Typically your analysis would be accurate. Without trades it is hard to place a true value a companies shares. Remember in ENHD's case the fact that institutional investors put up 17 million dollars in funding at $4.40 per share. Those investors poured over the financials and were willing to put up some serious money. Tells me they think ENHD is worth way more than $4.40 per share. Venture Capital players usually buy at what they perceive to be a discounted price.
Simultaneous with the acquisition on December 31, 2007, the company completed a private placement with institutional and accredited investors led by Pinnacle China Fund, L.P. which resulted in gross proceeds to the company of $17.0 million through the issuance of 3,863,636 million shares of common stock, which represents an approximate 18% stake in the company. As part of the private placement, management entered into a "make good" provision whereby it placed 3,863,636 million of management's shares into an escrow to secure its obligations to meet specific future after-tax net income targets. In the event the company does not achieve its earnings targets of $15.9 million in after-tax net income ("ATNI") for 2008, and $20.9 million in ATNI and fully-diluted earnings per share of $0.99 for 2009, then 1,931,818 million shares held by management, respectively for each year will be transferred on an all-or-none basis to the investors in the private placement on a pro-rata basis.
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