James M. Bleifus said:Donald, first you have my sympathies for the money lost. Having said that, these cases aren't relevant because there is no promise of a return. Howey involved people purchasing orange groves, cultivating them and receiving a promised return. Purchasers were offered a contract for the land AND a service contract from one of their subsidiaries. Moreover, the court found that those investors were people who invested because they EXPECTED a return on investment. To quote from the case:
The transactions in this case clearly involve investment contracts as so defined. The respondent companies are offering something more than fee simple interests in land, something different from a farm or orchard coupled with management services. They are offering an opportunity to contribute money and to share in the profits of a large citrus fruit enterprise managed and partly owned by respondents. They are offering this opportunity to persons who reside in distant localities and who lack the equipment and experience requisite to the cultivation, harvesting and marketing of the citrus products. Such persons have no desire to occupy the land or to develop it themselves; they are attracted solely by the prospects of a return on their investment.
"Share in the profits" is critical here as is a failure to meet the definition of a security for sale as found in footnote 3 of the case. Michael has never offered anyone a share of the profits hence there is no ROI. And an expected ROI is critical in this case. It's the difference between going down to your local store and buying a book and going to a meeting and buying into an oil well. Different laws will apply. No one is buying Azo with the intent on making money from reselling the paper (at least not before printing their images on it). The Azo deal is merely a sale of goods, nothing more.
One disclaimer, because I am at home today I am unable to shepardize this case so I am relying on your observation that it has not been overturned.
Yes, it does give us a view. Without the representation of an ROI or demonstration of a security offered I'd bet on Michael any day of the week in this case. The language of investment has always been yours.
Donald, I've received some PMs from fellow APUGers (non-Azo users at that) who have been on this list longer than I and I now know more about your antipathy with Michael. This is my last post in this thread. I think that it's demonstrated that your understanding of the law is is not what it should be to make the representations you have and that your motivations are not as you claim. I wish you the best in your endeavors.
Cheers, James
avandesande said:Donald, how is this different than pre-ordering TMY?
Jim Moore said:Do you really, REALLY believe that this is what Michael is doing?
Photo Engineer said:I think Michael Smiths comment in his last post says it all.
He is bearing the entire burden financially and from a labor aspect until a final usable salable product can be shipped, and no money will be taken from customers credit cards nor will checks be cashed until that time.
It therefore seems different to me than what Donald asserts in that the entire financial burden is on M&P and not the public. You might consider the payment and acceptance an exchange of prommisory notes rather than a form of investment. There will be no exhange of money until the product is available. That does not seem to me to be unreasonable. (except to M&Ps finances - but they are willing to do this for OUR sake)
I am all for what they are doing. I simply don't have the time, nor extra cash or I would be placing a large order myself! I am putting all of my resources into a similar type project - namely, those workshops of mine. I can speak from that standpoint and say that it is a huge financial drain and takes a lot of labor. I can sympathize with their trials and tribulations and again wish them all of the best.
I might add that it would be nice someday to see an exact scientific comparison of this new Azo paper with the old Azo paper for each and every photographic parameter so that we can all see where or even if they differ from each other.
PE
Donald Miller said:I think that we need to be very clear about what this matter represents.
Paul Sorensen said:Emphasis added.
Donald, they are asking for pre orders of paper, how is that an investment, except for the specific amount of paper you are ordering, you are not investing in anything. There are those who really wish to see this succeed and will buy paper to support the venture, but they know that they are ordering paper.
Paul, This is an investment in a product that doesn't presently exist. In fact without the financial input of others by Michael Smith's own words as stated publically, it will not exist. That my friends is what makes this an investment.
Until they sell it to someone. There are lots of industries in the world where contract manufacturing is the norm. Most of the items that we all end up getting from China are made to spec for a US company. I don't personally think it is much different than what Ilford used to do with Freestyle. The principal difference is that the item is not yet completed and fully tested. If folks are not comfortable with MAS being able to pull this off, then they should definately not preorder paper. It really is their choice.
That is true. But there are those who either are prone to hero worship or so exuberant in their belief that this paper is going to be something that in reality has not been proven. For those people caveat emptor should be observed and applied.
Not at all. If you order $10,000 worth of paper, MAS will send you that much paper. It is paid for once and you have it. I do not expect to have some sort of future rights to paper or ownership stake in Freestyle because I buy a box of Arista paper, I expect them to send me a usable box of paper.
The point that the supporters of this endeavor fail to grasp is that it is the profits from these initial sales that are in reality the funding for the rest of the paper that is not currently sold. Thus when you order paper again, should that be the case, you will be paying again for paper that you helped bring into existence with your initial purchase. It's a sweet deal for the person that pulls it off. In the case of Freestyle and Arista you are buying a paper that a manufacturer and dealer has brought into being with their own funds or funds that they borrowed from financial lenders and not from a bunch of their customers.
In addition, if you buy one of their prints or a set of prints, that is what you are buying. You are likely encouraged to buy it because you support what they are spending the money on, but you are buying a print.
The value of their print is assigned by them...just as yours are by you and mine are by me...are those values realistic? Since Michael and Paula do not sell limited editions, the cost of a print to them is the cost of the paper, chemicals they use and their time...Let's be realistic here.
I understand Jay and others thinking that there are too many variables here and not wanting to order. I also have no problems with Jay mentioning his concerns so that others can consider them before they order. I also understand others feeling that they have enough confidence in Michael and Paula and are willing to place orders for a product that does not yet exist, since they believe that Michael and Paula will test it appropriately. What I don't get is this implication in your post here that there is some sort of questionable dealing going on. It is quite simply a pre order situation for some paper. You will get your paper or MAS will refund your money.
No, it is an investment. The thing that makes it an investment is that Michael has publically stated that he is relying on these "pre orders" in order for the paper to be brought into being. I would have no problem if Michael went out and borrowed the needed funds to see the paper into production and distribution and thereafter approached potential users of the paper for orders. But that clearly is not the case here. His attempts at creative financing leaves me cold.
Edit: Oh, and an FYI, I am not buying any paper, I do not contact print, I am not a huge fan of Michael and Paula, and I don't have enough money to consider one of their AZO editions. I have no dog in this fight, except that it is nice to think that there will be a replacement for AZO.
Photo Engineer said:Donald, in his own words, Michael has stated that he will not deposit checks or use anyones charge card order until the paper is a 'reality'.
Interpret that any way you wish, but I believe that he is being honest about this and will not act until the paper is just that, a 'reality'.
I prefer to think positively in this until proven otherwise. I believe that I will not be proven wrong. The paper may not be exactly 'perfect' to every single persons eye, but then all art and beautiy is in the eye of the beholder. But, I trust Michaels judgement in this. I do feel that Jay has made an excellent point regarding a full suite of testing and I have advocated this myself. This will do nothing more than reduce any surprises that might be found later on.
PE
c6h6o3 said:It's very clear to me.
INVESTMENT. The placing of capital or laying out of money in a way intended to secure income or profit from its employment. Securities & Exchange Commission v. Wickham, DC.Minn., 12 F. Supp. 245, 42, et seq.
-- Black's Law Dictionary, Fourth Edition
Does Michael's request for pre-orders promise to secure income or profit from employment of the funds gathered? No. It promises to exchange certain goods (silver chloride printing paper) and services (shipping) for the funds. And that's all.
Donald Miller said:There is a very great distinction between the two. The first and most important is that TMY is an existing product with a long record of having been produced by Kodak.
Michael A. Smith said:Paula and I are now teaching a workshop. All day. And beyond. I have not had time to get back to this Forum and those who say my response on the Azo Forum can readily see it is brief.
Paula and I, through the sale of our Azo Portfolio, will be putting up FAR more money for this than anyone else, or more precisely, more than everyone else combined.
A test run will be made on the coating machines. We will pay for this ourselves. No one elses money will be used. If anyone bothered to read my announcement carefully they would have seen that we stated that no checks would be deposited and no credit cards would be charged until we needed final payment to get the paper. Hence, no one is at the slightest risk but us.
If the test run is not up to our standards we will either not go forward with this suppler and will try to find another or, preferably, we will ask them to make improvements.
Those who have actually seen our prints, as opposed to seeing web images know well that we do not compromise our print quality and will not accept a substandard product.
Yes, we are asking people to make a substantial commitment to commit to buy significant quantities of paper in advance. It is the only way we will know that when the time comes we will be able to pay for the paper. If everyone buys a box or two of 100-sheets each, we will not raise the necessary funds and this whole venture will end right now until we are able to come up with all of the money ourselves. Which we will at some point.
By the way, if anyone thinks we are doing this as a moneymaking venture, we will happily give them (not sell to them) the entire business and they can put up the money and do it themselves. All they have to do is make the same commitment we are making. Are there any takers out there?
No more time to answer.
Where is that other thread someone mentioned where this is discussed?
Cannot promise to get back here for a few days.
I think that these are great questions, especially the money back issue, but I think that you ought to post them to the Azo forum where the paper is announced. That will be most likely to get you an answer.WorkingInZoneI said:Two quick questions and a point:
1. Will there be any kind of publicized peer review of the new paper?
2. What if the buyers of the new paper discover problems while they're printing? Will they still get their money back?
Alex Hawley said:Please enlighten us Jay. I'm a technical-type person, having been a degreed engineer for thirty years now so I feel I can understand it, but I don't have much of a clue about it.
Please give us a detailed description of the coating process, starting from the assemblage of raw materials to final storage of the master roll. Please include all tolerances to the specifications and what effect variations from specifications have on the paper in terms of speed, tone, contrast, and longevity. I am particularly interested in how the light sensitive emulsion is protected from light all through the process.
Mark Layne said:All we're doing here is preordering a box of paper.
Mark
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