<<< BACK TO TOP
2. The Financial Elements and Mechanics of the
Operations
A brief
description of the major elements of the System:
● The
No-risk, No Cost Provision
Our sales plan
allows us to offer a provision that calls for no payment, of any
kind, to be made by the client unless ATS delivers new business.
● The
System Trade Credit: the ATS Dollar
The medium of
exchange and unit of account in the System is the ATS Dollar,
equal in value to the U.S. Dollar. It is an electronic form of
currency for the exclusive use by the System’s members. It is
used, in combination with the U.S. Dollar, in commercial and
real estate deals, referred to as dual-currency transactions.
● The ATS
Account
After a member
is admitted an account is established in the member’s name. When
a member executes a sale, the trade credit portion of the sale
(ATS Dollars) is deposited and credited to the account. When the
member makes a purchase, the ATS Dollars are debited to the
account. The account is subject to various fees and
charges.
● A
bank-like System
The operation
is similar, in many ways, to a banking operation except for the
fact that the currency is a privately issued form of money for
the exclusive use by its members and it is not subject to
banking or SEC regulations. ATS maintains accounts on behalf of
its members, extends credit and charges a variety of fees. The
infrastructure for the Trade System has been created including
an accounting/banking software that allows online access.
● Tax
Equity Fiscal Responsibility Act (TEFRA)
The American
Trade System is in compliance with TEFRA, a federal act that
requires that ATS report all trade activities by providing all
participants with an IRS Form 1099 annually.
● The
Capitalization of the Trade System
The Trade
System is capitalized through the extension of secured credit to
its members. A member pledges an asset and provides a personal
or corporate guarantee against the extension of a credit line.
The aggregate value of the security behind all credit lines is
the asset that constitutes the trade system’s capitalization.
Businesses and real estate investors benefit because they are
able to monetize their own net-worth and convert it to
investment and/or working capital.
● The
Credit System
After the
member is admitted and a credit line established, the member can
conclude purchases that entail a combination of U.S. and ATS
Dollars. When the credit line is activated the member pays
interest, monthly, in cash, at the rate of 2.5% per annum on the
amount borrowed. When a member executes a sale of its own
property or goods and/or services the private currency portion
of the sale is credited to the account and the principal balance
owed is reduced by that amount.
● The
Collateral
A member
applying for credit pledges an asset, typically a promissory
note, and provides a corporate or personal guarantee. The asset
is placed in a trust to protect the System in case of default.
Default consists of a member using the credit line and failing
to pay interest when due.
● The
Fiduciary
The documents
representing the collateral are placed for safekeeping with a
fiduciary company that is bonded and licensed by the Department
of Corporations for the State of California, Department of
Financial Institutions.
● The
Balance Sheet
On the first
day of each month, the System issues a report showing, as the
assets, the list of assets pledged as collateral security and,
as the liabilities, the aggregate number of ATS Dollars in
circulation.
● The Loan
When the
credit line is activated, the amount borrowed becomes an
obligation of the borrower. The loan is not placed on an
amortization schedule and is repaid with ATS Dollars.
● The
System Revenues
The System
derives its revenues from various fees, such as transaction
fees, interest charges and commissions generated from the
closing of deals on behalf of members and facilitated by sales
personnel of the System.
●
Membership Termination
The System can
terminate a membership for a violation of the rules and a member
can terminate the membership by bringing the account balance to
zero, meeting all cash obligations to the System and exiting the
System.
●
Dissolution of the System
In the event
the System terminates operations, an ordinate dissolution is
enacted by having a trustee order all holders of accounts with a
negative balance to remit the balance in cash and distribute the
proceeds to all holders of account with a positive balance.
● U.S.
Patent Application
The company
has filed an application with the United States Patent and
Trademark Office to protect its proprietary information and
methodologies.
<<< BACK TO TOP
3.
Collaborators and Contributing Factors
ATS operation
is supported by IREEX, the sister company, and a group of
intermediary companies. There is also a tax law that, properly
applied, can bring significant benefits to participating
companies.
● The
International Real Estate Equity Xchange (IREEX)
IREEX
(www.ireex.com) is a subsidiary of the parent company, the Hawk
Group, (www.hawkgroup.info) and functions as the exclusive
portal for the real estate sector to services provided by the
American Trade System.
● Collaborators
ATS works with
a number of individuals and companies that provide services to
clients that qualify for participation in the System. They
include QIs, consultants, real estate brokers/agents and other
entities that act as intermediaries for these types of
transactions.
● Internal
Revenue Code (IRC) 1031 Like-Kind Exchanges
This law,
unique to the U.S., was originally created to benefit real
estate investors by allowing them to move from an investment
property to a higher value property while deferring the capital
gains taxes due from the sale of the original property. Section
1031 applies to all like-kind properties, including real and
personal and it is, increasingly, being used for purposes other
than real estate to defer ordinary income taxes derived from
transactions involving various kinds of corporate assets.
Example: A
construction company acquires a new piece of equipment for
$100,000 then, by taking the depreciation allowance over several
years, reduces its basis to $20,000. Now it wants to replace it
with new equipment. The used equipment might sell for $50,000
and the company will have $30,000 of taxable ordinary income.
By structuring
the sale of the used equipment and the purchase of the new,
through a 1031 exchange done through a Qualified Intermediary
(QI), the company can defer the tax and have substantial cash
savings.
For large
companies, in constant need to replace equipment, such as
manufacturers and O&G operations, this can result in millions of
dollars in savings. Applications have been found for exchanges
involving collectible cars and race horses.
Traditionally,
most exchanges, if not all, handled by QIs involved real estate,
however, more and more clients involved in the sale and
purchases of corporate assets, realize the benefit of using
Section 1031 to save taxes on their exchanges.
<<< BACK TO TOP
4.
The core concept and the WIRBank Trade System
This segment
helps one understand ATS’s operation by providing information
about the “core concept” identified as the monetization of
assets and a description and some history of Switzerland’s WIR
Trade System.
The Process
of Asset Monetization and Switzerland’s WIRBank Trade System.
Asset
monetization is the process of converting an asset to something
others will accept as payment. The universally accepted method
of monetizing an asset is to sell it for cash, i.e. the national
currency. Except for a nominal amount of assets being traded,
selling for cash, or cash-related instruments, is the only way
to monetize assets.
There is a
little known alternative, developed and perfected by
Switzerland’s WIRBank (www.wir.ch).
In 1934 the Great Depression brought the Swiss economy to a
virtual standstill and bankers drastically reduced their
lending.
This left many
businesses unable to secure credit and financing and a group of
16 business owners got together in Zurich and created a trade
system, in the form of a business network, which allowed for a
unique and alternative method to monetize assets. Their charter
allowed for a variety of assets to be placed in a vehicle
similar to a trust, to act as backing for the issue of the WIR
Franc, a private form of money, a trade credit to be used in
combination with the Swiss Franc to buy and sell goods, services
and real estate in dual-currency transactions.
The charter
stipulated that no WIR Franc be issued unless a corresponding
asset was placed in the trust. Acceptable assets varied from
real estate to personal property to notes signed and guaranteed
by creditworthy borrowers. WIR accepted virtually anything that
would place it in the position to make itself whole in case of a
default.
The charter
also stipulated that the Trade System would be prohibited from
extending its operation outside of Switzerland and that WIR
Francs could not be bought, sold or exchanged for cash.
The result was
the establishment of an operation with a credit-extension
mechanism that provided innovative financial dynamics that
resulted in more transactions being closed while providing
credit and financing at very low rates of interest. Aside from
the fact that the balances in clients’ accounts are not in Swiss
Francs, the Trade System operates similarly to a bank, deriving
revenues from interest and fees.
Businesses
were able to gear their operations to conduct business using two
bank accounts: a cash account and a trade account and to take
advantage of the financing provided by the Trade System.
Membership
grew and by the mid-1980s it reached 30,000 and the decision was
made to add traditional banking services to the trade system
operation. For years the operation had tried to work with banks
that did not understand the Trade System’s operation. Now WIR
was in the position to make loans which involved both Swiss
Francs and WIR Francs.
This resulted
in a dramatic increase in membership and business volume. By
1997 WIR’s membership reached 76, 000, and business volume was
over 6 billion dollars. The balance sheet showed assets of 974
million dollars, consisting of the assets pledged as security
and liabilities of 929 million dollars, consisting of the
circulating WIR trade credits. Cash profits were at 38 million
dollars. Today WIR has over 100,000 members.
For more information about the ATS and the WIR
system link to:
http://www.americantradesystem.com/Construction_Sector.pdf.
The real
estate sector was also heavily affected as members began buying
and selling properties using the WIR Franc as part of the
consideration. Today there are 502 brokerage firms providing
services for members.
The ban against doing business outside
Switzerland and Swiss secrecy banking laws have kept WIR out of
the spotlight, however, WIR is widely given credit for helping
make the Swiss economy one of the strongest in the world.
Supporting
Documents:
-
Exhibit 1 - Application
and Membership Agreement
-
Exhibit 2 - ATS Trading
Rules and Regulations
-
Exhibit 3 - Confidentiality Agreement
-
Exhibit 4 - Loan
Agreement
-
Exhibit 5 - Corporate Guarantee
-
Exhibit 6 - Personal Guarantee
-
Exhibit 7 - Member
Profile
(To view the Exhibits please contact
ATS)
<<< BACK TO TOP
PRINTABLE PDF
