INCREDIBLY DETAILED AND ACCURATE POST FROM MONEYFORNUTHIN--welcome xdrive, gave you a follow.
Blade, I think we should all take heart in the fact that On4 is not unlike ALL startup businesses, especially public companies trading on the OTC... in that it can use any and all dollars it can drum up from just about any and all sources - but that the CEO selling HIS shares in order to raise that money is MUCH, MUCH better than taking on toxic convertible loans.
When SB sells his shares, whether he uses any or all of that money for personal needs or for loaning to the business directly, he IS EFFECTIVELY loaning the money to ONCI. WHY DO I SAY THIS? HOW IS THIS POSSIBLE? It's simple. Look at the financial reports. The liability "Due to related party" (due to SB) has increased with each quarter. This item is described clearly in the report. On page 15 of 21, it reads:
Quote:
The amount due related party of $1,590,640 represents the cumulative amount due Steve Berman, CEO at July 31, 2018 and includes loans totaling $571,473 made to the Company during the 9 months ending July 31, 2018 at 5% interest, plus accrued salary, reimbursable business expenses paid for the Company and his accrued sales commissions.
So think about that. So long as On4 owes SB any significant amount of money for loans and/or accrued salary and/or reimbursable business expenses and/or accrued sales commissions, then any time he sells his own shares, he is effectively loaning that amount to the company - -First, if the money is for personal living expenses and he's raising it by selling his shares, then this is in lieu of the company paying the cash outright; in this case, it turns out to be an interest-free loan, in the form of "accrued salary" or "accrued sales commissions" that have not yet been paid out to him. Second, any of the proceeds that are loaned back to the company (instead of being kept for personal use) are / have been accounted for as loans to the company with 5% interest. Well, there's no way in hell a small public company trading on the OTC gets any better financing than a straight non-convertible, non-collateralized (unsecured) loan with a 5% interest rate!
So whenever you hear trash talk about the CEO selling shares - at any price - think about the facts here.
And also remember this - selling his shares is NON-DILUTIVE. Those shares have been issued long ago, they are not adding to the O/S. Yes, it's true that SB is receiving some shares quarterly in lieu of cash for compensation (typically 7.5M shares, much fewer than the ~44M being sold each quarter). But again, you have to go back to - - it's much better for shareholders than for the company to take on toxic convertible notes in order to generate necessary cash flow.
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