X-Message-Number: 6492 Date: Wed, 10 Jul 1996 08:47:49 -0700 (PDT) From: (Greg Stock) Subject: Re: CryoNet #6484 - #6489 David Kekich wrote concerning the Promethius project: > You don't get a stock loss, whether the company is public or >private, until you actually sell your stock at a loss or until the company >goes out of business or if the stock becomes worthless. If anyone knows of >exceptions, please clarify. A Limited Liability Corporation (LLC) would be a mechanism for passing through losses to investors. This is like an S-1 corporation in that it passes on profits and gains as well as losses directly to investors, but an LLC has no limits on the number of shareholders. Some restrictions on this type of organization are that it must have 1-- "continuity of life," ie not plan on dissolving for some 30 years. This would probably be a good idea anyway, even if you're only arranging funding for 10 years. 2 -- centralized management, ie a manager of some sort. 3 -- The interests of a member can not be sold to another without the consent of some specified percentage of existing members. Finally, some individuals may have a problem in using losses from the LLC because they are "passive" and hence carry certain restrictions. That's about all I know about LLCs. One additional point: A few days ago Paul Wafker wrote something to the effect that pledgors would be allowed to increase their pledges in the future, and thus purchase more shares if they saw fit AT THE ORIGINAL SHARE PRICE. This would be a good idea if the only intent were to raise more research money for the project, but unfortunately (unless it is strictly limited by some mechanism such as issuing a specific number of warrants or some other such device) would undermine the possibility of the investment ever appreciating. The better the project performed, the more original investors would be diluted by additional share purchases from various parties, so the stock price would essentially end up pegged at its original price by new sales. Good luck with Promethius! Greg Stock Gregory Stock , Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=6492