Monthly Financial Report for September 2006

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Sudane Erato
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Monthly Financial Report for September 2006

Post by Sudane Erato »

The Income/Expense Report and the Balance Sheet for the Month of September have just been posted. As usual, they are available here:

Neufreistadt Balance Sheet in Lindens ... heetLD.pdf

Neufreistadt Balance Sheet in US Dollars

Neufreistadt Income/Expense Report in Lindens ... enseLD.pdf

Neufreistadt Income/Expense Report in US Dollars ... xpense.pdf

and also on the Services/Finances page of the website.

These comments are as usual directed at the US$ version of the reports. In saying this, I am becoming increasingly convinced that the resolution of over a year ago, which stated that because our monthly fee is payable to the Lindens in US$ we should therefore consider our primary currency US$, is inappropriate. While it is true that we have an obligation to the Lindens fixed in US$ currency, the native currency of the world in which we live, have community and do business is L$. I will soon propose that the L$ become the primary reporting currency of our community, with appropriate budgeting measures in place to account for L$/US$ flucuations as applied to our monthly LL obligation. After all, the US$ is no more a native currency of our community than is the Euro or the Yen. Financial records should be an organic and accurate picture of our community's life. They should be expressed in the currency of that community.

Please forgive the digression.

Looking first at the Income & Expense report, we had a fairly normal amount of revenue, with US$214 from land fees, $21 from land sold by the City, and $8 miscellaneous revenues. On the expense side however, in addition to the normal Linden fee for the sim, we had a much higher than normal Paypal transaction fee amount. This is because we began to receive loans from citizens able to help the new CN sim funding project. Those amounts which were deposited with us via Paypal were subject to the Paypal fees. This would only happen at times such as this that we are raising money.

The net result is that the City had a net income of US$6.17 I should begin now to refer to the financial records as those of the CDS, the Confederation of Democratic Simulators. I may begin to adopt a shortened form of this: The Democratic Sims.

That income, as usual, carried over to the Balance Sheet, increasing the Net Worth by $6.17 to $1297.98. (Called EQUITY on the report itself). I should explain here, as I usually do, that this number is the sum total of our ASSETS (everything we own) minus the sum total of our LIABILITIES (everything we owe). It is the fundamental underlying number representing the financial value of our community.

This month, the Balance Sheet becomes extremely interesting. Thats because two very important things happened. The first is that we bought a new sim for $1140 from Kavai Onizuka. (A new one from LL would have been $1250). For the first time in over a year we actually have a dollar value in "Land Asset" on our Balance Sheet (remember, its a list of everything we own).

But, you might ask, why is this the first time in over a year. We've owned Neufreistadt since May 2005. Well.... we bought Neufreistadt in May 2005, and in June 2005 we began to pay back that purchase by selling land to citizens. On June 1, the asset was worth $980, but as the land was sold, that money "paid back" that $980, slowly lowering it, until within a few months it was paid back. At that point the asset was $0, because citizens had paid in sufficient of their own money to equal the $980. From that moment on, all land sales have become real "profit", real income on the Income and Expense Report, and not just paying back the purchase price.

But now, for the second time ever, we have a reappearance of the land "asset" which we have just bought. As the months proceed, this too will slowly lower in amount until, when $1140 has been received for the sale of land, we will again have $0 of Total Land Asset. It may seem like I'm waving a magic wand here, since in the cases of both sims, we still have them. You might say... yes!... but they're still worth something! And indeed they are. But what they are worth is intangible, in other words not strictly defined in dollars. At some point in the future we may wish to agree upon an intangible value for our sims, and enter that value into the financial records. Until that time, the way things are recorded here is the most conservative and clear way to demonstrate the picture of our community.

The second very important thing that's happened is that we've initiated the loan program which will enable us to start up the second sim, Colonia Nova. This loan program has been previously announced and described. In a nutshell, people are lending us funds which will yield to them a 6% per year interest. At least half of the principal and accumulated interest will be repaid to them on April 1, 2007, with any remaining amounts due to be paid on or before November 1, 2007. As you can see, as of September 30, the date of this report, US$700 has been loaned. Since that date, several more loans have been received. The loan program closes on October 31, 2006.

In summary, I'd say that the financial picture of the CDS, the Democratic Sims, is quite good, despite the fact that we have embarked upon our second big gamble, the purchase of a sim. Right now, its of the utmost importance that that sim be made ready for land sale as soon as possible, so that revenues will start to arrive to offset the additional US$195/month that we will owe the Lindens. If past experience is any guide, we will probably achieve this goal handily.



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