I want to clear up for everyone what a Performance Bond is.
For 1 PBLS will not see this money, it should not appear on their financial statements. This is a bond, the bond guarantess something, ie in criminal cases a defendant puts ups a bond to get out of jail, so long as he appears at all of the hearings scheduled he gets back the bond. However if he failts to appear then the county/clerk of court gets to keep the bond.
A bond is a promise to do something. In this case KOMEX will put up the bond as a measure to show PBLS that they intend on taking receipt of the products generated from the contract. This allows PBLS to invest in the large capital investment needed to fullfill the contract. Now PBLS knows that if they perform and delviver the goods then the will get paid, one way or another.
If for some reason KOMEX does not take delivery of the product and PBLS had performed under the contract then PBLS would claim the bond. It is PBLS insurance for investing in large capital assests to meet production.
The bond will be secured through an insurance agent. Either KOMEX will put the entire 3% cash into an escrow account or they will contract with a insurance agent to put up the money for them.
So please make sure that NO one looks for the performance bond to show up as an asset on the financial statements.
What we should be looking for is the PR that the bond has been issued. This will que PBLS to begin investing in new assets. When the bond posts we should see a significant build up of capital assets on the balance sheet.
I hope this clarifies the bond situation for everyone.
