This is a Stobox Community quarterly report that represents the current operational and financial status of the company.
This report is intended for general guidance and information purposes only. This report is under no circumstances intended to be used or considered as financial or investment advice, a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of a financial asset. Please note that this is not an offer document. The report is not to be considered as investment research or an objective or independent explanation of the matters contained herein, and is not prepared in accordance with the regulation regarding investment analysis.
The material in the report is obtained from various departments per the date of the report. We have taken reasonable care to ensure that, and to the best of our knowledge, the material information contained herein is in accordance with the facts and contains no omission likely to affect its understanding. Be advised that some of the information provided below is a matter of assumptions and plans that can be adjusted/postponed/canceled by the time the next quarterly report is released. We cannot guarantee 100% fulfillment of all of the indicated plans and projections. Readers should not place undue reliance on forward-looking information, which will depend on numerous factors, and any reader must make an independent assessment of such projections. Please note that we make no assurance that the underlying forward-looking statements are free from errors. Stobox Technologies Inc. team is not making any representation or warranty, expressed or implied, as to the accuracy or completeness of this report and will not have any liability towards any other person resulting from your use of this report.
The information contained herein may be subject to changes without prior notice. The company does not accept any form of liability, neither legally nor financially, for loss (direct or indirect) caused by the understanding and/or use of this report or its content.
The contents of this report are not to be construed as legal, business, investment, or tax advice. Each recipient should consult with their legal, business, investment, and tax advisors as to legal, business, investment, and tax advice. Investors should understand that statements regarding future prospects may not be realized, and should also understand that past performance is not necessarily a guide to future performance.
Do not share this document or any part of it with any unauthorized persons or entities. The information contained herein below is ONLY for the registered investors and shareholders of Stobox Technologies Inc. and associates.
Dear partners, investors, and DAO members,
According to the recent decision of the DAO, we are restoring periodic reporting on the results of the company’s work and its achievements. Going forward, we plan to issue monthly reports to provide more coverage of current events, quarterly reports for investors, and, of course, annual reports for shareholders and government filings.
Please note that Stobox legal entities are privately held companies incorporated, where reporting is only obligatory on an annual basis. All Stobox legal entities act in conjunction to achieve the necessary goals of the company. The Stobox group of companies consists of 3 legal entities: Stobox Technologies Inc. (Wyoming, US), Stobox Plus (British Virgin Islands), and Stobox Ukraine (Ukraine).
Before moving on, it is very important to recall the main goals of the company.
Develop open, efficient, and highly liquid capital markets for private companies using Tokenization and Web-3 Technologies.
Enabling businesses with the implementation of decentralized blockchain technologies, simplifying operations with digital assets, and removing the obstacles to their adoption.
- Promotion of community-driven businesses;
- Digital assets are accessible and manageable for everyone;
- Promotion of innovation and tech evolution;
- Simplification of processes.
This report covers the main activities of the company, which can be classified into the following areas:
- Product development;
- Business development;
- Investment relations and financial metrics;
- Marketing activities;
- Sales and customer delivery;
- Crypto activities.
Objective Key Results (OKR)
It is a collaborative goal-setting methodology used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals.
We have made alterations to the OKR table and plan to meet the targets by the end of 2023.
O-1 — Grow exponentially
KR1 — 60+ STO clients in 2022/2023 (closed deals).
KR2 — Whitelist 1000+ investors.
KR3 — Successfully close Series-A Round.
KR4 — Stobox Tech Inc. Valuation — $25+M.
O-2 — Build a clear understanding of the company activities, objectives, and goals for all employees.
KR1 — 70% of employees can clearly formulate the company’s service range, roadmap, objectives, and strategic goals.
О-3 — Stobox is one of the top 5 tokenization providers in the world.
KR1 — 20 successful cases (based on collected funds) for 2023.
KR2 — Customer satisfaction with us is 90%.
O-4 — Provide an exceptional STO service.
KR1 — Average bill of 350k our community invests in our client’s STO.
In 2022 our performance is worse than we expected. We planned to implement Security Token Offering for 50 clients in 2022, while according to forecasts, by the end of the year we will release only 15–17 cases.
The drop in demand for tokenized investment offerings is due to a general slowdown in business activity in the crypto market and in the global economy as a whole. The fall in the value of bitcoin by half since the beginning of the year and the collapse of the NFT market is holding back most crypto investors from entering new deals.
The second significant factor that complicated the working conditions is the beginning of an active phase of russian evasion of Ukraine. Ukrainian cities were and still are bombed by the russian fascist army, killing hundreds and injuring thousands. Some of the team could not continue to work, and those who continued were forced to work in the face of bombs and missiles, blackouts, and a generally emotionally difficult situation.
Despite the difficulties, we are remaining optimistic. The current team is even stronger and has reached a new level of product development. We receive requests for tokenization every day and work with clients from all over the world. We believe in tokenization and plan to exclusively strengthen this business direction at Stobox. We are confident that we will be able to prepare for the next bull round, have a good foothold in the field of asset tokenization for private companies, and also restore the position of the Stobox token.
For more than 2 years we have been developing our proprietary tech products for issuing and managing tokenized assets. During this time, the team managed to design and build one of the best (according to customers' feedback) products in this domain — Stobox DS Dashboard.
In the Q3 of 2022, we released two full-fledged releases of DS Dashboard, which significantly improved the work of our clients and expanded the possibilities of tokenization based on Stobox. The product allows the issuance and management of numerous security tokens and their offerings at once, which makes the product interesting for large businesses, especially in the real estate market. The product is customized for each business client and deployed separately, which allows for taking into account the interests of individual clients.
In September we released the latest version of our lead product DS Dashboard.
Stobox DS Dashboard
Current version — v.2.21.22
Functionalities and features:
- Separated environments for issuers and investors;
- Complete and immutable transaction history;
- Multi-blockchain support;
- Advanced smart contracts to ensure compliance;
- Sleek and glossy UX/UI;
- Multiple security tokens support;
- Manual and automatic KYC & AML;
- On-chain corporate governance;
- Multiple Security Token Offerings support;
- Blockchain-based roles and permission management;
- Atomic swap to ensure instant settlement;
- Dynamic cap table management;
- Self-management of the issuer’s profile.
The team has made the decision to differentiate between standard DS Dashboard for regular clients and customized them in accordance with client requirements. The customized DS Dashboard may be referred to as DS Dashboard Pro. Custom design and architecture are being developed along with the third-party professional dev teams to ensure scalability and the quality of the final product. We have the following features in the roadmap:
- Integration with Fireblocks. With the Fireblocks Network, you have access to the entire crypto capital markets ecosystem. Directly connect to over 1,300 of the largest liquidity providers, lending desks, banks, and market makers through the web console or API for instant settlement.
- Integration with iComply. Institutional grade identity verification & compliance provider. Introduction of Know-Your-Transaction.
We continue to bet on the DS Dashboard products. According to our vision, the DS Dashboard is a logical continuation of a business that uses blockchain technology. The ability to transfer existing assets to the blockchain, in other words, their tokenization, allows businesses to open up completely new opportunities. It’s not just about raising money, although fundraising is the key aspect of any business. A private company using DS Dashboard is able to tokenize part of its balance sheet, intellectual property, or even employees’ time. Every asset is represented by its own security token and is bound by the logic of smart contracts.
We are not only engaged in product development but we are deeply involved in experiments to create new business models using various types of tokens: Governance tokens, NTTs, NFTs, Utility tokens… We believe that the tokenization of business assets will become something as accessible and understandable as a computer used to be for office computing.
Current version — Stobox DS Swap 1.0.1
DS Swap is an integral part of Stobox products. It is a decentralized secondary market for security tokens.DS Swap provides security tokens issuers the solution to manage liquidity pools and automated market-making functionality.
The security token market is just beginning to take shape and DS Swap is a bit ahead of its time. DS Swap became the first DEX for security tokens on the Binance network in the world. At the moment, only one security token from the Landshare company is traded on the decentralized exchange. But the growing demand for tokenization eventually results in active trading on the decentralized secondary market. By the end of the year, we plan to list at least one more project.
On 20 September an important decision has been made by DAO, that DS Swap would be focused mainly on security and asset-backed tokens, instead of broadening the focus to all of the potential crypto assets. We plan to expand the functionality of the DS Swap product. I.e. Borrowing and landing; access to other EVM-compatible chains; Soulb ID integration.
During the third quarter, we completed a number of important milestones in relation to business development.
First, we launched the Stobox Decentralized Autonomous Organization (DAO) to provide our community members with greater authority, influence, and exclusive features. DAO voting allows members to actively propose and vote for various initiatives. It is important to note that voting is built using Soulbound or Non-Transferable Tokens, where every DAO member is represented by the non-transferable ERC-1155 token.
The second important event in the previous quarter was the partnership with Security Token Markets. STM is the leading global provider of sources of data & news on tokenized assets. By working closely with STM, we are able to improve the additional viability of our customers and will be able to draw additional attention to the STOs powered by Stobox.
Integration with DS Swap allows to display data on trading security tokens on the Stomarket.com aggregator.
The next important event was the beginning of a partnership with KYC provider Sumsub. The provider automatically checks documents from more than 150 countries. We are integrating Sumsub into Soulb ID and implementing a Web3 identity program. The Soulb ID allows investors to be automatically verified and issued an NTT token to be granted access to security tokens and transactions with them. We study regulatory trends in the field of digital assets and build our products taking into account the planned regulatory restrictions.
In terms of business development, we are also very actively following the development of the security token industry. We constantly analyze competitors, study various STO cases, and explore different approaches and regulatory changes. One of our focuses is to fully understand the dynamics of the industry and technical solutions.
We have recently updated the roadmap which included new milestones. Besides the product and business development activities, Stobox has plans to acquire a crowdfunding license in order to help its clients fundraise via the Stobox community of investors. The funds for the licensing are budgeted from the ongoing Series-A STO investment round. The application will start once the investment round is complete and the funds are allocated accordingly.
Investment relations and Financial metrics
We have decided not to include detailed financial figures (Balance Sheet and Income Statement) in this report, as we do not want to disclose these data to a large number of people without the need. We limit ourselves to the main metrics and indicators. A complete 2022 financial statement will be made available exclusively to the company’s shareholders upon filing with the IRS in the first quarter of 2023.
Throughout the third quarter of 2022, we did not attract any investments, either through STOs or through return funds. This is due, first of all, to insufficient focus on this area. In the current quarter, we are prioritizing fundraising activities. We have updated the company’s pitch and are actively communicating with a number of VCs. As a reminder, we are raising $2.5M by offering investors dividend-tokenized shares of the company. This is in line with the company’s plans in Objective Key Results 3 and 4.
Key financial highlights for the third quarter of 2022:
- The company’s revenue amounted to $175,550;
- The company has Account receivables in the amount of $115k, which, if fully repaid by customers, will significantly improve cash-flow indicators;
- The company reduced the burn rate by 45–50% and reached the figure of $55k per month, taking into account the costs of marketing and customer acquisition;
- The company reduced its staff from 65 to 59 people.
The company has no problems with government reporting, is not in any litigations, and has no debts to creditors.
In the fourth quarter of 2022 or in the first quarter of 2023, we plan to successfully close the current Series-A STO round to scale our activities and introduce our products for the tokenization of business customers.
Marketing is one of the most important blocks of work for our team. We face a number of tasks to attract business clients for tokenization. Firstly, tokenization is a very new market, which has not yet developed certain rules or canons, and, accordingly, the promotion of products and services for tokenization is always an experiment. Our task is to find the cheapest and most effective channels to attract customers, as well as to form a positive information field for projects that have decided to follow the path of tokenization.
Since the beginning of 2022, we have been focusing on working with inbound traffic. To do this, we have developed a conversion site, a number of landing pages, and a set of sales finances for warming up and converting incoming traffic.
We focus primarily on organic traffic, which over time will help us generate leads without advertising costs. Already today, 3 out of 10 leads come from organic traffic.
In addition to the site, we are actively developing 2 more information platforms:
- Stobox Blog, which contains not only the news of the company’s life but also important information regarding the industry as a whole.
- Stobox YouTube Channel — a video channel with educational and engaging content on the topic of tokenization and digital assets.
We are one of the most active participants in the market, publishing weekly content on the topic of tokenization.
Due to a temporary drop in demand for tokenization during a period of crisis and uncertainty, we see the need to develop not only inbound marketing activities, but also urgently develop outbound marketing.
This consists in attracting professional sales agents, building external communication, and creating and implementing a strategy where it is not the client who is looking for tokenization, but we actively offer our services and products to businesses that are ready for such a digital transformation.
We highlight several important metrics:
- Customer Acquisition Cost (CAC). In Q3 2022 the CAC is $1,600;
- Budget for marketing team and activities. The average monthly budget in Q3 was <$10k.
We are pleased to announce that Stobox will take part in one of the most significant international conferences in the blockchain industry — the AIBC World Summit.
Stobox was selected as one of the best startups and will have its deck in Startup Village. We are planning to:
- Present an updated version of Stobox’s lead product — DS Dashboard;
- Meet our partners and clients;
- Conduct the closed meet-up to explore more about tokenization
The conference will be held in Malta, from 14 to 18 November.
Sales and Customer delivery
During the third quarter, there were a number of innovations and changes in the mechanisms of sales and customer deliveries.
Tokenization is a complex product and it should be offered by specialists with experience and a full understanding of the nuances and processes. Of course, it is difficult to find such specialists on the market, and poaching sales staff from competitors is an expensive and counter-productive idea in our opinion. That is why the founders decided to get involved in the study of customer requests and the sales process on their own. Ross Shemeliak headed the sales department, consisting of 2 senior sales managers and 3 founders of the company. During the third quarter, sales processes, scripts and automatic emails, and other tools were developed to effectively control the sales process and increase the conversion from lead to client.
During the third quarter, 10 contracts units were closed, which is ±50% less than in the previous quarter.
Recall that the tokenization process consists of 4 steps:
- Consulting, where the main parameters and features of the future STO project are determined;
- Legal preparation;
- Technical implementation;
- Opening of the secondary market and post-STO support.
At the moment, Stobox has provided its services to more than 30 business clients. Many companies are in no hurry to implement their own tokenization projects, limiting themselves exclusively to consulting services. For many, it is important to understand the steps and features of implementation before making a decision to start training. That is why not all clients reach the technical implementation. We must accept this state of affairs and adapt our business model to suit the market. That is why we actively offer consulting services in the first place. For most clients, STO is a once-in-a-lifetime event. Of course, they want to feel comfortable making such important business decisions as issuing and negotiating a security token.
We believe that in the medium term, tokenization will be available for any business. That is why we are actively working on two processes:
- Standardization of approaches and processes;
- Simplification of technical implementation and reduction of time for deploying a client.
Our task is to provide a business client with a tool, guidelines, and training, after which he himself should be able to manage his tokenized assets. We can compare it with banking. We used to come to the bank and ask the clerk to make a transaction, now thanks to bank clients, encryption systems, and streamlined processes, the average housewife can send an international payment from her phone.
We are constantly working to improve the quality of our services and products. We prepare complex reports detailing tokenization processes and provide step-by-step instructions. Our task is to provide a “one-stop shop” or turn-key solution service in order to make life easier for the client in the process of tokenizing his business.
For the third quarter, we have released:
- 7 сonsulting reports;
- 2 legal research reports;
- 2 legal drafts doc. packages;
- 1 project roadmap;
- 2 business plans;
- 2 financial models.
Launched DS Dashboard STO for 1 client.
We see demand not only in tokenization but in general in the possibilities and ways of using digital assets in classic business, transforming familiar business models. Businesses are increasingly willing to experiment, involving a young crypto audience through NFTs, loyalty tokens, various kinds of voting, and staking. We see examples of such transformations in various industries, for example, in retail, StepN and RTFCT with their integrations with the metaverses are bright cases. We understand that this is the future and are ready to offer our clients the development and implementation of such business models. For example, a new scope of work for us was the development and implementation of a DAO structure for one American client. Its task is to provide voting for a business community of more than 13 thousand people, while it is necessary to comply with legal rules and guidelines. Our clients are willing to experiment with our full involvement in the process and this is the main element of trust for us.
Although tokenized asset-backed tokens have little in common with traditional cryptocurrencies, nevertheless they are in the same blockchain environment, which means that their interaction is inevitable. Understanding this, our team sees Stobox as a long-term business partner for the implementation of such solutions in traditional businesses.
A Stobox utility token (STBU) has been issued by the Stobox group of companies back in 2021. It was issued as a native token for our centralized Stobox Exchange, which we have been working on for over 6 months. To our great regret, we were forced to close the project due to the loss of part of the team and the outbreak of war in Ukraine. The market has gone far ahead and we decided not to restore the Stobox Exchange project, but to allocate resources to the main focus — tokenization.
Another task is to correctly implement the utility token in the company’s current products. Both legal and technical application is important here.
We have implemented the Stobox token in our DEX solution DS Swap for security tokens, which we launched on July 1 this year. When trading on the decentralized exchange DS Swap, a commission is charged, which goes to the redemption and partial burning of STBU. On September 6, we announced the first token buyback and burn, which was used as a fee payment.
Trading volumes on DS Swap are not yet large enough to count on strong organic demand, however, we understand that we are one of the first to occupy the DEX niche for security tokens, and demand is secured in the long term. We are also working on the additional utility of the token, planning its use in the lead product DS Dashboard. But this functionality will appear no earlier than Q1 2023.
Stobox is not going to stop supporting the token and, on the contrary, we are planning marketing activity for the period of the next bull rally. Unfortunately, the bear market does not allow the value of the token to return to its original values of $0.10 — $0.20. But this is a matter of time and the work of the Stobox team.
Despite many difficulties from the market and external circumstances, we find resources to develop the company and popularize tokenization. We are convinced that tokenization is one of the most important elements of the transition to decentralized technologies and blockchain adoption. Our team is working on completely new concepts and is at the forefront of changing current business models and attracting investments through web3.
If you have any questions or comments, please contact us by email or in the Stobox DAO group (for DAO members).