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Microcap & Penny Stocks : ACRT about to move to new highs -- Ignore unavailable to you. Want to Upgrade?

To: Ryan Plovie (Hijacked) who wrote (1392)	2/11/1998 11:30:00 PM
From: John Chew	Respond to of 7054

Compensation for Mr. Amos Aharoni: Mr. Aharoni received 200,000 warrants each year for five years as a employment contract. His base salary is $70,000 per year. At the end of year 1, he would receive 200,000 warrants at the strike price of 20% discount to wherever the stock is trading at the day of the grant. Say the stock is $20. the 20% discount would put the discount at $4.00 or the strike at $16.00. Then if he decided to exercise the option (warrant) then he would pay $16 per share to the company in cash to obtain the 144 restricted stock. Now Amos would have to hold the stock for a year. Unless the stock price goes up, the his options could be worth nothing and if he converts into stock, he takes a holding risk on his stock. He converts at $16, then a year later the stock is worth $14, then he is out $2.00 per share. On top of that each year he can earn 20% of the after tax profits (net income) under the same formula. I believe (but you should check) that the options are for one year. Is this fair? It is the same bonus structure (except for the five year employment contract) as all the account executives. He won't make money unless the stock goes up, so his hurdle rate is the market return of the stock. Is the percentage too much? I do not know, except that 1. you have to align the management with shareholders. 2. All salaries at Actrade are about 25% under normal salary ranges. If you have suggestions as to compensation, please post it. ___________ Regarding Revenue recognition: Actrade has NO CHOICE but to post the full face value of the TAD as revenue. It is like a wholesaler, but in reverse. Remember that Actrade does not make loans, it purchases insured short-term notes. A wholesaler buys a computer for $500 and then sells it for $800. The revenue is $800, the CGS is $500, and the Gross margin is $300. The sales revenue is NOT $300. Actrade purchases a TAD for $1000, this is the product, this is the cost of sales and when Actrade collects the money--that is the revenue. So the revs are not the differeence between purchase and cost. The revenue is the full amount of the trade acceptance. Actrade has no choice under GAAP but to report revenues this way. Anyway, if you listen to the conference call, then you might learn more.