JD Brown and Glenn Harr's "advances" would appears to be entirely collaterized by shares according to the data available. Meaning if they fail to pay it back, the shareholders of the company have in effect paid it back for them. Who's kidding who here?
In May of 2006 a NV shell (Advantage Technologies, Inc.), bought D&D Displays. They then performed a 250:1 reverse stock split and changed the name from Advantage Technologies, Inc. to Expo Holdings, Inc. The new shares issued from this split totaled 187,156 shares. The company then acquired all of the outstanding stock of D&D Displays, Inc. in exchange for 40,000,000 (forty million) shares of stock in the Company (Expo Holdings, Inc.). Additional shares were issued in the Company for settlement of an outstanding promissory note totaling 7,079,808 shares. A total of 470,192 shares were issued for services rendered. Additional Paid in Capital total $5,016,555 was netted against retained deficit due to the reverse merger in May of 2006. They then immediately began dumping those corporate retained shares for cash.
It appears a total of $375,911 was advanced to JD Brown ($147K) and Harrs ($228K) from these stock sale proceeds in 2006. I can't find any other source for the capital that was given them. Oddly enough, D&D Displays had just lost $347K+ in 2005. What a coincidence. I can't say for certain, but if that doesn't look like they took the company public to shift the burden of overwhelming debt and loss from themselves to their hapless shareholders, I've never seen it happen. And now if they decide to sell shares to pay back their "advances", you have a situation where the money paid to them through dilution of shareholder equity is now being repaid to the company...through further dilution of shareholder equity. Yes the company will get the money from the share sale but where has that historically gone? You got it...to make up for losses. Losses generated by what? Well, historically it's been excessive G&A payments...namely salaries, perks and general expenses. In other words, a nice chunk of those share sales eventually find their way back into the principal's pockets.
Of course that wasn't the end of the great D&D shuffle all the debt to the shareholders free for all. In 2007 they decided to sell off $826,129 worth of their real estate holdings and property and then (I am assuming since lease expenses went up $174K) lease back what they sold @ $174,000 a year. Thereby banking, IMHO, some more of their shareholder's equity for use in providing massive G&A payments to personnel and turning a shareholder asset of over $826K into a $174K annual liability. Also interesting to note is that while their real estate holdings were booked in their financials at around $652K, the sales amount equals almost precisely that amount plus a year's lease of $174K. That may be completely meaningless and/or innocent and/or a complete coincidence, but I intend to look into it anyway out of curiosity. And no, I don't want to hear the argument that the sale was a "business" move because "depreciation factors" had been depleted. Their real estate was booked on a 39 year straight line depreciation. D&D Displays was founded in 2000.
All in all, not a bad deal for a couple guys who ran a sandwich shop and something called "The Service Group" a few years back. And who suddenly in 2007 were personally out of gross debt where the company was concerned and earning an estimated $125K a year plus great benefits. And to think...just two years prior they'd lost $347K+ without all those neat shareholders around to buy their paper.
No they're not hiding any of this. It's all been revealed in publically accessible records but it's an incredibly ugly picture of what has happened to their debt and their shareholder's equity IMHO. Now, if this miraculous pumped SM event actually leads to the PPS permanently soaring and revenues following, I suppose all could be excused. But if this is nothing but another of many misleading set-ups to jack the share price? All of the above IMHO.
SBB
AI
