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Dear Laxmi, I may have missed your response to the question?
K
Dear Laxmi,
Thanks a lot for all this detailed information. The gist for me as an investor is that profitability should be very good. Margins are expected to be so good that they would be good evgren if margins were significantly narrowed. A crucial point is that with good profitability growth should be very fast since much of the profits will be reinvested in rice. It is also very nice to see that two of the verticals advance the progress of each other. My bottom line is as it were: I AM VERY IMPRESSED.
Dear Snow,
We will be placing 1000 Metric Tons 1121 Grade Basmati Rice - Golden Sella Pesticides Free Rice Order with a Firm in Karnal Haryana India.
We will release this order after our discussions with the Banking Group in Europe that is actively willing to distribute our Fractional Asset Tokens.
Price is finalized for $1,089/Tons FOB Mundra Port Gujarat India
Delivery in 5 Kilo Bags
Minimum Grain Length 8.40 mm
This is the finest quality Pesticides Free Rice....
The Indian firm is requesting that we place this order before the end of Indian Financial Year which is March 31, 2024. And given that our cash flows are getting readied and we are meeting the group in this month, we do plan releasing the order this Month, before the month ends. If any delays, for sure before the 10th of April.
One important point that we are investigating is the ratio of rice we should use internally for our food carts business and externally as subscription base selling.
Our Final Cost including distribution is around $6.65 / 10 LB and we plan selling it for $1 per LB -- Prevailing market rate in US at all stores is $12.80 to $15.00 and as regular consumption, our price is expected to make a huge difference. Selling at $1.00 per LB we gain 3.35/6.65 as our Gross Margin => 50.38%. But, if we consume internally on food carts introducing eatable rice for $1.00 per Bowl of 200 grams $1.50 per 300g, cost of sourcing rice is just $0.147 per 66.67g of uncooked rice. Assuming a final cost of $0.333 per 200g of cooked rice & $0.50 per 300g, we have a clear margin of 200% if we use the rice internally. Plus if the same rice is used for selling the most popular Biryani Rice Bowl, margins are even better. Not just the pricing advantage, even inventory turnover is at least twice a day if its food carts vs weekly 10 LB consumption pattern, if sold subscription based. Also the inventory consumption if through food carts will shoot northward 10 times...to serve 1 Million meals on a daily basis. Over a period our goal is to make people simply stop cooking rice....
1 Million meals will consume 100 T of rice daily and this means 10 days to cycle 1,000 Tons Inventory with 200% value addition each time we circulate meals on a daily basis vs 50% we get on direct rice selling as weekly subscription to consume the same 1,000 tons inventory.
This said, we do have to sell some rice at least to the consumers -- probably we use 75;25 mix to optimize financial compounding and stabilize our brand in the minds of people.
Will further update by this month end, Snow!
RD One question I forgot to ask: When is the first purchase of rice in india expected to happen?
Very nice update, Laxmi.
Thanks!
Thank you Snow,
Its all of our wait and a moment for celebration...
The team's responsibility and that of mine now multi-folds as we need to use every dollar of this availability in the wisest means...
Fortunately we do not require deep inventory pockets but a strong distribution network...and our signing up with European Bankers group will propel this distribution heavily... and we will replicate the model in every geographic region we are planning to focus...
Cash availability will improve solidly with
(a) Growing investor interest and
(b) Gross margin realization out of every sale...
(c) Management Fee share month on month...
More as we keep progressing,
Sincerely,
Laxmi Prasad
Dear Laxmi,
Excellent news! I hope you will have a nice and productive trip to my part of the world - Europe.
Dear All, Cash grants will be paid out on March 22, 2024 and eligible receivers should see wire credits on 3/25. I will be in Amsterdam at that time -- meeting a few from European Banks on token underwriting and distribution -- Will celebrate the occasion with our team based out there...
RD I see better than before the calculation of 10 dollars now for the RISO tokens. It may be some sort of compromise between potential and various kinds of things that may go wrong. I think it will be a lot easier to see what is realistic to expect at the end of this year based on experience than to calculate before the real business is in progress with all its aspects.
We have calculated it several ways now. I already told you I have seen numbers of $78 per token (for 12 cycles) and $240 for 15 cycles per year.
We calculated it ourselves and determined $117 may be fair value. Which is in line with the other estimates.
This is all subject to certain conditions of course.
And there is always a degree of uncertainty.
We also said they will probably be valued at $10. Today. Or close to that.
I think you can see why.
Let's leave it at that.
RD Here you assume that all the profits are reinvested and that the growth rate is several hundred percent. But I agree that a p/e ratio of 20 is too low in this type of situation even if the growth only lasts for 3 years. I have no idea what is a fair p/e ratio here. I assume it can fairly easily be calculated.
RD I thought that the 10,000 tons was the target for the year be it 2024 or the first calendar year. If the price at which the rice is sold is 40% higher than the price at which it is bought there will be some big "gross profit" to cover expenses and to be shared by the owners of the two series of tokens. Of course my numbers will be way off it the first cycle means about 10 times as high volume as my numbers are based on. If we assume a 10 million dollars investment which is sold for 14 million dollars, there might be a profit for our series of tokens of let's say 1.5 million dollars from the first cycle. Let's assume that profits for the whole year will be 15 times this number or about 22 million dollars for the whole year. Assuming a p/e ratio of 20 because a quite high growth rate is anticipated that would mean a total value of the tokens of 440 million dollars or somewhat more than 4 dollars per token. I now better understand your and Laxmi's optimism. The potential is clearly high but very often things don't work out as well as projected.
Snow, the 40% margin that I mentioned is on the trade. ie buy/sell. As it will dictate the growth rate when resinvesting the profits.
The 10,000 tons rice is the target for 1 cycle. It's only a $10M investment.
Laxmi believes we will have to reduce inventory after the 3rd year. Because we will grow too fast.
RD When it comes to margins I wonder if you forget that there are two series of tokens according to a previous post. Our tokens will have revenues from running the business + one third of the profits after the owners of the other series of tokens have had 8% percent annual interest + two-thirds of the profits. Our share of the profits cannot possibly be anywhere near a 40% margin in relation to the gross margin fetched by the sale of rice?
RD Thanks for very interesting information! I don't know if your numbers are based on a full calendar year or 2024. My calculation was based on the former assumption and implied 1000 tons times 12 which is 12,000 tons. When profits are reinvested growth should be very fast and value per token more than a dollar after the first calendar year.
Most of the profits will be reinvested. Also, margins are much higher than your 10%. As high as 40%. Also, we are targeting 10,000 tons of rice for the first year. This is a world of a difference compared with your numbers.
RD I got the impression some months ago that a relatively flat sum of money will be remitted to the owners of our tokens and the remainder reinvested. If that were to be the case the growth rate would be fairly modest initially but gradually increase as the remittances would represent a decreasing part of the profits. In your case with 1000 tons of rice initially and based on prices I have seen in shops I guess the rice might have a value of about 3 million dollars or perhaps a bit less initially. If we assume that the profit rate had been independent of volume and we assume a profit margin of 10% here too, profits would have been 300,000 dollars for the first cycle. If we assume that no profits had been reinvested but remitted to the holders of the tokens and we also assume 12 cycles accumulated profits would have been 3.6 million dollars. If we again assume conservative p/e ratio of 10 and 100 million tokens the value of each token would be 36 cents. In this case 12 times 300,000 dollars would have been remitted to shareholders and remittances and the value of all the tokens at the end of the year would have been 72 cents per year. In my view these are encouraging numbers. They suggest very good value for the holders of the tokens even if no profits had been reinvested and therefore no growth.
I have seen some numbers.
If we reinvest the profit after every cycle then you get exponential growth.
If we start with 1,000 tons of rice then the RISO tokens will be worth $78 after 5 years when doing 12 cycles per year.
If we cycle it 15 times per year then the tokens will be worth $240
So you can see how fast it goes up when the cycle rate increases.
We have the same principle and result for SWIM Gold.
So, there are many factors to consider.
How much can we start with?
How many cycles do we get per year?
How much physical supply do we have?
Can we maintain margins?
And all these things will determine the result and token value.
Let's leave it there.
Almost done. We will be close to 60M RISO 👍️
Yes, we will have good growth on the volume side and profits per share. Probably more than you think.
We already have a supplier and 30% margin. So 20% longer term is conservative already.
We are getting ahead of ourselves. I will get some numbers from Laxmi today. Perhaps we will share some later.
RD I sometimes mix up dollars and Norwegian crowns when I do my calculations in my head. 480 million dollars would be the right number. It also struck me that 12 cycles was more realistic in this case. 10% profit margin was an attempt to be conservative on my part. What surprised me that you assumed that there will be no growth. I assumed that the other series of tokens would not distribute all the profits and that part of it would be retained and would result in the purchases of rice gradually increasing. That woud result in a gradual increase in the distribution to the owners of the other series of tokens too.
RD I have tried to do some calculations of the value of our RISO tokens based on some very uncertain factors. Let's assume 24 purchases of rice in India in the course of a year and a profit margin of 10%. That would result in profits of 24 million dollars in profits if each purchase was rice for 10 million dollars. Let's assume a p/e ratio of 20 and 100 million tokens outstanding. That would mean a market cap of 4.8 billion dollars or a value of each token of 48 cents as far as I can see.
Yes, Snow. Usually we get 10% sweat equity (could even be 20%) plus 2% management fee per year plus 1/3rd of profits above 8%.
RD What you write here is that there are two different kinds of RISO tokens and that the ones we get are different from the ones that will trade externally. Actually, this is very interesting in some ways. I suspect that the volume of trading will be a good deal lower than for the other kinds of tokens. The prices are likely to be quite different too even if the price of our tokens will indicrectly depend on how well the business is going which will again decide the price of the other tokens.
For us I assume the management fee is important when it comes to the profits. Moreover, we will be entitled to one third of the gain above 8% if I have not misunderstood. From the revenues the expenses will have to be detracted. Of course we could also buy the other series of the RISO tokens if we want to. Since you write that these tokens will be backed by 10 LB of Basmati rice per token, I assume that they are not trading so far. If my memory does not fail me Basmati rice is a good deal more expensive than some other types of rice.
Regarding the value of our RISO tokens I get the impression from your post that there will be about 70 million tokens. I have had the impression that there will be 100 million. This is quite significant when it comes to the value of our tokens.
Most of the rice is sold in the US. I'm not aware of the details.
We are looking at 30% profit margin. One reason could be, usually you need expensive bank loans in order to be able to trade it (internationally). We are also making it easy for the supplier by buying it from them (at the source).
Laxmi will share the numbers with me later today. But we already know that the issue price of the RISO tokens that are issued internally is close to $10. Which would give the Rice vertical a market cap of $1 billion assuming 100M tokens are outstanding (after dilution). This is all as expected. The RISO tokens issued to the public/investors could be worth > $100. But not that relevant for us. You can do the math yourself if you assume it cycles 12x per year.
Gold SWIM trades in a similar way. They have been doing this for a long time already. And we will also have SWIM for Plane Seats.
Again, I am not aware of the details. I have been working mostly on the 5 projects in Nigeria together with Alex Anigbogu and we have an Aqua RAS team of 5 strong as well, in Nigeria. Those developments will speed up soon when the funding arrives. But I haven't been working on much else so I am learning just like the rest.
RD This makes sense but I think even so Ihave to pay a wealth tax on the others equal to what I paid for the tokens to be issued a later year.
RD Thanks a lot for clearing up things! What is most important for me is this: "
RISO are the security tokens now reflecting ownership of the vertical company. Same function as ordinary shares." I thought this was one possibility. But I also thought it might refer to something like PADDY with the difference that the 10 LB of rice served the same type of function as a certain area of rice paddy.
You mention that the rice is purchased in India. Where is it expected to be sold? Is the business concept that it is purchased at a significant lower price in India than what it fetches in other countries, and that a profit is thereby generated? If that is the case I find it hard to understand why this is possible.
Moreover, I don't undserstand at all is how it is possible to decide the value of the RISO tokens if they are not freely traded and the trading has a certain minimum volume, so that the price the tokens are traded at is not arbitrary or flutcutates a lot because the volume of trading is very low.
This is new for me too. And for most of us. But I learned some things today. About SWIM.
The RISO tokens that are issued now internally, close to 70M, are like the shares in a company. The profits that are generated by the company are divided by the 70M tokens. That is all there is to it.
The tokens that will be sold to the public are also called RISO. But they are a different series. They function differently. They have different values. These tokens will be backed by 10 LB of Basmati rice per token, and they will cycle 12x or 24x per year. The client will get 8% return minus management fee plus 2/3rd gain above 8%.
There is no wealth tax on Plane Seats and Whiskey for 2023. Because they were issued on Jan 16, 2024.
Only Gold, Rice and Food Carts are relevant for tax year 2023 (in Norway).
It doesn't work that way. There are no MyCow tokens. They do not exist. You can look at MyCow as the parent entitity of all the verticals. Which is officially called Cow Group (I think). With MyCow being the brand name.
So, for rice we have 3 tokens
RISO = security token and SWIM (Systematic Wealth and Income Multiplier). Backed by 10 LB of rice per token. You are basically granting rights to the company to trade rice on your behalf. And they will cycle it 12x or 24x per year, generating profits on every cycle. Rice is purchased in India (now).
AROZ = utility token. Not active. These usually get burned when the rice is physically delivered.
PADDY = fractional acres for rice farms. Also not active yet.
RISO are the security tokens now reflecting ownership of the vertical company. Same function as ordinary shares.
And yes, 84 accounts have been created. With RISO tokens issued. The same way that ordinary shares can be issued.
The other verticals will follow soon. Gold, Food Carts. And then Plane Seats and Whiskey.
The RISO tokens should be worth close to $10 per token. We will know soon.
I hope that is clear.
RD I appreciate your discussing this in a non-committal way. The deadline for my return to tax authorities is the end of April. To me it makes sense to use what I paid for the tokens is the natural valuation of the verticals at the end of last year - at least for the vertical shares that had not been issued at the turn of the year. As for the three that had been issued before the turn of the year it may be more complicated. If each of Rice,Gold and Wood Carts had had real assets injected into them before the turn of the year it would seem natural that the value at least reflected those assets. If the tokens had been freely traded with some volume I get the impression that the value for wealth taxation in Norway would be the value the myCow tokens were traded at, or the implied price for those tokens based on the price the rice, gold and Wood Carts tokens were trading at.
RD You may have misunderstood my question or I may have misunderstood the information about the rice tokens. I have had that the rice tokens themselves and not the myCow takens that we were to receive have started trading. <in other words, one vertical has a certain number of rice tokens that I thought have been trading for some time. I now have a feeling that I have misunderstood and that the numbers refer to myCow tokens that relate to rice and that the number 84 refers to the number of people that have received digital wallets including some rice tokens - whether that is myCow tokens related to rice or the tokens that that those who trade the rice will receive. This may be very unclear because of the complications because there are two kinds of tokens related to for instance rice - the myCow tokens related to the ownership of one of the verticals and the tokens related to the rice itself.
I also discussed taxes with Laxmi recently. Would probably be good to share with you.
First, the income tax. Which applies to employees. I'm using $0.01 for the shares that were issued to me last year.
Some people were gifted shares, for free. In which case the gift tax might apply. But that is not relevant here. I have already informed those people.
Now for the wealth tax (if applicable in your country). If the tax date is december 31. For 2023 you should probably use $0.01 per token. Laxmi has given me the issue dates of the vertical shares.
1) Rice and Gold = 15 sept 2023
2) Food Carts = december 2023
3) Plane Seats and Whiskey = 16 Jan 2024
None of this info should be relied upon. I'm just sharing to help you get going with taxes.
I think most of the tokens that were issued yesterday were issued to employees. Because of the round numbers. Some will get more tokens than others.
As for the valuation, Laxmi is working on it. But it should be close to $10 per token. For most vertical companies.
Also don't forget, 3 of the vertical companies are paying the first cash dividend. That money is coming from Interups though. So Interups is basically investing in, and acquiring tokens of, the vertical companies. But that price is determined slightly different. For your understanding. So we are not talking about $0.01 anymore. That is in the past now.
RD I notice that the amount of the transfers varies a lot. I forget what for instance 1,000 means in terms of money. I suppose you have an idea.
68 holders now. Moving forward. Not much to discuss 😃
https://etherscan.io/token/0xb87CF5b60111A7145ddfcFcBD2D809088085E056
Looking forward to understanding the challenge. It's coming up on one and one half months as a process and it doesn't appear to be nearing completion. Curious.
K
Laxmi will answer that one 😀
Laxmi/RD... Quite encouraging news! How is the token transfer process going?
Best regards,
K
Thanks RD and Thank you Snow -- Yes we are seeing it happening finally...and I thank you all for the enormous patience shown on me...
It will shape us into the modern avatar going with the world ...
RD Thanks a lot for the update! I agree it does not matter if there is a small delay beyond March 19 in the payment of the dividend. The good funding forwards should make things easier for management.
Money was wired, 2 days ago. We expect it to arrive on monday. Well, part of it. Most of it will go into Escrow for dollar match with an investor and doubling to $108M. But this is all according to plan. We are probably looking at a slight delay beyond the March 19 date as far as the dividends are concerned. But this is not important. What is important is that we will have really good funding going forward and the ability to pay several dividends before operations and cash flow will take care of it.
RD "Also, more importantly, the transfers of money that we have been waiting for so long, should happen tomorrow before noon India time." This was March 4. Today is March 7. Has the transfer happened? If it has not what are the expectations now?
Awesome! Thanks for the info!
Will not touch it then.
Don't do anything unless they tell you to. They already have your bank account number and bank info and they will use this to pay the dividends.
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