Eco Products Inc Case Report
This report is taking a deeper look at Eco-Products, Inc. past financial performance and projecting the future. The company was founded by Kent and Steve Savage in 1990 in Boulder, Colorado. The company is a lead supplier of environmentally friendly food service products in the United States. The margins were low and the salaries were small. The company was financed by family and friends up to 2005, when they received their first line of credit from the bank at $30,000. This line of credit reached $4 million by 2007, and the company was running low on working capital. With a cash short fall, Steve is looking for addition financing.
2005-2007
Survival Breakeven. Survival breakeven revenues are the revenues needed to cover the company’s fixed and variable costs. As seen in the table below, Eco-Products, Inc. was able to breakeven in both 2005 and 2006, but unable to do so 2007. This may be due to the fact of the high increase in General and Administrative Expenses and Depreciation and Administrative Expenses.
YEAR SURVIVAL BREAKEVEN NET REVENUE NET INCOME (LOSS)
2005 2,829,321.89 3,649,799 237,336
2006 5,478,197.37 5,751,787 41,946
2007 10,422,672.47 10,867,104 (36,199)
Table 1 Survival revenues versus actual revenues for Eco-Product, Inc. …show more content…
In the proposed term sheet shown in Appendix B, Eco-Products is issuing Series A Convertible Preferred Stock at a price of $1.50 per share to Greenmont Capital Partners. A total of $2 million will be raised in exchange for a 7.8% ownership position on a fully-diluted basis The proposed terms of the Series A Preferred Stock are spelled out in Appendix B and include: dividends, liquidation preference, conversion, automatic conversion, anti-dilution provisions, voting rights, board of directors, board meetings, protective provisions, information rights, registration rights, right of participation, purchase agreement, employee pool, stock vesting, restrictions on sales, co-sale agreement, and employment
2005-2007
Survival Breakeven. Survival breakeven revenues are the revenues needed to cover the company’s fixed and variable costs. As seen in the table below, Eco-Products, Inc. was able to breakeven in both 2005 and 2006, but unable to do so 2007. This may be due to the fact of the high increase in General and Administrative Expenses and Depreciation and Administrative Expenses.
YEAR SURVIVAL BREAKEVEN NET REVENUE NET INCOME (LOSS)
2005 2,829,321.89 3,649,799 237,336
2006 5,478,197.37 5,751,787 41,946
2007 10,422,672.47 10,867,104 (36,199)
Table 1 Survival revenues versus actual revenues for Eco-Product, Inc. …show more content…
In the proposed term sheet shown in Appendix B, Eco-Products is issuing Series A Convertible Preferred Stock at a price of $1.50 per share to Greenmont Capital Partners. A total of $2 million will be raised in exchange for a 7.8% ownership position on a fully-diluted basis The proposed terms of the Series A Preferred Stock are spelled out in Appendix B and include: dividends, liquidation preference, conversion, automatic conversion, anti-dilution provisions, voting rights, board of directors, board meetings, protective provisions, information rights, registration rights, right of participation, purchase agreement, employee pool, stock vesting, restrictions on sales, co-sale agreement, and employment