Superior clamps
I
Harvard Business School
(
9-196-040
Rev. October 27,1995
Superior Clamps, Inc.
Peter Fuller was the inventor of a metal hoseclamp for automobile hose connections.
Having confidencein its commercialvalue, but owning no surplus funds ofhis own, he sought among his friends and acquaintances for the necessary capital to put it onthe market. The proposition which he placed before possible associates was that a corporation should be formed with capital stock consisting of 60,000shares of $1 par value stock, that he be given 32,000shares for his patent, and that the remaining 28,000shares be sold for cash. Fullers' patent had 16of the 17-year legal life remaining.
The project looked attractive to a number of the individuals to whom the inventor presented it, but the most promising among them-a retired manufacturer-said he would be unwilling to invest his capital without knowing what uses were intended for the cash to be received from the proposed sale of stock. He suggested that the inventor determine the probable costs of experimentation and of special machinery, and prepare for him a statement of the estimated assets and liabilities of the proposed company when it was ready to begin actual operations. He also asked for a statement of the estimated transactions for the first year of production and sales operations, together with an analysis of the operating results indicated by those expectations.
This information would be based on the studies the inventor had made o,probable markets and costs of labor and materials. It would include a listing of resulting assets and liabilities; an analysis of expected sales, expenses, and profits; and an explanation of the expected flow of cash over the course of the year.
.
After consulting the engineer who had aided him in constructinghis patent models, Fuller drew up the following list of data relating to the transactions of the proposed corporation during its period of organization and development.
Harvard Business School
(
9-196-040
Rev. October 27,1995
Superior Clamps, Inc.
Peter Fuller was the inventor of a metal hoseclamp for automobile hose connections.
Having confidencein its commercialvalue, but owning no surplus funds ofhis own, he sought among his friends and acquaintances for the necessary capital to put it onthe market. The proposition which he placed before possible associates was that a corporation should be formed with capital stock consisting of 60,000shares of $1 par value stock, that he be given 32,000shares for his patent, and that the remaining 28,000shares be sold for cash. Fullers' patent had 16of the 17-year legal life remaining.
The project looked attractive to a number of the individuals to whom the inventor presented it, but the most promising among them-a retired manufacturer-said he would be unwilling to invest his capital without knowing what uses were intended for the cash to be received from the proposed sale of stock. He suggested that the inventor determine the probable costs of experimentation and of special machinery, and prepare for him a statement of the estimated assets and liabilities of the proposed company when it was ready to begin actual operations. He also asked for a statement of the estimated transactions for the first year of production and sales operations, together with an analysis of the operating results indicated by those expectations.
This information would be based on the studies the inventor had made o,probable markets and costs of labor and materials. It would include a listing of resulting assets and liabilities; an analysis of expected sales, expenses, and profits; and an explanation of the expected flow of cash over the course of the year.
.
After consulting the engineer who had aided him in constructinghis patent models, Fuller drew up the following list of data relating to the transactions of the proposed corporation during its period of organization and development.