Andy explained that when he structured his company in 1997, he had 51% of the partnership and his ex-partner R___ had 49%. There were 10,000 company shares having no value.
Soon, Andy became displeased with R's performance and the bar bills he submitted for entertaining clients.
Andy's wife gave him an idea. He called a special Board of Directors meeting. He and R were the sole members of the Board, and his wife also attended to take minutes. In the meeting, a series of resolutions was passed.
In the first resolution, Andy's son was appointed to the Board of Directors immediately as a voting member, without any share value in the company. After the resolution passed, his son entered the room and voted on the remaining resolutions.
In the second resolution, the 10,000 shares were declared to have a total
value of $1.00. R was perplexed but voted yes, along with Andy and his son.
In the third resolution, approved by Andy and his son, R was removed from the company as director and as Vice
President. R was furious and threatened legal action.
In the fourth and final resolution, R was paid his share value for his
contribution to the company: Andy tossed R a bag of 49 pennies. Andy and his son and wife laughed after R stomped out, and Andy never heard from his ex-partner again.
Andy told me this story to explain that for over six years, there had been 4900 outstanding shares in his company belonging to no one. At another special meeting of the Board in 2004, they declared the share value of R&A Media to be US$100.00 per share. In this way they could make nearly half a million dollars in share "value" available to potential investors. (Andy justified this value with what turned out to be false information provided to him by his marketing guy that there were 100,000 pending orders for Calmplex puzzles.) In Andy Snowie's October 2007 bankruptcy petition, he lists the R&A Media share value as nil.
