Insider purchases? If you review insider transactions, you may think that the insiders are purchasing shares. Many view insider purchases as bullish, but one must examine the evidence before reaching a conclusion.
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However, if one reviews a recent filing [yes, the statements filed with the SEC], you'll find that the shares are not being "purchased" by the insiders, rather "given" to them.
Here's a statement from the recently filed S-2/A with the SEC [Oct 22, 1999]. Read the entire section.
Since October 1998, we have accrued $109,243 in salaries payable to our
executive officers and directors, Richard J. Grable, Allan Schwartz and Linda B.
Grable, due to our lack of working capital. These salaries remain unpaid to date
and will be paid as soon as the Company determines that the funds are available.
In January 1999 and February 1999, Richard Grable, our Chief Executive Officer,
director and founder sold an aggregate of 831,743 shares of our Common Stock
owned by him in excess of four years, pursuant to Rule 144 and lent the
aggregate proceeds of approximately $347,775 directly to the Company.
In January 1999, February 1999 and March 1999, Linda Grable, our President,
director and founder sold an aggregate of 520,000 shares of our Common Stock
owned by her in excess of four years, pursuant to Rule 144 and lent the
aggregate proceeds of approximately $166,618 directly to the Company.
In December 1998, January 1999 and February 1999, Allan Schwartz, our Executive
Vice President, director and founder sold an aggregate of 820,000 shares owned
by him in excess of four years, pursuant to Rule 144 and lent the aggregate
proceeds of approximately $359,707 directly to the Company.
The loans to the Company by Messers. Grable, Schwartz and Ms. Grable were
interest free and were evidenced by promissory notes. The December, January,
February and March promissory notes were due on January 30, 1999, February
28,1999, March 31, 1999 and April 30, 1999, respectively. The net proceeds were
recorded as a loan payable to each respective founder.
A meeting of the Board of Directors was held on May 12, 1999 to review and act
upon the previously adopted schedule of repayment of the loans, interest and
potential tax liability. Based on an opinion of the Founders personal outside
counsel and upon advice of a tax advisor, the Board voted to rescind the
previously adopted resolution. The new resolution authorized the repayment of
the December, January, February, and March promissory notes in full by the
issuance of shares equal to the number of shares sold. The restricted shares
issued as repayment for the loan bear registration rights. Since the loans were
repaid on a share for share basis with no other consideration, the Founders have
been advised that there is no capital gain and therefore no tax liability.
Messrs. Grable, Schwartz and Ms. Grable received 831,743, 820,000, and 520,000
shares of our restricted Common Stock, respectively as payment in full for the
loans from December 1998 to March 1999.
In May 1999, Messrs. Grable and Schwartz each sold 110,000 shares, respectively,
of our Common Stock owned by them in excess of four years, pursuant to Rule 144
and lent the aggregate proceeds of approximately $91,759 directly to the
Company. The loans to the Company are evidenced by interest free promissory
notes, which are due, and payable on June 30, 1999.
In June 1999, Messrs. Grable and Schwartz each sold 280,000 and 315,020 shares,
respectively, of our Common Stock owned by them in excess of four years,
pursuant to Rule 144 and lent the aggregate proceeds of approximately $201,795
directly to the Company. The loans to the Company are evidenced by interest free
promissory notes, which are due, and payable on July 31, 1999.
In July 1999, Mr. Schwartz sold 500,000 shares of our Common Stock owned by him
in excess of four years, pursuant to Rule 144 and lent the aggregate proceeds of
approximately $137,241 directly to the Company. The loan to the Company
evidenced by an interest free promissory note, which is due, and payable on
August 31, 1999.
The loans to the Company by Messers. Grable and Schwartz were interest free and
were evidenced by promissory notes. The May, June, July promissory notes were
due on June 30, 1999, July 31, 1999 and August 31, 1999, respectively. The net
proceeds were recorded as a loan payable to each respective founder.
Messrs. Grable and Schwartz received 390,000 and 925,500 shares of our
restricted Common Stock, respectively as payment in full for the loans from May
1999 to July 1999. |
