While this period beginning in June of 1977 may seem to be less chaotic than the previous six months with the Farrah Phenomenon, in reality there were several incidents that were transpiring simultaneously. Mike. John and I had a very difficult time in keeping track of each major endeavor since we were "shell shocked" by Farrah's tremendous success!

Since Pro Arts used most of its time shipping the Farrah Posters instead of invoicing the clients immediately, Pro Arts was six to seven weeks behind in invoicing the shipments.

No one actually knew how many were exactly shipped and sold and our fiscal year end was quickly approaching.

Mike and John had hired a new outside accountant, John Madigan from Wadsworth, Ohio, to assist our Controller, Frank Dillion, in preparing our Certified Financial Statements and this accountant was "conservative" to say the least about his ability.

A year later, this accountant would cause Pro Arts much loss and aggravation in that he did become Pro Arts' full time Controller and Frank Dillion became his assistant controller.

It was determined by late May of 1977 that Pro Arts would gross nearly One Million Dollars in profit from the sales of its posters over the past 11 months.

The cash taxes that would have to be paid to the Internal Revenue Service were estimated to be nearly $400,000.oo dollars!

Imagine working very hard for ten years and only netting $100,000.oo then in eight short months you gross nearly $1,000,000.oo! It has a very exciting effect, and a very demoralizing effect both at the same time.

Our accountant, John Madigan, had discussed with Mike the "opportunity" to purchase a "tax shelter" from E.F. Hutton that would cost the company over $700,000.oo in cash. This would defer the tax on the $1,000,000.oo profit over a six to seven year period.

With only six weeks left to purchase this tax shelter prior to the end of our fiscal year June 30th, Mike called both John Argiry and me into his office to "announce" his decision to purchase an IBM 250 Main Frame Computer and lease it to Manufacture Hanover Banking in New York City.

The actual purchase price of the computer was over $4,000,000.oo and Pro Arts had to pay $700,000.oo in cash to have it delivered to the New York bank prior to June 30th in order to qualify for the tax shelter.

Needless to say, both John Argiry and I relied upon Mike's business judgment since Mike was the "Chief Financial Officer" and he had always guided us through "rough waters" prior to the Farrah success.

After the seven-year lease, we were told that the computer would have nearly a $400,000.oo residual value and that we would see this cash on our bottom line when 1984 came about.

Little did Mike, John or I realize two things would happen that would change the course of our lives over the next seven years.

The first thing that transpired was the revolutionary break-through on the P.C. Computers! These mini-computers were faster, cheaper and more effective than the White Elephant 250 IBM Main Frames.

The computer we purchased in 1977 would fill an entire office area with its large magnetic tapes and require water to "cool" the units so as not to over heat during their usage. The only residual value the 250 Main Frames would have been their scrape value for their gold terminals when they were replaced with the much smaller and less problematical P.C. Computers.

In fact, during the Pro Arts Chapter 7 liquidation in June of 1984, the $4,000,000.oo computer was sold for less than $3,000.oo!

The second big problem that affected Pro Arts after June 1977 was the rising interest rates in 1979 and 1980 that eventual hit 21.5% Prime! Pro Arts had locked into two major loans during this time. Pro Arts leased 2 Burrough Computers ($100,000.oo each) that were always breaking down on the company. This was done at John Madigan's request when he became Pro Arts' Controller. I did not want Madigan to be our accountant let alone our controller. He had "screwed up" on my personal 1977 tax return to the IRS that conservatively cost me $4,000.oo in an additional cash refund since he used straight line depreciation on my farm return instead of the accelerated depreciation which would have given me more money immediately instead of the next ten to fifteen years.

I remember telling both Mike and John that Madigan was not a good accountant and that he would hurt the company.

Both Mike and John thought it was "sour grapes" on my part since Madigan used his "conservative approach" in doing my personal taxes.

Yet, it was Madigan that hired Tousch Ross Certified Public Accountants in 1977 to 1978 to file our 1978 June 30th Fiscal Statements.

Later, our 1979 accountants, Ron Cohen & Associates in Cleveland would reconstruct the 1977 and 1978 financials correcting the blunders that Madigan and Tousch Ross had created earlier.

Along with these financial problems, I had recommended that Mike and John seek another bank other than Old Phoenix National Bank as our main bank.

Old Phoenix had foreclosed on Pro Arts in 1972 and we continue to remain with the bank after a "settlement" had been obtained in 1973.

Mike, John and I had no choice but to stay with the bank after 1973 as all our assets were tied up by Old Phoenix and no other bank was willing to take on a weak customer like Pro Arts especially since its present bank had foreclosed on their original loan.

Now, Pro Arts had a Net Worth of nearly $1,000,000.oo and no debts! Pro Arts had national recognition and could chose any bank with which to do business and the bigger the bank, the less conservative the bank.

Yet, Mike and John wanted to "prove" to Old Phoenix that their earlier foreclosure was a "mistake" and they decided to use Old Phoenix as the main bank.

John had a good relationship with both the bank president, David Jones, and their new Vice President in charge of commercial customers, Gary Hallman.

Hallman had dinners with John and his family through a small "gourmet club" that they had started with two other couples. John used to have coffee and donuts with Hallman during the Recession of 1980-1981 and they would both lament over the economy since Hallman had recently purchased a second house without selling his present home.

Hallman, according to John, was barely able to keep making both house payments during the rising interest rates and each would console the other over the existing problems.

I can remember the day when John had told me that Hallman had sold his first house and no longer had this financial burden on his shoulders. John said that Hallman became "aloof" and indifferent towards our problems. As the Vice President in charge of our loan, Hallman became less understanding and more assertive.

It appeared to John that Hallman had this new "attitude" that projected the feeling that "I'm solid without worry, and I don't give a damn about your problems!"

John said that the change in Hallman's attitude would significantly affect our relationship with Old Phoenix.

Hallman had always struck me as a "corporate ass kisser" that always wore the right clothes and said the right things to his bosses so that he could aspire to the top of his corporate ladder. It was Hallman's attitude that ultimately caused tremendous frauds when Pro Arts was going through the Chapter 11 and Chapter 7 period of its existence.

Hallman's boss, Executive Vice President Donald Bramley, was also a very jealous person.

Bramley had been the Commercial Loan Officer of Old Phoenix prior to Hallman with his aspirations on being the President of the bank one day. Yet, with David Jones' family either President or Chairman of the Board of Directors of Old Phoenix, it was not likely to happen.

Then, in late 1981, First National Bank of Akron acquired Old Phoenix and all of its officers were now being evaluated. Loans that were not doing well were being reexamined to determine their real book value to the bank. Each officer's job was on the line.

Prior to Pro Arts filing Chapter 11 on December 28, 1981, another major account of Old Phoenix had filed Chapter 11. This account had "political ties" to the bank.

Horizon Prints, a corporation owned by Mark Whitfield, had obtained a "questionable loan" from Old Phoenix without all the necessary guarantees.

Mark's father, Medina County Common Pleas Judge Whitfield had ruled in favor of Old Phoenix on many occasions and his "power" in the legal world of Medina County was without equal!

It might be remembered that Mark Whitfield was later put on trial for the Murder of a young girl that once worked for his company, Horizon Prints.

But this story will be told later on in this book since it involves the former Medina County Prosecutor, Gregory Happ.

To illustrate the complexities that were happening from June of 1977 to June of 1979, I will list the transactions that had a significant effect in diluting Mike's, John's and my abilities to "control" Pro Arts tremendous growth.

In June of 1977, Fan Club Corporation of America was formed to handle the mail order business and Fan Clubs of the many celebrities that we were acquiring for licensing.

Since Factors, Etc. had lied about the Farrah poster and obtained Sylvester Stallone as a personal license, Factors also persuaded Twentieth Century Fox to license "STAR WARS" to them with a $250,000.oo purported guarantee and substantial "up-front dollars" to seal the deal. Needless to say that Star Wars became the summer of 1977's greatest smash hit and set the stage for other George Lucas's epic films.

Additionally, I had hired three new sales managers to support the "layering" of my sales programs.

Pro Arts was testing a permanent poster rack program with K-Mart against Pro Arts biggest competitor, Western Graphics in Eugene, Oregon.

Western Graphics had purchased several thousand flat Farrah posters to feed into their retail outlets and they had a better sales and service organization than Pro Arts.

While Pro Arts had less than 50 permanent poster displays in the retail discount stores, I had always stated that K-Mart was the "key" to major poster distribution.

K-Mart had purchased posters from Pro Arts in March of 1977. I can recall the exact conversation with the associate buyer, Mr. Keppler; the day Pro Arts had received the telephone call.

I had occasionally called on K-Mart every six months to see if they wanted to try posters in their stores. Like the other four or five major poster companies that also called on the Troy, Michigan Headquarters, I was refused because "posters was not an item that K-Mart wanted to sell."

That is until that fateful March 1977 day.

When I took Mr. Keppler's call, I thought that the "local K-Mart" store wanted to put a display in their Medina store since Farrah's poster from the Medina manufacturer had obtain national exposure.

When I realized that Mr. Keppler was calling from the Troy Headquarters for the Senior Buyer, Leo Corwin, my attention was heightened.

Mr. Corwin wanted to see me immediately so I made an appointment to see him the following morning at 9:00 AM in Troy.

I left Medina at 5:00 AM so that I would not be late on this 3-hour drive. I took one 72-piece poster display and my top twelve posters including the two Farrah Posters.

When I arrived at their Troy Headquarters, I was immediately "humbled" by the massive size of their office headquarters.

The clear span waiting area in the main hall was large enough to put our entire plant into its facility and still have room for our parking lot!

Their building seemed to "go off into the horizon" as one viewed it from the outside!

When I was guided by one of the secretaries from Mr. Corwin's Department, I was taken on a long walk that seemed like a quarter mile! It was indeed a new experience to me since I was only at their older office two or three years earlier.

After my introduction to Mr. Corwin with Mr. Keppler, his assistant standing by, I immediately began to pitch our posters. Mr. Corwin liked what he was shown, however he was not going to put the famous red bathing suit Farrah poster in his stores! I told him that this was the design that everybody wanted and that he should put it in.

Just then, Mr. Corwin's boss, Mr. Hardisty, the Merchandise Manager, came by the door briefly looking in to see what I was selling.

Hardisty immediately grabbed the Farrah poster and said, "That's the one! Put it in immediately!"

With that remark, Corwin stated that since he was going to be retiring before Corwin, it was easy for Hardisty to make that commitment. But since Corwin was going to be there longer, he did not want to have the poster on his purchase order.

Hardisty took the poster and left the office briefly for fifteen minutes. During that time I explained the Pro Arts terms and conditions to Corwin and Keppler.

Thereafter, Hardistry returned stating that the "people upstairs approved the poster" and that he would sign the purchase order himself.

With that, Corwin looked at Keppler and said to give me a "G-9 Order" for the six posters he had chosen which included the Red Bathing Suit Farrah.

After thanking Mr. Corwin, I went into Keppler's office. He asked me if I wanted it mailed and I said that since I was there I might as well take it with me since K-Mart wanted it shipped immediately.

Thirty minutes later, Keppler handed me a stack of purchase orders trying to get my reaction to his estimate on the total. He said, "That's about half a million posters, a little over $400,000.oo."

While the truth of the matter staggered me, I sat emotionless and casually said, "That's not bad."

I thanked him for the order and left his office so excited that I couldn't wait to leave the building before calling Mike and John with the good news.

Both Mike and John were on the telephone when I stated this conversation at 10:30 AM in a K-Mart phone booth in their lobby:

"Well, I wrote the order."

Mike: "How big is it?" Ted: "Guess."

John: "200,000!"

Ted: "Pieces or dollars?"

Mike: "Pieces!"

Ted: "More!"

Mike: "250,000!"

Ted: "Pieces or dollars?"

John: "Dollars!"

Ted: "More!"

John: "300,000!"

Ted: "Pieces or dollars?"

Mike:"Pieces!"

Ted: "More!"

John: "400,000!"

Ted: "Pieces or dollars?"

Mike: "Pieces!"

Ted: "More!"

At this point, everyone was getting excited. While the company was to have sold and shipped over 3,000,000 Farrah posters for February and March, the order that I was holding was probably the largest single order for posters in the history of our industry. I just couldn't burst the bubble that easily. I wanted to savory that moment since the past ten years were such a struggle to get to this point. Finally Mike said, "$500,000.oo" And I said, "No, 500,000 pieces; it is over $400,000.oo!

There was a silence on the phone and one of them asked, "When will we get the order?" I replied, "I have it with me so get the presses running!"

Many thoughts enter your head when you have three hours of car time to contemplate a $400,000.oo order. For years I was proud of the fact that Mike, John and I had built a business to Pro Arts' size prior to Farrah without large sums of working capital. We had been taken advantage by many people and under normal circumstance; we should have been out of business a dozen times.

Yet, I have always felt that my mother, Geneieve Argiry Trikilis, who died in 1965 at the age of 42, looked over me and guided me to that which I am to be and to the place where I shall be going.

Now, we had arrived.

My statements to both Bill Treffinger and Roger Macon over the past ten years were, "If we could build a business like this without any real money, can you imagine what we could do if we really had the working capital?"

Now, after ten years, we were finally going to get our chance to try.