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Our lawyers have suggested we consider offering non-voting preferred stock. That is certainly an option, and would be a better way to finance the project if there are enough potential investors who want to buy preferred stock. The effect of preferred stock is that the holders of common stock give up profit and insurance against risk in exchange for retaining control of the company.
We could reserve the sale of voting stock to people we do know personally. In fact, by SEC regulations we can only do a private offering to people with whom we've made personal contact. The regulations are to protect the investor; he must know the company's principal officers well enough to judge their ability to do the job. However, that requirement works in reverse, too.
Beyond that, there are two sound business reasons for carrying through with the space flight:
The basis of the project is advertising our intent and ability to conduct the flight and establish the lunar base. If the company violates the public's trust by deciding not to do the flight, they'd be out of business forever. This is not in the best interest of the stockholders, who would then forego all the downstream profit potential of the enterprise.
There is one, and only one, scenario where it would make good business sense to abandon the plans for conducting the space flight: if we discover that it just ain't gonna work. The time value of money could conceivably preclude profitably conducting the flight; I've said before that it's a not a question of whether it will work, but rather how long it will take. We might find that it takes so long that we are unable to sustain a profitable business based on the promise of space flight.
We have no indication that this will happen, but if it does, we'll know long before we have invested huge amounts of money in the flight.
While there is considerable entertainment value in promising to do it -- probably enough to get us there and then some -- the big payoff comes after we've done the flight.
We might rethink the spaceship tax we're levying on the for-profit divisions prior to the flight in our business plans. An alternative to consider: prior to the flight, we could invest 100% of the profit from these activities in the space flight, minus the portion retained for growth in each division's particular industry.
That means the company will not pay dividends to stockholders until after realizing the profit made from actually conducting the flight. Stockholders' profit comes solely from growth of equity per share in the company, and the anticipation of future dividends. This is how most new companies do business.
Actually, I don't know of any new company that started paying dividends in their first few years of operation. What we're puzzling over here is how to balance investment in advertising -- by investing in the space flight vs. investment in capital to build a specific part of the overall business. Once we start running out details of the long-range pro-forma financials and adding it all up, we should know. Every piece of this project supports all others.
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