Techcom Inc (TCRI)

[Potse]

Settlement agreement was interesting......

On March 8, 2022, the General Court of Justice of Mecklenburg County, North Carolina, issued a civil summons regarding a complaint William R. Allessi Jr. vs. Techcom Inc., Mr. Alessi, the Company’s President and majority shareholder prior to October 2017, alleged that he is entitled to an additional 3,097,017 shares of Common Stock of the Company under his prior employment agreement. The parties executed a settlement agreement as of May 18, 2022 that provided, in part, for a dismissal of the action with prejudice without the issuance of any additional shares of Common Stock or payment of any other amounts to Mr. Alessi, for the mutual release of any claims or potential claims between the parties and for Mr. Alessi to retain the 120,000 shares of Common Stock that he was issued under this employment agreement.

That settlement agreement TCRI/Alessi entered into was quite interesting. According to Alessi's complaint his employment agreement had a provision that entitled him to an issuance of 4.95% of TCRI's outstanding shares following the reverse split (minus the 120K post-split shares he already owned). I think most people/courts would interpret that as meaning his issuance would be based on the outstanding share count immediately after the reverse split (which was 9,920,254 shares). That would have resulted in TCRI issuing him roughly 371K shares.

However, Alessi claimed he was not only entitled to those 371K shares but he also was entitled to 4.95% of the 55M shares that were issued to Kok Seng Yeap more than 6 months after the reverse split took place. As far as I am aware the text of the employment agreement has never appeared in TCRI's filings, so I don't know if there was anything about this specific situation or terms/language in the employment agreement that would allow his claim on any shares that were issued after the split occurred.

If I am interpreting the above bolded language correctly, it appears that TCRI did not need to make any payment of any kind to Alessi to settle this lawsuit. If there were any significant payments connected to this settlement (common shares, preferred shares, cash, convertible notes, etc.) I would assume they would be fully disclosed in that paragraph in the quarterly report. Assuming that is an accurate interpretation and all pertinent details of the settlement have been disclosed in that paragraph, this agreement would be extremely favorable to TCRI.

One thing I find particularly interesting is the part about allowing Alessi to retain the 120K shares he was issued in 2017 as part of that employment agreement. The lawsuit never proceeded to the point where we got a chance to see what TCRI's full defense would have looked like. But the wording of that statement makes me wonder if TCRI felt it had a strong enough position here that the company could have actually demanded the return of those shares to the company if it had wanted to.

If in fact Alessi came out of this lawsuit with nothing more than the 120K shares that he had already been issued, that is pretty amazing to me. I am assuming/guessing that those 120K shares were the ones that the company unrestricted on January 13.