The Tokens are digital assets that have been developed by QON Rewards PTE.PLD. (hereinafter referred to as the “Company”). General information on the Seller, the Company, the Token, and the Token platform is provided in APPENDIX A attached hereto. Each buyer does not obtain any right, whether explicitly or implicitly, by taking ‘possession’ of Tokens. Each buyer understands that the Tokens do not represent or otherwise grant any sort of ownership right, equity interest, stock, or other similar right, or the right to receive a portion of future sales proceeds, any intellectual property right, or right to the Company or any of its affiliate companies. The Tokens are also not designed to serve as a prepayment means, electronic money, virtual currency, security, commodity, or any other type of financial product.
Each transaction to purchase Tokens from the Seller during the Sales Period is final upon completion. Therefore, no buyer shall be allowed to request the Seller to provide a refund or cancel the transaction, unless the Seller is obliged to do so pursuant to any applicable law, regulation, etc. The Company reserves the right to deny or cancel any request by a buyer to purchase Tokens at its sole discretion at any time, depending on the circumstances surrounding the Token sales.
Important matters concerning the procedure and specifications of the Token sales (including but not limited to the sales dates and time, sales price, planned sales quantity, intended use of the proceeds, and other details) are as specified in APPENDIX B. By purchasing Tokens, each buyer understands and agrees to such procedure and specifications.
Each buyer recognizes and consents that the risks as specified in APPENDIX C attached hereto exist for purchasing, possessing, and using the Tokens. If there is any question concerning these risks, an inquiry must be sent to the email address designated for this Token service, i.e., firstname.lastname@example.org (mailto:email@example.com). By purchasing Tokens, each buyer is deemed to have explicitly recognized and accepted these risks.
Each buyer shall be responsible for taking reasonable measures to safeguard the credentials, etc. that are necessary for accessing security keys and their storage means concerning the wallet and other storage means that are required for purchasing Tokens from the Seller and storing them. If any security key or other credential is lost by a buyer, it could possibly lose its access to the Tokens being involved. In such event, the Company and the Seller shall not be held responsible for the consequence.
The Seller may determine, at its sole discretion, that it is necessary to obtain certain information pertaining to any buyer in order to comply with any law, regulation, etc. that are relevant to the Token sales. In such case, the buyer agrees to promptly provide the required information to the Seller as requested. Each buyer must also recognize that the Seller reserves the right to deny sales or delivery of any Tokens to the buyer until and unless the buyer provides its required personal information and the Seller can verify that it is allowed to sell the Tokens to the buyer under the applicable law, regulation, etc.
All payments to be made to the Seller are indicated in amounts that do not include tax. Each buyer shall be solely responsible for knowing what types of tax will be levied on to the Seller (i.e., consumption tax, sales tax, use tax, value added tax, etc.). In addition, each buyer shall be responsible for withholding, collecting, reporting on, and paying correct amounts of tax to the appropriate tax authority. The Company and the Seller shall not be responsible for withholding, collecting, reporting on, or paying any consumption tax, sales tax, use tax, value added tax, or other tax that may be levied on payments that each buyer makes to the Seller.
By purchasing Tokens, each buyer agrees to represent and warrant as follows.
(3) The buyer has obtained sufficient information concerning the Tokens to make sound decisions based on appropriate information for purchasing Tokens.
(4) The buyer understands that acquiring Tokens does not mean that any right pertaining to the Company or any of its affiliate companies is granted to it in any form. Such right that the buyer must understand that is not granted to it includes the right to vote, receive distribution of profit, claim redemption, partake in liquidation, receive any asset (including intellectual property rights of any form) as well as any property right and statutory right.
(5) The buyer is not purchasing Tokens for any investment, speculative, financial, or other similar purposes.
(6) The buyer’s purchase of Tokens is compliant with (a) all the legal capacity requirements to execute a Token purchase contract with the Seller and other threshold requirements in the jurisdiction where the buyer is located, (b) all foreign exchange and related regulatory restrictions that are applicable to such purchase transaction, and (c) all applicable statutory and regulatory requirements, etc. in the jurisdiction where the buyer is located, including but not limited to any governmental and other types of approval that the buyer must obtain.
(7) The buyer will comply with all applicable tax obligations in the jurisdiction where the buyer is located that arise with the purchase of the Tokens.
(8) The buyer is not a resident of the U.S.A., the People’s Republic of China (including the Macao and Hong Kong Special Administrative Regions), Japan or the Republic of Korea, does not have an address in any of these countries, and has not purchased or is not purchasing the Tokens from any of these locations.
(9) The buyer (a) is not a citizen or resident of a region where access to the Tokens is prohibited by an applicable law, regulation, treaty, or administrative policy, (b) is not a citizen or resident of a region that is the subject of a sanction or trade ban being enforced by the U.S. or other sovereign state, and is not based in such region, (c) is not an individual being employed by an individual or party that is on the list of individuals or organizations with which business transaction is prohibited by the U.S. Department of Commerce, the list of specially designated nationals or blocked individuals as specified by the U.S. Department of the Treasury, or the list of the parties to be denied entry into or deported from the U.S. as specified by the U.S. Department of State, and (d) is not having and never had an economic, business, employment, or contractual relationship with an anti-social force, etc., and never engaged in commercial transaction, provision or transfer of any sort of benefit, or other types of transaction with an anti-social force, etc. whether temporarily or on an ongoing basis. If any of the representations and warranties as provided in this ARTICLE 9 is breached by a buyer, the Seller and the Company explicitly reserve the right to suspend or take away the account of the buyer and also implement any other measure as deemed appropriate by the Seller and the Company at their sole discretion.
(2) The Company reserves the right to implement any measure to protect any of the claims, etc. by itself that are within the scope of the compensation as specified in the preceding paragraph, at the cost of the buyer(s) being involved.
To a maximum extent that is allowed under the applicable law, etc., and unless it is otherwise explicitly stated by the buyer in writing, (a) the Tokens are sold ‘as is’ and only to an available extent, without any guarantee as to their type, and the Seller expressly disclaims all implied warranties concerning the Tokens including but not limited to warranties of their merchantability, fitness for a particular purpose, title, and non-infringement, (b) nor does the Seller provide any representation or warranty that the Tokens are trustworthy, most current, free of error, meet any conditions as required by any particular buyer, or any defect found in the Tokens will be repaired in the future. In addition, (c) the Seller does not represent or warrant that the Tokens or the Token delivery mechanism is not infected by a computer virus or other harmful element. As exclusion of specific types of warranties or disclaiming of implicit provisions in contracts with consumers is not permitted in certain jurisdictions, the exclusion of warranties and disclaimers, in whole or in part, as set forth in this ARTICLE 11, may not be applicable to certain buyers.
(2) The restrictions as set forth in (a) in the preceding paragraph shall also apply to the Company and the Seller’s responsibility concerning any gross negligence, fraud, intentional or careless act, in which case, the application of the restrictions shall not be limited or excluded.
(3) In certain jurisdictions, limiting or eliminating ancillary or consequential damage is not permitted. Accordingly, part of the restrictions as set forth in this ARTICLE 12 may not be applicable to some buyers.
(1) To the maximum extent permitted by applicable laws and regulations, the Purchaser shall indemnify the Company, its affiliates, agents, sellers or distributors (including their directors, officers and employees) against any and all liability, claim, demand or damage of any kind or nature (whether actual, consequential or incidental), which arises or may arise in connection with any act or omission thereof.
(2) The Purchaser shall settle any and all claims and/or disputes arising out of or in connection with any act or event attributable to the Purchaser at its costs and expenses (including, but without limitation, any attorney fee, legal and other expenses incurred in connection therewith), and its responsibility.
(3) In case the Company, its affiliates, agents, sellers or distributors (including their directors, officers and employees) incur or may incur any amount of any kind or nature (including, but without limitation, any costs, expenses or damages) in connection with aforegoing provisions, the Purchaser shall pay in full with immediate effect or reimburse such amount、as the case may be.
Last revision date: January 1st, 2018
Explanation on the Company, and the Tokens
The Company is a stock company based in Hong Kong that provides the Qonect tokens and issues the Ethereum-based open source platform called ‘Qonect’ under the name of the ‘Qonect project.’ The Company was originally founded in 2015, and started conducting the Qonect project in April 2016. Qonect is a Next Generation Service platform that the Company has developed in conjunction with AI development engineers. The Company is planning on making available to the public QONECT APP in July 2018, an AI-recommendation-based optimization function in January 2019, and a next-generation attribution function in April 2019. It is expected that the Qonect tokens will be used on our service platform in the future. If the development of the Qonect tokens will be a success, the Company is planning on offering next-generation service market where each participating individual will serve as advertisement based on the Qonect token platform.
The Seller is a company for which the incorporation procedure has been executed in Hong Kong. The Company's plan is to use the funds raised from the buyers to research and develop the Qonect tokens and private AI-driven applications.
Overview of the management team and the members of the project team are provided below.
・Anton Dzyatkovskiy (Advisor)
・Hirokazu Matsuno (Advisor)
Please refer to our website for a brief history (https://qonectcoin.com)
The Procedure and Specifications of the Token Sales
In the Token sales transaction during the Sales Period, the Seller shall sell 10% of all Tokens that have been issued at that point. As for the price of each Token, it will be denominated in BTC and ETH, i.e. the currencies in which the Seller will accept payments. The actual Token price is expressed in the form of the following exchange rates: 1 QONECT=0.00001 ETH. As for the exchange rate to be applied to each of the currency pairs USD/BTC and USD/ETH, the exchange rate applicable when the Seller receives payment for the Tokens at the Seller’s unique deposit address in either BTC or ETH shall apply pursuant to the procedure as set forth in paragraph 3 of APPENDIX B. During the Sales Period, the Seller reserves the right to reduce the price of Tokens at its sole discretion. Tokens are only available for purchase using either Bitcoin or Ethereum, and no conventional statutory currencies will be accepted.
The Seller shall start the sales of Tokens at (Coordinated Universal Time 5:00) on May 1st, 2018 (hereinafter referred to as the “Launch Date”) and end the sales of Tokens at (Coordinated Universal Time 5:00) on May 31st, 2018 (hereinafter referred to as the “End Date”).
For the Token sales, the standard exchange rates are 1 QONECT=0.00001 ETH. To ensure that 10% of all issued Tokens will be available for sales to people, the Seller will issue and retain 20% of the total number of the Tokens sold to buyers and the Tokens that were distributed during the community marketing campaign during the Sales Period (including the pre-sales period), immediately following the End Date. Immediately after the Tokens are issued, the issuance procedure will be locked up (in this connection, the sum of the number of Tokens sold to people and the Tokens retained by the Seller will be referred to as the “Number of Outstanding Tokens” hereinafter).
If a buyer desires to purchase Tokens during the Sales Period, it must set up and operate a certain Token wallet in advance. More specifically, the buyer must have (i) a Bitcoin wallet if it wants to purchase Tokens using BTC, or an Ethereum wallet if it wants to purchase Tokens using ETH, or have (ii) an Ethereum wallet that is compatible with the ERC20 token standard if the buyer desires to purchase and receive Ethereum-based Tokens from the Seller. The Seller reserves the right to stipulate additional guidance concerning requirements on any particular wallet.
On the Launch Date, the Seller shall make available for use a web-based application that will facilitate the process through which the buyers will purchase and receive Tokens. If a buyer desires to purchase Tokens, it must first provide its Bitcoin address (if it wants to purchase the Tokens using Bitcoin) or its Ethereum address (if it wants to purchase the Tokens using Ethereum) to the web-based application as its return address. The reason the Seller requests each buyer to provide its return address is to enable the Seller to refund any payment made in BTC or ETH to the address in the event of an unforeseen circumstance due to which the Seller is prevented from selling the Tokens to the buyer as requested. Secondly, each buyer (if it wants to receive Ethereum-based Tokens) must provide a wallet address that is compatible with Ethereum ERC20 in order to receive the Tokens properly. The Seller may also request additional information from each buyer such as its email address through the web-based interface.
The web-based application will then transmit to each buyer a unique Bitcoin-specific reception address (if a Bitcoin address was provided by the buyer) or a unique Ethereum-specific reception address (if an Ethereum address was provided by the buyer). Upon receiving BTC or ETH from a buyer at its unique reception address at the Seller’s end, the Seller will deliver the requested Tokens to the wallet address that was provided by the buyer for receiving the Tokens. The system through which the Tokens will be delivered to the buyers is operated in Hong Kong by the Seller and is programmed in such a way that the series of transactions will be executed in Hong Kong. Therefore, the title to and the risk of loss of the Tokens that will be distributed through this delivery system shall transfer from the Seller to each buyer in Hong Kong.
While the Seller plans on delivering all Tokens to the buyers within one week of the last day of the Sales Period, the Seller reserves the right to delay the delivery by a maximum duration of four weeks following the end of the Sales Period. While the Seller does not anticipate any specific security-related issue arising in connection with the Token sales, such four-week time frame is intended to serve as a preventive buffer period for resolving any security issue that could possibly arise.
As for the currency exchange rate to be applied (i.e., the exchange rate for either of the currency pairs BTC/USD or ETH/USD that corresponds to the cryptocurrency chosen by each buyer for the purpose of purchasing Tokens), each buyer that purchases Tokens during the Sales Period agrees that the exchange rate notified by the Seller at the time when the buyer’s payment in BTC or ETH is received at the unique reception address at the Seller’s end shall apply.
The minimum quantity of the Tokens that the Seller intends to sell during the Sales Period is equivalent to USD 884. Immediately following the end of the Sales Period, the Seller shall retain 50% of the Number of the Outstanding Tokens that will have been sold during the Sales Period (10% of all issued Tokens) and lock up the issuance procedure after that point. All Tokens shall have equivalent functions. The Tokens that will be sent to the buyers and the Tokens that will be retained by the Seller are the Ethereum-based Tokens that will be specified by each buyer or the Seller.
Immediately following the end of the Sales Period, the Seller shall retain Tokens in the quantity that is equivalent to 80% of the total number of the Tokens that will have been sold during the Sales Period (including the pre-sales period) (hereinafter referred to as the “Retained Tokens”).
The Seller is planning on using the Retained Tokens over an extended time period to pay remuneration to its employees, fund the development of the Qonect tokens and related system, and achieve overall facilitation of various projects on the Qonect tokens. More specifically, the Seller intends to distribute 18.715% of the Retained Tokens as management incentives to the management team and also to the project members, etc. The Seller will hold onto 81.365% of the Retained Tokens to fund the Qonect token solution development, sales, and marketing activities, business alliance, provision of remuneration, and business expansion.
The following is the breakdown of the total number of issued Tokens.
• Total issue number 50 billion • Presale 5 billion (10%) • Pool 32.5 billion (65%): subject to holding token • Community marketing 5 billion (10%) • Management incentive 750 million sheets (15%): subject to holding token
Except as the remuneration to be provided to the founder and the existing investors in the Company for their service performed for the issuing party or the Company, the founder and the existing investors shall not receive any amount of BTC or ETH that is contributed by the buyers to purchase the Tokens during the Sales Period.
The Bitcoin and Ethereum that are paid by the buyers during the Token sales shall be used to cover the labor cost of the technical and non-technical staffs, sales, marketing and operational expenses, and the expenses for developing service platform system. At the moment, the seller are planning on using the sales proceeds to fund the following:
• Business development (system, service, settlement fund) 40%
• Sales, marketing 40%
• Operating 10%
• Committee, Advisor 10%
Risks, etc. associated with purchase, sales, and use of the Tokens
By purchasing, retaining, and using Tokens, each buyer agrees to recognize and undertake the following types of risks:
A security key or a combination of security keys will be necessary for each buyer to properly control and process the Tokens that are stored in its digital wallet or vault. Therefore, if the security key that is associated with the digital wallet or the vault where the Tokens are stored is lost, it would be the same as losing the Tokens themselves. In addition, there is also a risk that a third party that is capable of accessing a security key by finding out the buyer’s login information for the wallet being hosted, etc. could possibly steal the Tokens.
As the Tokens are based on Ethereum, any erroneous operation, malfunction, or abandonment of the Ethereum protocols could have a material adverse effect on the Tokens. In addition, technical advancement such as advancement in cryptology, development of quantum computers, and the like could pose risk to the Tokens by invalidating the cryptologic consensus system that currently supports various relevant protocols.
As with the case of the distributed-type encrypted tokens that are based on other public blockchain protocols, the Tokens are prone to attacks by miners, including but not limited to redundant payment attacks, majority mining power attacks, and selfish mining attacks, while Token transactions are being verified on the applicable blockchain. Each type of such attack, if successful, could pose a risk that negatively affects execution of any scheduled Token transaction, transaction record, etc.
There is a possibility that any hacker, other type of malicious group or organization could attempt to tamper with the Tokens through various means such as malware attacks, DDoS attacks, consensus-based attacks, civil attacks, smurfing, spoofing, etc.
The Tokens are intended only to spread the use of Qonect tokens. The Seller does not offer any guarantee to support or promote the secondary distribution or external evaluation of the Tokens. Even if the Company should choose to provide support for handling the Tokens at the virtual currency exchange, any handling of a new virtual currency as a virtual currency exchange business operator requires amending of the operating procedure document that has been registered with the Local Finance Bureau. Therefore, handling of the Tokens under such circumstance won’t be allowed unless the governing authority examines the situation and deems it appropriate, which poses non-liquidity risk to the buyers that are in possession of the Tokens.
Unlike accounts held at the banks and other financial institutions, the Tokens are not covered by insurance unless each buyer obtains an insurance policy on its own, especially one from an insurance company in the private sector. Therefore, if any loss or deterioration of the value of the Tokens should occur, there is no publicly run insurance company such as Deposit Insurance Corporation of Japan that the buyers can seek help from, or any privately run insurance that the buyers can arrange by themselves.
In many jurisdictions, the regulatory environment surrounding tokens, token sales, and the distributed-type ledger technology still lacks clarity and is still in the developmental stage. Hence, it is difficult to predict how the governing authority will view the Tokens, related technology and their usage, and whether or how to apply the current regulations. It is also difficult to predict whether and how the legislative body or regulatory authority will make amendments to the laws and regulations that will affect the Tokens and distributed-type ledger technology. Any regulatory action could negatively affect the value of the Tokens in various ways, even before handling of the Tokens at the virtual currency exchange, such as the government deciding that the Tokens are a financial product that must be regulated, and requiring registration, approval, and licensing. If any regulatory action or statutory or regulatory change would decide that a business operation in any specific jurisdiction is unlawful, or that it is not commercially desirable to obtain the approval of the regulatory authority that is necessary to run a business operation in any jurisdiction, the Company may cease to operate its business in that jurisdiction.
Taxability pertaining to the Tokens is still unclear. For the purpose of purchasing Tokens, each buyer must seek advice on taxation on its own, which could possibly lead to being required to pay withholding tax, corporate income tax, file a tax return, or be subjected to other unfavorable taxation issues.
There is a possibility that the Token platform ends up not being used by many companies or projects, which could also lead to society only taking a limited amount of interest in the creation and development of the distributed-type system, generally speaking. If the Token platform ends us not being used much or not generating much interest from people, it could negatively affect the development of the Token platform, which might then harm the potential usability of the Tokens.
As the Token platform is still in the developmental stage, there is a possibility that some crucial specifications may be changed in the future. The Seller is planning on developing the Tokens and the Token platform based on the policy as set forth in APPENDIX A, and taking commercially reasonable steps to achieve the aforementioned objectives. However, there is still a possibility that the specifications of the Tokens and the Token platform must be modified due to various justifiable reasons.
Therefore, there could also be a risk that the level of expectation of any buyer at the time of purchase might not be fulfilled, while the Tokens and the Token platform will be further developed and maintained. Despite the Seller’s efforts to develop and maintain the Token platform in good faith, there is a possibility that the Token platform may not properly function, or it could not be developed or maintained at a certain level, which could have a negative effect on the Token platform and the Tokens going forward.
The Company intends to use the proceeds from the Token sales to pay for the maintenance and development work on the Token system as specified in APPENDIX B. As the proceeds from the Token sales will be either Ethereum- or Bitcoin-denominated, they could possibly be converted into another cryptocurrency or statutory currency. If the value of Ethereum or another currency should fluctuate unfavorably following the Sales Period, there is a possibility that the Seller may not be able to allocate sufficient funds to the development activities, or develop or maintain the Token platform through initially intended means.
Due to an unfavorable fluctuation in the value of a cryptocurrency or statutory currency, deterioration in usability of the Tokens, failure of any business relationship, filing of a motion to question the title to any intellectual property, or any other number of reasons, there is a possibility that the Seller or the Company may dissolve itself as a corporation.
Aside from the community voting system that will be applied to the Tokens or wallet, no governance right of any type will be granted concerning the Tokens, the Token system, the Company, the Seller, or any of their affiliate companies. In this connection, the Company, which is the parent company of the Seller, shall be solely responsible for making a decision to suspend the Token initiative; create and sell additional Tokens to be used on the Token platform; sell or liquidate the Seller or the Company; or any decision made concerning the Seller, the Company, or any of their affiliate companies. Any such decision could have a negative effect on the Token system and the Tokens that have been purchased. A governance team is set up within the corporate organization for reducing the risk associated with the lack of the governance right concerning the Tokens, which is expected to function properly. However, it is uncertain as to whether such measures will be successful.
Any encrypted tokens such as the Tokens are novel technology that is yet to be tested and verified on a broader scale. In addition to the types of risks as specified in this APPENDIX C, there exit other types of risks that are associated with the purchase, retention, or use of the Tokens that are not foreseeable to the Seller at the moment. Such other risks could actually occur as a modified or combined risk that has been unforeseeable and is being evaluated in this APPENDIX C.
Various fees concerning business transactions, etc.
Each customer is responsible for incurring the fee and remittance charge at the virtual currency exchange.
The amounts fluctuate constantly due to the fact that the currencies being involved are virtual currencies.
When to pay the transactional prices, various fees, etc.
Token vouchers used to perform a business transaction, etc. shall be reflected upon the business transaction being agreed to by both Parties. Actual Tokens will be provided at a later date.
Retraction, cancellation, etc. of purchase and sales contracts
Once a contract is entered into, no change or cancellation request can be accepted concerning the purchase and sales transaction, delivery/acceptance, etc.
Warranty against defects
The Company does not provide any warranty against defects pertaining to the service or the Tokens under any circumstances.