Hearts Essay Example for Free

Hearts EssayThis case is about a company named Hearts R Us. This company provides research and culture for medical devices. According to the instruction provided the company is in its early stage and has no products in the market. They grant 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 work well with this new Heart Valve System. Therefore both companies decided to fuse by agreement. The agreement is as follows $3.5 million like stock shares 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, harmonise to the information provided. This transaction gave Bionic specific rights 1. Board Rights, 2. Mandatory Conversion right, 3. Contingent Redemption Rights.Additional Protective Rights, 5. Right of first refusal and Co-Sale Right s. The $3.5 millions of shares would be convertible credentials in common stock according to the agreement when the IPO reaches net proceeds of at least $50 millions. It is stated that if on year basketball team 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 basis and its planning to make an IPO soon. There are a couple of issues border this case. First is an early-stage company that doesnt have the financial stability and this might create trouble for further transactions. The only product that might be glide slope 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 accounting transactions have being enter to comply with the covenants of its outstanding debt. Furthermore they are not required to comply with SEC and are currently not doing so. Also theirs an issue of how to be thro ugh with(p) 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 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 at heart 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, interest right, call prices and da tes, 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 satisfaction of required conditions during at least the most recent annual fiscal period and any subsequent meantime period presented.