Artificial Intelligence Technology Solutions Inc (AITX)

[fromtheuk]

Yes and no

Liability is essentially a way to put on the book the risk. If the Dirivatives work out and everyone pays, it will simply disappear off the book.

Think of a bank lending someone 1 millilon. What’s the risk. Well on a single deal it’s 1 million (ie it’s not payed back). Banks have more favourable ways of calculating this as they lend to more than one person.

So say the bank lends 1 million to 100 people, what’s the liability. Well the chance all 100 fail to pay it back is low, but the chance at least one will is high. So let’s say the liability is 5%. 100 Million loaned, but on the books the banks liability is only 5 Million. That 5 Million isn’t real as a hard number. If everyone pays it disappears. If something disastrous happens that 5 Million could grow to 100 million. Liability in this sense is only correct if things pan out as expected.

Dirivates are different. If it’s pans out it disappears. (31 Million off the books) but it’s stated as 31 Million as there is a chance something goes wrong, and if it goes wrong it will not be for 31 Million.

It’s an over simplification, but if I have a coin heads / tails. One person bets heads , the other tails. The bank charges everyone 1 dollar 1cent. The bank keeps the two cents and hands out the winnings to whoever wins the spin. On paper the bank can’t lose UNLESS the loser can’t pay. In this case the bank has to make good out of its own money. Hence the risk / liability.

In banking terms this is BAU. For a robotics company it makes no sense.