, the company sold 42,500 shares at $5.00 per share of its Class B Preferred for $212,500. Each share of Class B Preferred is cumulative convertible into either one share of voting common stock of the company or one share of common stock of Iso-Torque Corporation under certain circumstances and entitles the holder to dividends, at $.50 per share per annum. The holder has the right to convert into shares of the company’s common stock after one year subject to Board approval. At September 30, 2006 and 2005, dividends in arrears amounted to approximately $43,000 and $22,000, respectively.
(1) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Class B Preferred Shares then outstanding are entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether such assets are capital, surplus or earnings, before any payment or declaration and setting apart for payment of any amount in respect of any shares of any Junior stock with respect to the payment of dividends or distribution of assets on liquidation, dissolution or winding up of the Corporation, all accumulated and unpaid dividends (including a prorated dividend from the last Dividend Accrual Date) in respect of any liquidation, dissolution or winding up consummated except that, notwithstanding the provisions of Section B(2), all of such accumulated and unpaid dividends will be paid in Class B Preferred Shares at a rate of 1 Class B Preferred Share for each $5.00 of dividends. No fractions of Class B Preferred Shares shall be issued. The Corporation shall pay cash in lieu of paying fractions of Class B Preferred Shares on a pro rata basis.
(2) The Class B Preferred Shares will be entitled to participate on a pro rata basis in any distribution of assets as may be made or paid on Junior Stock upon the liquidation, dissolution or winding up of the Corporation. |
