Every Supporter (“Supporter”) should be aware that a purchase or acquisition (both terms used interchangeably here) of tokens issued by a single or multiple companies or organizations on the ICOICO platform (each, a “Fundraiser”) involves a high degree of risk. There can be no assurance that (i) a Fundraiser will achieve its project objective or business plan, or (iv) a Supporter will receive a return of any part of its purchase of tokens, including any utility, present or future, attached to the token by the Fundraiser. The following considerations, among others, should be carefully evaluated before making a purchase of tokens issued by a Fundraiser.
Risk Inherent in Protocol Tokens; a Supporter May, and Frequently Does, Lose All of Its Purchase amount
Purchases of Protocol Tokens involve a high degree of risk. Financial and operating risks confronting Protocol Tokens are significant. While future consumable value, usability or appreciation should reflect the perceived level of risk in any acquisition situation, such returns or value may never be realized and/or may not be adequate to compensate a Supporter for risks taken. Loss of a Supporter’s entire purchase amount is possible and can easily occur. Moreover, the timing of any return on the purchase amount is highly uncertain.
The Protocol Token market is highly competitive and the percentage of companies and projects that survive and prosper is small. Protocol token issuers often experience unexpected problems in the areas of product development, manufacturing, marketing, financing, and general management, among others, which frequently cannot be solved. In addition, Fundraisers may require substantial amounts of financing, which may not be available through institutional private placements, the public markets or otherwise.
Investment in Technologies
The value of a Supporter’s Protocol Tokens may be susceptible to factors affecting the technology industry and/or to greater risk than an investment in a vehicle that invests in a broader range of securities. Some of the many specific risks faced by such Protocol Tokens include:
- Rapidly changing technologies;
- Products or technologies that may quickly become obsolete;
- Scarcity of management, technical, scientific, research and marketing personnel with appropriate training;
- The possibility of lawsuits related to patents and intellectual property;
- Rapidly changing market sentiments and preferences with regard to technology sector investments (which are generally perceived as risky); and
- Exposure to government regulation, making these companies susceptible to changes in government policy and delays or failures in securing regulatory approvals.
Changing Economic Conditions
The success of any Token acquisition activity is determined to some degree by general economic conditions. The availability, unavailability, or hindered operation of external credit markets, equity markets and other economic systems which an individual Fundraiser may depend upon to achieve its objectives may have a significant negative impact on a Fundraiser’s operations and profitability. The stability and sustainability of growth in global economies may be impacted by terrorism, acts of war or a variety of other unpredictable events. There can be no assurance that such markets and economic systems will be available or will be available as anticipated or needed for an investment in a Fundraiser to be successful.
Future and Past Performance
The past performance of a Fundraiser or its management is not predictive of a Fundraiser’s future results. There can be no assurance that targeted results will be achieved. Loss of principal is possible, and even likely, on any given Token acquisition.
Difficulty in Valuing Protocol Tokens
It is enormously difficult to determine objective values for any Fundraiser’s Protocol Tokens. In addition to the difficulty of determining the magnitude of the risks applicable to a given Fundraiser and its Protocol Tokens issuance and the likelihood that a given Fundraiser’s project or business will be a success, there may be no readily available market for a Fundraiser’s Protocol Tokens, and hence, a Supporter’s investments will be difficult to value.
A significant portion of a Supporter’s Tokens acquired will represent minority stakes with the Protocol Tokens issuance. As is the case with minority holdings in general, such minority stakes will have neither the control characteristics of majority stakes nor the valuation premiums accorded majority or controlling stakes. Supporters will be reliant on the existing management and board of directors of such organizations or companies, which may include representatives of other financial investors with whom the Supporter is not affiliated and whose interests may conflict with the interests of the Supporter.
Lack of Information for Monitoring and Valuing Fundraisers
The Supporter may not be able to obtain all information it would want regarding a particular Fundraiser, on a timely basis or at all. It is possible that the Supporter may not be aware on a timely basis of material adverse changes that have occurred with respect to certain of its Protocol Tokens. As a result of these difficulties, as well as other uncertainties, a Supporter may not have accurate information about the value of a Fundraiser’s Protocol Tokens.
No Assurance of Additional Capital for Fundraisers
After a Supporter has purchased Protocol Tokens issued by a Fundraiser, continued development and marketing of the Fundraiser’s products or services, or administrative, legal, regulatory or other needs, may require that it obtain additional funds. In particular, technology Fundraisers generally have substantial capital needs that are typically funded over several stages of fundraising. Such additional financing may not be available on favorable terms, or at all.
Absence of Liquidity and Public Markets
a Supporter’s Protocol Tokens will generally be illiquid holdings. As such, there may be no public markets for the Tokens held by the Supporter, and no readily available liquidity mechanism at any particular time for any of the Tokens.
There are many tax risks relating to investments in Fundraisers are difficult to address and complicated. You should consult your tax advisor for information about the tax consequences of purchasing Protocol Tokens issued by a Fundraiser.
Withholding and Other Taxes
The structure of any acquisition in a Fundraiser’s Token issuance may not be tax efficient for any particular Supporter, and no Fundraiser guarantees that any particular tax result will be achieved. In addition, tax reporting requirements may be imposed on Supporters under the laws of the jurisdictions in which Supporters are liable for taxation. Supporters should consult their own professional advisors with respect to the tax consequences to them of a purchase of Tokens issued by a Fundraiser under the laws of the jurisdictions in which the Supporters and/or the Fundraiser are liable for taxation.
Certain information regarding the Fundraisers will be highly confidential. Competitors may benefit from such information if it is ever made public, and that could result in adverse economic consequences to the Supporters.
Forward Looking Statements
The information available to Supporters may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes" and words and terms of similar substance in connection with discussions of future operating or financial performance. Examples of forward-looking statements include, but are not limited to, statements regarding: (i) the adequacy of a Fundraiser’s funding to meet its future needs, (ii) the revenue and expenses expected over the life of the Fundraiser, (iii) the market for a Fundraiser’s goods or services, or (iv) other similar maters.
Each Fundraiser’s forward-looking statements are based on management's current expectations and assumptions regarding the Fundraiser’s business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. The Fundraiser’s actual results may vary materially from those expressed or implied in its forward-looking statements. Important factors that could cause the Fundraiser’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:
- recent and future changes in technology, services and standards;
- changes in consumer behavior;
- changes in a Fundraiser’s plans, initiatives and strategies, and consumer acceptance thereof;
- changes in the plans, initiatives and strategies of the third parties that are necessary or important to the Fundraiser’s success;
- competitive pressures, including as a result of changes in technology;
- the Fundraiser's ability to deal effectively with economic slowdowns or other economic or market difficulties;
- increased volatility or decreased liquidity in the capital markets, including any limitation on the Fundraiser’s ability to access the capital markets for debt securities, refinance its outstanding indebtedness or obtain equity, debt or bank financings on acceptable terms;
- the failure to meet earnings expectations;
- the adequacy of the Fundraiser's risk management framework;
- changes in U.S. GAAP or other applicable accounting policies;
- the impact of terrorist acts, hostilities, natural disasters (including extreme weather) and pandemic viruses;
- a disruption or failure of the Fundraiser's or its vendors' network and information systems or other technology on which the Company's businesses rely;
- changes in tax, federal communication and other laws and regulations;
- changes in foreign exchange rates and in the stability and existence of foreign currencies; and
- other risks and uncertainties which may or may not be specifically discussed in materials provided to Supporters.
Any forward-looking statement made by a Fundraiser speaks only as of the date on which it is made. Fundraisers are under no obligation to, and generally expressly disclaim any obligation to, update or alter their forward-looking statements, whether as a result of new information, subsequent events or otherwise.
The foregoing risks do not purport to be a complete explanation of all the risks involved in acquiring Protocol Tokens issued by a Fundraiser. Each Supporter is urged to seek its own independent legal and tax advice and read the relevant whitepaper, marketing materials and other acquisition documents before making a determination whether to acquire Protocol Tokens issued by a Fundraiser.