Yes folks, breaking up is hard to do… so goes the song, and so goes it in real life. The Collins / Samblis breakup will be no exception. Not only will it be no exception, unless one or the other (or both) comes to their senses and agrees to a compromise, this thing is likely to drag on for quite a while. And what are the chances one or the other of these men will compromise ??? There is a term used in the nuclear arms race… MAD, Mutual Assured Destruction. Its very likely that this dispute will end in the destruction of both sides if, someone does not realize this and accept a compromise.
There are those who think this is a slam-dunk for Samblis. We suspect its those that are avid supporters of Mr. Samblis, and his company IC Punch Media. What you are about to read will likely not change the minds of avid supporters, but those of you who have an open mind will likely see some validity in the concepts. There are some, according to some message board posts, that are seemingly already thinking of ways Mr. Samblis should spend the winnings. Folks… it is unlikely either side will benefit from this breakup. However, there is one group that will benefit from this dispute… the attorneys !
Since the breakup… who has done better, or maybe look at it as who has minimized their business as a result. Mr. Collins has a robust website, Mr. Samblis closed down his website and forwarded any traffic to FilmOn. When Mr. Collins and Mr. Samblis were together they had a lavish “upfront” party. Since the breakup Mr. Collins has scheduled a New Years Eve gala for late December (see details here). Mr. Samblis on the other hand has no such events scheduled, and didn’t even put something together for the launch of his new network. Mr. Collins has press releases frequently, while Mr. Samblis has them rarely, if at all, and simply chooses to utilize FaceBook as his media PR outlet. Mr. Collins’s network is broadcasting on over 20 affiliates, while Mr. Samblis’s network is simply broadcasting on FilmOn, where anyone with a video camera can obtain air time (details here). Mr. Collins has a production studio, and Mr. Samblis apparently does not. Mr. Collins is recognized by the California Assembly (here and here) while Mr. Samblis is photographed with playboy bunnies and women at bars. We could go on and on but I think you get the picture… one CEO is moving forward, while the other CEO is… well lets just say not so much. The thought here is… who has more resources to defend legal actions, and who has creditability as an upstanding businessman in the community ?
According to wording that was listed in the most recent 10-Q (here )… Mr. Collins returned 153 million shares. The business “assets and business” were valued at 135 million shares (see graphic below). So… Mr. Collins returned more than the value of the business assets, therefore he will likely be deemed the rightful owner of the Punch name, and any associated assets of the company. Perhaps what could be at dispute here is the shares for the employment contract, NOT the assets. Mr. Collins appears to have returned a portion of his employment contract shares (some 18 million shares) and the balance is in question. Perhaps there is an open dispute regarding service rendered and the shares were held back, or, deemed rightfully his to do as he saw fit. In any case, there will likely be a creditable defense put forth by Mr. Collins’s attorneys that there is no dispute with the assets (because he returned those shares), just the employment contract. Mr. Collins obviously contributed to the company while he was there, so all that is left to determine is to what extent his services should be compensated. Perhaps there was a calculation by Mr. Collins (and/or his attorney) that would account for the return of shares over and above the asset value. Mr. Samblis can not have the Punch name AND keep the money (shares) used to pay for such. Remember… Mr. Samblis has repeatedly maintained a distinction between the asset purchase, and the employment contract.
Click any graphic to enlarge for reading)
Additionally, Mr. Samblis (see post below) has stated recently, and repeatedly, that he wants to distance himself from the Punch name, and at times has called the Punch name “poison”. WHY then is he taking a position of fighting for such? The classic question is… was he lying then, or is he lying now when he says now that he wants the Punch name, and apparently seems to be willing to spend investor funds to go after it. This action simply defies logic.
It appears Mr. Collins was to be given 150 million shares of restricted stock as inducement to join the company as President. In the employment contract, at first glance, it appears that stock exchange only happened if Mr. Collins raised 3-million dollars of capital investment. However, when read more closely it actually states “the company” needed to raise the 3-million, not specifically Mr. Collins. Therefore Mr. Collins can not be held personally (specifically and wholly) responsible for “the company” not reaching that goal. Section 4b seems to indicate that 150-million shares are to be given to Mr. Collins NOT related to any achieved criteria, but simply as an inducement to come on board as President. The clause appears to be independent of any criteria by using the words “immediate issuance”. Section 4b stands independent, unlike section 4c, where “bonuses” are addressed, and are definitely tied to achievements (but not necessarily Collins personal achievements) . If 4b stands up in court, Mr. Samblis could be looking at a situation where he ows Mr. Collins some 18-million shares back of the returned shares.
There was also some disagreement (and some thought it was a ridiculous statement for Mr. Collins to make), that Mr. Samblis was to give up his CEO title after 3-months to Mr. Collins. If you look at the contract closely you will notice section 4c i, ii, iii, iv all contain the “and” provision, however section 4c V follows no “and”, and appears to stand independent of the conditions placed on the awards above. You can be sure any good attorney will argue this point.
Will ANY of the Collins legal arguments prove successful… who knows, but keep in mind as the saying goes… you never know what a judge will do. Remember the woman who sued McDonald’s because SHE spilled hot coffee on herself… AND WON ! One has to look no further than to some of the ridiculous consumer warnings on products nowadays. These warnings, in most cases, were put there as a result of someone suing the manufacture of the product because THEY did something stupid.
Folks… if you think Samblis has a lock on emerging a winner in this dispute, you are simply ignoring the facts and possible endings. Even a “compromise” solution to this dispute will hurt, because in a compromise, neither party gets all of what they wanted.
Stayed tuned (but feel free to get up and make a sandwich, because this will likely take some time). This will likely get nastier before it gets any better. And… what happens to the PPS in the meantime ???