A Security Token Offering, or STO, is a fundraising mechanism in which new projects sell their shares as crypto tokens in exchange for fiat currency. It’s somewhat similar to an Initial Public Offering of stock, except that is an option also available to newer startup companies.
The key difference between a cryptocurrency like Bitcoin and an Initial Coin Offering (ICO) is that the tokens represent traditional securities (in our case, Regulation D/S Convertible Preferred shares) backed by the future earnings of the issuing business.
Gramarye can offer the shares as certificates for investors who are more comfortable with that.
Typically, it can take at least seven to ten years for investors to recoup their money when investing in a startup through traditional instruments. With an STO, investors can potentially get their money out, along with a significant return, in as little as one to two years, although those who hold their investment longer may see an even better return.
An STO typically involves selling a new digital token at a discount as a way for a company to raise capital. 2017 saw security tokens raise more than $2 Billion in investment capital for new companies. When the Company does well and the tokens appreciate in value — just as stocks do in the public market — the investors make a profit. Some tokens, ours included, also offer dividends.
NASDAQ has published an excellent article that explains the token concept in greater detail. Our STO will be fully SEC-compliant and will honor all anti-money laundering laws and other pertinent regulations. We are not using Blockchain technology as a way to circumvent any security laws or regulations and we are based in the United States.
Our STO will be fully SEC-compliant and will honor all anti-money laundering (AML) laws and other pertinent regulations. We are not using Blockchain technology as a way to circumvent any security laws or regulations and we are based in the United States. Our STO is based on a solid business plan, is backed by our assets and future earnings, and is intended to return dividends and investment growth to investors.
This is NOT a new or exotic security. It is Regulation D/Regulation S Convertible stock, the kind that has been regulated for more than 80 years. It’s just wrapped in a high-tech package so that investors have the option of liquidity after one year.
Each token represents one share of a traditional Convertible Preferred Share of stock. These shares can be issued as traditional certificates upon request. For more information, please contact us.
No. Well, not exactly. While Asset-class Security Tokens use the same underlying technology as cryptocurrencies like Bitcoin and Ether, they are not spendable currencies. Stock certificates and dollar bills use the same technology (ink on paper) but are different financial instruments made for different purposes. Like a certificate stock, Security Tokens may gain value over time and be sold or traded on accredited exchanges, potentially at a profit for investors.
Gramarye Media, Inc. is the sole owner and promoter of the Mythos Token (MYT). While we intend to use proceeds from the sale of the tokens to help fund other partner companies and projects in order to help grow a thriving entertainment ecosystem, Gramarye Media will be the entity making the investments, and owners of the tokens will benefit from additional activity to potentially help the tokens grow in value and via additional opportunities for dividends. This also helps to further diversify the investment risk.
Yes. Some Mythos tokens will be reserved for Gramarye Media founders, present and future employees, partners, and previous investors. All employees, including founder tokens, will vest over a period of not less than five years, and founder/employee token holders will not be permitted to release more than 20 percent of their tokens in any one calendar year. Gramarye Media, Inc. will reserve the right to reclaim tokens from employees fired for cause.
Proceeds will be used to fund the operations of Gramarye Media, Inc. including content incubation, cross-media production, distribution, 200+ acres of real estate acquisition and development, and more. We also intend to use proceeds from the sale of the tokens to help fund other partner companies and projects in order to help grow a thriving entertainment ecosystem. For more details, please see our White Paper and Pro Forma, located in our Resource Library.
Token Benefits for Individual Investors
In any year Gramarye Media or the partner companies in which it invests recognizes a net profit, token holders will have the right to vote (one vote per token) themselves a dividend of 15 percent of net profit or to reinvest it. The dividend is paid in the form of bonus tokens, which can be held or traded on accredited exchanges for crypto or fiat currencies.
If a simple majority of token owners elect to receive a dividend, they will benefit by increasing the number of tradable tokens they hold. If a simple majority decides instead to reinvest into Gramarye’s operations, they would do so in the hope that such a reinvestment may potentially help their tokens increase in value more rapidly.
While there is risk associated with any investment, the primary benefit of token ownership is an expectation that, like a stock, the tokens may potentially appreciate in value over time and may be sold on an accredited exchange for a profit.
Companies and partners that have purchased Mythos Tokens may use them in lieu of cash when doing business with Gramarye Media. The tokens will be honored at the present market value at the time of the transaction, regardless of the purchase price.
Companies holding at least 500,000 Mythos Tokens have prioritized access to Gramarye content, intellectual property, and services.
To offer a hypothetical example, say a streaming partner owes Gramarye Media $10,000 in residuals. That company purchased Mythos Tokens at the issue price of $1, but at the time of the business transaction, the tokens are trading at $2. That company may pay Gramarye $10,000 in cash or may return 5,000 Mythos Tokens — effectively giving themselves a 50 percent discount.
The partner company may use any combination of cash or tokens at its sole discretion.
While the tokens must be held for a year from the original purchase/investment (to comply with SEC Rule 144), they can be sold or traded after that time for fiat or cryptocurrency on accredited exchanges. Tokens will be placed on as many exchanges as possible to ensure maximum value and tradability. Gramarye Media will cooperate with all accredited broker-dealers and platforms officially registered to trade tokens when investors are able to sell and buy Lumiere tokens on the open market. Sufficient Ethereum gas will be added to the smart contracts to ensure smooth operations and rapid transactions.
$75 million worth of Mythos tokens will be released to investors, with no current plans for subsequent releases. Gramarye Media and its board will make every good faith effort to ensure that additional tokens are released only when we have confidence the release will be accretive to offset any potential dilution effects.
Yes. Since Mythos Tokens will be SEC Regulation D-Compliant, only accredited investors will be able to purchase in all rounds.
In general, STOs have performed better than cryptocurrencies like Bitcoin, and compare favorably to traditional stocks, both in terms of asset value growth and volatility. This article offers historical data as of April 2018. Like a stock, however, STOs are meant to gain value over time, and the while the data here shows positive trends, the sample size in terms of time is very small. Also, the gains shown do not take discounts into account. Of course, past performance is not an indication of future performance.
A digital wallet is an electronic device that allows an individual to make electronic transactions and to store digital security and cryptocurrency tokens. This can include purchasing items online with a computer or using a smartphone to purchase something at a store. An individual’s bank account can also be linked to the digital wallet. When Gramarye Media’s Lumiere Tokens are delivered, we will provide digital wallet instructions to ensure a safe transfer.
A blockchain is a publicly accessible and decentralized database that is distributed over the Internet. It maintains transaction records publicly in cryptographic form. Transactions can be computed, verified, and recorded using automated methods across a peer-to-peer network of computers, eliminating the need for an intermediary or third party to manage information.
As the blockchain grows, tampering or takeover is virtually impossible, creating an immutable chain of records. Blockchain transactions become permanent records that are placed into a secured “block” in the system —basically an encoded list of records of transactions. When a particular block reaches its capacity of data, it is marked with a digital signature called a “hash” which encrypts the data in the block, securing it and adding it to the chain of blocks.
Cryptocurrency is an encrypted decentralized digital currency transferred between peers and confirmed in a distributed public ledger across a network of computers (or nodes). A distributed ledger is a database held and updated independently by the node in a large network. The distribution is unique as records are not communicated to individual nodes controlled by a central authority but are instead independently constructed and held by every node — thus being decentralized rather than managed by one entity.
All confirmed transactions from the beginning of a cryptocurrency’s creation are stored in a distributed public ledger. The identities of the coin owners are encrypted, so anonymous, and the system uses other cryptographic techniques to ensure the legitimacy of the record keeping. The ledger ensures that the corresponding “digital wallets” can calculate an accurate spendable balance. Also, new transactions can be checked to ensure that each transaction uses only coins currently owned by the spender. This distributed public ledger is called a “transaction blockchain.”
The transfer of funds between two digital wallets is called a transaction. The transaction gets submitted to the distributed public ledger and awaits validation by the network. When a transaction is made, wallets use an encrypted electronic signature to provide mathematical proof that the transaction is coming from the owner of the wallet.
Utility tokens, also called user tokens or app coins, represent future access to a company’s product or service. The defining characteristic of utility tokens is that they are not designed as investments; if properly structured, this feature exempts utility tokens them from federal laws governing securities.
By creating utility tokens, a startup can sell “digital coupons” for the service it is developing, much as electronics retailers accept pre-orders for video games that might not be released for several months. Some companies attempt to use Utility Tokens to avoid SEC Compliance. Gramarye is not going this route.
If a crypto token derives its value from an external, tradable asset, it is classified as a security token and becomes subject to federal securities regulations. Gramarye’s Lumiere tokens will be fully SEC-compliant, asset-class Security Tokens.
Gramarye is also creating a utility token that fans will earn through their actions by participating in games, forums, and by sharing with their friends to help with the viral spread of brand awareness. Those tokens will grant privileges that can be used within the Gramarye ecosystem. In other words, it’s a way for us to give meaningful and valuable rewards to fans. However, these utility tokens are not the same as the Lumiere security tokens.
We were afraid you were going to ask that. In short … we don’t know. We recommend asking your attorney or accountant. The fact that after exhaustive research we still aren’t sure exactly how to answer is one of the reasons we are allowing token holders to vote on when to give themselves a dividend.
In short, the token should be treated as stock for tax purposes. The proceeds from a sale of stock should only be taxable on the capital gains. But seriously, we are not lawyers or accountants.
CoinDesk has published a terrific article on this topic.