Good question, tigerpac. There are two things here
Post# of 40991
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Posted On: 08/22/2018 1:27:53 PM
Good question, tigerpac. There are two things here.
First about the loans related to the shares Steve sold - there ins't a direct relationship to the timing and quantity of Steve's shares being sold and the timing and amount of the loans he made to the Company. That is, a sale of his stock and a loan to the company were not connected in some transaction or agreement.
It's like this... he's not getting paid, only accruing salary, etc.; but he knew that, until the cash flow caught up with sales/marketing costs in the early stage, the time was going to come when he'd have to loan the Company money so he wouldn't have to revert back to more toxic debt. So...
He began issuing some shares to himself in lieu of cash to chip away a little bit of the accrued salary, expenses, etc. - which he could then sell and use the proceeds to loan the company.
So he began issuing the shares periodically, starting in Q3 of last year (12.5M shares issued prior to 7/31/2017 "against executive compensation of $13,750," which calculates to ppp = 0.0011). He obviously wanted to wait until the price was good enough to get the best out them, so he did not sell any until early October.
I didn't add this part in the chart that I posted, because it started in Q3 and I didn't want to confuse everyone even more detail. Though it IS in the spreadsheet that I gave, showing Steve sold 5.5M shares in Q4 (period ending Oct 31, 2017). Based on that, I expect that he sold those right around the time that they were issued in early October (but the price was declining), and he probably got an avg price of around 0.011. So that nets him $60.5K in proceeds.
So... sometime in Q4 he sold shares netting ~$60.5K in proceeds; sometime in Q1 he sold shares netting ~$300K in proceeds; sometime in Q2 he sold shares netting ~$40K in proceeds. (total of $400,500)
And... sometime in Q1 he loaned the Company $206,473; sometime in Q2 he loaned the Company $250,000. (total of $456,473) - not directly connected to the timing or amounts of stock sold.
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Okay, second, disclosing how many shares he sold BEFORE the 44M that was disclosed in the Form 144 - Yes, you are correct, he didn't make any sort of disclosure when he sold the 5.5M in Q4, the 31.5M in Q1 or the 13.6M in Q2. That's par for the course with the great majority of Pink non-SEC reporting (alternative reporting) issuers. It is much looser for these companies, as there is a whole range of events that aren't reported in the same way as for SEC reporting issuers. That's part of the reason that these toxic note holders can't sell Rule 144 shares from convertible notes in 6 months like they can with SEC reporting companies. Instead, they have to wait 12 months - like what LAM had to do for their July 14, 2017 $65K note that just finished (IMO) converting.
But what you're asking about is something that stuck out BIGLY to me as a signal, in a way, of things changing here... Why, when he didn't report the earlier sales, did he file a Form 144 for the 44M?
A few interesting items to note: 1) note gap between "tranches" starting 1 month prior to Q report - it's a common recommendation from "higher tier" of SEC filing attorneys and accountants to their penny stock clients: blackout any insider buying/selling of company stock 30 days prior to quarterly/annual report filings; 2) didn't file the Form 144 until immediately after the Q filing; 3) started selling the 2nd tranch immediately after the Form 144 filing; 4) it's peculiar to see the Form 144 filed with the SEC at all - you can see the Form 15 (15-12G) filed on 4/2/15... ONCI is alternative reporting, does NOT report to the SEC; so... why did he/"they" file this?
Rule 144 exemption for the sale of affiliate (definitely applies to CEO) free-trading and/or restricted shares calls for, among other things, filing a Form 144. I've never seen it done by a Pink non-reporting issuer. By definition, ONCI is non-reporting. Now, they could have filed a Supplemental Information disclosure, just like the ones they do for the equivalent of an 8K (when they actually choose to do it).
A theory - it looks like the company is brushing up a few things in the area of accounting and reporting, potentially on the recommendations of some party that has recently come to the table to help in the legal and/or accounting/bookkeeping/auditing area. It seems very possible that some progress is being made with the help of some "high quality" legal and/or accounting/auditing party or parties on the Delaware Tax and or Financial Auditing projects.
First about the loans related to the shares Steve sold - there ins't a direct relationship to the timing and quantity of Steve's shares being sold and the timing and amount of the loans he made to the Company. That is, a sale of his stock and a loan to the company were not connected in some transaction or agreement.
It's like this... he's not getting paid, only accruing salary, etc.; but he knew that, until the cash flow caught up with sales/marketing costs in the early stage, the time was going to come when he'd have to loan the Company money so he wouldn't have to revert back to more toxic debt. So...
He began issuing some shares to himself in lieu of cash to chip away a little bit of the accrued salary, expenses, etc. - which he could then sell and use the proceeds to loan the company.
So he began issuing the shares periodically, starting in Q3 of last year (12.5M shares issued prior to 7/31/2017 "against executive compensation of $13,750," which calculates to ppp = 0.0011). He obviously wanted to wait until the price was good enough to get the best out them, so he did not sell any until early October.
I didn't add this part in the chart that I posted, because it started in Q3 and I didn't want to confuse everyone even more detail. Though it IS in the spreadsheet that I gave, showing Steve sold 5.5M shares in Q4 (period ending Oct 31, 2017). Based on that, I expect that he sold those right around the time that they were issued in early October (but the price was declining), and he probably got an avg price of around 0.011. So that nets him $60.5K in proceeds.
So... sometime in Q4 he sold shares netting ~$60.5K in proceeds; sometime in Q1 he sold shares netting ~$300K in proceeds; sometime in Q2 he sold shares netting ~$40K in proceeds. (total of $400,500)
And... sometime in Q1 he loaned the Company $206,473; sometime in Q2 he loaned the Company $250,000. (total of $456,473) - not directly connected to the timing or amounts of stock sold.
________________________________
Okay, second, disclosing how many shares he sold BEFORE the 44M that was disclosed in the Form 144 - Yes, you are correct, he didn't make any sort of disclosure when he sold the 5.5M in Q4, the 31.5M in Q1 or the 13.6M in Q2. That's par for the course with the great majority of Pink non-SEC reporting (alternative reporting) issuers. It is much looser for these companies, as there is a whole range of events that aren't reported in the same way as for SEC reporting issuers. That's part of the reason that these toxic note holders can't sell Rule 144 shares from convertible notes in 6 months like they can with SEC reporting companies. Instead, they have to wait 12 months - like what LAM had to do for their July 14, 2017 $65K note that just finished (IMO) converting.
But what you're asking about is something that stuck out BIGLY to me as a signal, in a way, of things changing here... Why, when he didn't report the earlier sales, did he file a Form 144 for the 44M?
A few interesting items to note: 1) note gap between "tranches" starting 1 month prior to Q report - it's a common recommendation from "higher tier" of SEC filing attorneys and accountants to their penny stock clients: blackout any insider buying/selling of company stock 30 days prior to quarterly/annual report filings; 2) didn't file the Form 144 until immediately after the Q filing; 3) started selling the 2nd tranch immediately after the Form 144 filing; 4) it's peculiar to see the Form 144 filed with the SEC at all - you can see the Form 15 (15-12G) filed on 4/2/15... ONCI is alternative reporting, does NOT report to the SEC; so... why did he/"they" file this?
Rule 144 exemption for the sale of affiliate (definitely applies to CEO) free-trading and/or restricted shares calls for, among other things, filing a Form 144. I've never seen it done by a Pink non-reporting issuer. By definition, ONCI is non-reporting. Now, they could have filed a Supplemental Information disclosure, just like the ones they do for the equivalent of an 8K (when they actually choose to do it).
A theory - it looks like the company is brushing up a few things in the area of accounting and reporting, potentially on the recommendations of some party that has recently come to the table to help in the legal and/or accounting/bookkeeping/auditing area. It seems very possible that some progress is being made with the help of some "high quality" legal and/or accounting/auditing party or parties on the Delaware Tax and or Financial Auditing projects.
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