With the Super Peace poster settlement, the Advance Process Settlement, the move to Medina, and all the other problems behind us, Mike, John and I were slugging it out in the trenches trying to stay in business.

It was 1974 and I had been married for less than two years. I had just purchased a 57-acre farm for my wife with very little cash down payment. All the repairs and farm work was being done by my wife, Io, and me.

The Viet Nam War had ended and though the Blacklight Posters were still successful, the trend was changing to posters of KISS, FONZ, ALICE COOPER, ELTON JOHN and the SIX MILLION-DOLLAR MAN.

Lithographs were selling, but the upward trend was the Velvet Blacklight Posters.

While we were producing more Blacklight Posters than any other company, the demand for Velvet Blacklight Posters was rapidly rising.

As we did not have the money to purchase a flocking machine, I proposed to Mike and John an idea that involved two exclusive distributors for Velvet Posters. We would be guaranteed a base distribution for the posters as well as an opportunity to sell these directly to our own retail accounts.

Both Mike and John did not think that I could sell this idea to anyone, however they said if I wanted to try the idea out, I should do it.

I approached Bi-Rite Enterprises in Chicago and Dargis Associates in Beltsville, Maryland. Gus Stevens and Bruce Sedlac were partners in Bi-Rite and they were a little cool on my idea stating that "if" I could find other distributors to "buy" into the Velvet program, they might also come in on the deal.

Al Dargis from Dargis Associates was hot on the idea since he had sold velvets to Spencer Gifts and his costs were 25 % to 35% higher than my proposed price to him as an Exclusive Distributor.

Al was a sharp businessman and the cheaper cost for his posters would not only make his profits higher, but his freight from Chicago to Beltsville, Maryland would be considerably cheaper.

After two or three months of negotiating, I convinced both Bi-Rite and Dargis to put up $10,000.00 each and this was enough to begin the purchasing of our first Flocking Machine.

As the silk-screen Presses were costing our company too much money to operate, it was also about this time that John began investigating the Lithography process.

The Gas Company had put us on a "quota" system and since we were drying the first three colors with a gas dryer, the use of a litho press would cut our direct costs down. The Black ink/adhesive used with the black flock would all be used on the flocking process.

We could actually increase our production of Blacklight posters four times.

Mike and John worked with several ink companies until they were able to formulate very good Blacklight Ink for the Lithography Press.

This in itself save the company over $35,000.00 the first year alone in Blacklight Ink costs!

Additionally, the gas to dry the velvet posters was very abundant and we were not threatened with any cut-offs because of our present usage.

By the end of 1975, Pro Arts had stabilized itself and we were now on a very solid foundation.

It was in October of 1975 that John discussed his desire of obtaining more stock in Pro Arts.

He was the fourth largest shareholder. He felt that by obtaining ten or more shares of stock in the company, he would surpass Bill Treffinger.

This would give John the "personal satisfaction" that not only was he one of the "Top Three Executives" in the corporation, he was also one of the Top Three Shareholders.

John had been signing personally for the corporation as its Vice President and he had felt that Treffinger, who owned five more shares of stock than John, did not have the risk of guaranteeing the corporation's obligations.

There was a meeting in Mike's office after work to discuss the opportunity of John buying more stock in the company.

When John asked Mike for this opportunity, Mike told him coldly and directly without any hesitation, that he was not going to issue any additional shares.

John was visibly shaken and greatly distressed. Mike was so cold and absolute that the hardships we had all endured together over the past five years meant nothing to him.

Mike had the same number of shares as I did and he did not want to consider selling any of them to John. After Mike left, I told John that I would be happy to sell him some of my stock and that I would ask our outside accounting firm to set a price on each share.

While I was certain that the value of Pro Arts stock would eventually be worth a great deal more than it was in the fall of l975, I felt that John had earned the right to purchase more equity in the company and that the amount of stock John would purchase would not hinder me in any way.

I stated to John that our accountant, John Madigan, would have to evaluate the company and determine a "fair market" value on each Pro Arts share.

John Madigan was a Certified Public Accountant that appeared to know correct accounting practices, yet I was not too sure that he actually knew what he was doing.

Since Mike was responsible for the financial department in the company, I felt that Mike knew what was going on and by protecting his own interests; Mike was indirectly protecting my interests as well.

Since Pro Arts had a very good l975 Fiscal Year, it appeared that Pro Arts had "stabilized" its financial position and was no longer in danger of going out of business.

For the first time since we moved into the Medina Building in l970, we were now no longer worried about losing our homes and the flocking business had created enough revenue to solidify our business position in our industry.

The cash value of each share in November of l975 was estimated to be nearly $300.oo per share. As there were 300 shares outstanding, the $90,000.oo net worth made each share at liquidated value about $300.oo per share.

This was the original price of each share that Bill Treffinger and Roger Macon had paid for the stock in 1969!

After nearly six years of having stock that was worthless, both Bill and Roger had now realized the true value of their shares. As I considered both Bill and Roger to be personal friends of mine, every time they visited our factory over the past six years, I exuded total confidence in our ability to overcome the tremendous overhead and debt that we had encountered during that time.

Yet, during that time, I could never offer them any money for their stock nor could the company redeem it if they wished to sell their stock.

A privately held corporation has no real market value of its common shares.

If the company is doing really well, no one wants to sell their stock. And contrary, if the company is on the verge of going out of business, no one in their right mind wants to buy stock in that company.

John Madigan stated to both John and me that each share of Pro Arts stock was worth about $300.00 book value. He also stated that since it was privately owned, it is very difficult to buy or sell the stock, as there is no "stock market" that trades in private stock.

Since I did not want to gouge John on the stock, I did want to obtain enough for the shares that I was willing to sell so that five years down the road I would not feel badly when the stock became worth much more than the $300.00 present book value. (And John knew that the stock could just as easily be worth less than $300.00 per share in the event the company took a nosedive thereafter!)

John and I had agreed to set the price of each share at $1,000.oo per share.

John was eager to buy 9 shares from me. He would then have 34 shares of Pro Arts and his additional shares would make him the third largest shareholder in the company after Mike and me.

I would then have 109 shares of the company and Mike would remain the largest shareholder at 118 shares.

Before I agreed to sell John my nine shares of stock, I wanted him to offer $1,000.00 per share to either Roger Macon or Bill Treffinger so they would have an opportunity to profit from their investment. They could never say that they did not have the opportunity to "cash in" during their investment into Pro Arts.

I called Bill Treffinger and discussed John's interest in obtaining the nine shares as well as John's reason for wanting to be the third largest shareholder in the company.

Bill told me that he had no interest in selling any of his stock and reaffirmed his desire to stick with Mike, John and me in the Pro Arts Company. Needless to say, I was pleased and happy that Bill was giving all of us a "vote of confidence" by refusing to sell and I thanked Bill for his trust.

I called Roger Macon in Atlanta to discuss the same situation and he had not been doing very well in earning the money he needed to live in the Atlanta area.

He was very receptive to the idea of selling at least 5 shares of his nine shares for $1,000.oo per share and he wanted to sell the other 4 shares in l976 for tax purposes. His $3000.00 investment would be totally recouped by his sale of the 5 shares for $5,000.oo and he would have 1.33% of the company left with no invested capital!

John agreed to stop in Atlanta on the way back from Florida during December and give Roger the $5,000.oo for his five shares of stock.

Shortly after that agreement, Bill Treffinger called and reconsidered John's offer!

He stated that if John would agree to buy the nine shares and pay Bill $5,000.oo in Cash, Bill would sell the nine shares to John.

Since John did not care whether he paid Bill in Cash or by check, John agreed to buy Bill's nine shares for $9,000.oo. John would give me $5,000.oo in Cash and a $4,000.oo check to John's attorney and the transfer of the nine shares would be completed.

Bill flew to Cleveland to consummate the deal and I met Bill at the Airport. John had left on a business trip and did not see Bill. John relied upon me to take Bill to the attorney's office to sign the necessary forms and assignment papers so that everything would be legal.

When I picked up Bill at the airport, I asked him why he wanted $5,000.oo in Cash and $4,000.oo by check. He stated that he did not intend to pay any taxes on the $5,000.oo, as he was not going to report the profit on his income tax form.

I was shocked! I told Bill that I did not want anything to do with his evasion of the tax, but he assured me that no one would know about it except Bill, John and me.

I told Bill that if John or I were ever asked about the $5,000.oo cash payment, neither John nor I would deny the payment to Bill.

I later asked an accountant about this situation and he replied that it was not my responsibility to report Bill Treffinger's profit.

Since the Tax Return is on the "Honor System," each taxpayer is obligated to report all income to the government. Yet, if the income is not reported, the taxpayer is at risk.

John had obtained 14 shares of stock prior to 1976 and I did not sell any of my stock.

Mike and I still retained 118 shares each while John now had 39 shares of stock in Pro Arts. Roger Macon told John that John could buy the other remaining four shares from Roger prior to the end of 1976 for $4,000.oo. John agreed to see Roger in December of 1976 to consummate that transaction in Atlanta.

By early l976, Bill Treffinger called me to see if John wanted to buy his remaining 21 shares of Pro Arts stock.

Since John had just sold his second house in Kent, he had the ability to buy the stock and not have to finance the purchase of the stock through a bank.

Bill sold the stock prior to April of l976 and he no longer had any interest in Pro Arts. John now had 60 shares of Pro Arts, which represented 20% of the outstanding stock.