X-Message-Number: 29208 From: Date: Wed, 28 Feb 2007 17:50:45 EST Subject: Re: 29198; by Mr. Ben Best Mr. Best made some important clarifications in his post reproduced below. I have some comments related to that post, preceded by &&&, that can be found below. Michael Riskin Message #29198 Date: Tue, 27 Feb 2007 05:56:03 -0500 From: Subject: Response to Michael Riskin's CryoMessage 29188 I would rather avoid "Alcor versus Cryonics Institute (CI)" exchanges, but Michael Riskin's posting in CryoMessage 29188 ( http://www.cryonet.org/cgi-bin/dsp.cgi?msg=29188 ) contained inaccuracies that need to be addressed. CI policies are printed regularly in THE IMMORTALIST/LONG LIFE (available free on the web at http://www.cryonics.org/immortalist/index.htm ). I explained many CI policies when I spoke at the October 2006 Alcor Conference, but Michael Riskin was ill and he missed hearing my presentation. One fact about which Michael Riskin is correct is that CI's financial statements are not compiled by an independent CPA firm. Our financial statements are compiled by CI Treasurer Pat Heller, who is a CPA. Another CI Director, a man with considerable corporate financial experience, acts as auditor. We have not seen convincing evidence that the expense of an independent auditor is justified at present, in part because of the honesty of our Directors, Officers and staff. &&& Fair enough. Some interested parties find it helpful to read financial statements that are independently prepared, regardless of the stated integrity of management. Michael Riskin said that CI's pre-paid cryopreservation funding is treated as equity rather than as liability and is therefore in violation of GAAP (Generally Accepted Accounting Principles). All prepaid funding received since March 31, 2004 has been treated as liability rather than as equity. &&&& I am pleased to hear that a change has been made in the right direction as far as post 3.31.04 pre-funding is concerned It is also possible, to correct the accounting for the $411,348 pre 3.31.04 pre funding that is treated as equity and reclassify it as a liability. That would make the financial statements more accurate by $411k, by recording it in the same correct manner as the post 3.31.04 $426k is recorded. Further, there was likely an actual and unnecessary expense to CI due to the way this was previously handled, meaning that by booking the $411k as income / equity there would have been a related and unnecessary income tax liability. Perhaps amended tax returns for prior years could be filed in order for CI to recover some or all of prior income tax expenses paid. At present CI has $411,348 in pre-paid funds treated as equity and $426,006 treated as liability. With the passage of time the equity portion will be consumed and all pre-paid funds will be treated as liability. Much more important, however, is the fact that ALL of the pre-paid funds are sequestered from other revenue -- held at a separate bank where a withdrawal can only be made with the signature of two of our Officers. All pre-paid funds are invested through this bank account in T-Bills or short-term CDs. If there was a "run on the bank" of CI Members demanding a refund of their pre-paid funds we could refund all of the $837,354 on short notice. Michael Riskin also said that CI does not have a patient care trust. Since early 2004 CI has had an independently administered trust containing money for patient care. The amount of money in this trust is currently about $4,800 per patient. CI also has over a million dollars in financial assets and CI owns its building free-and-clear. &&&& Thank you Ben. The $4,800 per patient in the CI trust, is for all whole body patients, since CI does not yet do neuros. Alcor has approximately (I do not have the current financial statement in front of me as I write but the quoted figure is very close to the exact figure) $40,000 per patient in patient trust assets. It is the revenue stream generated from these assets that cover the patient expenses. Alcor has more neuro patients than whole body patients, and neuro patients are far less expensive to maintain on an annual basis than whole body patients. Alcor believes that this cautious and conservative funding approach is necessary for the long term assurances it offers. One might argue that Alcor is being excessively cautious and I respect that argument. It simply reflects a difference in philosophical thinking and judgment. &&&& Similar to the pre funding accounting, Alcor carries patients trust funds as a liability on the books due to the patients. I cannot tell from Mr Best comments if this is the manner in which CI also records such patient funds. The fact that the million dollars is outside the patient care trust is not a matter of great concern to us at present. All CI Officers are chosen from Directors and by Directors -- who are elected by funded Members. It would be difficult to become a CI Officer without having a track record of honesty and commitment to cryonics and the Cryonics Institute. Ultimately those responsible for money must be trustworthy, whether they be Directors, Officers, Trustees or employees. CI has an exemplary record of both integrity and organizational stability. In the over 30 years of Cryonics Institute history there has not been one single instance of someone absconding with funds. We are not complacent, however, and will continue to think about ways to improve financial controls. Michael Riskin said that the Alcor Patient Care Trust is adequate to "maintain the patients indefinitely even if Alcor never receives another nickel of revenues." By some estimates I have heard that this would require Alcor to cut its spending to one-quarter of its current level. &&&& I am not at all sure what Mr Best is referring to in the above statement. Simply put, the assets in the Alcor patient trust and its related revenue stream can cover the patients expenses even should all other aspects of Alcor's operation cease.to exist, and most if not all non patient trust asset generated revenues simply stops. In fact, hopefully, this will be the case in the future, if biological aging and disease related death is ever eliminated. The only reason then for membership would be to insure against accidental death or other violence. How effectively Alcor could cut expenses in the face of an absence of revenue is a hypothetical matter. If, for some unexplained reason, the Cryonics Institute ceased to have revenue we could significantly cut our costs by ending our research and Membership programs. Considering that we own our building, income from the $370,000 in the patient care trust plus the million dollars of financial equity would be more than enough to pay for liquid nitrogen, taxes and general maintenance. But a cryonics organization without revenue, Members or Membership growth would not bode well for the patients -- no matter how big the nest egg -- and I question the value of fundamental planning based on such a scenario. &&& Of course I agree with Mr Best on this. It is quite uncomfortable to imagine a situation where members or membership growth cease to exist. I hope this clears up any misconceptions about the policies of the Cryonics Institute. I would encourage everyone from both Alcor and CI, especially members of the Boards, to be well versed in facts about the other organization before making harmful comparisons -- and to avoid making such comparisons unnecessarily. Partisan acrimony is damaging to both organizations. &&& I too hope that all cryonicists can stay accurately informed on a current basis as to what is occurring in our small community. Michael Riskin -- Ben Best, President, Cryonics Institute Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=29198 <BR><BR><BR>**************************************<BR> AOL now offers free email to everyone. Find out more about what's free from AOL at http://www.aol.com. Content-Type: text/html; charset="US-ASCII" [ AUTOMATICALLY SKIPPING HTML ENCODING! ] Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=29208