Garland Brown, an attorney with GreenBerg, Traurig, LLP discusses fundamentals of organizing, funding and IP for startup technology companies. See www.danlistens.com for other notes.

1. Discussion for Early Stage Ventures Presented by: Garland A. Brown, Jr. ©2007, Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Thoughts and Ideas for Early Stage Ventures Microsoft BizSpark Update Meeting ─ May 14, 2009

4. Business Entity Formation Traits Sole Proprietor General Partnership Limited Liability Company S Corporation Corporation Formation No state filing Agreement between 2 or more No state filing State filing required State filing required State filing required Duration of Existence Dissolves when sole proprietor ceases doing business Dissolves upon death or withdrawal of partner Perpetual Perpetual Liability Unlimited Unlimited Member not liable for LLC debts Shareholders not liable Shareholders not liable

5. Business Entity Formation Traits Sole Proprietor General Partnership Limited Liability Company S Corporation Corporation Pass Through Yes Yes Yes Yes No Double Tax No No No No Yes Cost of Creation None None State filing fee State filing fee State filing fee Raising Capital Difficult Through adding partners Possible Shares sold Shares sold Transferability of Interest No No Operating Agreement Yes Yes

6. Business Entity Formation Traits Sole Proprietor General Partnership Limited Liability Company S Corporation Corporation Operational Requirements Few legal requirements Few legal requirements Some formal requirements Board of Directors, annual meetings / reporting Board of Directors, annual meetings / reporting Management Sole proprietor has full management rights Each partner typically has equal voice Operating agreement outlines management Managed by directors Managed by directors Taxation Not a taxable entity/1040 schedule C Not a taxable entity/Partners taxed Income - loss passed to members Income - loss passed to shareholders Taxed at entity

9. Source of Funds Risk Time Seed Startup Early Growth Expansion Maturity Founders Friends and Family Angels Venture Capital Acquisition & Equity Markets Banks