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CAPITAL MECHANISM / INTEGRATED V2Capital Mechanism · Complete Integrated MapUnified entry → Three paths → Separate ledgers and budgets → Return choices and operating feedbackSolid blue: settled funds and defined payment arrangements Solid dark gray: business, delivery and rights changes Dashed gray: condition checks, ledgers and feedback01 / Business Foundation, Roles and Entry ConditionsStarting point: business and economic modelReal demand, delivery costs and cash sourcesTest target returns through scenarios firstThe original 40% remains an unverified parameterCustomer expansionChannel cooperation → Real end demand → Repeat purchasesKeep transaction, delivery and after-sales recordsCalculate channel compensation from verified business contributionsConfirm roles and voluntary choicesConsumer / Channel partner / InvestorSeparate contracts and records for overlapping rolesIdentify recipient entity, use, term and loss bearerEvery contract must answerWho collects, who owns assets and who pays?What is the return base and when is it recognized?Who bears losses and when may it terminate?If performance fails, how are refunds, recovery or settlement handled?Separate financing entryEquity, borrowing or contractual project contributionsIdentify use of funds, entity and obligations at maturityRecord financing principal separately from operating profitSources of investable cashSeparate financing principalSettled returns available for voluntary reinvestmentApproved retained operating cashIdentify the source and use of each amountRecord consumption rights, investment units and withdrawable cash separately;buying goods does not automatically make a consumer an investor.02 / Four Participant Types: Value, Settlement and Operating FeedbackConfirm contracts and real contributions for each role; register products, fees and rights received separately.01 / ConsumerReceive actual goods or servicesAttractive price, quality, experience and after-salesBuy and repurchase voluntarily according to demandConsumption rights may have defined scope and validityFormation of consumption rights and discountsBased on orders, actual service or approved marketing budgetExplain eligibility, scope and refund/change rulesRecord amount, cost and responsible entityTest consumer valueReal external customers, order value, repeat purchase and refundsRights use, fulfillment cost and satisfactionImprove goods/services to sustain demand02 / Channel PartnerProvide verifiable channel servicesQualified leads, real sales and customer serviceService fees or contribution-based settlement may be designedSpecify fee types and budget in advanceSettle based on real contributionLead verification → Sales cash received → Delivery confirmedRecord commissions, service fees and taxes item by itemAdjust refunds and cancelled orders as agreedTest channel economicsVerified net sales, acquisition cost and payback periodChannel service quality, complaints and returnsDistinguish productive channels from inefficient costs03 / InvestorObtain project rights matched to riskReceive real operating information and post-investment reportsChoose business investment, income rights or equityDecide after understanding terms and risksReturns arise from specific transaction arrangementsProject cash, distributable profit or real transfersClarify contractual rights, fees, losses and payerRecord capital input separately from distributable returnsTest capital allocation outcomesProject inputs, recoveries, losses and remaining obligationsActual returns, voluntary reinvestment and exit outcomesInform the next project selection and use of funds04 / Supplier and Operating PartnerProvide deliverable goods, services or assetsReceive real orders and agreed settlementService cooperation and volume purchasing may be designedCreate partnership value through quality, cost and fulfillmentMatch cash needs with responsibilitiesSupply/service standards, acceptance and settlement termsAgree cash, payables and consumption-right cost allocation separatelyTrace fees, after-sales and loss responsibilityTest supply and operating efficiencyDelivery lead time, stockouts, quality and actual purchase pricePayables, settlement timing and fulfillment cash gapsMatch expansion speed to actual delivery capacitySeparate pledges and lockupsPledge financing: verify collateral, debt and repayment separatelyLockups restrict trading; they do not automatically create returnsDo not combine income rights, equity and consumption rights into one balanceSeparate cash ledgers for issuer and holdersCash from a holder's sale belongs to that holderIssuer capital increases/borrowings are recorded as financingService fees follow actual entitlement, performance and collectionDo not combine the three as “project revenue”Refine information and trading managementDisclose actual operations, finances, rights and risksTrace issuance, lockup, unlocking and transfer rulesMonitor concentration and real transactionsUse rules and information instead of “price control and news-driven exit buying”In this draft, DRIP means voluntary reinvestment of settled returns; unrealized appreciation, returns not yet due and unsettled consumption rights are not directly treated as cash returns.03 / Use Pilot Data to Decide Incentives and ExpansionSmall-scale pilotReal quotes, orders and serviceVerify actual contributionsCash, costs, delivery and refundsApprove affordable incentivesMatch performance obligations and cash budgetObserve repeat purchase and partnership qualityValidate long-term customer and channel valueExpand or revise the planReview projects, supply and capital allocationIncentive budgets are jointly constrained by verified contributions, unfulfilled obligations, refunds and operating cash; specific ratios and settlement cycles follow pilot data.Repeat purchases, voluntary reinvestment and more channels should result from value and service; they cannot replace real external demand, profit and cash recovery.A / Reinvestment and Long-term CapitalEntities: contributor / Asset or project company / Operating company / Return payment obligor / Equity issuer; specific names, relationships and jurisdictions remain to be confirmed.Common entry conditionsProject approval, budget and valuation basisOwnership, contract, term and loss allocationStaged investment and milestone acceptancePost-investment ledger and designated reviewerReal value creationAsset registration, delivery acceptance and actual revenueGenerate project cash recoveries and record lossesLong-term capital developmentOperating results, profit records and equity governanceHold for dividends / Financing / M&AIPO is a conditional exit; retain an unlisted branch01 / Business InvestmentSelect a real businessEquipment purchase, leasing or smart sharingVerify through customer demand and ordersInvest and register assetsPurchase price, ownership and depreciation/maintenanceRecord delivery, utilization and wear/lossGenerate real recoveriesSales volume, fees, costs and receivable collectionsVerify project net cash and lossesStage review and actionContinue investment / Adjust / StopPay under the contract and record lossesBook valuation is not a direct cash return02 / Contractual Income-right InvestmentIdentify the income-right contractLink to a specific project or businessFirst establish the nature of principal and rightsDefine the calculation baseRevenue, costs, expenses and taxesDistribution period, priority and audit recordsSettle based on actual resultsConfirm distributable amount and obligorHandle shortfalls, losses and disputes separatelyPerform the agreement; no automatic interestActual payment / Contractual deferral or terminationRecord rights settled and unpaid obligationsDo not treat future income rights as cash received03 / Equity InvestmentDefine the equity transactionIssuer, valuation, price and unitsUse of funds and shareholding entityRegister shareholders and governance rightsVoting, dividends, dilution and transfer restrictionsRelated parties and effects of later financingBuild long-term valueAssets, customers, profit and governancePost-investment data and financial reportsList conditional exitsHold for dividends / Transfer / M&AExplore an IPO if conditions are metIf unlisted, continue holding or exit under the contractDRIP / Settled returns → Voluntary choice → New transaction → Renewed reviewConfirm settled returnsIdentify distributable amount and paying entityFirst meet actual cash and rights conditionsThe individual makes the choiceCash receipt / Full or partial reinvestmentTrace amount, term, risk and authorizationProcess as a new transactionNew price or valuation and new contractRecord new units and cost basis separatelyRe-enter project reviewInvest according to budget and purposeFuture returns still arise from real businessB / Trading Exits and LiquidityRights submitted for exitEquity / Contractual income rights / Other instrumentsConfirm holder, nature of rights and restrictions firstHandle consumption rights under their consumption contractsVerify rights and channelsTransferability, term, eligibility and disclosureRelevant contract, venue rules and applicabilitySpecific jurisdictions and issuance arrangements require verificationCondition checks only identify executable paths; showing an “exchange/transfer venue” does not make rights inherently tradable or applicable in every jurisdiction.01 / Holder-to-holder Transfer: Buyer Pays, Seller ReceivesIndependent buyer and sellerReal buying demand and complete informationWithout a buyer, remain unexecutedPrice and execution conditionsDisclosure basis, negotiated or venue executionConfirm fees, taxes and settlement arrangementsBuyer pays sellerComplete settlement under transaction termsReconcile cash and rights registration togetherUpdate holder registrationSeller receives net settlement proceedsIssuer records only its own fees/revenueTotal turnover does not automatically become company operating receipts02 / Contractual Redemption or Payment at Maturity: Obligor Performs the ContractConfirm contractual payment obligationsWho owes redemption or payment at maturity?Triggers, amount and application procedureVerify maturities and available fundsSources, use restrictions and maturity matchingActual payment coveragePay and settleMake payment and handle fees under the contractCancel/settle corresponding rights and obligationsHandle shortfalls under the contractRetain unpaid obligations and identify the responsible entityContractual negotiation, dispute resolution or recoveryNew issuance or a future IPO is not a payment guarantee03 / Buyback by Company or Designated Entity: Subject to Authority, Contract and BudgetDefine buyback arrangementsEntity, authority and triggersPricing mechanism and budget constraintsReview actual payment capacityUse of funds, payment obligations and liquidityComplete applicable decisions and disclosuresPay and process rightsFollow contract and applicable rulesRecord cash outflow and holding/cancellation separatelyTrack execution outcomes continuouslyActual buyback amount, remaining commitments and payment coverageDo not recognize completion if conditions are unmetDo not depict an unconditional, anytime redemption channelNo buyer / No quote / Transfer conditions unmetUnexecuted → Continue holding or choose another contract-permitted exitRecord and handle market illiquidity separately from a payer's cash shortageDo not assume continuing purchases by new participants as the default exit.Monitor by entityUsable cash, current payables, future maturities, net outflows and maturity mismatchesExecuted/unexecuted trades, concentration and remaining buyback/redemption obligationsC / Consumption Performance and Operating ContributionEnter the consumption path: real customer demand, specific goods or services and identified performance obligor; confirm cash and contract-permitted consumption rights separately.Essential consumption demandReal customer demandSpecific goods or servicesIdentified performance obligorCandidate goods and servicesSupply-chain daily goods, actual AI equipment or related servicesVerify purchase price, sales price and real demand for each SKUHigh gross margin is a calculation outcome, not an assumptionPricing and paymentCash payment / Contract-permitted consumption-right deductionsSpecify limits, scope and validityBudget supplier cash requirements separatelyDelivery evidence and resultsOrders, supplier quotations, shipping and acceptanceAfter-sales, returns and refund methodsRecord cash received, fulfillment cost and redeemed rights separatelyCultural and experiential consumption demandReal customer demandSpecific goods or servicesIdentified performance obligorCandidate real servicesConferences, events, training, study travel, etc.Define schedule, service standards, personnel and responsible partiesVerify qualifications and issuance basis where certificates are involvedPricing and paymentConfirm orders from service quotes and customer demandSeparate discounts/rewards from actual service costsClarify refund/change conditions, places and delivery period in advanceFulfill and settleAttendance, itinerary, service delivery and customer confirmationRecord supplier settlement, cancellation fees and refundsDo not count the full face value of rights as profit for unfinished servicesPremium consumption demandReal customer demandSpecific goods or servicesIdentified performance obligorCandidate real goods or servicesJewelry and luxury goods based on real demand and quotesVerify goods, suppliers and after-sales responsibilityLet customers choose voluntarily; avoid purchases solely to redeem rightsPricing and paymentShow cash cost and consumption-right deductions separatelyVerify market price, transaction authenticity and taxesInvestment units are not automatically payment instruments for goodsResults and operating contributionGoods ownership, delivery, authentication or acceptance recordsRules for restoring cash and rights on refundsCorresponding supplier cash settlement and order cash contributionUnified Order and Fulfillment ProcessOrder and payConfirm contract and priceSupply and settleProcurement, fees and supplier payablesDeliver and acceptConfirm actual performance evidenceAfter-sales and refundsReverse and return corresponding cash/rightsRedeem and reconcileSettle eligible rights transaction by transactionSettled cash contribution per order (management measure)= Actual order cash received − Supplier cash settlement − Cash fulfillment/channel/payment fees − Actual refunds − Related taxesContinue tracking unsettled payables, later refunds and restricted uses separately; this measure does not replace accounting profit or the cash-flow statement.Record at least four figures for every transaction: face value of rights redeemed, actual fulfillment cost, cash actually received and accounting revenue recognized.Redeeming 100 in rights does not create 100 in cash or profit; classification and recognition timing depend on contracts and applicable standards.04 / Ledger Reconciliation, Rolling Budget and Return ChoicesFive linked ledgers / Use one transaction ID across each business event; do not add balances directly across categoriesCash ledgerEntity, currency, source and useReceived/paid, restricted/availableBank and settlement recordsCustomer contract ledgerOrders, performance obligations, delivery and refundsReceivables/payables and relevant payerRevenue recognition basisConsumption-right ledgerIssuance basis, scope, term and face valueAcquisition, use, refunds and redemptionUnfulfilled obligations and cost estimatesProject asset ledgerOwnership, investment cost and statusProject recovery, maintenance and lossesSeparate valuation from recoverable cashEquity/investment-unit ledgerIssuer, holders and unitsContribution, valuation, dilution and transferDividends, redemption and remaining obligationsPresent three cash categories separately / Explain financing inflows, operating receipts and project recoveries separatelyOperating cashReceipts and related payments for real goods/servicesAssess revenue recognition and cash receipt timing separatelyInvesting cashAsset/project investment, disposal and recoveryAsset appreciation does not automatically generate cashFinancing cashCapital increases, borrowings and related outlaysRecord principal, interest, rights and use separatelyRolling cash budget (illustrative) / Confirm statutory and contractual priorities and fund restrictions against actual arrangementsUsable cashExclude restricted funds and amounts not belonging to the entityMatch payment arrangementsFulfillment, refunds, taxes, costs and maturing obligationsRetain necessary operating and earmarked fundsMaturity matching, reserves and budget reviewAssess remaining availabilityContractual/statutory distribution conditions still applyThen decide to expand, distribute or retainObligation payments: funds available for the relevant entity, period and purposeCover redemption, buyback, supplier and other payments dueRetain original payment obligations for any shortfall; handle under contract and disclose continuouslyAllocate only after constraints are metExpand verified business / Retain operating cashPay distributable returns / Offer voluntary reinvestmentNo distributable cash → No new unfunded commitmentsReturn choiceFirst confirm actual returns lawfully and contractually distributableReceive cash or voluntarily choose reinvestmentRevalue, contract and register reinvestment anewKey metrics and trigger actions / Include thresholds, data owners and review cycles in the project parameter sheetReal demand and unit contributionReal external customers, repeat purchase and per-order cash contributionFinancing or circular transactions cannot replace external salesMaturity payment coverageUse-matched available cash ÷ Payables due in the same periodShortfall → Identify responsible entity and funding responseFulfillment and refundsOutstanding rights, expected fulfillment cost and refund rateRising costs/refunds → Review pricing, reserves and ordersProjects and tradingProject losses, concentration, executed/unexecuted tradesDelayed recovery or restricted exits → Adjust investment and termsTesting the original 40% scenarioIf annual cash return is merely modeled at 40% per 100 of principal, required return cash is 40; principal repayment, if required, is a separate outlay.This is not a verified return, default commitment or distributable profit. Test against actual project cash, terms, losses and distribution conditions.Stress scenarios and stop conditionsNew financing stops, sales fall, receipts are delayed, refunds/maturities increase together, or IPO is delayed.Recalculate cash and fulfillment gaps separately; if coverage fails, do not expand commitments beyond budget, and handle existing obligations under the contract.An IPO, rising asset prices and new financing do not replace verification of current operations.Minimum missing evidence: entity and ownership relationships, product/supplier quotes, customer/investment contracts, rights issuance and liability details, historical operating cash and refunds,project budgets/recoveries, financing uses and maturities, valuation basis, transfer/redemption/buyback terms, distribution policy and applicable jurisdictions.References for definitions: IAS 7 (three cash-flow categories), IFRS 15 (performance and revenue), and SEC guidance on private secondary markets (U.S. example only). See direct links in the accompanying explanation.Internal Mechanism Design Draft · Details from Six Pages Integrated · Confirm amounts, ratios, valuations, terms and thresholds with project dataChoose a path by role and contractOnly service fees, etc. actually attributable to and received by the issuer → Operating cashTotal holder transfer proceeds remain in buyer/seller ledgers, outside issuer operating receiptsyutengfei.com · Andrew David W.Y.
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