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ANDREW DAVID W.Y.
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01 / CAPITAL MECHANISM · V2.0
Capital Mechanism V2 · Customers, Three Paths and Operating Cash Recovery
Preserve the original structure while adding roles, ownership, actual cash, performance obligations and failure branches.
V2.0 Internal Mechanism Design Draft · Additions are proposals; entities, contracts, parameters and applicability remain to be confirmed. Original: Capital.pdf.
01
Solid: business and cash actions Dashed: conditions, information or feedback Blue: operating recovery and voluntary choices
Starting point: business and economic model
Real demand, delivery costs and cash sources
Test target returns through scenarios first
The original 40% remains an unverified
parameter
Customer expansion
Channel cooperation → Real end demand → Repeat
purchases
Keep transaction, delivery and after-sales records
Calculate channel compensation from verified
business contributions
Confirm roles and voluntary choices
Consumer / Channel partner / Investor
Separate contracts and records for
overlapping roles
Identify recipient entity, use, term and
loss bearer
Record consumption rights, investment units and
withdrawable cash separately;
buying goods does not automatically make a
consumer an investor.
Separate financing entry
Equity, borrowing or contractual project
contributions
Identify use of funds, entity and obligations at
maturity
Record financing principal separately from
operating profit
Return choice
First confirm actual returns lawfully and
contractually distributable
Receive cash or voluntarily choose reinvestment
Revalue, contract and register reinvestment
anew
A / Reinvestment: from capital input to verifiable operating results
Three investment choices
Business investment / Contractual income
rights / Equity
Define rights, risks and uses of funds
separately
Project and transaction conditions
Review budget, valuation, ownership and
contracts
Milestones, verification records and
post-investment management
Real value creation
Asset registration, delivery acceptance
and actual revenue
Generate project cash recoveries and
record losses
Long-term capital development
Operating results, profit records and equity
governance
Hold for dividends / Financing / M&A
IPO is a conditional exit; retain an unlisted branch
Define pledges, lockups, contractual income rights and equity separately; locking assets is not itself a source of returns. See page 2.
B / Trading and cash-out: identify seller, buyer and payment obligor
Distinguish exit types first
Holder transfer / Contractual redemption
/ Company buyback
Identify rights and transfer restrictions
for each
Establish real transaction conditions
Independent counterparty, pricing basis
and disclosure
Applications, verification and contractual
triggers
Payment, settlement and registration
Transfer: buyer pays seller
Redemption/buyback: designated entity pays its
contractual obligations
Record and handle any shortfall under the
contract
Exit outcomes and fallback
Reconcile cash with ownership changes
No buyer or unmet conditions → Unexecuted / Continue holding
Do not assume continued buying by new participants as the
default exit
The total value of transfers between holders does not automatically become the issuer's operating revenue; the company records only revenue and cash attributable to it. See page 3.
C / Consumption absorption: settle corresponding rights through real delivery
Three types of real consumption demand
Essential / Cultural and experiential /
Premium
Identify specific goods, services and
suppliers
Pricing and payment arrangements
Cash actually received +
Contract-permitted consumption rights
Disclose deduction conditions, validity and
refund/change rules
Performance and supplier settlement
Procurement, delivery, acceptance,
after-sales and refunds
Match supplier obligations with cash
settlement transaction by transaction
Rights settlement and operating contribution
Separate rights redeemed, fulfillment cost and cash received
Return only settled cash with clear entitlement to the budget
The face value of rights redeemed does not directly equal
profit
Investment units are not automatically payment instruments; the contract determines how many rights are used, who bears fulfillment costs and which rights are restored on a refund. See page 4.
Operating recovery and cash budget / Meet actual obligations before assessing expansion and distribution capacity
Settled cash grouped by source
Operating receipts / Project recoveries / Separate
financing
Separate records by entity, use and restrictions
Total cash does not equal distributable cash
Rolling budget and payment schedule
Verify contractual, statutory and maturing payment obligations
Fulfillment, refunds, costs, taxes and operating minimum
Confirm earmarks, reserves and distribution restrictions
separately
Allocate only after constraints are met
Expand verified business / Retain operating cash
Pay distributable returns / Offer voluntary reinvestment
No distributable cash → No new unfunded commitments
Review monthly: real external demand, order cash contribution, fulfillment and refunds, maturity payment coverage, project losses, voluntary reinvestment and holding concentration
Handle shortfalls under the contract and improve information and budgets; IPOs, asset appreciation and new financing do not replace current operating verification.
How to read: pages 2–4 expand the three paths, page 5 unifies ledgers and budgets, and page 6 adds participant value and growth feedback. Amounts, ratios, valuations and terms await project data.
yutengfei.com · Andrew David W.Y.
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