Moola / aXpire Project Announcement - 7 October 2022
Dear community members.
The board of aXpire have decided to wind down the AXPR token and conduct a token to equity swap at a valuation favorable to the community, to consolidate and drive value, and to remove some of the uncertainties we have experienced due to the volatility in the crypto markets and the capabilities of several technology partners during our attempts to deliver on the Moola payments app.
A live voice Q&A in the Moola/aXpire Telegram channel with CEO of aXpire, Gary R. Markham, will be conducted at 5 PM BST next Tuesday on October 11, 2022. Please submit your questions by clicking here.
Before we get into the specifics and mechanics of the token/equity swap, the following provides some history and background that underpins our decision to move forward in this fashion.
In 2018 we conducted a successful token generation exercise. During the tail-end of this event and the week immediately following, the crypto market went into freefall, marking the beginning of the “crypto winter”, where the company's asset values were slashed by 75-80%. Once able, we moved some assets into stable coins to protect the company's financial position, selling assets at much lower prices than the value upon the company's receipt of them. This meant our treasury was diminished considerably.
The company had developed a roadmap for fund allocation and spend management tools, branded as Resolvr, and continued to enhance this product over the years, building new functionality and features that added value. The use of blockchain technology for audit trails and immutable record keeping was also offered, however clients and prospects were not interested in this functionality. We promoted the product amongst B2B clients intending to generate new sales revenues. The sales efforts proved very hard in a niche, somewhat closed market. We used referrals from our hedge fund anchor client, direct sales and marketing, and events and promotions to sell the product. Sales revenues, unfortunately, did not follow as planned and expected, however our sales efforts continue.
As our first foray into the crypto markets with a pure retail product, we developed MatchBX, a B2C crypto freelancer marketplace akin to Fiverr and Upwork. This product was developed and launched; however, it did not see high levels of adoption despite our best efforts. To further bolster the product, we detailed our plans for MatchBX 2.0, which would include the adoption of complete decentralization and the use of Kleros for crowdsourced jury arbitration in contentious matters between freelancers and their clients. At the time, we were one of the first companies to discuss utilizing Kleros' technology in such a way, a very novel concept. However, after having embarked on the path of development and being some ways down the road, we realized that even with the renewed plan, MatchBX would not be a winning product, and the focus on this platform would detract from our ability to support other more likely to succeed products. This decision was announced to our community and the vast majority agreed with the decision, and following the announcement, the platform was taken offline and indefinitely mothballed.
To bolster sales efforts, we decided to add more B2B software products to the portfolio. We designed, built and launched the Bilr app, for time recording, invoice creation and payments for attorneys, which was launched in January 2020 in New York. As a pure Saas B2B play, Bilr has the latest technology baked in, including voice-to-text time recording, plus fully native mobile for iOS and Android. Sales have proved somewhat elusive with less active clients than initially forecasted, but we continue to support the product and sales efforts and are undertaking a renewed effort with an upcoming brand refresh, a new website and a move to focus on all professionals that rely on time recording and invoice creation, as opposed to focusing only on lawyers. We have also identified channel partners which we are aiming to launch marketing campaigns with following the release of this brand refresh and widening of the scope of target users. Last month, a new dedicated Sales & Marketing Executive was onboarded to the UK team to assist in these efforts.
More recently, aXpire was engaged with a very large global investment bank, in order to develop and deploy ExpenseCore, an expanded product off the back of Resolvr, and a B2B bill pay and spend management platform for their private wealth management and family office high net worth clients. After an 18-month development and product delivery program, the client put the entire process on hold due to the crashes in the stock markets and their shifted focus onto the front end (e.g. investor base) of their business. This was a blow as the product had grown into a compelling offering; however, we continue to hold the IP to this software and are exploring new avenues to generate revenue with it while awaiting word from the investment bank regarding a possible re-opening of the initiative.
Alongside all this activity, the PayBX app began life in 2019, intending to deliver a crypto to fiat mobile payments app in 2020/21. The product got off to a less-than-perfect start wherein we churned through two separate partners in attempting to build the product before having created a piece of technology that did not meet our expectations with insufficient features and functions, and significantly higher consumer-facing fee levels than what we considered commercially reasonable set by the partner utilized for the infrastructural components of the product. A clear example was that our initial focus was on letting users spend crypto using their regular debit cards. However, with the app we'd built, the transfer of crypto into FIAT and ultimately the deposit into the bank would only happen at the end of the day, becoming available no earlier than 1-3 days later in the user's bank account, meaning that users would have to cover the cost of the transaction themselves for several days before seeing their spent funds replenished by their crypto. The workaround was a functionality offered by the partner that enabled same-day receipt of funds into the users' banks. Still, this feature was heavily geo-restricted and came at a hefty 1% fee of transferred value.
At this time, we also encountered the significant barrier of regulatory uncertainty and the lack of licensing. After spending time and resources exploring our options, notably looking at acquiring our own license in Estonia, we realized that attempting to become licensed ourselves would not be a viable path. Factors that went into this decision were the uncertainty around the licenses in Estonia, and our decision was later proven correct when all licenses were revoked, and companies would have to go through the process all over again with all-the-more scrutiny this time. It was clear: we would have to partner with a third-party who could let us operate under the umbrella of their licensing, and that would have fees that were both competitive for our users, and that enabled the company to add a margin and turn a profit with the product without inflating already high fees. This led us to our most recent partner, and our optimism soared as the functionalities we could now compliantly offer widened significantly.
We decided to rebrand the product as Moola in early 2022, bringing on board this new partner to accelerate the development and solve our regulatory conundrum. Within 4-5 months of the relationship's inception, it became clear that they had oversold their capabilities and directly misled aXpire in their ability to support our aims and objectives for Moola. Not only was their technology defective, but the timelines for various crucial enhancements and inclusions we relied on that were to be made to the product were seemingly made up. We discovered that they were borderline nefarious in their actions, and following this revelation we terminated the relationship immediately in July 2022.
Following this, we searched worldwide for a licensed technology partner that could deliver all or at least some of the back-end and banking connectivity required to deliver the Moola app to our community, with a minimum requirement to enable an EU/EEA release. This search uncovered three potential partners, leading us to conduct in-depth technical, regulatory and business due diligence on all three. Only one partner looked close to what was required. Still, their technology is not yet market-proven, their licensing situation is very fresh, and the extent of tokens available through their solution did not meet the mark. Most notably, full-fledged AXPR support would be at issue, requiring a pairing of the app being custodial for the vast majority of its features but incorporating a non-custodial component (self-generated and stored private key) for just the AXPR token alone, which would mean a poor user experience and further regulatory ambiguity in that the token's storage would not be covered under the partner's regulatory umbrella, hence the need for the self-storage element.
With several failed relationships and the uncertainty over a possible new one, the decision was taken, after much deliberation, to move forward in the direction of exiting the crypto markets, winding down the token and conducting the equity swap, thereby reverting our focus to what we know best and where we know we can deliver most value: B2B software.
Main Benefits (to the swap)
By aggregating all existing technology IP rights into a single legal entity, the token-to-equity swap will provide community members with shares in a vehicle that is no longer subject to the vague nature of the crypto market and the uncertainty of unproven third-party technology partners. These IP technologies are: Resolvr, Bilr and ExpenseCore. Moola and MatchBX are also included, but these are unlikely to be explored any further.
Owners of these shares will be able to trade (sell/buy) to others over time, thus creating a marketplace. The value of shares in a privately held company is determined by its buyers/sellers, who could be private persons or companies. Generally, these shares' value will follow a valuation multiplier applied to the company's annual revenue, or in the case of SaaS, annual recurring revenue (ARR), as well as the value of the company's assets (IP, cash, etc.). In the beginning stages, these shares will only be available for buying/selling privately, independently coordinated between two parties and confirmed by the board of aXpire. It is worth being aware that the liquidity of private company shares is less than that of a crypto token; at least to begin with, it'll be harder to buy/sell shares in aXpire than the AXPR token.
The significant prevailing benefit is that the community will become shareholders moving forward. Therefore, all product sales and any future acquisition of the company or its products will benefit shareholders directly as company owners. With this decision, all growth for the company is growth for shareholders; every product sale will increase the company's revenue, and therefore its valuation and the value of the company shares will follow. Our ultimate goal in delivering value for shareholders is to achieve an exit with a complete acquisition or several partial acquisitions. Upon an acquisition, in exchange for their shares, all shareholders would receive a payout proportional to the number of shares they hold in the company and relative to the company's value at the time of the acquisition. In the case of a partial acquisition, by which we mean the acquisition of a singular aXpire product, we are committing to a complete dividend payout of the entire value of the acquisition. This would mean a payout proportional to the number of shares held in the company, but without giving up shares in the company, provided there is still IP held by it (i.e. other products still available to be acquired).
Though there is no guarantee of (an) acquisition(s), this is the explicit goal, and we believe we have several strong products that can get us there. This includes the likes of Bilr, which as a SaaS product, would likely command a high valuation multiplier. For example, with this token-to-equity swap, we're valuing aXpire at roughly $2M. At an 8x multiple for Bilr, we would only need $250K in ARR to achieve the same valuation for just that one product alone, as we are valuing the entire company today.
Mechanics of the swap
UK registered legal entity will be the owner of the IP technology assets, the revenue-generating US entities, and the issuer of shares to community members.
The conversion rate of the 350M tokens will be representative of 35% of the total shares of the company, meaning 1M AXPR tokens = 0.1% of aXpire's shares. At the token's current market cap, this values the company at a valuation of around $2M.
To conduct the swap, there will be a KYC gateway and equity conversion platform wherein community members can verify their identity and token holdings and can swap their tokens for shares issued in their names and registered accordingly. More information on this will become available later, however, only persons from OFAC sanctioned countries will be restricted from participating in this swap.
As a consequence of the swap, the AXPR token will become delisted from KuCoin and other exchanges. The timeline of this delisting will be provided by KuCoin, with notice provided ahead of time, and we'll revert with more details regarding steps needed to be taken to withdraw tokens from their platform ahead of the swap.
Timing of the conversion
The aim is to conduct the complete conversion within six months of this announcement. We shall keep community members informed of the progress as this is achieved.
This is the right decision to make at the right time. We continue to fully support our community and believe this path forward offers the greatest value to all.
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