Hearts Essay

This cheek is about a company named sums R Us. This company provides investigate and development for medical devices. According to the teaching provided the company is in its primordial stage and has no harvest-tides in the market. They have developed a Heart Valve System that would be revolutionary in the market if is approved. Also thithers another company called Bionic Body that is a biological medical device company, they have another product that would work substantially with this new Heart Valve System. Therefore both companies decided to fuse by agreement. The agreement is as follows $3.5 million preferred stock sh ars of serial publication A from Heart Company are sold to Bionics with a par tax of $1 each. This relations was completed on November 30, 2011, according to the information provided. This transaction gave Bionic specific rights 1. Board Rights, 2. Mandatory Conversion right, 3. Contingent salvation Rights.Additional Protective Rights, 5. Right of first ref usal 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 emergence of at least $50 millions. It is stated that if on year v of the agreement the FDA has not yet 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 base of operations and its planning to make an IPO soon. There are a couple of uncovers surrounding this case. First is an early-stage company that doesnt have the monetary stability and this might 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 just starting all of its be transactions have being recorded to comply with the covenants of its outstanding debt. moreover they are not required to comply with SEC and are currently not doing so. Also theirs an issue of how to be d one to register the Series A shares that have being sold to Bionic.Preferred Stock A security that has preferential rights compared to common stock. Participation Rights contractual rights of security holders to match dividends or returns from the security issuers profits, coin flows, or returns on investment. FASB has few 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 inwardly 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, participation right, call prices and dates, conversion or exercise prices or rates and pertinent dates, sinking-fund requirements, unusual 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 bliss of required conditions during at least the most recent annual pecuniary period and any subsequent interim period presented.