HOH Is Ordered to Pay $760,000 to Ex-Executive in Loan Dispute
HOH Water Technology, a Newbury Park company that is developing a water-purification system, has been ordered by a federal court to pay $760,000 to a former executive who claims the company reneged on an agreement to repay money he loaned it.
George Todt, a businessman in Cape Girardeau, Mo., last Thursday was awarded $360,000 that he claimed HOH owed him and an additional $400,000 in punitive damages. Todt sued HOH and its chief executive, Harry O’Hare, in 1987 in U.S. District Court in Los Angeles.
The judgment is the latest piece of bad news for HOH. Last September, HOH announced it received a seven-year, $3.25-million line of credit from Sisson International & Associated Refineries. Sisson, a real estate and energy concern, also agreed to pay $1.75 million to sell HOH products in such Asian countries as Indonesia and Malaysia, HOH said then.
But Ronald Givner, a lawyer who represents HOH, confirmed Monday that Sisson has so far failed to meet its obligations under the contract. Givner said HOH is reviewing its options on what to do in the wake of the court judgment.
Price of Securities Dropping
The prices for HOH’s stock and units are beginning to reflect the company’s problems, in sharp contrast to last year when they shot up in price even though the company did not have a product on the market. Three months ago, HOH’s units were trading at $23.625 each on the over-the-counter market.
But on Monday, they plunged $1.875 to $9.875 each, while the stock fell 28 cents to $2.625. (One HOH unit consists of three shares of common stock and three warrants, which give holders rights to a specific amount of stock at a certain price within a specified time.)
Todt had been working since 1982 with O’Hare, who invented Ty-D-Bol toilet bowl cleaner and helped pioneer the use of chlorinators to clean swimming pools. HOH is developing “The Watergizer,” a purification technology it hopes to sell to homes, offices, factories and farmers.
Todt claimed he had loaned the company $218,000, which HOH would pay back periodically with interest as it raised money. HOH paid nearly $20,000 to Todt in 1983 and 1984, but it stopped after that, according to Todt’s lawyer, Jeffrey Ehrlich.
HOH claimed that in 1984, Todt agreed to give up his claim to the money in exchange for 100,000 shares of stock. Todt denied that he made any agreement, saying he bought the stock separately in July, 1984, for 1 cent a share.
The company ultimately raised $4 million in June, 1987. Ehrlich said Todt was entitled to receive his money then.