Quote from Marty: <<ANSWER: This is a complete misconception. Robert Gordon does NOT have 41MM shares or options or a combination of either. His shareholdings and granted options are listed above. In order to protect the company's financial viability, it signed a contract with Rob Gordon that IF in the event the company needed cash (which it obviously does not since the PP was put into place and with the other alternatives being worked on) and IF Rob Gordon gave the necessary funds to the company at the time… then and then only would these options (so many shares per contract) go into effect. As of this date, this is also a moot point and Rob Gordon has no further options than are listed above… i.e.: zero.>>
The only problem is that in Feb., 1999, Robert Gordon converted $1 million of loan into 6,666,667 shares (converted at $.15). So I guess he (and his family) now own outright 20.7 million shares (14 million + 6.7 million). If Gordon elects to convert the remaining $4 million of revolving credit at $.15, he will acquire another 26,666,667 shares.
But, you say, the company doesn't need to borrow another $4 million from Gordon. Perhaps not, but we can surmise the loan outstanding to Gordon is very close to half a million dollars at least. As of 12/31/98, Loan to Stockholder was $1,351,095. He has already converted $1,000,000 leaving a balance of $351,095. We are 37% through the year of 1999 in which he has drawn none of his $360,000 salary. So $133,000 in accrued salary + the old balance takes us very close to $500,000 (converts into 3.3 million shares at $.15).
Is Gordon raping the stockholders?
The following is from the 10KSB quoted for reference: << Robert P. Gordon may be deemed to be a founder of the Company. Robert P. Gordon individually owns 12,086,667 shares; Elizabeth K. Gordon, his wife, individually owns 909,857, and they jointly own 698,750 shares. Also included are 362,010 shares owned by Heaven International, Inc., which is controlled by Robert P. Gordon and Elizabeth K. Gordon. Included in the table are up to 26,666,667 shares which Mr. Gordon may have the right to acquire pursuant to the $5,000,000 Revolving Credit Loan Agreement Revolving Credit Master Note between Mr. Gordon and the Company, each dated April 23, 1998, in the event that the should the full amount of the loan is funded and should Mr. Gordon elect to convert the debt to shares of restricted common stock.>>
From 10KSB: <<On April 23, 1998, the Company entered in to a Revolving Credit Loan Agreement and Revolving Credit Master Note with Robert P. Gordon, the Company's Chairman, whereby Mr. Gordon would loan, at his discretion, up to $5,000,000 to the Registrant over the following year, if and when requested by the disinterested members of the Board of Directors. The loan may be repaid in cash or in restricted common stock of the Registrant, at the option of Mr. Gordon. On February 22, 1999, Mr. Gordon elected to convert $1,000,000 in principal due under the loan into shares of restricted common stock at the conversion rate of $.15 per share, resulting in the issuance of 6,666,667 shares.>>
More from 10KSB: <<As of December 31, 1998 loans payable to a stockholder totaled $1,351,095, accruing interest at 11% per annum. The loan is payable on demand and is uncollateralized. Subsequent to December 31, 1998, a $1,000,000 portion of the loan balance was exchanged for 6,666,667 shares of the Company's common stock that was registered with the Securities and Exchange Commission on a Registration Form S-8. The exchange price was $.15 per share.>>
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