Mr. Hudson stated that after the prototype plant goes into
production, members will be able to transfer extra memberships
into shares in the production company. He stated that each
membership would be transferred to shares in accordance with
the percentage of material to which each member was originally
entitled. That is, if you had one membership worth 0.25/5000
or 0.005 percent of the total production, then you would
continue to be entitled to the financial value of 0.005 percent
of the total production in the form of shares.
Mr. Hudson and other company executives (if any) would retain
shares representing 75 percent of the company plus whatever
percentage was not transferred in the form of stock to members
of the foundation. Thus, it is likely that about 85 percent
of the financial ownership would be retained by the principals
of the company. (See more precise calculations later on.)
These shares would be awarded as "founders" stock. The
principals would make no further financial investment in
the company in return for their share of ownership. This
is commonly called "sweat" equity and is quite normal for
high-technology start-up enterprises where the inventor
receives a majority of the outstanding shares as payment
for his ideas.
The specific details of the investment follow:
Initially, the founders would own 100 percent of the
financial shares and would be entitled to 75 percent
of the product produced. The "spiritual investors"
would own the rights to 25 percent of the product
produced. Thus, initially, there would be 15,000
financial shares and 5,000 spiritual shares.
Next, it is likely that the "spiritual" investors would
choose to convert half their spiritual shares to financial
shares. After conversion, there would be 17,500 financial
shares and 2,500 spiritual shares. The founders would then
own 85.71 percent of the total financial shares outstanding.
The spiritual investors would own 14.29 percent of the
financial shares. (Of course, these exact percentages would
vary depending upon the percentage of spiritual memberships which
are actually converted to financial shares.)
Mr. Hudson estimates that the initial production rate from
the prototype plant would be 720,000 ounces of product per year.
Of that, 12.5 percent would go to the remaining spiritual shares
and the remaining 87.5 percent would be licensed under long-term
royalty agreements.
Mr. Hudson's method of licensing his products under long-term
royalty agreements serves several purposes:
2E..It helps develop new markets by reducing front-end costs.
This is particularly important in the fuel-cell market.
2E..It allows the same product to be sold in various markets
at different prices dependent upon the value of the product
in each market.
2E..The product is immune from theft. It has no commercial value.
2E..Low front-end costs discourage competition. A potential
competitor would have difficulty recovering the cost of product
development when he must sell the product with a multi-year
licensing agreement to match Mr. Hudson's prices. Hudson has
already personally covered the cost of product development.
This is a very ingenious strategy for "selling" the white
powder into industrial markets. The plant can manufacture
precious elements at a very low cost. But, instead of
selling the elements as bullion on the precious metals
market, Mr. Hudson intends to license his materials for use
as catalysts in various industrial processes. Thus, the
company retains ownership of the precious elements while
putting them at work drawing "royalty" payments. Instead
of having these materials sit in a guarded safe earning no
interest, he has them spread out in industry earning an
income for the company. Because the material is not being
consumed by the industrial processes, it is available to earn
royalties in perpetuity. This results in an exponentially-
increasing revenue stream. Every entrepreneur dreams of
exponentially-increasing revenues although few have the
opportunity to experience it.
Based on a spreadsheet cash-flow analysis of the information
just provided, it would seem that the company will generate
adequate cash to rapidly expand the royalty base as well as
to provide a handsome return on investments.
It is emphasized that this analysis is not an offer to sell
stock in Mr. Hudson's company. It is merely a best effort
by an outsider who is trying to figure out what is going on
based on the scanty financial information Mr. Hudson has
provided during his numerous lectures.
Potential industrial applications for the white powder include
the following:
2E..Long-life turbine blades for jet aircraft.
2E..As a catalyst in fuel cells for alternative energy applications.
2E..As a catalyst in the production of chlorine from seawater.
2E..Many medical applications.
2E..Many room-temperature superconductor applications in electronics =
and power production and distribution.
2E..High-Q electronic filters.
=2E..Radar diffusion applications, ie stealth aircraft.
=2E..Reentry vehicle heat shields.
=2E..Nuclear radiation shields.
=2E..Levitation in transportation applications.
Any comments or suggestions to this posting would be most welcome.
=1A=
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