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Thanks Dapper10. My Uncle invested in this company and asked me to look at it since I work in wealth management. He ended up holding his shares and getting burned. Although he acknowledged that he no longer believes in this company, he is still holding out for another PR. Working in wealth management really reduces your tolerance for companies that treat their shareholders this way, as it erodes confidence in the industry in general.
I'm sorry, maybe I'm not explaining this very well. If management believed that it was "more likely than not" that TTCM would have taxable income in the next 20 years, there would be a DTA on their balance sheet. There isn't a question anywhere in that sentence, so I'm not sure what question you would have me ask. It would also be illegal for DLM to answer questions surrounding profitability and timelines and such on Telegram. That information should be formally disclosed as part of an ER. Of course, it never has been. For some reason, investors have been satisfied with vague statements that imply the business is improving rather than any kind of formal guidance that would create accountability for management.
It's also alarming that I'm continually encouraged to ask management to commit Regulation FD violations.
There was never any discussion of the 100% valuation allowance used to offset the DTA. Again, this isn't a question. You either care that management isn't currently forecasting profitability or you don't.
It's disclosed in their 10-Q. Unless you think that their 10-Q is wrong, it's a fact. Management is legally responsible for the information provided in their 10-Q.
It's not a question. It's a fact.
There's also no way to "ask the company." There is no IR contact. The Telegram group is extremely hostile to anyone who posts critical questions. It's a cheerleading squad. I have also seen DLM violate Regulation FD using Telegram. I'm not interested in participating in any of that.
If management believes that it is "more likely than not" that TTCM will have net income over the next 20 years, there would be a deferred tax asset on their balance sheet. This really isn't debatable, and I don't remember DLM ever discussing it. Maybe you could remind me what he said?
"Yes management believes that ARknet will be very successful and profitable ahead."
If that were true, they would have a deferred tax asset on their balance sheet. They don't. This information is contained in their last 10-Q. DLM can say whatever he wants on Telegram where there are no consequences, but there are legal consequences for material misstatements on financial statements.
1) Their only major product isn't economical. The amount it costs to build the kind of platform that TTCM claims to be building is more than they're spending. Amazon LOST hundreds of millions of dollars a year for over a decade building its e-commerce platform. It's impossible for TTCM to build anything approaching a functional e-commerce platform for the amount they're spending each month.
2) The only financing available to TTCM is extremely expensive. The effective interest rates on the convertible securities TTCM uses to finance its operations range from 7% to 564% (from the last Q). TTCM will also have to raise its authorized share limit very soon. So TTCM can't finance its continuing operations without diluting the common shareholders into oblivion. And TTCM will need huge amounts of money to continue operations. Look at Nextech. Nextech is generating millions in revenue a quarter and is still burning cash. However, Nextech actually has access to financing at reasonable interest rates.
3) The licensing fees management charges create a conflict of interest and make it nearly impossible for TTCM to ever be profitable. Again, Nextech earns millions in revenue each quarter and still isn't close to profitability WITHOUT these licensing fees. In other words, TTCM has to have at least a 7.5% operating margin before shareholders earn a cent. That's nearly impossible. You can't vote to change this arrangement because DLM and Jon have the majority of the voting power through their preferred shares.
4) Management doesn't actually believe that this company will be profitable. TTCM has a $1,012,582 deferred tax asset that is the result of the deductibility of their losses from future net income for tax purposes. Companies must adjust the value of their deferred tax assets if they don't believe that some or all of those deferred tax assets will be realized. "In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized." In other words, you can't have a deferred tax asset unless you plan on having net income. TTCM has a valuation allowance equal to ($1,012,582). This means that management believes it is 'more likely than not" that TTCM will not earn any net income in the next 20 years (length of the carryforward).
Again, I think we have to distinguish between fraud that is illegal and fraud that is legal but immoral. There is plenty of evidence of the latter.
I don't think that anyone here is using fraud as it is defined in the dictionary. Investors are being misled but not defrauded. There are a lot of reasons why this company won't succeed, but it doesn't seem like the any of the investors are capable of understanding them.
This is ostensibly a technology company, but I haven't seen anyone discussing any technical details around its products. That's strange. When you look at discussions of companies like AMD and Nvidia, you'll see people arguing about technical details of their chips. Nobody discussing this company understands accounting either. I asked a simple rev rec question and was assured by multiple people that my question could be answered easily (although they couldn't provide that answer).
This tells me that the people investing in this company don't really have the expertise (This isn't an insult. Not everyone is fascinated with computers or works in accounting) to determine whether they are being misled. So no, I don't think anything illegal is happening here (except maybe some regulation FD stuff), but people are certainly being deceived by the facade created here.
Based on recent reviews on the Apple Store, I'd guess that Main Street Shopping has tens of users.
You also have to remember that most small businesses don't sell physical products that can be shipped. Restaurants, bars, auto shops, golf courses, law offices, etc. will have no use for an e-commerce website. I've also noticed that a certain beef jerky retailer has been responsible for most of the activity on Main Street Shopping. That company already has a website. I thought the value proposition of Main Street Shopping was that it allowed small businesses to sell products online without maintaining their own website.
It doesn't mean anything. Collaboration is vague. The 8-K doesn't describe a contract or any agreement that has any economic substance. However, it obviously fulfilled its purpose. ~300 million shares traded that day. A lot of investors were misled by that 8-K into purchasing shares that have now lost ~60% of their value. If I were one of those people, I would be pretty angry about this.
"And the chosen process by management here is perfectly fine."
We don't know that it is fine because we don't actually know the process. I just want to know why the revenue generated by Main St Shopping in May didn't appear on the 10-Q for the quarter ended June 30. So far, nobody has been able to provide an answer.
" It’s normal for new revenue streams not to go thru the process until actual revenue is made." Sales were made using Main Street Shopping in Q2. This revenue should have been recognized in Q2, and the revenue recognition policy should have been updated in Q2. If Main Street Shopping was not operational until Q3, then you're right that the rev rec policy would not have needed updating. But we know that it was functional in Q2 and that sales were made. I posted the screenshot of the revenue attributable to those transactions. So there's something weird going on here that apparently neither of us understand.
I just read the revenue recognition policy for the last several quarters. It has not changed. This means that it has not been updated to incorporate Main Street Shopping. So my question will likely remain unanswered until at least the next Q.
Thanks for the reply. I don't think that the rev rec has been updated to include e-commmerce. Also just want to let you know, the SEC doesn't audit financial statements. Audit firms do. And they don't audit 10-Qs. Typically only 10-Ks are audited.
Let's say I'm wrong about rev rec for e-commerce not being included yet. So customers buy a product through Main St Shopping. TTCM receives cash equal to 2% of the sale and the customer receives a credit that can be redeemed for an ARk? I'm struggling to understand this. Why would TTCM attach a second performance obligation to the transaction?
I think the simple answer here is that rev rec hasn't been updated. The current rev rec section applies to the selling of ARks, not ecommerce.
I checked the post history. I saw one user claiming that Main Street Shopping wasn't launched until July. People were posting screenshots of orders in May in the Telegram. Someone even posted a picture of the revenue generated from purchases (that didn't appear on the income statement). This is the image. ">
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If an order were placed in April or May, it would have shipped by June 30. The revenue would have been recognized. There is also no "deferred revenue" account on their balance sheet.
Ok, let me make this extremely clear. Main Street Shopping was operational before the end of Q2. People were ordering products through the app. Why does the revenue associated with those orders not appear on the 10-Q?
As of their last 10-Q they had generated zero revenue this year. This is strange because Main Street Shopping was launched well before the end of the second quarter. They also reported zero PP&E on that 10-Q. Here's the filing. https://sec.report/Document/0001477932-20-004757/
TTCM also doesn't have any assets. It licenses the intellectual property necessary for its platform. The license is not exclusive. When you buy TTCM, you're not actually buying anything. You're not buying the IP. You're not buying the skills and experience of the development team. The development is outsourced. Everything of potential value associated with TTCM is owned by people other than the common shareholders, but the entire operation is financed at the expense of the common shareholders.
The entire business model is ridiculous. Pay to license some IP and pay someone else to build a platform ostensibly using that IP. If the IP were valuable, its owners (DLM and Jon) could have just simply hired Honeycomb themselves.
Alternatively, what is stopping Honeycomb from ceasing the development of ARknet and launching a competing platform? The licensing agreement TTCM has for their IP isn't exclusive. What happens if one day Honeycomb decides it wants in on the action and pays DLM and Jon to license the IP TTCM is currently using. Honeycomb already has a development team that has experience with the product. It would be over for TTCM immediately, as TTCM doesn't have a development team of its own.
These are questions that longs should be asking.
It just doesn't make any sense. No major U.S. smartphone producer actually even owns the factories that produce their product. They design the product and outsource production to a company that actually specializes in producing consumer electronics. As a company with no experience with designing, building and operating manufacturing facilities, why would Akyumen not just pay a contract manufacturer to produce its product? It would be cheaper and production could begin quickly.
But I think I know why. Akyumen now has an excuse for not bringing their product to market any time soon. They can simply claim that their factory is still under construction/renovation.
Point is that if Akyumen had a real product that consumers wanted, they could have it being mass produced by a contract manufacturer by Christmas. This whole fiasco is just another way to keep the narrative alive.
It's the other way around. Google pays Apple billions to be the default search engine for iPhones. TTCM would likely be paying Akyumen to be preinstalled on their products.
Again, this is another question that, as investors, you should have asked management a long time ago.
Wow $50,000. Who knew that you could acquire a production facility for smartphone production for just $50,000. Someone should call Hon Hai (Foxconn) and let them know that they didn't need to spend billions on their facilities in Taiwan and China.
Main Street Shopping was functional in April, but no revenues appear on the income statement from the quarter ending June 30. That's strange.
These partnerships don't matter. They're vague. They don't represent anything of commercial substance. Disclosure of monthly users of the Main Street Shopping platform would be useful for investors. The Main Street Shopping platform is useless if there aren't a substantial number of users. The network effect is very real for e-commerce platforms. Also, the number of businesses onboarded would be another important metric.
My point is that you can't argue that TTCM is growing because management won't even give you enough information to determine it.
Yes, they know that they're taking money from people who don't understand technology or accounting. They earn money from licensing fees whether TTCM makes money or not. The $200k annual fee plus 7.5% of revenue ensure that TTCM is structurally unprofitable. There's just simply no way that TTCM can generate enough revenue to pay operating expenses and the 7.5% fee. If you need proof of this, you can look at Nextech's financial statements. It's still not even close to profitable with over $5 million in quarterly sales. Add in a 7.5% fee and it's not a good picture. oh and you can't vote to change any of this because DLM & J have the majority of the voting power with their preferred shares.
If shareholders were actually serious about this company not dying a slow, miserable death while DLM & J get rich at their expense, you would demand that the licensing agreement be rewritten or you would sell. This scheme only continues so long as DLM & J can sell convertible debt to continue to keep TTCM afloat while they collect licensing fees. If shares decline too far and/or volume drops too low, it's over and they know it.
"Succeed and be successful" You said the same thing twice...
Will TTCM have revenue this quarter? Will dilution be more or less than 200 million shares? These are not questions typically asked of successful companies.
It ridiculous to think that Akyumen has any chance of competing with any of the existing smartphone manufacturers. Is there anything new about their technology? No. Do they have deals with any major carriers? No. Do they actually develop their own products? No. Does anyone know about this company besides TTCM investors? No.
However, none of this actually matters. I don't know why we are even discussing it. TTCM is going to fail either way.
Two things regarding Akyumen:
1) There's no way this company ever sells a meaningful number phones. It's competing with some of massive established companies. Its main product isn't interesting or even new. Samsung has made various projector phones for nearly a decade now. Few know about them because they simply aren't popular.
2) Is there a fee paid by TTCM associated with the installation of ARkNet on every Akyumen phone? I know Google pays Apple an obscene amount of money to be the default search engine for iPhones.