It seems they're being very negligent with interatcting to the customer base here...

this seems like a potentially really good idea i just hope you guys aren't in it for the $$ and are actually wanting to help people

huh? how hard is it to multiple TAT x 5? The only thing that takes some time (albeit not that much) to understand is DMS selling. DMS Mining is almost exactly like every other PMB.

The single largest expense for the RE market are the financing costs. So long as those costs are denominated in USD it would be a bad idea to charge BTC rents. Such a setup would only be feasible if there was no mortgage and the entirety of the property is equity-financed.

Not a problem. Yea, typically banks, insurance companies and private lenders will back out of goodwill when assessing a company. I'm not sure if anybody but me cares, but the history of goodwill and its treatment by the accounting profession is fascinating. It is one of those things which everybody would rather not allow because of how fuzzy and potentially misleading it is, but it has to be allowed as it does more often than not represent the true economic substance of an acquisition (nobody would be able to buy Coke or McDonalds at Book Value + FMV adjustments, for example).

Your reading of "acquisition" is not correct. The type of goodwill that the article is referring to is when one company acquires another, the difference between the purchase price and the Book value + FMV adjustments is treated as goodwill on the B/S of the acquirer. Goodwill is basically the extent to which the acquirer "overpays" for the identifiable assets of the business. "Acquisition" in this context does not refer to merely the purchasing of any asset.

There is a little more complexity here such as negative goodwill and when there is a non-controlling interest, but you get the gist of it.

Sorry, double post

Your would be correct Mr. Lambert.

The key here however is not that the art contest payout was capitalized, after all MP has indicated he thinks very little of IFRS so it is not a problem per se that he does not follow its rules. What is important is that it would be impossible to develop a framework which both allows something like the contest payout to be capitalized while at the same time not allowing all sort of other absurd things to be capitalized that any sane person would think should be expensed. One of the biggest areas of fraud and management manipulation of performance has been aggressive capitalization. WorldCom is but one example of many. There is a reason that the criteria is so fleshed out in IFRS and US GAAP. MP is effectively trying to create a framework on an ad hoc basis. It is doomed to failure unless he leverages heavily off of current mainstream standards.

Any framework or set of criteria with respect to capitalization vs. expensing that is loose enough to deem the contest payout to be capital in nature can be used to justify capitalized just about every other expense imaginable. There is a reason that preexisting standards are so stringent with respect to capitalization criteria (identifiability, future economic benefit, measurability, etc).  This all seems to be lost on MP.

I'm not sure what preexisting accounting standards did to you, but your attack against them is unwarranted.

a) They are not uniquely tailored to fiat currency. Having a your reporting currency in BTC does not change anything structural. Accounting standards were actually developed when the currency was commodity-backed and not fiat.

b) The lack of taxes is also irrelevant to reporting standards. Accounting standards do not match tax standards anyway. All that would happen with BTC securities is that those handbook sections related to taxes (i.e. future income tax method, taxes payable method, disclosure requirements, etc) were just become irrelevant.

c) In your post you discuss forward-looking statements/projections. It is a mistake to include such projections in with the financial statements. The two need to be segregated, like what you see in annual reports.


With respect to your example statements for S.MG:

http://polimedia.us/trilema/2013/smg-june-2013-statement/

a) You need to have note disclosure for the breakdown of your accounts. For example, what your intangibles are composed of and the amortization period (even if it is 12 months). In this case it is obvious because there has been almost no activity, but for business which are in operation it can become complicated.

b) Your treatment of the prize as an intangible is inappropriate. This is a perfect example why relying on pre-existing accounting standards is a good idea. The guidelines and rules with respect to capitalization of intangibles and goodwill is hashed out thoroughly (I prefer IFRS to US-GAAP in this case, but either is good).  I'll save you some reading time: the prize cannot be capitalized and needs to be expensed.

c) You should value the warrants on the B/S. They represent a possible future stake in the business.

d) Your "incoming and outgoing" table, which I presume is a cashflow of sorts, needs to have a rec at the bottom. Basically "Opening + Changes based on the table = ending" and then the ending ties to the cash balance on the B/S. Right now the "Changes" are not even netted.

Point c) is actually a perfect example of what I think the right course of action would be for Financial Reporting. Those preexsting standards which are applicable and make sense should be used, we should not be trying to reinvent the wheel. However, there is indeed too much complexity in certain areas with how current standards deal with things. In those isolated instances, it is certainly justified in attempting to improve clarity for the users of the statements by simplifying. c) is a good example of this as the current standards would treat the warrants in a much more complicated manner. My strategy with TU.SILVER has been to treat outstanding options written by the company as a liability held at cost. Is this compliant with IFRS or US GAAP? no. Is the additional complexity related to adhering to current standards worth it to the users of the statements? no.

It was rhetorical. Basically the entire recent bets screen was green with 2x payouts. Just something which you don't statistically see very often.

Sorry for the spam.

Can someone tell me what happened just now?

I'm not trying to be rude here, but do you even know what you invested in?

it has potential, there are just a few key issues:

1) Management fee is bit high. I would have preferred it being based on net income rather than gross revenue

2) Its assets and cashflow are USD denominated. Anybody who strongly bullish on BTC should not be investing.

3) The dissolution policy is a gaping hole for management abuse.

I expect the stock price to drift below IPO levels for the next month or so. They arent going to be generating cashflow for a fair amount of time and this will push weak shareholders out. I'll buy then.

I still have concerns over the dissolution. Frustratingly I cannot come up with an alternative way that does not still have exposure to abuse. Anybody have any good ideas?

As an aside, if you plan on issuing debt later on as a means to avoid the dilution problem I mentioned, you need to have a hard USD peg. There is no way you can issue debt with BTC FX exposure when your assets and cashflow is denominated in USD.

Gone through the document again. A couple of points:

1) I am glad you have included disclosure re: management partaking in repairs and rehab, although I think you still need more clarity beyond merely "We promise not to charge too much".

2) It appears that your 10% management fee comes off the top. Therefore I suggest you rephrase your definition of "net income" to include it being post management fee expense.

3)There is a good chance that the FMV per share could very well change from block #1 to #2 to #3, etc. I think you need to flesh out how exactly your secondary offerings are going to be priced. I could imagine a scenario, for example, in which you issues block#1 then over the course of 2 months the shares drift downward, at which point you issue block #2 at the suppressed levels and dilute the hell out of the existing shareholders.

4) Your "Dissolution" section is a bit weak. First, I think you should drop this buyback @110 nonsense. It is way to easy for management to abuse such a clause especially if it is not weighted or a historical average. We are not talking about a bond here. Second, it is not feasible for shares to be converted into a direct ownership stake in the RE. For a big chunk of your investors located outside of the US, it is not even legal.

I have more comments, but this is enough for now.

How would it be organized? Who would make decisions about changing things (the layout, etc)? Who would make decisions about which securities to list and which to avoid (or do you suggest that everything be listed)?

The oversight you make is that unlike bitcoins, an exchange cannot be some homogenous, static, pre-scripted entity. In that context you cannot have it decentralized.

"A real exchange would ideally also be based on cryptocurrencies and totally distributed, and be running 24/7/365"

Mind explaining how this word work? It appears like you just took a description of how bitcoin itself works and replaced "bitcoin" with "exchange".

Lohoris,

I believe this is what you are looking for;


"DIVIDENDS FOR DMS.SELLING

Whenever a DMS.MINING dividend is paid an assessment will be made of whether a DMS.SELLING dividend should also be paid.  This will be done as follows:

NAV/U post (DMS.MINING) dividend will be divided by the dividend just calculated for DMS.MINING.  This produces the number of days at current difficulty for which dividends could be paid from current capital.

If that number is greater than 410 then a dividend will be issued for DMS.SELLING (and any outstanding DMS.PURCHASE) such that it would reduce capital to exactly 400 days of dividends at current difficulty.  If the number is less than 410 then no dividend will be paid.

This serves to keep capital at around 1 year's dividends (the buy-back price) plus just over a month extra to allow for short-term variance in difficulty."

Deprived, speaking of investing, have you considered in future offerings (i.e. when the current batch goes to zero) limiting the issuance size? I ask because if this becomes a popular instrument you might end up having cash drag become a problem for later iterations. And, as uncomfortable as this may be, the counter-party risk increases as the issuance grows. There is both increased incentive for your to take the money and run (Rude, I'm sorry) and for hackers and others to try and abscond with the money. The downside is that this would hurt your management fee and limit liquidity and increase miss-pricing of the pre-existing mining and selling (as there is no more ask wall on purchase).