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Peak, AZ has repeatedly said its a true sale which I assume it will end of being. The problem is the companies then have a contractual agreement to pay the monies received back. Normally that would go down in liabilities as monies owed (as a loan) but they don't want to show it as a loan. That's the whole point of this new way of lending money. They want it to appear as a true sale yet the companies still have to repay the funders/lenders when they sell there stock. Maybe like invoice factoring, when stock is sold the monies will go straight to the funder. Hopefully we find out soon. I think the Trade Flow guys coming on board is a great thing going forward. They seem like two very astute businessmen who I figure will help sort some of these issues out and open a lot of doors. Realistically I think we have at least another 6 months to wait for really positive news. Maybe a year. Hopefully sooner but the whole thing is complicated and going to take time. In the meantime people will continue to bash the company here but when we get up and running there will be no looking back. :)
Hi Will, haven't looked at this for a while, but I view this as follows, a little simplistically perhaps and I paraphrase and putting aside arrangement costs etc.... If the inventory is legally sold, but held in storage by the company on behalf of the legal owner (the SPV), with an agreement that the company will sell the inventory over time and participate in the sales proceeds. Sales proceeds to the extent that these consist of the valuation of the inventory held by the SPV shall be paid to the SPV, and to the extent that they are over and above will accrue to the company. So how do you recognise that on the balance sheet of the company? Well I'd say it doesn't appear on the balance sheet, but instead as a note to the accounts along the lines of 'during the year the company sold £x inventory to a 3rd party which appears in the revenue for the period. The company has an agreement with the 3rd party to hold and sell the inventory on behalf of the 3rd party, including a participation in the sales proceeds. During the year £y of such inventory was sold and the company participation in the sales proceeds net of fees was £z which appears in the revenue for the period. At the balance sheet date, the £(x-y) of unsold inventory, owned by the 3rd party, does not appear on the balance sheet of the company as it is not owned by the company.
In effect, as year by year rolls forward such an approach would be applied in the notes and expanded to show the opening inventory, new inventory sold to 3rd party, inventory sold on behalf of the 3rd party, and closing inventory, with additional notes to show the fees and sales revenue from participating in sales of inventory to customers. Sort of a shadow stock account that links to the p&l, but doesn't actually appear on the balance sheet.
It is the way they are looking to account for the transaction on the yearly accounts. The IM transaction. On accounts you'll have assets, liabilities and stock. If stock is sold but still held this will have to be accounted for in a new way. As its never been done before in the accounting world (as far as I know) they are looking for a new way to class this so it doesn't go down on the accounts as a loan. The IM cash will have to be paid back when they (the companies) sell the stock, to the funders, so how do you class it. That's the difficult part.
Thanks Divvyup - I was under the impression that the new asset class referred to non physical assets such as digital currency - you can’t feel it but it has a value or intellectual property - fintech platform - hubs - computer programmes or anything digital/virtual - they must have a value as we use them in everyday life and businesses cannot function as efficiently without them - if that is the case it opens up an whole new set of assets that could also be monetised of course I could be completely wrong and talking nonsense , is there someone who understands it more and is willing to share their knowledge. Best wishes all LTH
Peakhope Its basic but I`ll have a bash. Financial instruments refer to a contract that generates a financial asset to one of the parties involved, and an equity instrument or financial liability to the other entity. In the case of SYME who takes a valuation from inventory whether in in transit or held stock is complicated by financial tools which passes on the funding risk to a third party. This then eliminates any direct funding and risks associated with the client. The current asset class system of third-party funding of inventory is a grey area and as such difficult for the client to administer within their accounts due to the current regulation structure. Simply. How does a company currently show a listed valuation of inventory with funds raised against it without distorting the balance sheet? Hopefully a new Asset class will deliver a manageable structure method to administer contracts to clients and funders accounts recognised legal governance without penalty.
Lots more news and debate to come on this topic but if successful it will be a significant.
I can take heart that the BOD has remained “intact to date, a good indication that all on the board are happy with the method and amount required to allow development of the company.”
Another much overlooked point - the BOD seems to be strong and united in their efforts. Divvyup -Glad you mentioned the “ new asset class “ I’m struggling a little to understand it myself - I’m not afraid to ask for help so here goes - am I right in thinking the new asset class means symes platform for example or possibly bit coin - I get other asset classes like commodities- wheat,grain , rice etc but not 100% sure of what the new asset class might look like or contain - can others possibly confirm my theory or correct my understanding of “new asset class” Best wishes all LTH
Back off much needed summer break and trust all are well. As previously posted, funding was inevitable. The timing is as it is and will have been in the mix in some form or other from the beginning of the year. I can take heart that the BOD has remained intact to date, a good indication that all on the board are happy with the method and amount required to allow development of the company. The SP is as expected in a fledgling disruptive business and will continue to drag and spike in an involuntary volatile path until a positive is shown on the P&L. The “Cracking RNS” has caught a lot of attention, but the whip on such statements is often turned against investment shareholders in favour of day traders. Under promise & over deliver AZ if you want to educate and build trust. Boring for some but I still hold stock waiting for the introduction of a new Asset Class as I believe this will give the green light for rollout of funding and most importantly, sustainable growth. There’s a lot going on out there from Inflation to changes of Global too local supply. These are all areas that SYME can have a positive impact and build a very successful company to boot.
We are getting updates but seemingly lost within the complexity of the model. Progress continues and wouldn’t say at a slow rate as its morphed into a more rounded business over the past 6 months. Classification will follow, then I expect another painful pause and reality check before the real journey can begin.
I’m never wrong and if this share does go pair shaped its somebody else’s fault, not mine.