Prior to our move to Medina, Mike and I had estimated our worth at about $180,000.00! We had a very good year and we felt that the move to Medina would cost about $25,000.
This was not only "short- sighted" on our part, but a very naive approach to a serious business decision. Later, a financial consultant was to tell us to use the following formula when considering a major move:
Take your first estimate as to the dollars you will need to make the move, and then double it!
After you have doubled this figure, double it again and YOU JUST MIGHT HAVE HALF OF WHAT YOU WILL NEED TO MAKE THE MOVE!
Not only was this person correct in retrospect, but also he underestimated even this estimate regarding our move!
Once the move was made, we continued to keep the Retail Store operating. It was generating our biggest cash flow! Shortly we would lose the Store Manager as she was graduating from school, but we would also hire individuals to run the store that were either incompetent or dishonest. And in some instances, both!
Yet, we needed the cash flow!
Advance Process had sold us a printing system that was totally contrary to their verbal representations!
The equipment would not have a 2% wastage, but nearly a 33% wastage!
Instead of three people to operate both machines, it took 5 people!
The impressions were 200 to 300 per hour NOT 900 per hour! This was a "blessing in disguise!" If we were getting the impressions, the wastage would have killed us at a faster rate!
Little by little, we were going out of business! After moving into the new building in Medina, Mike had decided Pro Arts was to become a more formal business. Prior to this move, Pro Arts kept relatively good records, however our financial statements were never "certified" by a Certified Public Accountant (CPA).
As we knew that our financial positions was very strong prior to the move, with John joining Mike and me in the business, we had acquired a deeper desire to become "big business!"
We no longer viewed posters as a "fad item" but looked at it as an industry. With the investment of over $100,000.00 in the overrated "finest silk screen equipment in the industry," we wanted to be a company that potentially would dominate the poster business!
Mike had hired Price Waterhouse to audit our books and to certify their audit in order to have both a "starting point" and to satisfy the Internal Revenue Service that was at that time "questioning" our present filings with their office.
Additionally, we had been involved in two copyright lawsuits as Defendants and the experience of the legal world was yet to awaken our naive business minds to the "real world."
We also employed Burke, Berrick and Haber in Cleveland to represent us corporately as our attorneys.
Carl Gillombardo was our account representative and ironically, his family knew our father very well.
Our father was involved in the Air and Water Purification Business with a very dynamic patent that could purify the air and water better than anything in existence then, or even now.
Our father, Nick Trikilis, had struggled for twenty years fighting chemical companies in order to establish his patent as the panacea for all our water and air problems to no avail!
Up to November of 1980 when our father was killed in an automobile accident, he never achieved this dream and though it is probably the best solution to the world's problems, it never attained the billion-dollar business that it should have been today!
Price Waterhouse spent nearly ten weeks in auditing our books and studying our business procedures.
They interviewed all our employees to determine the best manner in which each department should conduct the affairs of the business.
At the end of the audit, not only did Price Waterhouse NOT GIVE US A CERTIFIED AUDIT, BUT ALSO THEY ONLY LISTED THE THINGS WE WERE DOING AS THINGS WE SHOULD BE DOING!
They charged us in excess of $20,000.00 for the audit and review and we were not certified on our financial statements, which was the main purpose of hiring them in the first place!
Lester Wingman was the Price Waterhouse representative that handled the main audit.
During this time he had seen the opportunity that we had created and he had "hinted" that what we needed was a "good" controller. Yet we were struggling and though he might have been the best thing for the company at that time, we simply could not afford to hire a man of Lester's ability.
Instead, Lester helped John and Mike interview for that position and after narrowing it down to three possible controllers, Mike asked Lester which one Lester would hire if he had to make the decision.
Lester said that he would hire James Deegan (Jim). And Mike hired Jim Deegan with Lester's suggestion that it might take ten or twelve weeks before Jim could truly understand our business since we were in a relatively new industry, the poster industry.
While Jim was supposedly learning about Pro Arts, we had two pending lawsuits in the federal courts involving copyright infringements and we were the defendants!