Emtec (ETEC) – Reverse Stock Split – $800 Gain

Current Price – $1.01

Offer Price – $1.05

Upside – 4% or $800 for holders of 19999 shares

Expiration date – not announced yet

SEC Filling

Trading Strategy:

Buy 19999 shares of ETEC and wait for reverse-split to take place, at which point the shares will be cashed out.

Summary:

On April 30, 2013, a Special Committee of the Board (the “Special Committee”) recommended and the Board approved a reverse stock split (the “Reverse Stock Split”) of the Company’s authorized, issued and outstanding common stock at an exchange ratio of 20,000-for-1 whereby each 20,000 shares of common stock held immediately prior to the Reverse Stock Split will be exchanged for one share of the same class of common stock, to be effected by an amendment to the Company’s Certificate of Incorporation, as amended. In lieu of the issuance of any fractional shares on account of the Reverse Stock Split, stockholders who hold fewer than 20,000 shares of common stock immediately prior to the effective time of the Reverse Stock Split (the “Fractional Stockholders”) will receive from the Company $1.05 in cash for each share of common stock. At the effective time of the Reverse Stock Split, the Fractional Stockholders shall cease to be stockholders of the Company.

Shareholder Approval:

The Transaction was approved by the written consent of the Consenting Stockholders, who collectively beneficially owned approximately 11.5 million shares, or approximately 63%, of the Company's issued and outstanding common stock as of April 30, 2013. No further stockholder approval is required.

Source of Funds:

Based on estimates of ownership of shares of common stock, the number of shares outstanding and other information as of April 30, 2013, and assuming that, as a result of the Transaction, 1.0 million shares are purchased, Emtec estimates that the total funds required to consummate the Transaction will be up to $2 million.

The funds required to consummate the Transaction will be derived from an up to $2 million senior subordinated note (the “Subordinated Note”) payable to New Spring and Peachtree, with interest to be paid at a current rate of 12.0% and a payment in kind interest rate of 4.0%.  On April 24, 2013, the Company executed a term sheet for the Subordinated Note to fund the Transaction and the costs and expenses of the Transaction.