Set up a holding company

[Focus Fusion Society]

Brian H., commenting on this weblog says:

OK, here�s how to fund yourself with PayPal.

Set up a holding co. which has ALL rights to future licensing, exploitation, etc.

Sell units online for $100 each, each unit representing .001% of the total net profit of the holding company on-going. (That extrapolates to 20% of net profit.)

I predict you�d have your $2M by, oh, Christmas or so. Being conservative.

The problem is this is not legal. We can’t sell shares to the general public unless we do an initial public offering which costs anywhere from $50,000 uo to several hundred thousand.

If anyone knows of a way of doing this that is legal, please let us know!

[Brian H]

They don’t have to be shares, just distribution of net profit. I.e., no voting rights, no equity claims — just a contract between the holding company and the purchaser that the profit will be distributed on a fixed schedule and the details of its calculation.

[Lerner]

First, Focus Fusion Society is a non-profit. So this whole discussion should really be directed to Lawrenceville Plasma Physics, Inc.

Second, what you are decribing are shares–stock. It does not matter to the SEC if we call them shares or not, according to SEC regulations, they are shares. Shares can be voting or non-voting. To sell shares to the general public, LPP, Inc. would have to have a prospectus and an initial public offering (IPO). This costs a lot of money. At some point this will no doubt make sense, but right now it would not.

[ailabs]

You might be able to utilize a relatively unknown SEC exemption, called “Intrastate Offering Exemption.” Costs are minimal. Here is a link to a company, offering this type of financial service:

http://www.gopublictoday.com/goingpublic/goingpublic-howto-intrastate.php

and an article from Inc. magazine:

http://www.inc.com/magazine/20061201/handson-finance.html

Trust this helps … I’m also waiting for answers to my postings under Marketing/Fundraising:

1. How can I give memberships as gifts?
2. Donating advertising space on MillionDollarWebTV.com; Fundraising through MillionDollarWebTV.com

[Focus Fusion Society]

Interesting site! Thanks for pointing it out! We will look into it.

I don’t think the intrastate exemption applies, though:

Section 3(a)(11) of the Securities Act of 1933 is generally known as the “intrastate offering exemption.” It exempts from registration any security which is part of an issue offered and sold only to residents of a single state or territory by an issuer that is both a resident of and doing business within that state or territory.

Unless we keep it limited to people in New Jersey.

Gift subscriptions: The simplest way is to just put a note in your paypal subscription saying this is meant as a gift and tell us who it’s for and add their email address. We will then make a note of it on our side and include the person in the mailing list, and inform them (and you). We use paypal, so if you know of any other more sophisticated tools they have for gifting, let us know!

About that milliondollarwebtv.com link. I couldn’t tell from the site how it works. Do you just purchase a few pixels on their home page? What draws people to their home page? Specifically people searching for fusion?

[ailabs]

I think you can find enough people in New Jersey to invest, so this could be a viable option.

Thank you for the advice about the gift subscriptions!

Milliondollarwebtv.com is my site. It works by people uploading an ad image and video, which are placed on the home page, after payment is verified. In our case, you’d just email me the image and video and I’d put them up free. The idea is to introduce visitors to FFO/LPP. You can see how that works, at:

http://www.milliondollarwebtv.com/About.php

Trust this helps.

P.S. If your question is also about how the site works for advertisers (in the fusion field): We’ll spend between 10-25% of sales from these advertisers to acquire traffic specific to them.

[Brian H]

I think Steve is right; $2M/500 = $4,000 per person average. (That would be a minimum since you can’t go over 500 investors. I’d suggest a minimum investment of $10,000 just to cut yourself slack for the future, which would mean 200 investors or less. You could probably get a Joisey credit union to kick in a major chunk of it.)

[Brian H]

Brian H wrote: I think Steve is right; $2M/500 = $4,000 per person average. (That would be a minimum since you can’t go over 500 investors. I’d suggest a minimum investment of $10,000 just to cut yourself slack for the future, which would mean 200 investors or less. You could probably get a Joisey credit union to kick in a major chunk of it.)

Just to reiterate a previous point, though, the $2,000,000 should be set up to represent only a fraction of total capitalization, the balance being held by your holding company. If you got one pilot running successfully, the market value of the company would instantly increase by up to a handful of orders of magnitude.

Makes me wish I had some NJ relatives …

[maihem]

What about retailing energy credits with a covenant to pour the revenue into taking the focus fusion concept to market (and to justify and prove the costs to these customers regularly) and redeemable from any focus fusion licensee in the future if and only if the technology works? Is that legal? Essentially they buy the first n Joules off the focus fusion production line. I might consider buying a few Focus Fusion Joule Futures.

[ailabs]

How would the energy credits be priced and their value maintained?

[Nanos]

Could you not set up a company in another country which has different regulations and cheaper costs for selling shares ?

[Brian H]

ailabs wrote: How would the energy credits be priced and their value maintained?

Since the claim and expectation is that FF energy will be cheaper, peg them at the current going rate — “inflation proof”.

[ailabs]

How about pegging the credits at, say, 70% of the current going energy price?

[maihem]

I would have thought anything but somewhat below the expected future price of focus fusion energy would be pointless. The whole point is that I have something to gain by buying now instead of then, and LPP has to lose something then in order to get me to give money *now* to the non-profit research firm that they want to prove their patent’s value in order that they can make many times more in the future.

[ailabs]

If I understand Eric Lerner’s lecture at Google correctly, focus fusion will provide energy at $60/kW vs. $1,000/kW. That leaves a LOT of “wiggle room” for pricing in risks and profits even at 70% of the going energy price.

[Author]

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