Case 15-1
Nearly There
Nearly There (the “Company”), an SEC registrant, designs, develops, manufactures and sells various navigation products and services. Given significant research and development expenses and slumping sales results in recent periods, the Company is in need of additional capital to continue product development and to meet projected operating budgets for the coming year.
In November 2012, the Company issued 5 million shares of Series B preferred stock at
$1.20 per share (the “Original Issue Price”) to new investors (the “Series B Preferred
Stock”). Total proceeds, net of issuance costs, received by the Company from this issuance were approximately $5.9 million. The significant terms of the Series B Preferred
Stock are as follows:
• The par value of the Series B Preferred Stock is $0.01 per share.
• Dividends – In each calendar year, the holders of the then outstanding Series B
Preferred Stock are entitled to receive, when, as and if declared by the Company’s
Board of Directors (the “Board”), cumulative dividends at the annual dividend rate of 8% of the Original Issue Price, as appropriately adjusted for any stock dividends, combinations, reclassifications, recapitalizations or splits with respect to such shares.
• Voting Rights – Holders of the Series B Preferred Stock have protective voting rights to vote together with the common stock holders on an as-converted basis on certain significant events (e.g., change-in-control, major asset sales, extraordinary distributions, etc.).
• Conversion Option – At the holders’ option and at any time after the date of issuance, each share of the Series B Preferred Stock can be converted into the
Company’s common stock. The initial conversion price is $1.20, which is subject to certain adjustments including: o Stock dividends and combinations or subdivisions of common stock

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