Providing Clarity and Compliance for Digital Coin and Token Offerings
This profile is part of a paid investor education campaign.*
DigiMax Global Solutions (legally named DigiCrypts Blockchain Solutions pending a name change to be approved by Shareholders at the next Shareholder Meeting), is a Toronto-based company designed to become a world leader in advising companies issuing security token offerings (STOs) on a 100 percent regulatory compliant basis in countries around the world.
DigiMax is a Reporting Issuer in Ontario, Canada and has filed an application to become listed on the Canadian Securities Exchange (“CSE”).
DigiMax was formed by five partners, three of whom have vast experience in the crypto-currency, ICO and STO industry and two of whom that have over 40 years of combined experience raising capital through security tokens and in conventional securities markets. The result is a team that combines expertise from both the token and conventional public capital markets.
While the token issuance space has been popular in the last few years, it has raised security concerns that have prompted the industry to turn away from the crowd-funding model into STOs that abide by global securities laws and regulations.
Despite this shift, the industry has continued growing. It is estimated that approximately $6.5 billion was raised via ICO globally over the course of 2017. Meanwhile, in the first three quarters of 2018, ICOs raised $20.6 billion worldwide. With this much money involved, the market needs further transparency to ensure that funds are being allocated properly and jurisdictional securities, including in the US, have been responding accordingly.
DigiMax is addressing transparency concerns in the space with their regulatory-compliant security tokens marketplace in two ways. First, through its wholly-owned subsidiary, DigiMax Capital Corp., DigiMax will provide both non-registered consulting services to clients to assist them in being properly prepared to issue 100 percent regulatory compliant security tokens. Upon becoming a registered exempt market dealer (EMD) in Ontario, Canada, DigiMax will provide services requiring registration such as legal due-diligence, valuation and sales of STOs to qualified investors in regions where allowed as an Ontario registered EMD.
Second, following a successful registration as an EMD, DigiMax Drop app will become available for download through the Apple and Google app stores. The goal of the app will be to provide investors with a transparent and safe way to identify and purchase new, regulatory-compliant digital coins and tokens. The app will provide regular updates on specific coins as they progress through their development and after the coin has been launched.
DigiMax has also built a global network of industry advisors, securities lawyers and auditors, registered broker-dealers, registered KYC/AML agents and registered salespeople in seven countries who are capable of assisting their clients with a broad range of services including:
- Preparing a business plan to support the raising of capital through an STO
- Developing the appropriate STO structure and “tokenomics” to be competitive among other companies raising capital through STOs
- Creating a global syndicate of professional, registered service providers to complete the due-diligence and sale of tokens through a global network of investors
- Providing long-term post-STO support for issuers and investors
- Developing a safe and transparent way for investors to identify and purchase regulatory-compliant digital coins and tokens by implementing industry best practices.
- Digital coin and token offerings becoming more transparent and regulated.
- DigiMax Capital seeking registration as an EMD in Ontario.
- Management is notably invested in the company and controls approximately 60 percent of the shares.
- DigiMax Drop app platform provides investors with regulatory-compliant STO’s.
- Established joint venture partnerships in Hong Kong, Singapore, South Korea, Indonesia, England, Malta and the US.
History of Cryptocurrencies, ICOs and STOs
Cryptocurrencies are decentralized and encrypted tokens that can be exchanged between users across a network. The transactions between users are validated across a decentralized public ledger, or blockchain, by other users on the network.
Bitcoin emerged in 2009 and sparked the development of a comprehensive industry that includes numerous cryptocurrencies, such as Ethereum, Litecoin and Dash, which are hosted and transacted within blockchain networks. Cryptocurrencies have seen significant growth as multiple industries begin to embrace blockchain technology solutions.
With the rise of cryptocurrencies, the applications of blockchain technology soon developed to include smart contracts and initial coin offerings (ICOs), among other applications. An ICO is the non-literal description given to the issuance of a “utility” token, which is issued for use between two parties on a B2B or a B2C basis to assist with electronic transactions between the parties. Under securities laws around the world, utility tokens were NOT legal as a means of raising capital for the company issuing the utility token. Unfortunately, issuers and the purchasers of these tokens were confused by these laws and utility tokens were often used as a means of raising capital. As a result, the issuers (and their advisors) were in violation of the securities laws in the country that these tokens were issued.
DigiMax’s partners understood this problem from the outset and chose not to become involved in ICOs as a company. Instead, DigiMax has put its effort into becoming one of the world leaders in developing a global infrastructure to develop 100 percent regulatory compliant STOs. STOs are regulatory complaint because they follow all of the same laws as any company that issue common shares. A security token is a “security” under the laws that already exist in every country in the world. By ensuring strict adherence to all such laws in whatever jurisdiction the STO is being issued, the issuer and advisors can ensure that each offering is 100 percent regulatory complaint. This includes all activities related to the formation, due-diligence and sale of each token to investors is conducted by properly registered broker and dealers in the country where each token is being issued.
Today the market for ICOs as a form of capital raising is all but finished with only a few countries having laws that allow the issuance of utility tokens to raise capital remaining under certain highly restricted conditions.
The STO market however, although relatively new, is gaining popularity very quickly because they are 100 percent regulatory compliant and have several economic benefits that conventional common shares do not.
First, with a more stringent focus on transparency from securities around the world, and as more businesses recognize the benefits of raising capital through the digital market, STOs are becoming more commonplace. STOs can be issued, tracked and exchanged more easily and securely than common shares.
Second, security tokens often carry more features that are beneficial to the investor such as having both an equity value and a dividend value where such dividends are based on a percentage of sales, gross profit, or EBITDA. These extra payments can often make an STO more valuable than a simple common share.
Efforts are continually being made to regulate the space to ensure that funds raised in STOs are being used for their intended purposes. Securities regulators, in the US inclusively, have begun regulating these instruments in the same way as traditional securities. Companies like DigiMax are also working towards providing investors with transparency in an unregulated zone. This is being done through the implementation of regulated channels that have been created to address the issues in the space and the delivery of platforms that only supply potential investors with regulated companies to choose from.
DigiMax is a 100 percent regulatory compliant platform designed to provide investors with information on regulatory-compliant, STOs being offered around the world. The platform was developed to address three pain points in the cryptocurrency space.
The pain points
One pain point in the industry that DigiMax is addressing is the lack of awareness regarding which coins are compliant and which are not. The platform offers potential investors potentially profitable information for startup tokens while also giving investors the option to vote on company decisions with the founders of the startup. This decreases the chance of investors losing their money to STO startup companies that will not make it in the space down the line.
The second pain point the company is addressing is ensuring that STO startups fulfill the promises they have made to their investors. Startups cannot guarantee their success, but they can keep their investors informed of their progress on a regular basis. The platform delivers a fair, dynamic tracking of startups, marketing activity and progress on the project through the regular disclosure of information. The release of regular updates will create fairly valued tokens and applications such as Airdrop and Flyerdrop will provide regularly updated statistics of the startups activities. At the STO stage startup companies are usually overvalued and it is better for investors to buy tokens after they have been released to the market, rather than in the development process as it is a safer investment.
The final pain point DigiMax is addressing is regulatory issues in the industry. In order for an STO to be featured on the DigiMax platform, they must provide the following documentation to ensure compliance within their jurisdiction: legal due diligence and public discourse documentation, comparative analysis and proper rating, app based marketing and worldwide distribution plans, post-STO marketing plans and post-STO disclosure or where that company will be filing their legal disclosure documents.
DigiMax Global Solutions is developing three applications that will help investors track startup STOs from development through to the execution of the STO.
In July 2018, DigiMax launched Flyerdrop, the company’s STO communication application. The application is available through the company’s subsidiary and allows users to view advertisements and flyers from regulatory-compliant STO issuers. Users can scan the QR codes on physical flyers, which then connects the user to the STOs information in the Flyerdrop application.
Flyerdrop offers STO issuers a low-cost tool to create awareness through the user base of the application and through those who attend cryptocurrency conferences. For US$10,000 per month, which is generally less than attending a conference, an STO issuer can ensure that their STO is seen by the application’s entire user-base. The application does not filter the advertisers and DigiMax provides no comment or input on the STO or its issuer.
SaleDrop is a service that organizes and facilitates the quick launch of mass token sales for STO projects at any stage of their development. The startup STO company installs DigiMax’s module on its website, which allows them to launch their sales immediately and gain access to a substantial audience of potential buyers and sellers on DigiMax’s website. DigiMax then b-lists the STO on their exchange to form the history of the company so they can raise funds from the investors visiting the site.
Investment and information platform
DigiMax is designed to bring investors and traders who are interested in automatically updated analysis of regulatory-compliant startup issuers together.
Joint Venture Partnerships
Digimax has signed joint venture partnerships in seven countries, enabling the company and its partners to provide consulting services to companies wishing to issue a STO. The goal of these partnerships is to build a corporately-owned and controlled network of registered brokers and dealers that operate under the DigiMax Capital name. DigiMax intends to form at least one joint venture partnership on each continent, excluding Antarctica.
The joint venture partnerships will assist clients in each country to establish their business plans to make them compatible with using STOs as a form of raising capital. After this step is complete, the joint venture partnership will introduce clients to registered brokers and dealers who will assist with raising funds in a regulatory-compliant manner.
David Posner — Chairman of the Board of Directors
David Posner currently serves as the Chairman of the board of directors of the Nutritional High International Inc. and Capricorn Business Acquisitions Inc. and is a director for Aura Health Corp.
Between July 2014 and July 2016, Posner was the President and Chief Executive Officer of the NHII. Between 2012 and 2014, he served as the Acquisitions Manager for Stonegate Properties Inc., where he managed real estate properties and brokered deals in Canada and Oklahoma.
He was a Managing Director of Sales and Acquisitions for Maria Chiquita Development Company from 2005 to 2012. From 2004 to 2007, he was a partner in a private investment group investment group involved in the acquisition, rezoning and re-positioning for sale of land holdings in Costa Rica and Panama. Posner holds a Bachelor of Arts degree from York University.
Chris Carl — President & CEO
Chris Carl brings over 25 years’ experience of public-company experience including 10 years as CEO of CanFibre Ltd. developing technology from a lab at UBC in Vancouver to building two $125 million manufacturing facilities in US. He then spent nine years as CEO developing BioExx Specialty Proteins Ltd. which was listed on the TSX. Prior to that he spent eight years with Tenneco Inc., which was number 11 on the Fortune 500 at that time.
In addition to his public company experience, Carl spent three years running Foundation Investment Capital Corp., a boutique venture capital and advisory company helping small public and soon-to-be-public companies establish foundation required to become successful. He was also the Regional Director for The CFO Centre based in Toronto. He obtained his Honour’s B.Comm. from Queen’s University in Kingston, Ontario.
Greg Limon — VP Business Development
Greg Limon has 25 years’ experience in the medical, legal, real estate development, high tech, production and trading commodities industries. He has also completed two successful IPOs with his partners. He was a Founder of Canada Capital Group Inc. in 2015, which was created with two primary objectives: build a North American distribution arm for its Chinese cryptocurrency mining computer manufacturer and to build a better platform for underwriting ICOs.
During the ensuing three years, Limon has become a global leader in the crypto technology and ICO industries having been recognized by icobench.com in March 2018 as one of the top 20 most influential industry leaders in the world.
Sergey Shilnov — Chief Technology Officer
Sergey Shilnov has been involved in digital development projects for over 20 years. With a background in gaming and coding, he was an early adopter of technologies related to the cryptocurrency space. Shilnov has launched two software and infrastructure companies in the digital and crypto space in the past five years. He has been the CEO of QCoders LLC, a custom outsourcing software development company, and the CEO of reOrder Technologies Inc., a retail cryptocurrency infrastructure company.
Stan Milc — VP Global Marketing
Stan Milc has had a 10-year career in global business development focused on digital and cryptocurrency companies. He was recognized in March 2018 by icobench.com as one of the most influential leaders in the crypo industry worldwide. During the past seven years, Milc has been a partner at Canada Capital Group International and Caviar House.
Kyle Appleby – CFO
Kyle Appleby spent the first 10 years of his career working in public accounting where he worked in both audit and advisory practices working with private companies and investment funds. In 2007, he left the world of public accounting to focus on providing management and accounting services to public companies across a variety of industries including food production, agriculture, cannabis, technology, mining and crypto-currency, among others. He has been the CFO for numerous companies, listed in Canada, US and London and has extensive experience in financial reporting, providing strategic direction and leadership, IPOs, fund raising and corporate governance. He holds a Bachelor of Economics and is a member in good standing of the Chartered Professional Accountants of Ontario.
Steven Glaser – Director
Steven Glaser is a financial service executive with a diverse background in corporate finance, communications and governance for private and public companies. He is currently COO and Director of Pool Safe Inc., a company that designs, develops and distributes a product known as the “PoolSafe”.
From 2008 through 2017, Glaser worked in the corporate finance and investment banking arena focused on assisting late-stage private and early-stage public companies with strategic planning and capital raising. Prior to that, he spent seven years as Vice President Corporate Affairs of Azure Dynamics Corporation. He was responsible for the company’s corporate governance, its domestic and international stock exchange listings, as well as the build-out of the company’s investor relations division. He holds a Bachelor of Administrative Studies degree as well as an M.B.A. in finance.
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