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% of business and my sweet equity- can I change my mind?

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garbaby

Junior Member
What is the name of your state?What is the name of your state? California

New here. I'll be as brief as possible.

I agreed to talk part ownership in a company (to be an S corp) for my design skills. JD, the owner (not real name), had an idea and some money. He needed my design talent and skills to develop the product, the packaging and labeling, company graphics, marketing and other design tasks. To make a long story short, he really did not have any real product to sell before I entered the picture. He has not yet incorporated the company and is only operating in a fictious name and not doing very well at that. Because he has very little money, I have had to take on the task of keeping the books and watching the finances. For about 6 months I have been after him to get the company incorporated and tell me what part of the company I really own. Recently, he wrote me a letter (did not want to meet face to face) stating the I owned 10 of the company, which again does not really exist yet).

At this point, the company has not made any money because he is living off the company bank account and using company money to pay his bills, grocerys, car expenses, meals, golf, etc. I have not been paid any money to date because there is no money to pay me. Not even sure that he would pay me if there were any because he says he has a lot of debt starting the business.

My delema is this: I have put a lot of time and effort into getting the product developed and the structure for marketing and selling the product. I am suppose to own 10% of the company, but there really is no company. I can not see any way the "company" can make any real money in the next two years going like it is now. I know that I will not be getting paid for about that long.

My Question: Under the circumstances, do I have the right to turn down the percentage of the company and asked to be paid for my contribution? Remember, even tough he offered me the 10%, there is no real company at this time. And if there is no money and he can't pay me, do I have the right to take all that I created and not let him use it?

Any thoughts on this are greatly appreciated!
Thanks! Garbaby
 



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