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The DESICO financial instrument
The Security called DESI Token, is the financial instrument in accordance with Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU Text with EEA relevance. DESI token is transferable security that gives the right to receive revenue from the DESICO group.
Name of the Financial Instrument: DESI Token
DESI Token issuer: LLC DESICO (UAB DESICO) Private limited company, Legal entity code 304827865, A. Rotundo st. 5-102, Vilnius, the Republic of Lithuania
Number of DESI Tokens to be issued in this offering: 1,023,018
Nominal value of DESI Token: 1.00 EUR/each
Issue price: 1.00 EUR/each discount of 15% will be applied
Start of subscription: November 7th, 2018
End of subscription: on or about November 23rd, 2018 (please see sections "Allotment of financial instruments" and "DESICO financial instrument", page 33 of Offering document)
Payment and delivery: on or about November 25th, 2018 (please see sections "Allotment of financial instruments" and "DESICO financial instrument", page 33 of Offering document)
Maturity term: 30 years
DESI Tokens payout per Token: 12.5% of revenues of the DESICO group*companies / 38,575,472 total number of DESI Tokens (IMPORTANT NOTICE: DESICO will issue not more than 38,575,472 units of DESICO Tokens. All emission of 38,575,472 DESICO Tokens will have a right
to a revemnue of 12,5% of companies of DESICO group. The holder of one token will receive 12,5% / 38,575,472 of DESICO group companies revenue.
In case less than 38,575,472 tokens will be issued the total amount of revenue transferred to token holders will be proportionally reduced.)
Secondary trading of DESI Tokens DESI Tokens are transferable. The trading of DESI Tokens on the secondary market will be limited until the platform for trading of DESI Tokens is fully developed.
Token issue info
DESICO commitments: To transfer each quarter to the DESI Token holders part of the revenue of DESICO group of companies. The first payment shall be made after 12 months from the end of the public offering (starting on 15 January 2020), subsequent payments on a quarterly basis (15 February, 15 May, 15 August and 15 November).
Rights of DESI Token holders: DESI token holders will also be given the rights to:
a) Be the first to invest in Security Token offerings on the DESICO platform and receive bonuses;
b) To participate in Security Token project screenings and other projects, which offer rewards for completed tasks;
Corporate structure: DESICO will operate under joint venture agreements with the following companies from DESICO group (a) an entity which is publicly listed on a list of crowdfunding platfroms (b) an entity with an e-money license, and (c) an entity with investment brokerage license. Such joint venture agreement will ensure the distribution of the income of the DESICO group of companies to the DESI Token holders the implementation of the rights granted by DESI Token.
DESI Tokens buyout: UAB DESICO may redeem the DESI Tokens: not earlier than 5 years from the date of payment and delivery of the Tokens (on or about November 25th, 2018). In case of redemption, the redemption price is equal to: 3 * last year audited revenue * 12.5% + nominal value of DESI tokens. Example: in 2028 audited annual revenue was 1000m EUR. In 2029 single token buyout price would be 3 * 1000,000,000 * 12.5% / 38,575,472 + 1 = 10.72 EUR
The purpose of DESI Token issuance: To fund the DESICO platform development project.
Contracts entered into by DESICO for the issue of DESI Tokens
DESICO has entered into:
1. Choice (Option) contracts with service providers;
2. Contracts under which the remuneration of advisors, team members, and initial investors will be, amongst others, paid in DESI Tokens.
Contracts that DESICO entered for the issue of DESI Tokens Agreements with crowdfunding plaftom UAB "Finansu Bite Verslui" and agreement with financial brokerage firm UAB FMI "DV Invest" (please see sections "Allotment of financial instruments" and "DESICO financial instrument", page 33 of Offering document).
DESICO financial instrument
All 38,575,472 DESICO financial instruments will entitle its holders to a revenue share of 12.5% of DESICO's group of companies income (Please note that revenues of the DESICO group companies refers only to the total external revenues of the DESICO group, i.e. the revenues which DESICO group companies will receive from the services provided to their clients (excluding value added tax). Therefore, any amounts that are distributed within the DESICO group companies will not be considered as DESICO group revenues: such internally distributed amounts will be deducted when calculating total DESICO group revenues as a basis to the DESI Tokens payouts.). Payouts will be quarterly, with no cap on the revenues. There are multiple sources of revenue for the DESICO platform. Firstly, the fees from the Security Token Offerings on the platform, paid partly in fiat and partly in Security Tokens. As a result of being paid partly in the security tokens launched on the platform, the DESICO platform shall receive in addition, any sharing revenue from these holdings. Secondly, the fees from the secondary market tradingactivity on the DESICO exchange.
UAB DESICO may redeem the DESI Tokens: not earlier than 5 years from the date of payment and delivery of the Tokens (on or about November 25th, 2018). In case of redemption, the redemption price is equal to: 3 * last year audited revenue * 12.5% + nominal value of DESI tokens. Example: in 2028 audited annual revenue was 1000m EUR. In 2029 single token buyout price would be 3 * 1000,000,000 * 12.5% / 38,575,472 + 1 = 10.72 EUR
DESICO plans to issue similar DESI Token offerings within the next 2 years in order to attract EUR 37,552,454 in public and non-public offerings.
Allotment of DESICO financial instruments
Information presented below defines what happens in the following situations:
1) when the number of DESI Tokens to be issued in this offering (hereinafter the Cap of the Offering) is already reached and there are subsequent calls to subscribe financial instruments (hereinafter Over-Subscription);
2) when the Cap of the Offering is not reached yet and there are no more calls to subscribe financial instruments after the Offering term is expired (hereinafter Under-Subscription). UAB Desico will not grant over-allotment option in the public offering of its financial instruments. In case of Over-Subscription the subscription term is terminated by UAB Desico and all subsequent calls are immediately rejected. In case of accepting the subscriptions made after the Cap of the Offering is reached, such subscriptions shall be cancelled as soon as possible (any payments as a consequence of such subscriptions, if made, will be declined and the money refunded to investors). If an investor wishes to subscribe more financial instruments than the amount of financial instruments needed to reach the Cap of the Offering, such investor will automatically subscribe the amount of financial instruments up to the Cap of the Offering. For instance, if the amount of financial instruments needed to reach the Cap of the Offering is 10 000 and the investor wishes to subscribe 20 000 financial instruments, he will automatically subscribe 10 000 financial instruments.
In the case of Under-Subscription UAB Desico will issue the amount of financial instruments that were subscribed. For instance, if the investors subscribe financial instruments for 0,5 million EUR UAB Desico will issue financial instruments exactly for 0,5 million EUR.
Risks related to investment in DESICO financial instrument
Please read carefully the following risks associated with the purchase of the UAB DESICO financial instruments (“ DESI Tokens” ) and the representations and warranties of the investor, i.e. the purchaser of DESI Tokens (“ The Purchaser” ): Please note, that information on risk factors provided in this section should not be considered comprehensive and covering all aspects of the risk factors associated with UAB DESICO or its financial instrument. The risks described below may adversely affect UAB DESICO (and/or DESICO group companies) and, in extreme cases, lead to DESICO (and/or DESICO group companies) insolvency and violation of the obligations arising from DESICO financial instrument (DESI Token).
Risk related to DESI Tokens
DESI Token is a financial instrument issued by UAB DESICO and that the issue, offers and sales of this financial instrument are regulated under the applicable laws of the Republic of Lithuania and European Union. The DESI Tokens involve risks, all of which the Purchaser fully and completely assumes, including, but not limited to, the risk that:
The counterparty risk should be considered as a probability that group of DESICO may become insolvent, bankrupt, its activities may be suspended or terminated and the result may be that it will be impossible to perform rights arising from DESI Tokens.
When purchasing DESI Tokens, DESI Tokens holders take on the risk of liquidity, i.e. DESI Tokens holders can suffer losses by not being able to sell their existing DESI Tokens for a while or will be forced to sell them at unfavourable prices when DESI Tokens will become tradable on secondary market.
The situation on financial markets may affect the value of DESI Tokens. There is a risk that the value of issued DESI Tokens may fall.
It is a risk that in case of inflation, the depreciation of money may be higher than the yield on DESI Tokens.
It is the potential risk of losses arising from the occurrence of amendments to laws, regulations and legal acts; the risk arising from the implementation of new legislation that may result in additional costs or a reduction in return on investment; this risk includes possible changes in the applicable tax assessment and changes in tax-based procedures. This may negatively affect DESICO results.
Risks related to DESICO
The UAB DESICO (as well as DESICO group companies) also involve risks, all of which the Purchaser fully and completely assumes, including, but not limited to, the risk that:
This is a potential loss that may arise due to the failure of UAB DESICO to fulfil its contractual obligations or improper fulfilment of them due to failure in UAB DESICO (and/or DESICO group companies) business or other factors.
It is a risk to incur losses or higher costs due to the fact that the UAB DESICO (and/or DESICO group companies) cannot timely fulfil its payment obligations.
Potential loss may result from improper response to competitors' actions and environmental changes.
Risk to suffer losses due to inadequate or unenforced internal control processes of UAB DESICO (and/or DESICO group companies), employee errors and unlawful actions, technical and software malfunctions.
It is the risk arising from external and internal environmental factors that could negatively influence the achievement of the goals of UAB DESICO (and/or DESICO group companies), the consistency and continuity of operations.
These are the risks arising from inefficient management and the inability to ensure a sufficient long-term income of UAB DESICO (and/or DESICO group companies).
It is a risk that could adversely affect the UAB DESICO's (and/or DESICO group companies’ ) income due to an unfavourable opinion about UAB DESICO (and/or DESICO group companies) reputation that may arise from counterparties, investors.