About your contribution
Use of your contribution
Your contribution will be used for getting MSF therapeutics to patients at a low cost. This will entail raising sufficient contributions (funds and services) to:
- complete pre-clinical and clinical testing of MSF;
- obtain marketing approval for MSF; and then,
- produce and distribute MSF at a low cost to patients.
Successful completion of these steps should allow millions of Alzheimer’s patients to recover their memories for a precious few years, as well as save our society tens of billions of dollars per year due to reduced costs of caring for those patients with revived memories.
Structure of your contribution
Your contribution will be structured as an interest-free un-secured loan to Brain-Tools, LLC. This means that your contribution will be repaid to you if and when MSF development is successful and Brain-Tools achieves modest profitability (hopefully by 2016). Regrettably, if the project is not successful then your contribution can’t be repaid.
Why this funding structure ?
For comparison, contributions to the world-renowned Kiva Microfunds are also structured as interest-free un-secured loans (www.Kiva.org). Kiva’s process is as follows. A contributor in a rich country makes a modest interest-free un-secured loan to Kiva (say $200) for a worthy project. Kiva then passes that loan on to an individual or a small group or a village in a poorer country. When that project is completed (such as installation of a water pump for a village), the exact amount of that loan ($200) is paid through Kiva back to the original contributor. The result is no gain and (generally) no loss to the contributor, but that loan has provided a substantial benefit to the person or group who used the loan to complete the worthy project. Such micro-loans have been of much, and often life-changing, benefit to many persons, particularly women, in dozens of third-world countries since Kiva’s founding in 2005. The total of interest-free un-secured loans contributed through Kiva since 2005 now exceeds $400 million.
Contributions to our MSF development program are structured essentially the same. If you contribute say $200, then if and when Brain-Tools successfully completes development and begins distributing MSF to patients (we hope by 2016) you will be repaid that $200 dollars from the first profits. However because Brain-Tools is committed to keeping the cost of MSF to patients quite low, any profits are expected to be rather modest and so it may take several years to complete payback of these loans to the original contributors.
This structuring of contributions as interest-free un-secured loans is used by both Kiva Microfunds and Brain-Tools because it avoids your contribution being classified by the US Securities and Exchange Commission under the Howey Test as a “security”. Therefore, your contribution is not subject to the very onerous and expense-laden US securities laws.
This special structuring also assures that your contribution is available for its intended philanthropic purpose (making MSF available to patients), rather than being taxed as profit by the Internal Revenue Service.
Lastly, this structuring is also the most ethical of the available options because it rewards the contributor with payback of the amount of the contribution in return for their having successfully funded a worthy project. And in the case of MSF development, you will be contributing to a worthy project which will likely provide for decades to come invaluable personal benefits to millions of Alzheimer’s patients, that being revival of their memories for a few precious years. Success in this project will also likely provide huge financial benefits to aging societies the world over – in the form of low costs for the drug and substantially reduced costs of care-giving for Alzheimer’s patients with revived memories.
Why Brain-Tools is a for-profit company?
Key goals in our MSF development program are to keep the cost of MSF therapeutics low for patients, while also maximizing the benefit of MSF to patients by offering an unprecedented dose optimization for each patient. In order to achieve both of these goals at an affordable cost to the patients, it will be necessary to use an unusual production process, an innovative distribution system, and novel periodic long-distance assessments of patients’ memories. We believe that only a for-profit entity is suited for implementing these challenging processes, systems, and assessments.
We also want to reward contributors for sharing the risk of this development program, and we feel this is best achieved by repayment of the contributors if and when the program is successful and modest profits are made.
Initially, our plan was to repay our contributors with twice the amount they contributed, or make a terminal payment of interest on the contribution (loan). But we soon learned that US Securities laws render these options completely impractical for contributions via crowd funding. Therefore, the best we are allowed to offer under US securities laws is to repay the exact amount of the contribution – which is now our plan.
Why we do not accept credit card contributions
We have made repeated attempts to set up on our website a capability to accept contributions via credit cards. However, it turns out that the key credit card companies (eg., MasterCard and Visa) prohibit use of their cards on internet sites for making donations or for debt financing (loans) to for-profit companies. These prohibitions then propagate to virtually all e-commerce sites, such as “Checkout by Amazon”.
Thus, it appears that in order to accept donations via credit cards we would have to change Brain-Tools to a non-profit entity. While this would allow contributors to take a tax deduction on their charitable contribution (saving the contributor something in the range of 5% to 30% of the amount of that contribution via a tax deduction), we feel that would be a poor substitute for the 100% repayment we will be able to provide as a for-profit entity if and when our MSF development project achieves profitability (hopefully by 2016).
Furthermore, as noted above we believe changing Brain-Tools to a non-profit entity, just so it could accept contributions via credit cards, would severely compromise or prevent achieving our highly desirable goals of:
- keeping the cost of MSF therapeutics low for patients: and,
- maximizing the benefit of MSF to patients by offering an unprecedented dose optimization for each patient.
We believe that to achieve both of these desirable goals it is essential that Brain-Tools continue to be structured as a for-profit operating company capable of carrying out both production and distribution of MSF therapeutics.
It is because of the above constraints that we can only accept contributions from individuals either:
a) in the form of checks, money orders, etc. made out
to Brain-Tools, LLC and sent through the US mail or
other carrier service such as FedEx; or,
b) in the form of electronic checks accepted on
our website (see contribute page ).