KOSH

Financials

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KOSH is an attempt to jumpstart a platform, building it from scratch with no money whilst ensuring a continuity of ownership for the community that forms itself around the platform. It has been demonstrated time and time again that when an owner or part owner is more concerned with share value, personal glory, return on capital investment, or strategic goals that are incompatibile with the community, then the community as a whole can go to hell. It will either to have to like it or lump it.

KOSH will see many people and organisations invest in it over the coming years, and each deserves both reward and a say in the direction. Those who give hours to design and build it for free in the hope of a better platform, those who invest in learning, building and selling into the new market, and those who invest in buying the machines, OS, applications and peripherals, and invest time in the development of the community.

Traditionally, the only people who ever seem to get a say in the direction of a company are those who invest money in it. Conventional wisdom suggest people investing money in a company will, by default have the best interests of the company at heart. In reality, as has been seen time and time again, they only have their own interests at heart, wanting to see their capital grow and enrich them. If the direction this takes co-incides with the community then great but if it doesn't, then the investor always wins out over the community. The result is that community companies go bankrupt, community magazines close and users see their platform slowly fall apart.

The KOSH view is that there are many types of investors, and that though these investors may invest many different things, time, resources, commitment, loyalty and of course money, all have a vested interest in seeing the company succeed, and all should have an equal say. By investing in the community, you become part of it.

A good way to understand the financials of a company is to investigate its capital flow.

KOSH Credit flows

  1. Revenue from the sale of the OS, either shrink wrapped, bundled with a machine or licenced.
  2. Revenue from third parties building KOSH aware devices (trademark) or using a hardware template.
  3. Revenue from licencing KOSH IP to third parties. This would have to be negotiated with the joint owners of the IP.
  4. Donations - hey, you never know ;-)
KOSH debit flows

In principle, KOSH cannot be in debt, since KOSH will not borrow money, take out loans or take out a contract without having the money to pay for it. It must always operate in a zero or positive mode. This is to prevent KOSH ever being in danger of being pushed into receivership or any other such position in which community ownership of KOSH could be endangered. That said, there are obvious drains on resources.

  1. Virtual Credits. Virtual Credits carry no interest or dividend but are protected against inflation. They are a solution to KOSH having no money, but not wanting to borrow, and thus go into debt. The operate as described below. They will be used for initial work, for repurchasing red shares, and any other mutually agreeable situation where money is required and there isn't any.
  2. Licences. As KOSH develops, there may become a need to licence certain key technologies and/or IP for inclusion within KOSH. This will require advance payment.
  3. Dividends. These are an amount paid out per share and must be paid in actual money as described below.
  4. As a commerical entity, KOSH will be liable for good old taxes.

One of the central tenets of KOSH is that good fortune for KOSH is good fortune for the community. For the Reds (creators and maintainers), the more work they put into KOSH, then the bigger the reward. Stop working and the reward slowly diminishes as others step in and start helping. For the Greens and Blues (commercial and non commercial users), the reward is money to be used to help support, advance and promote their respective sections. For the yellows, then the reward is in the increase in their share price and the dividends that they earn from those shares.

KOSH will honour its debts, through the virtual credit scheme, using at least half of any profit to do so. A central point though is that KOSH can never go into debt. As stated in the General law, to go into a negative equity situation is to risk a situation where ownership could be ceded. KOSH finances must always work from the situation of "have it before you can spend it".

Profit distribution

Working on the assumption that KOSH can only spend the money that it has, planning has to be done based upon a record of the profit that will be available at the end of the year. Profit comes from all accumulated credit flows for a year. There should be no costs, since all costs should have been budgeted for from the previous year's budget and plan. KOSH should not do anything within a year that requires it to utilise money it does not have. Virtual credits however can be used.

As a result, profits will be divided up according to the following rules.

  1. If there are any outstanding virtual credits then 50% of profit will be used to pay those outstanding debits until they are all gone. If that total is less than 50%, then the amount required is used.
  2. Whatever is left from (1) is divided up into 6 equal shares.
  3. 1 share is distributed as Red share dividend, and is divided up equally amongst the total number of red shares.
  4. 1 share is distributed as Yellow share divided, and is divided up equally amongst the total number of yellow shares.
  5. 1 share is given in trust to the Green speaker, to enhance the Green, as per the instructions of the Gathering of the Green.
  6. 1 share is given in trust to the Blue speaker, to enhance the Blue, as per the instructions of the Gathering of the Blue.
  7. 1 share is to be used to finance the plan of the Council of KOSH for the coming year.
  8. 1 share is to be kept in reserve, to pay for the unexpected. If it is not used by the time of the next Gathering, then it is free to be used for the next plan, or to be kept in reserve.
The virtual credit system

The virtual credit system is designed to allow KOSH to function without the luxury of money. It is a way of paying for work and resources when there is no real money. Virtual credits carry no guarantee of payment either. Their repayment is entirely dependent upon the success of KOSH itself.

The particulars of the virtual credit system are;

  1. Virtual credit can ONLY be awarded by the Council of KOSH. It can only be awarded through a Contract of KOSH, which specifies exactly what the award is for.
  2. KOSH makes no guarantee that the virtual credit will ever be paid.
  3. KOSH does guarantee that for all profit reported, 50% of it will be used to repay virtual credit in the manner described below.
  4. One virtual credit is the equivalent of one American dollar at the time that the virtual credit is awarded.
  5. Virtual credit is repaid in a FIFO queue chunked into years. All virtual credit awarded in the least recent year (n) is totalled and the 50% of profit put aside for virtual credit repayment is divided out in proportion to each virtual credit as a proportion of the total virtual credit for year (n). If all virtual credit for year (n) is repaid and there is money left for virtual credit repayment, then the year becomes year (n+1) and the process repeats itself ad infinitum until all the virtual credit is repaid.
  6. Once all the money assigned for virtual credit has been expended, then all remaing virtual credit is increased by a rate that matches the reported US department of treasury inflation rate for the period between the last virtual credit repayment and the virtual credit payment just performed. In this way, holders of virtual credits can be guaranteed that, assuming KOSH is a success, they will be paid and for the awarded amount, not for some inflation destroyed amount.
  7. Virtual credits cannot be converted into ownership shares of any colour.