Vulture, good analysis. It would be interesting to know for sure which debt was related to Pro-Mold and Semco to determine the true cost of the acquisition.
But when it comes to compensation, nothing holds a candle to what Turek gifts to himself. For example:
In January 2005, the Company obtained certain assets (molds, sales contract, customer base, and patents) from a related party, Promotional Container, Inc. (PCI). PCI is owned by James N. Turek Sr., the Company's president and majority shareholder. Consideration to PCI consisted of a promise to exchange 100,000,000 shares of preferred stock (recorded as $360,000 of preferred stock subscribed in the accompanying balance sheet) in the Company by May 2007 and a promise to pay $500,000 (non interest bearing) by May 2006. Due to common control, paid in capital was reduced by $860,000 to record the transaction.
If 1M shares of preferred stock is convertible to 7.3B common, then how does one value a whopping 100M preferred? 730B of common? OK, so that's potentially not a problem for almost a year from now. But what about the $500K in cash due by May, 2006? Given it's in the most recent financials but not listed as already paid, can we assume it was paid in May? Paid using what cash? Or will we find out later this debt has also been forgiven? If 100M shares of preferred is valued at $360K on the balance sheet, does this mean the $500K is equivalent to 139M shares?
- Jeff |
