OTCQB is the venture marketplace for companies that are current in their reporting with a U.S. regulator. There are no financial or qualitative standards to be in this tier.
Definition of 'Business Development Company - BDC'
A company that is created to help grow small companies in the initial stages of their development. BDCs are very similar to venture capital funds. Many BDCs are set up much like closed-end investment funds and are actually public companies that are listed on the NYSE, AMEX and Nasdaq.
Investopedia explains 'Business Development Company - BDC'
To qualify as a BDC, companies must be registered in compliance with Section 54 of the Investment Company Act of 1940. A major difference between a BDC and a venture capital fund is that BDCs allow smaller, non-accredited investors to invest in startup companies. Some of the reasons why BDCs have become popular is that they provide permanent capital to their management, allow investments by the general public and use mezzanine financing opportunities.
Read more: http://www.investopedia.com/terms/b/bdc.asp#ixzz2H1LH7xcw
Introduction to Convertible Preferred Shares
SEE: Valuation Of A Preferred Stock What Convertible Preferred Shares Are These shares are corporate fixed-income securities that the investor can choose to turn into a certain number of shares of the company's common stock after a predetermined time span or on a specific date. The fixed-income component offers a steady income stream and some protection ofthe investors' capital. However, the option to convert these securities into stock gives the investor the opportunity to gain from a rise in the share price. Convertibles are particularly attractive to those investors who want to participate in the rise of hot growth companies while being insulated from a drop in price should the stocks not live up to expectations. The Opportunity for the Investor To demonstrate how convertible preferred shares work and how the shares benefit investors, let's consider an example. Let's say Acme Semiconductor issues 1 million convertible preferred shares priced at $100 a share. These convertible preferred shares (as these are fixed-income securities) give the holders priority over common shareholders in two ways. First, convertible preferred shareholders receive a 4.5% dividend (provided Acme's earnings continue to be sufficient) before any dividend is paid to common shareholders. Second, convertible preferred shareholders will rank ahead of common shareholders in the return of capital if Acme ever went bankrupt and its assets had to be sold off. That said, convertible preferred shareholders, unlike common shareholders, rarely have voting rights. By buying Acme convertible preferred shares, the worst investors would ever do is receive a $4.50 annual dividend for each share they own. But these securities offer the owners the possibility of even higher returns: if the convertible preferred shareholders see a rise in Acme's stock, they may have the opportunity to profit from that rise by turning their fixed-income investment intoequity. On the reset date, shareholders of Acme convertible preferred shares have the option of converting some or all of their preferred shares to common stock. SEE: Leverage Your Returns With A Convertible Hedge Determining the Profit of Converting
The conversion ratio
represents the number of common shares shareholders may receive for every convertible preferred share. The conversion ratio is set by management prior to issue, typically with guidance from an investment bank. For Acme, let's say the conversion ratio is 6.5,
which allows investors to trade in the preferred shares for 6.5 shares of Acme stock.
The conversion ratio shows what price the common stock needs to be trading at in order for the shareholder of the preferred shares to make money on the conversion. This price, known as theconversion price
, is equal to the purchase price of the preferred share, divided by the conversion ratio. So for Acme, the market conversion price is $15.38 ($100/6.5).
In other words, Acme common shares need to be trading above $15.38 for investors to gain from a conversion. If the shares do convert and drop below $15.38, the investors will suffer a capital loss
on their $100-per-share investment. If common shares finish at $10, for instance, then convertible preferred shareholders' receive only $65 ($10 x 6.5) worth of common share in exchange for their $100 preferred shares. (The $100 represents the parity value
of the preferred shares.)
SEE: Analyze Investments Quickly With Ratios The Conversion Premium
Convertible preferred shares can be sold on the secondary market
, and the market price and behavior is determined by the conversion premium
, the difference between the parity value and the value of the preferred shares if the shares were converted. As we show above, the value of the converted preferred share is equal to the market price of common shares multiplied by the conversion ratio. Let's say Acme's stock currently trades at $12, which means the value of the preferred shares is $78 ($12 x 6.5). As you can see, this is well below the parity value. So, if Acme's stock is trading at $12, the conversion premium is 22% [($100 - $78)/100].
The lower the premium, the more likely the convertible's market price will follow the common stock value up and down. Higher-premium convertibles
act more like bonds since it's less likely that there will be a chance for a profitable conversion. That means that interest rates too can impact the value of convertible preferred shares: like the price of bonds
, the price of convertible preferred shares will normally fall as interest rates go up: the fixed dividend looks less attractive than the rising interest rates. Conversely, as rates fall, convertible preferred shares become more attractive. The Bottom Line
Convertibles appeal to investors who want to participate in the stock market without feeling as though they are taking wild risks. The securities trade like stocks when the price of common shares moves above the conversion price. If the stock price slips below the conversion price, the convertible trades just like a bond, effectively putting a price floor under the investment.
THE AUDITORS - MaloneBailey, LLP
CERTIFIED PUBLIC ACCOUNTING FIRM
WE KEEP YOUR COMPOSURE
In the midst of chaotic economic times, you need an accounting firm that stays focused and levelheaded so your business can stay viable. MaloneBailey's team of certified public accountants is your calm in the financial storm.
Everything we do is based on seven core values that encompass who we are.
- We support you with a thoughtfully chosen team of experts.
- With pride, we represent you with the same passion as we would ourselves.
- We hold ourselves accountable to you.
Client Service Standards
- Our client service commitment motivates us to start each day with you in mind.
- We believe in always being accessible to you and responding within 24 hours.
- We take deadlines seriously and meeting them is our promise to you.
- Our unwavering commitment to maintaining the highest level of integrity in all that we do remains a top priority.
- We keep you informed of the status of your engagement and notify you promptly of meaningful developments.
- With unequivocal respect for your finances, we strive to be efficient, cost effective and transparent with the delivery of our services and professional fees.
- A genuine balance between work and personal time that ensures a productive and fulfilling work environment with ultimate impact on the client work we do.
- We are guided by strong sense of passion for helping our clients and employees achieve their business, financial and personal goals.
- Through our niche specialization, we achieve greater competencies and time efficiencies simultaneously.
- Our approach includes partner involvement at all levels of the engagement.
- We will make every effort to understand the business or personal cicumstances that brought you to us.
- We strive to be your independent auditor, tax advocate and trusted advisor.
- Bringing value, not just compliance, to the table translates into being your stategic partner.
A Team Approach
- Through our seamless approach, we guarantee the best overall solutions and guidance for our clients.
- Our commitment to you is to find the best coordinated response that provides provides the greatest value to your needs.
- The combination of collaboration, proactive planning and knowing your business results in our ability to anticipate problems and avoid surprises.
- After nearly fifteen years as a solo practicioner, John Malone merged his practice with that of Sterling L. Bailey in 1996. Both John and Sterling had general practices including a mix of audit, tax, bookkeeping and consulting services - the standard 'full service' mix that the majority of local CPA firm practices have today. In 1996, we had two SEC clients.
- By early 2001, John and Sterling had 13 SEC clients and one non-partner employee. We then hired a third partner specifically to serve our growing SEC practice niche and instituted a number of changes to the standard CPA firm practice model to maximize the efficiencies that the smaller SEC companies require: lower costs, faster service and more competent work product.
- Our remarkable SEC audit growth has come from referrals from satisfied clients and other professional service providers. We are repeatedly told that the number one and two reasons for changing auditors are poor service and high fees. Today, we have 5 SEC-qualified audit partners serving smaller public companies in our Houston office - more than any competitor. We also have offices in New York, Beijing and Shenzhen, China conducting SEC audit work.
- We use the latest in technology and practice aids to create a quality SEC audit practice refined by the above attributes. We have modified the traditional CPA firm approach to more efficiently and productively serve the specialized requirements of our smaller public companies.
- We believe our approach sets us apart from our competitors as our laser focus on SEC auditing enables us to provide the increased quality that SEC and PCAOB demand while still maintaining our fees and turn-around time at the lowest reasonable levels.
- We have expanded our service offering to include the full range of services offered to private companies and their owners and the tax compliance and advisory services for our SEC clients.
Generating Corporate Success
At DS Enterprises, we're focused on helping entrepreneurs and corporate executives build great companies, both public and private. That's what drives us and everything we do - from how we organize our firm to our investment strategy. Using a consistent set of multidisciplinary financial and management skills and capabilities we develop a rich understanding of our clients' businesses and implement creative strategies to help maximize value for our clients.
The cornerstone of many of our engagements, DS Enterprises provides specialization and expertise in the following services (CLICK BELOW):
Why We're Different
What makes us different
We are known for our quality service and responsiveness. Our wide range of financial and business advisory services and a commitment to our client's own vision and goals has made us a respected industry leader. With proven expertise, DS Enterprises provides the support required to develop solutions to the varied challenges our clients face, and are differentiated by the following features of our approach:
Over the years, we have developed proven processes to challenge our client's assumptions and stretch their thinking. It is through these methods that our clients are able to define their direction, build consensus among stakeholders, and develop and implement action plans that work.
Analytic Rigor and Objectivity
Due to our simulation and scenario analysis, financial modeling, and our integrated market, financial and operational analysis, our clients can achieve focused decision-making with confidence in conclusions, ensuring practical solutions and the necessary "buy-in."
We have worked with our clients for many years and they consider us to be accessible, flexible, professional and effective communicators. Time and again they turn to us as analysts, advisors and facilitators not only for our expertise, but because they are confident in our process and trust the outcomes we achieve together.
Client Value Creation
Improving our clients' business performance, creating long-term, win-win relationships and focusing on execution excellence.
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The CDFT RUBIX CUBE...
Convertible Preferred C & D Facts on CDFT:
(1) these are cumulative dividend based securities according to their Articles of Incorporation.
(2) these securities are all priced @ $2.50 per share
(3) they both convert at the par value of the public company.....00001 par
(4) the company is registering at least 1 share from every shareholder, based on proof
(5) the registration would encompass securities from both classes
(6) A registration statement is broad based, must be over 30 shareholders
(7) The company needs 400 shareholders who own 500,000 in the float to be AMEX company
(8) naturally our shares will be part of the 400 shareholders, as CDFT does not have enough
(9) both series of preferred stock are Anti Dilutive
(10) any further conversions of stock above and beyond the registration will require the occupant to hold the security for 6 months........extremely fair
According to the AMEX rules, CDFT must have 400 shareholders who own 500,000 shares or 800 shareholders who own 1,000,000 shares in order to meet their qualifications. Their are only a handful of professional advisors, management and other affiliates that own the C Preferred Securities which would likely be part of a registration statement as well. The company must register everyone's shares in the float to meet those obligations. Remember if they were to reverse the security, while they would still end up with the same amount of stockholders, the amount of shares each of us would own would not be enough to satisfy the requirements to up list. We are now on the launch pad, we can say that for certainty, because the issuance of these preferred shares to each of the investors is a requirement for them, if they intend to keep the integrity of the amount of shares each investor must actually hold. They have to register everyone's stock because in the case of a R/S or Acquisition, in either case, the registration creates new freely traded securities at the new price of $2.50 per share. These guys are absolutely brilliant. This is financial engineering at it's best, unequivocally brilliant.
To all the LONGS out there, they HAVE to register everyone's stock at the same time because according to the AMEX rules, they must have a broad based float that owns no less than 500,000 to 1,000,000 shares at $2.00 per share. Those are the rules. CDFT knows that if they either reversed the stock or were acquired, it would either lower the amount of shares we owned or create no trading public float in the latter. This my friends is the GOLDEN GOOSE, and it laid it egg on those who don't own any stock. This is brilliant and the DETAILS.......well here is one detail for those who think they actually have a choice in the matter:
(1) should CDFT be acquired by another company quoted @ $2.50 per share, all your common shares will be turned in for the new company, they will cease to trade, the company is forced to register 400 shareholders to stock to meet up list requirements.......so everyone does not own CDFT stock anymore.....it won't trade!!!!
(2) should CDFT R/S it's stock, all us longs who have sent our records in before May 13, 2013 will own anti dilutive convertible preferred stock, which the company has to register, because the R/S would wipe out everyone's cumulative holdings. They have to register a minimum of 500,000 shares from 400 shareholders to up list. We are part of that because there are only a handful of insiders and advisors. Those who don't participate are SOL because in the RS they don't have any preferred to protect them, won't have their securities registered and will likely see their investments eliminated.
So that leads us to this fact: THERE ARE NO OPTIONS HERE!! if you think not accepting the preferred is an option, in both instances, it's not, it's either you get them by default in the case of an acquisition, or you get them by having them sent to you for FREE, which could preclude a RS. Either way, CDFT 's advisors are pretty smart, and they know it, they know a RS would create an avalanche of pre selling, and we longs also know that if we sold it, we are likely to lose our money, so waiting till May 13th, which coincidentally is the drop dead date for retirement of Gary's common shares, is deft skill, they think the PPS is likely to go up and could go up knowing that everyone has until May 13th to show & tell. After the 23rd it's anyone's guess what happens, but either WE ARE ALL ALONG FOR THE RIDE, and I LIKE WHERE THIS RIDE IS GOING!!!!
This is real, real SKILL ladies and gentlemen. None of us here who owns our common right now will actually ending up owning the same stock when it's all said and done.....whether it's a RS or Acquisition. In either case, we will own something far more valuable, when the dust clears.....the AMEX rules demand it, to meet the distribution requirements. Our common shares we can sell them after May 13th...... they don't care if we do.....come on guys, wake up!!! They don't care because those shares don't count for anything as far as they are concerned. And you know what, they are right. Sure we can make a couple dollars selling them when and if the price goes up, but there is no BONANZA there. This is not LET'S MAKE A DEAL.....where you give up your common for something behind the curtain that could be worth less than what you have. We already know what's behind the curtain, you just have to connect the up list dots to know that they need the distribution requirements, because if they were acquired or reversed, they could meet every other requirement in a New York minute. They have to take us along for the ride, because it's clear, READ THE REQUIREMENTS:
(1) THEY NEED 400 shareholders or 800 who own 500,000 or 1,000,000 in the FLOAT!!!
This is BRILLIANT, it's not confusing in the least....Was the rubix cube confusing, or were the people attempting to figure it confused? And by the way a 14 year old showed us all how to figure it the rubix cube.
If anyone reads this post, and has not seen the light after my dissertation, LIGHTS OUT to them. I am thoroughly thoroughly pleased and after calling the company, I can say I figured out the rubix cube!!!
FULL CREDIT TO RIGGLER... LET HIM KNOW YOU APPRECIATE IT!!!