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Skyman
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OK, I have this idea to start a company and raise capital by going public, but in a different way. What if I issued stock and did not hand out any stock options to an IPO or to the employees. In other words only the corporation owned any stock to begin with.

Then have the corporation sell corporate stock to the market and deposit proceeds to a risk free, certificate of deposit. So every penny realized from the sale of the stock would be in a safe interest bearing account.

If I or anyone else wanted to own some of the company's stock we would have to put up some of our own money to buy stock on the open market.

In other words, no one is dumping stock and everyone is buying. Hopefully.

The interest from the CD's would be used to begin company operations.

The company would not sell and sell and sell until the stock was completely worthless. Instead the company would sell only when the price was making a peak. Just skim some off the top. This way, the total assets per share of stock would make a steady and continuous climb, thereby driving the stock price higher.

The company would hopefully sell stock on a continuous basis, always increasing total assets of the company. The company would be registered in Wyoming so the company could issue new stock to supply the continuing sales of stock without a shareholder vote to issue the new shares.

There would be lots of ifs, and ifs, and ifs, but the one question that I am still wondering about is what would shorty do to my company's stock? Would the short sellers short my stock out of existence or would they stay away from it because every share would be backed by the money in CD's?

I would own A shares created to establish ownership and control of the company. B shares would be created to be tracking shares. The B shares would be the only shares traded. That way no one could buy enough shares to take away the company.

Why would anybody buy stock in this company? The total assets and earnings per share would be going up. Debt free and cash in the bank.

Well anyway, I welcome anyone's opinion on whether this would work.

Thanks.

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metal1
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ok, so how do you operate a cash flow postive business with only the 4% interest from cd's? LOL
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Skyman
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The profit would come from the increasing stock price. Any one could buy stock and hopefully sell the stock later at a profit. The question "is the company actually doing something to make a profit from operations?" could be answered by actually making a product (anything) and offering that product. Some might say, "ah baloney, you aren't making anything" might be silenced by comparing the hard facts from my company to almost any of the phony companies now appearing over the counter. I could sell toothpicks or bags of select collectables (bags of trash) and still be far ahead of many companies that I have invested in. As long as the investors are making money on their stock, who would complain?
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metal1
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that's my point. raising capital is to fund operations/fuel growth. if you take all the money an put it into cd's you still won't have any capital to operate a business. and why would the stock be going up?
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Skyman
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The profits would be from interest on the CD's and the increased price of the stock that is sold. But the profits to the owner or anyone else would be from the increase in price of the stock that each person bought and sold on their own. The profits from the whole operation would not be from operations of the company, but the investment potential of the stock. The company would be there solely to increase the investment potential of the stock. How would that happen? Increase the total assets per share and increase the earnings per share. Selling shares only at the peaks of the price graph would do that.
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T e x
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They call that a "bank" re CDs...

No, very few outside the Pansamerica cult would go for that scheme.

First--How would you register?

--------------------
Nashoba Holba Chepulechi
Adventures in microcapitalism...

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Skyman
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Do corporations have cash earning interest? Does Microsoft earn any money on their cash? Register as a for profit company and actually pursue profits just like any one else, except do it for real.
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metal1
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quote:
Originally posted by Skyman:
Do corporations have cash earning interest? Does Microsoft earn any money on their cash? Register as a for profit company and actually pursue profits just like any one else, except do it for real.

everyone that has cash earns interst on it. you're not the first person to think: wow, if people give me money i can go public. the people that get funding usually have a business plan that has real growth potential. yours does not.
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T e x
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quote:
Originally posted by Skyman:
Do corporations have cash earning interest? Does Microsoft earn any money on their cash? Register as a for profit company and actually pursue profits just like any one else, except do it for real.

Put down the pipe, man...

ARE YOU KIDDING ME?

Microsoft is one of the best at "do it for real"

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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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metal1
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LOL, he is definitely smoking something. the majority of the assumptions in your original post are wrong. i will leave it that as i can't talk about this asinine topic anymore. when you make it big, please post the symbol of your company.
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Skyman
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Maybe I will. I think it would work.
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PCola77
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Skyman, how would you get peope to buy your stock? Type up what you would say to a potential investor, and then read it aloud to yourself, and a couple of friends. Don't argue with them or try to cinvince them, because in the real world you won't be able to have a back and forth with investors as to why they should buy it, you'd simply be able to potentially put out PRs. See how many of them say (including yourself) would say "Yeah, I'd definitely inves in that." I'm guessing few, if any. Why wouldn't they just put their money straight into a bank, instead of through an admittedly diluting intermediary? The reason people buy penny stocks is the chance of a homerun. Your "company" offers a 0% chance of that, unless I'm misunderstanding.
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Skyman
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The only reason for anyone to buy any stock is the chance that it will appreciate in value, and more than the other investments that an investor has before them.

Stock goes up because of an increase in total assets per share, or an increase in earnings per share. Or the hope of an increase.

For my company, I would concentrate on the total assets per share. As I stated before, no one would be given free or discounted stock that they could dump later. Take a look at the charts of most penny stock companies. The price takes off like a rocket until those with free shares start dumping their shares and the price goes straight down and does the flat line thing. The investment is gone, the CEO is gone, they won't answer the phone, etc.

So I thought how can a company simply sell stock to raise capital and avoid the peak then flat line disease? Stop giving away stock at a discount or for free.

How many times have you bought stock that was just as flat as the computer numbers would allow? Did you just buy a little and wait for a pulse? Happens all the time.

At my company probably the same thing will happen at first, but when the pulse happens the company will sell just a little of the companies stock. The company won't dilute the stock out of existence, but will take just a little off the top. If the stock was selling pre-peak at .0001 and the peak allowed the company to sell a few shares at .0002, then the average price per share sold would increase. The total assets per share would increase. And this is one of the things that investors look for. Obviously, I would like to be selling at higher prices like $10 and $12.

So, if what I have described works, the price per share would be equal to the total assets divided by the number of shares, plus the increase in price per share from gradual sales of shares at higher prices, and the interest earned from CD's, or making widgets. Almost like compound interest.

So the company would be the penny stock company that all of us are looking for, namely a company that is operating in a way that will persuade the stock to go up.

So why would the first investor buy any stock? I will be the first.

Also, monthly numbers from the transfer agent and the monthly income statement from the company, regular as clockwork would be a must. I have always thought that almost any penny stock would do a lot better if the company would just publish the numbers on a regular basis.

All questions and complaints are welcome. Keep 'em coming.

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T e x
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quote:
So why would the first investor buy any stock? I will be the first.
As asked before, how would you register?

--------------------
Nashoba Holba Chepulechi
Adventures in microcapitalism...

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metal1
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ok, i couldn't resist, these are my newest answers. this is very amusing

quote:
Originally posted by Skyman:
OK, I have this idea to start a company and raise capital by going public, but in a different way. What if I issued stock and did not hand out any stock options to an IPO or to the employees. In other words only the corporation owned any stock to begin with.

Then have the corporation sell corporate stock to the market and deposit proceeds to a risk free, certificate of deposit. So every penny realized from the sale of the stock would be in a safe interest bearing account.

If I or anyone else wanted to own some of the company's stock we would have to put up some of our own money to buy stock on the open market.

In other words, no one is dumping stock and everyone is buying. Hopefully.

ONCE AGAIN, WHY IS EVERYONE BUYING ??

The interest from the CD's would be used to begin company operations.

YOU STILL HAVEN'T TOLD US WHAT YOUR COMPANY DOES. THE INTEREST FROM THE CD'S WILL HAVE TO BE PAID OUT TO THE SHAREHOLDERS SO YOU WON'T REALLY HAVE ANY CAPTITAL FOR ANY OPERATIONS. IF THEY AREN'T GETTING INTEREST ON THEIR INVESTMENT THEY WILL NOT BE HOLDING YOUR 'CD INVESTMENT' STOCK FOR LONG .

The company would not sell and sell and sell until the stock was completely worthless. Instead the company would sell only when the price was making a peak. Just skim some off the top. This way, the total assets per share of stock would make a steady and continuous climb, thereby driving the stock price higher.

THIS SEEMS TO BE WHERE YOU BEGIN TO MAKE POOR ASSUMPTIONS. YOU NOW SAY YOU WILL BE DILUTING THE STOCK BY SELLING MORE SHARES. YOUR ASSETS PER SHARE WILL BE THE SAME BECAUSE YOU ARE SELLING MORE STOCK TO GET THOSE ASSETS. THERE IS NO NET GAIN. AND ASSUMING YOUR STOCK WILL BE GOING UP ALL THE TIME IS RIDICULOUS BECAUSE YOUR COMPANY HAS NO REAL GROWTH POTENTIAL. YOUR COMPANY WOULD BE TREATED LIKE A CD. NO GROWTH BUT PAYS 4.5%. ASSUMING RATES DON'T KEEP FALLING, WHICH WOULD BE A LARGE ISSUE FOR A CD TRACKING STOCK. SOUNDS LAME JUST SAYING THAT.

The company would hopefully sell stock on a continuous basis, always increasing total assets of the company. The company would be registered in Wyoming so the company could issue new stock to supply the continuing sales of stock without a shareholder vote to issue the new shares.

WHILE YOUR TOTAL ASSESTS WOULD INCREASE, YOUR ASSEST PER SHARE WOULD NOT. IF YOU ARE SELLING STOCK TO GET THE ASSESTS YOUR NAV WILL STAY THE SAME. SELLING UNREGISTERED SECURITIES IS MOSTLY FOR SCAM PINKS .

There would be lots of ifs, and ifs, and ifs, but the one question that I am still wondering about is what would shorty do to my company's stock? Would the short sellers short my stock out of existence or would they stay away from it because every share would be backed by the money in CD's?

SHORTS ARE A NON ISSUE. A COMPANY CAN'T BE SHORTED OUT OF EXISTENCE .

I would own A shares created to establish ownership and control of the company. B shares would be created to be tracking shares. The B shares would be the only shares traded. That way no one could buy enough shares to take away the company.

BY HAVING THE A SHARES YOU HAVE ALREADY DILUTED THE COMPANY .

Why would anybody buy stock in this company? The total assets and earnings per share would be going up. Debt free and cash in the bank.

TOTAL ASSESTS WOULD GO UP BECAUSE YOU KEEP SELLING SHARES. EARNINGS PER SHARE WOULD NOT. NAV WOULD NOT. AS I SAID BEFORE, YOU WILL HAVE TO BE PAYING OUT INTEREST. INVESTORS WOULD ALSO MISS OUT ON QUALIFIED DIV POTENTIAL AND THE FAVORABLE TAX TREATMENT .

Well anyway, I welcome anyone's opinion on whether this would work.

Thanks.

THATS ABOUT THE BEST I CAN DO .
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Skyman
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Thanks for the response.

The company would be a regular corporation registered in Wyoming.

The company's motto would be "Everything Aviation". I have over 30 years experience as an airline pilot.

Why would anyone buy the stock? Because the price is going up.

The interest from the CD's would be retained by the company and not be paid to the stock holders.

Say the first sale of company stock goes for $.0001 per share and the second sale goes for $.0002. After the first sale of stock the average price per share would be $.0001 and after the second sale of stock wouldn't the average price per share be somewhere between $.0001 and $.0002? Isn't that growth?

How many companies don't even achieve a growth rate of 4.5%? Try Boeing Commercial Airplanes, Inc.

All of the B shares would be registered with no restrictions. Buy and sell all you want.

America West Airlines had A and B shares before they merged with USAirways. They couldn't be taken over because the A shares had 50 votes per share and the B shares had one.

I agree that the naked short sellers can't put a company actually out of business, but they can drive down the price of a company's stock until it isn't worth it for the company to try to sell stock and use it to build the company until they start making a profit.

I've always thought that paying dividends was just a loss of capital. The company should keep that cash and build total assets of company. The stock holders would realize their profit through the increase of the stock price.

I still think it would work.

Thanks

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metal1
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quote:
Originally posted by Skyman:
Thanks for the response.

The company would be a regular corporation registered in Wyoming.

The company's motto would be "Everything Aviation". I have over 30 years experience as an airline pilot.

Why would anyone buy the stock? Because the price is going up.

THIS IS A VERY POOR ASSUMPTION. WHY WOULD THE STOCK BE GOING UP? JUST BECAUSE YOU HAVE THE CASH FROM THE STOCK SALES, DOESN'T MEAN THE STOCK SHOULD GO UP. IT WOULD JUST STAGNATE .

The interest from the CD's would be retained by the company and not be paid to the stock holders.

IF THE INVESTORS AREN'T GETTING ANY RETURN, YOU WON'T BE ABLE TO EVEN START THIS THING.

Say the first sale of company stock goes for $.0001 per share and the second sale goes for $.0002. After the first sale of stock the average price per share would be $.0001 and after the second sale of stock wouldn't the average price per share be somewhere between $.0001 and $.0002? Isn't that growth?

NOW YOU ARE MAKING ANOTHER ASSUMPTION THAT YOUR STOCK IS GOING TO DOUBLE IN VALUE? INTERESTING.


How many companies don't even achieve a growth rate of 4.5%? Try Boeing Commercial Airplanes, Inc.

All of the B shares would be registered with no restrictions. Buy and sell all you want.

America West Airlines had A and B shares before they merged with USAirways. They couldn't be taken over because the A shares had 50 votes per share and the B shares had one.

ALL THE SHARES ARE TAKEN INTO ACCOUNT WHEN CALCULATING EARNINGS PER SHARE. YOUR A SHARES WOULD DILUTE THE EARNINGS. IT'S BASCIALLY A GET RICH QUICK SCHEME FOR YOU AS THE OWNER OF ALL THE A SHARES.


I agree that the naked short sellers can't put a company actually out of business, but they can drive down the price of a company's stock until it isn't worth it for the company to try to sell stock and use it to build the company until they start making a profit.

ONCE AGAIN, SHORTS SELLERS CAN'T RUIN A LEGIT COMPANY. YOUR LOGIC IS OFF.

I've always thought that paying dividends was just a loss of capital. The company should keep that cash and build total assets of company. The stock holders would realize their profit through the increase of the stock price.

YOUR KNOWLEDGE SEEMS TO BE LACKING IN THIS AREA.


I still think it would work.

Thanks


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Skyman
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Curious.
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PCola77
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Skyman, let's put it into terms of actual numbers.

You have an IPO for 1 million shares at $1 a share to get starting capitla of $1million. You put it into a CD, and at the end of the year you have $1.05million. Then you sell 50,000 shares to "skim off the top" or whatever, and suddenly you have $1.05 million in value, and 1.05 million shares. So in other words, after 1 year your share price is $1, and all of your investors have returned 0%.

Show us how, in real terms, you can set this up to be worthwhile.

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