Prior to leaving for Europe, Bill Krupnick had complained to Mike and John that I was interfering with his negotiations with the fan clubs he was trying to secure for the company.

In October of 1977, Mike and John wrote a memo to me stating that Ted Trikilis was not to discuss fan club business with anyone in Hollywood. And that Ted Trikilis should refer all interested parties to Bill Krupnick.

Since I had thought up to that moment Bill was an honest individual, I respected Mike and John's memo and only discussed Fan Club concepts in merchandising with Bill.

Bill found it more and more necessary to travel to Hollywood on Fan Club business. His expenses were always very high and he continued to state that there were several fan club offers "pending."

I had already signed Shawn Cassidy and the Hardy Boys Fan Club with Universal as well as the Nancy Drew Fan Club.

Farrah had agreed to let Fan Club handle her Fan Mail and other people were coming around to the Fan Club idea.

Prior to our Fan Club offers, most personalities either answered their mail by themselves or did not answer their mail at all.

I had tentatively secured Cheryl Ladd's Fan Club and John Travolta's Fan Club and Bill only had to finalize the agreements and sign the contracts.

We had Susan Anton, Kristy McNichol, Jimmy McNichol, and Dirk Benedict Fan Clubs. Oliva Newton John was still pending and I felt that the mail order offers would create a whole new business entity for Mike, John and me.

Mike had authorized Fan Club to draw upon the cash flow of Pro Arts in order to create the business and establish its merchandise kit.

Bill had used the Art Department exclusively while Pro Arts billed Fan Club for its time and materials.

Since John, Mike and I each owned one third of the stock in Fan Club, technically Fan Club was different than Pro Arts since Mike and I owned forty per cent each and John only had twenty per cent.

Mike was taking revenue from Fan Club as the funds became available through its mail order offers.

I wanted Pro Arts to stuff Fan Club offers in each poster rolled and shipped to Retail Accounts since it did not interfere with the posters sales and it afforded Fan Club cheap direct sales opportunities that cost a fraction of the paid advertising presently used by Fan Club.

Both Mike and John were against this stating that the Retail Accounts would not like this and that it would create problems at the store level. Yet this was never proven or disproved since it was never tried.

Mike, John and I had all agreed to give Bill 25% of the company or 25% of the profits if he could make Fan Club a success. Bill chose the 25% of the profit deal since it was a short-term gain and the stock offer was a "locked in" option that meant long-term commitments on Bill's part.

Looking back, this should have been a signal to us that Bill was not planning to be with the company too long and perhaps he should have been watched more carefully.

But as ever, hindsight always proves to be 20/20 where foresight is always lacking in many aspects.

When I returned from Greece the first week in January of 1978, Bill was not too happy with the fact that Mike was taking large sums of cash out of Fan Club and paying off Fan Club bills from Pro Arts. He said that he was going to resign and that all he wanted was his owed expenses and a $4,000.oo bonus for working for the club. While Bill was paid a salary and expenses through out his employment with Fan Club, the $4,000.oo bonus seemed to be fair since Mike had John Madigan audit the Fan Club records and everything looked clean and tidy.

So without further ado, we issued Bill Krupnick his $4,000.oo bonus check and Bill left the Fan Club facility.

Madigan had estimate that Fan Club had about $60,000.oo in Accounts Payable and nearly that much in inventory so the money paid to Krupnick washed each other and Fan Club was for all purposes an "on-going business."

After Krupnick left the business, Mike, John and I had another meeting in which both Mike and John expressed their concerns about the new Sales Managers that I had hired in September of 1977.

Since I had tried to train them in each of their potential markets, they did not have any real opportunity to sell the markets since December is a poor month to try and see any buyers. The buyers are trying to sell those items they purchased earlier in hopes that Christmas will be good and their items would be sold.

Yet, while I was in Europe, the three men had discussions with Mike and indicated that they were confused about their responsibilities. Since Pro Arts knew that 1978 would generate 1,800 permanent racks with K-Mart alone, Mike and John felt that I was too unorganized to handle the sales for Pro Arts any longer and that Mike with his great organizational skills would make a better head for the sales department.

K-Mart had indeed proven to be the "key" to the permanent rack business. Since the news that Pro Arts got a nationwide distribution deal with K-Mart, all of the other sales representatives began beating the bushes to get their chain accounts to take the Pro Arts poster program.

Jeff Cohen, Photo-Liths President, stated to me several times that anyone could sell a Pro Arts poster program.

After all, Pro Arts paid all freight into the stores; Exchanged non-selling posters for new salable posters; provided a free poster rack for their exclusive usage; obtained the vast majority of all worthy licensed properties and sold the program at 20% below the normal wholesale price!

While Pro Arts' competition sold posters at 20% above our regular wholesale pricing, the cost of goods allowed any decent retailer the opportunity to retail a $2.00 poster for $1.60 and still double their money! Other companies were wholesaling their posters for $1.25 each and created a $2.50 retail at the same profit margins.

Where was the competition? There wasn't any!

With this push to place poster racks in other discount chains as well as K-Mart, Pro Arts was rapidly obtaining rack orders that pushed my 2,000 racks per year average off the charts!

It was in the early part of January 1978 that Mike, John and I agreed to allow Mike to take over the Sales Department at Pro Arts and I would take over Fan Club, the Licensing of posters, marketing, the art department, publicity, legal, export, premium, and Canadian sales.

Mike would have twelve months to obtain the desired organization of the Sales Department.

Mike had always felt that my Fifty Million Dollar Sales Projection was a pipe dream. He always refered to it as the "$50 million dollar Chase."

One man's ambition is often another man's folly. If you are a sales oriented person, the ability of attaining a $50 million dollar projection over a 5-year period is a reality if all of the necessary elements for it to happen are present. But in every circumstance, the person that makes the projection must first believe it himself. Without acknowledging the possibility that it can happen, the effort expended in trying to achieve the goal is half-hearted. There is never a real commitment to see it through since the person heading it cannot envision the end as it is projected.

Most successful companies will always have a salesperson as its chief executive officer since the drive and ambition of a true salesperson is not diminished by small failures.

To have an accountant or attorney as the chief executive office and head of a sales department is self-defeating. The attorney is always looking at the liability and the accountant is always looking at the bottom line. Neither is looking at the company in its whole aspect and its true potential.

Mike never believed that the $50,000,000 market existed so he only pretended to see it.

Mike took the three new sales managers and re-directed their priorities. Mike made Tex the West Coast Sales Manager, Joe the East Coast Sales Manager and Richard the Service Manager for the poster rack program.

When Pro Arts tested K-Mart, Pro Arts had service persons calling on the 125 stores that had the test racks. Now Mike and the K-Mart Sales representatives Paul Kaye and his son Charlie, gave K-Mart a 5% additional discount and allowed K-Mart to service their own racks!

This was like letting the wolves watch over the sheep!

Western Graphics continued to serve the 125 racks K-Mart let Western keep since they did participate in the test, but it was with the understanding that Pro Arts would obtain all the new store openings and Western would only have the 125 stores.

This promise was later broken by K-Mart and shortly after Pro Arts obtained the opening order for 1,800 poster racks, Leo Corwin was sent to Japan to study the Japanese market and Mr. Don Edel became the buyer for the K-Mart poster program.

Pro Arts had tested five areas in the K-Mart stores for maximum sales potential: the Record Department; the Card Department; the Toy Department; the front end caps near the check-out lines and the Lawn and Garden Department.

Of the five areas tested, all but the Lawn and Garden Department averaged nearly 400 posters sold per month per rack! The Lawn and Garden Department averaged less than 180 posters per rack per month!

It was decided during Corwin's tenure that the racks would either be in the Record Department or at the Front End Caps near the Checkout counters!

With this affirmation, Pro Arts set-up a rack building department in its warehouse and began placing 100 racks per week for the next 52 weeks of 1978!

The cost of lumber and anodized aluminum frames for the display posters were staggering!

It was estimated to cost Pro Arts nearly $600.oo per rack per store! Over $3,000,000.oo was being expended on the permanent rack program and the sales for racks soon became more and more demanding! Pro Arts was heading for its second $6,000,000.oo Net Sales but this time the profits were tiny!

With the rack program secured, Mike and John had made Rick Mihalik our National Sales Manager the new Vice President of Sales. Now Joe, Tex and Richard reported to Rick and Rick reported to Mike and John. I was officially now the Vice President of Marketing.

I have to admit that the stress I often felt but never showed was relieved in the beginning.

The decision to limit the distributor's credit on flat posters helped Pro Arts generate cash flow, but drove a wedge between Pro Arts and its old established inner-city distributors.

By mid-March of 1978, the sales representatives were "pushing" the new Sales Managers and Mihalik to stop selling flat posters to the distributors as the distributors were "cutting" prices and offering Pro Arts posters on promotionals cheaper than Pro Arts was offering posters in the rack program

While Pro Arts had experienced a great deal of returned posters from accounts not purchasing the Farrah poster directly from Pro Arts, this was attributed to the fact that the first original order emanated from Pro Arts, but reorders came from the distributors. In this manner, the retailer could claim the return and still get better service and cheaper pricing from the distributor in their area.

Realizing this, no one other than Pro Arts employees knew that Pro Arts had coded the Farrah posters by shortening the Farrah signature for the distributor posters and leaving a larger signature for the regular retail Pro Arts customer.

In August of 1977, Elvis Presley had died and created a big swell in the demand for Presley posters.

I was in Macon, Georgia for a party being given by Phil Walden of Capricorn Records. On the day I read the news of Presley's death, I tried to get to a telephone to call the office only to constantly get busy signals. Finally by calling on the private line in my office, my secretary Becky told me that the place was a mad house. Our representatives were selling posters of Presley without even a sample.