September 2, 1916, the remainder of the Boston Office Co. consignment was sold for $1,250 cash and our check sent for the balance due them. Desks and tables $575, and filing cabinets $250, were taken from stock for use in the factory. Additional benching and racks were bought for $450 cash. Shop and hand tools cost $875.25 cash.
September 10, 1916 a one-year fire insurance policy covering factory building and equipment was bought from the Northwestern Fire Insurance Co. for $584.68.
At a meeting of the directors and stockholders for the purpose of reviewing Goodman’s report and forecasting a policy for the coming year, the following items were thoroughly considered:
(a) In order to pursue a vigorous sales policy such as would now be necessary and along the lines suggested by Goodman, immediate purchases in large amounts would have to be made.
(b) The company’s credit, at the present time, with more than $70,000 of current payables outstanding, would not bear further expansion. Ready funds of at least $20,000 would have to be provided within the next month to take up outstanding notes and the more pressing bills, to say nothing of the amount needed to take advantage of all discounts offered on new purchases.
(c) The contracts entered into for purchases of machinery and raw materials would soon have to be fulfilled, requiring an additional sum of $20,000 to $25,000.
(d) In view of the policy previously determined to close out the division of sundry office supplies on October 31 and push with vigor the new Knoxfraud, a widespread advertising campaign was decided upon for the next six months in order fully to present the need for the new device and its merits. It was estimated that $15,000 or $20,000 would be required for this.
(e) The absolute necessity for additional capital was apparent. Before the company could hope successfully to secure subscriptions to a new issue of stock, not only would that stock have to be made attractive, but the company’s condition as to surplus would have to be improved. Accordingly, it was voted to donate 10% of the capital stock into the treasury and offer it for sale first to the present stockholders and then to the public at not less than 90. Then it was ordered that the capital stock be increased by the issuance of $50,000 of first preferred 6% cumulative, and $25,000 of second preferred 8% non-cumulative, both classes of stock to have further participation on the following basis:
In the event of dividends in excess of the requirements for the preferred stock and 6% on the common, the first preferred should share ⅓ and the common ⅔ of such excess for an additional dividend until they should have received in all an 8% dividend and so be placed on an equality with the second preferred. Of all further dividends the common was to share ¾ of the amount of such excess dividends, and the two preferred classes the other ¼ distributable between them in the ratio which the amount of each outstanding bore to the total of both classes outstanding. It was decided, at the time of the application for an increase of capitalization, to change the name of the corporation to the Knox-Davis Manufacturing Company.
The necessary legal requirements for increasing their capital having been met, the present stockholders took all the treasury stock at 90, and the two classes of preferred were entirely subscribed for at par, payable ½ down and the remainder subject to two equal calls at the end of 4 and 8 months respectively. Cash was received for treasury stock in full and for the preferred as indicated, i.e., for the ½ down in cash at the date of subscription. Permission was granted to change the name of the corporation as requested.