Power Ledger Disclosure Document

Sunday, June 3, 2018
Download document
Save for later
Add to list

DISCLOSURE DOCUMENT 4 AUGUST 2017 Version 1.3 We believe empowering individuals and communities to co-create their energy future will underpin the development of a power system that is resilient, low-cost, zero-carbon and owned by the people of the world.

POWER LEDGER TOKEN GENERATION EVENT - DISCLOSURE DOCUMENT TABLE OF CONTENTS POWER LEDGER TOKEN GENERATION EVENT - DISCLOSURE DOCUMENT .......... 2 1. Company Disclosure .................................................................................. 3 A. KEY STAKEHOLDERS ............................................................................................. 3 B. FINANCIAL INFORMATION .................................................................................... 3 C. PREVIOUS IMPLEMENTATION OF POWER LEDGER TECHNOLOGY ................... 3 D. KEY ASSETS OF POWER LEDGER ......................................................................... 4 E. IMPORTANT CONTRACTS ..................................................................................... 5 F. BACKGROUND OF SENIOR MANAGERS AND DIRECTORS .................................. 6 G. MATERIAL LITIGATION .......................................................................................... 6 2. The POWR Tokens ..................................................................................... 6 3. RISKS – TOKEN GENERATION EVENT ........................................................ 7 AND POWR TOKENS ........................................................................................... 7 1. RISKS ASSOCIATED WITH THE DEVELOPMENT AND MAINTENANCE OF THE PLATFORM ......................................................................................................................... 8 2. RISK OF LOSING ACCESS TO POWR TOKEN DUE TO LOSS OF PRIVATE KEY(S) 8 3. RISKS ASSOCIATED WITH THE ETHEREUM AND BITCOIN PROTOCOL ............. 9 4. RISKS OF MINING ATTACKS ................................................................................. 9 5. RISK OF HACKING, CYBER THREATS AND SECURITY WEAKNESSES .............. 10 6. RISK ASSOCIATED WITH MARKETS FOR POWR ................................................ 10 7. RISK OF EXCHANGES .......................................................................................... 11 8. RISK OF UNINSURED AND TRANSACTION LOSSES .......................................... 11 9. RISKS ASSOCIATED WITH UNCERTAIN REGULATIONS, ENFORCEMENT ACTIONS AND GEOPOLITICAL EVENTS .......................................................................... 11 10. RISKS ARISING FROM TAXATION................................................................... 12 11. RISK OF ALTERNATIVE PLATFORMS ............................................................. 12 12. RISK OF INSUFFICIENT INTEREST IN THE PLATFORM ................................. 13 13. RISK OF AN UNFAVOURABLE FLUCTUATION OF ETHER AND OTHER CURRENCY VALUE ........................................................................................................... 13 14. RISK OF DISSOLUTION OF POWER LEDGER .................................................. 13 15. RISKS ARISING FROM LACK OF GOVERNANCE RIGHTS ............................... 14 16. RISKS INVOLVING CLOUD STORAGE ............................................................. 14 17. CRYPTOGRAPHIC TOKENS MAY EXPERIENCE RISK OF EXTREME PRICE VOLATILITY ...................................................................................................................... 14 18. RISK OF INTELLECTUAL PROPERTY RIGHTS CLAIMS .................................. 15 19. UNANTICIPATED RISKS .................................................................................. 16 Power Ledger Pty Ltd Copyright © 2017 2

Do not participate in this event until you have read and fully understand the Terms and Conditions. This event is not open to residents or domiciliaries of the United States of America 1. COMPANY DISCLOSURE A. KEY STAKEHOLDERS The Power Ledger directors are the principle shareholders of the company owning approximately 80% of the total shares on issue in the company. Other key shareholders include a subsidiary of a large publicly-listed Distribution Network Operator and a blue chip Western Australian membership- based organisation with approximately one million members. In Australia, a company’s Shareholder register is publically available for viewing for a small fee on Australian Securities and Investments Commission (ASIC) website. B. FINANCIAL INFORMATION Power Ledger is a privately-owned company, registered in Australia and is compliant with all of the relevant obligations and requirements of the Australian Securities and Investments Commission 2001 (Cth) and the Corporations Act 2001 (Cth). Power Ledger was founded in Q3 2016 and, as such, has no public financial information available. However, it has received funding from private investors to date and is running its operations from its cash reserves. Power Ledger currently has no subsidiaries. C. PREVIOUS IMPLEMENTATION OF POWER LEDGER TECHNOLOGY Power Ledger has conducted a number of trials in the field and made a number of commercial deployments of peer-to-peer trading products which are currently in operation and/or under negotiation with users. Power Ledger has developed strategic relationships with multinational power meter/meter data and technology services companies to work towards a rapid and broad deployment of the Power Ledger Platform. Power Ledger Pty Ltd Copyright © 2017 3

Power Ledger also has strategic relationships with property developers and the developers of embedded electricity systems to provide an additional low-risk path to market: (a) Vector Limited; (b) Synergy; (c) Western Power; (d) Indra; (e) Witchcliffe; (f) National Lifestyle Villages; (g) Access Housing; (h) Nest Energy; (i) Landis+Gyr; (j) White Gym Valley; (k) Land Corp; (l) Curtin University; (m) Yolk Property Group; (n) Nightingale Housing; and (o) Liechtenstein Institute for Strategic Development. D. KEY ASSETS OF POWER LEDGER Power Ledger owns all intellectual property rights (to the extent possible – i.e. excluding open source rights) in the technology comprising the Power Ledger Platform, and has agreed exclusive use of the technology in its core business areas where it is free to use, reproduce, modify and exploit that intellectual property as follows: (a) the development of energy trading platforms within embedded networks and across regulated distribution networks (Energy Networks); (b) the development of a trading methodology consistent with the physical, commercial and regulatory constraints of the energy industry, related Power Ledger Pty Ltd Copyright © 2017 4

market development, related business development and subsidiary product(s) development including: (i) metering for carbon, water, gas and other utilities; (ii) for energy and energy storage; (iii) embedded and regulated network management; (iv) meter data provision services; (v) the settlement of transactions relating to the selling of energy; (vi) charging and use of electric vehicles; and (vii) carbon markets; (c) financial payments and credit systems for Energy Networks and Energy Related Applications; and (d) software that enables the ownership and trading of ownership of the assets relating to energy, energy storage and electric vehicles and the settlement of transactions relating to the selling of energy, charging and use of electric vehicles, gas and water, including financial payments and credit systems. Power Ledger has agreed to license the use of its technology to Ledger Assets Pty Ltd for possible use by Ledger Assets in other industries and sectors (excluding the above) in exchange for Ledger Assets agreeing not to compete with Power Ledger. E. IMPORTANT CONTRACTS Power Ledger has an exclusive project agreement with Indra Australia to work on agreed projects focussed on the development of dynamic and autonomous distributed energy markets. Power Ledger has an exclusive partnership arrangement with Nest Energy to support the deployment of Nest’s distributed solar/battery assets in the State of Tasmania (Australia). Power Ledger has a preferred-supplier relationship with multinational metering and data service provider Landis+Gyr relating to the deployment of energy meters and communications infrastructure and the remote provision of metering data to support peer-to-peer energy trading. Power Ledger Pty Ltd Copyright © 2017 5

Power Ledger has entered into a services agreement with Ledger Assets Pty Ltd (a private blockchain software services provider in Australia) to provide (i) development assistance services in relation to the development of components of the Power Ledger Ecosystem and (ii) certain software development and escrow services in relation to the Token Generation Event. However, Power Ledger can terminate the services in (i) above by giving 30 days notice. F. BACKGROUND OF SENIOR MANAGERS AND DIRECTORS Background information on the directors and senior managers of Power Ledger is provided in the White Paper on pages 16-17 available on https://tge.powerledger.io website. G. MATERIAL LITIGATION Power Ledger is not party to any litigation as at the date of publication of this Company Disclosure document. 2. THE POWR TOKENS By purchasing, holding and using POWR tokens, you expressly acknowledge that you are aware of the following: The POWR tokens are not intended to be structured or sold as securities, commodities, digital currencies or any other form of financial or investment product. Accordingly, none of the information presented by Power Ledger in respect of the POWR tokens is intended to form the basis for any investment decision, and no recommendations are intended. Power Ledger expressly disclaims any and all responsibility for any direct, indirect or consequential loss, damage, cost or expense of any kind whatsoever arising directly or indirectly from, or otherwise in connection with: (i) reliance on any information contained herein; (ii) any error, omission or inaccuracy in any such information; or (iii) any action resulting from such information. Ownership of POWR tokens carries no rights, express or implied, other than the right to use the POWR tokens as a means to enable usage of and interaction with the Power Ledger Ecosystem, if successfully completed and deployed. In particular, you understand and accept that the POWR tokens do not represent or confer: Power Ledger Pty Ltd Copyright © 2017 6

(i) any ownership right, share or security (or any equivalent right) in Power Ledger, any other company or the Power Ledger Ecosystem; (ii) any future right to receive an interest or revenue share in Power Ledger, any other company or the Power Ledger Ecosystem; (iii) any future right to receive an interest in any intellectual property rights relating to the Power Ledger Ecosystem; or (iv) any other form of participation in or relating to Power Ledger or the Power Ledger Ecosystem, other than a right to participate in the Power Ledger Ecosystem (if and when it is deployed) for the duration of the time you hold such POWR token. 3. RISKS – TOKEN GENERATION EVENT AND POWR TOKENS There are risks associated with the use of blockchain token technology for the POWR token sale process, and the purchase of POWR tokens generally. WARNING: DO NOT PURCHASE POWR TOKENS IF YOU ARE NOT AN EXPERT IN DEALING WITH CRYPTOGRAPHIC TOKENS AND BLOCKCHAIN-BASED SOFTWARE SYSTEMS. Purchases of POWR tokens should only be undertaken by individuals or entities that have significant experience with, and understanding of, the usage and intricacies of cryptographic tokens, like Bitcoin (BTC) and Ether (ETH), and other blockchain-based software systems. You should have functional understanding of storage and transmission mechanisms associated with other cryptographic tokens. While Power Ledger may be available to assist in the purchase of POWR tokens during and after the sale, in no way is Power Ledger offering advice and Power Ledger will not be responsible for lost BTC, ETH, POWR tokens or cash resulting from actions taken by, or omitted by you. WARNING: THE PURCHASE OF POWR TOKENS ENTAILS A NUMBER OF RISKS. The purchase of POWR tokens carries with it a number of risks. You should carefully consider all risks involved, including, but not limited to, those listed below and, to the extent necessary, consult an appropriate lawyer, accountant, or tax professional. If any of the following risks are unacceptable to you, then you should not purchase POWR tokens. Power Ledger Pty Ltd Copyright © 2017 7

By purchasing POWR tokens, to the extent permitted by law, you acknowledge and agree that there are risks associated with purchasing, holding and using POWR tokens. You expressly acknowledge and assume all risks and agree not to hold any of Power Ledger or any related party of Power Ledger liable for any loss, damage, cost or expense (including or any special, incidental, or consequential damages) arising from, or in any way connected, to the sale of POWR tokens, including, but not limited to, any loss associated with the risks set out below. The order of the risks set out below is not intended to have any bearing on the likelihood of such risk arising, or importance of any such risk to any particular person. 1. RISKS ASSOCIATED WITH THE DEVELOPMENT AND MAINTENANCE OF THE PLATFORM You recognise that the Platform is currently under development and may undergo significant changes before release and over time, including a change in direction at Power Ledger’s discretion. Although Power Ledger intends for POWR tokens and the Platform to follow the specifications set forth in Annexure A, and intends to take commercially reasonable steps toward those objectives, Power Ledger may have to make changes to the specifications of POWR tokens or the Platform for any number of legitimate reasons including, but not limited to, a change in the design, implementation plans and execution of the implementation of the Platform for global release. This could create the risk that the Platform or POWR tokens, as further developed and maintained, may not meet your expectations at the time of purchase of the POWR token. Furthermore, despite Power Ledger’s efforts to develop and maintain the Platform, it is still possible that the Platform will experience malfunctions or otherwise fail to be adequately developed or maintained, which may negatively impact the Platform and POWR tokens. You understand that while Power Ledger will make reasonable efforts to complete the Platform software for global release, due to circumstances beyond Power Ledger’s control it is possible that an official completed global version of the Platform may not be released globally, a limited release occurs or, in the worst case, a functioning operational global Platform may not be created at all. 2. RISK OF LOSING ACCESS TO POWR TOKEN DUE TO LOSS OF PRIVATE KEY(S) POWR tokens may be stored in a wallet or vault, which can only be accessed with a password selected by you. The wallet will hold a private key, or a combination of private keys, required to control and dispose of the POWR Power Ledger Pty Ltd Copyright © 2017 8

tokens stored in your digital wallet or vault. Any loss of requisite private key(s) associated with your digital wallet or vault storing POWR tokens, will result in loss of such POWR tokens. If you do not maintain an accurate record of your private key or password used to access your private key, this may lead to the loss of your POWR tokens. You must safely store your password in one or more backup locations that are well separated from the primary location. If you do not have such experience or expertise, then you should not participate or purchase POWR tokens. Any third party that gains access to your private key may be able to gain access to your POWR tokens. You must take care not to respond to any inquiry regarding your purchase of POWR tokens, including but not limited to, email requests purportedly coming from Power Ledger Website or a similar- looking domain. The loss, destruction, loss of access or data loss relating to a private key by Power Ledger used to access a POWR token, may be irreversible and could adversely affect the value of the Platform and overall POWR tokens. Power Ledger disclaims all responsibility for loss, destruction, loss of access or data loss relating to a private key or its related POWR token. 3. RISKS ASSOCIATED WITH THE ETHEREUM AND BITCOIN PROTOCOL As POWR and the Platform are based on cryptocurrency protocols, any malfunction, unexpected functioning, forking, breakdown or abandonment of the Ethereum protocol may have a material adverse effect on POWR or the Platform, including, but not limited to, impacting your ability to transfer or securely hold POWR. Such impact could adversely affect the value of POWR. Advances in cryptography, or technical advances such as the development of quantum computing, could present risks to POWR and the Platform by rendering ineffective the cryptographic consensus mechanism, that underpins the Ethereum and Bitcoin protocols. 4. RISKS OF MINING ATTACKS As with other decentralized cryptographic tokens based on the Ethereum ERC-20 protocol, POWR are susceptible to attacks by miners in the course of validating POWR token transactions on the Ethereum blockchain, including, but not limited to, double-spend attacks, majority mining power attacks, selfish-mining attacks and race condition attacks. Any successful attacks present a risk to the Platform and POWR Tokens, including, but not limited to, Power Ledger Pty Ltd Copyright © 2017 9

accurate execution, recording of transactions involving POWR tokens and expected proper payment operations. 5. RISK OF HACKING, CYBER THREATS AND SECURITY WEAKNESSES Hackers, individuals, other malicious groups or organizations may attempt to interfere with the Platform or POWR tokens in a variety of ways, including, but not limited to, malware attacks, denial of service attacks, consensus-based attacks, Sybil attacks, smurfing and spoofing. As the Platform is based on open-source software, there is a risk that any party may intentionally or unintentionally introduce weaknesses into the core infrastructure of the Platform, which could negatively affect the Platform and POWR tokens. Hackers, individuals, other groups or organizations may attempt to steal the BTC and ETH cryptocurrency from the Token Generation Event, thus potentially impacting the ability of Power Ledger to promote the Platform. To account for this risk, Power Ledger has and will continue to implement comprehensive security precautions to safeguard the BTC and ETH obtained from the sale of POWR tokens. Multi-factor security measures will be taken to protect the cryptocurrency and POWR, including, but not limited to, physical elements, multi-signature keys, splitting of funds, hot and cold wallet partitioning and diversification. Moreover, regular security audits of multi signature hot and cold wallets will be conducted by internal and external teams. Advances in code cracking, or technical advances such as the development of quantum computers, could present risks to cryptographic tokens and the Platform, which could result in the theft or loss of POWR tokens. To the extent possible, Power Ledger intends to update the protocol underlying the Platform to account for any advances in cryptography and to incorporate additional security measures, but it cannot predict the future of cryptography or the success of any future security updates. 6. RISK ASSOCIATED WITH MARKETS FOR POWR The POWR tokens are intended to be used solely within the Platform for Services of peer-to-peer energy trading and as Power Ledger is using the ERC20 protocol, Power Ledger cannot control the actions of Purchasers of POWR tokens. Even if secondary trading of POWR tokens is facilitated by third party exchanges, such exchanges may be relatively new and subject to little or no regulatory oversight, making them more susceptible to fraud or manipulation. Furthermore, to the extent that third parties do ascribe an Power Ledger Pty Ltd Copyright © 2017 10

external exchange value to POWR tokens (e.g. as denominated in a digital or fiat currency), such value may be extremely volatile and diminish to zero. If you chose to use POWR tokens on exchanges it is at your own risk. Exchanges are independent of and not operated by Power Ledger. 7. RISK OF EXCHANGES Cryptocurrency exchanges on which POWR tokens may trade may be relatively new and largely unregulated and may therefore be more exposed to fraud and failure than established regulated exchanges. To the extent that the cryptocurrency exchanges representing a substantial portion of the volume in POWR token trading are involved in fraud or experience security failures or other operational issues, such cryptocurrency exchange failures may result in a reduction in the price and can adversely affect the value of POWR tokens. A lack of stability in the cryptocurrency exchanges and the closure or temporary shutdown of cryptocurrency exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the Platform and result in greater volatility in the price of POWR tokens. 8. RISK OF UNINSURED AND TRANSACTION LOSSES Unlike cash reserves held in bank accounts or accounts at some other financial institutions, POWR tokens are uninsured unless you specifically obtain private insurance to insure those held by you. In the event of loss or loss of utility value, there is no public insurer or private insurance arranged by Power Ledger to offer recourse to you. POWR token transactions are irrevocable. If POWR tokens are stolen or incorrectly transferred, such transfer may be irreversible. As a result, any incorrectly executed POWR token transactions could adversely affect the value of POWR tokens. Cryptographic token transactions are not reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the processing power on the host blockchain platform. Once a transaction has been verified and recorded in a datablock that is added to the blockchain, an incorrect transfer of a POWR token or a theft of a POWR token generally will not be reversible and there may be no compensation for any such transfer or theft. Such loss could adversely affect the value of POWR tokens generally. 9. RISKS ASSOCIATED WITH UNCERTAIN REGULATIONS, ENFORCEMENT ACTIONS AND GEOPOLITICAL EVENTS Power Ledger Pty Ltd Copyright © 2017 11

The regulatory status of the cryptographic tokens, blockchain and distributed ledger technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether regulatory agencies may apply existing regulation with respect to such technology and its applications, including the Platform and POWR tokens. It is likewise difficult to predict how or whether legislatures or regulatory agencies may implement changes to law and regulation affecting blockchain and distributed ledger technology and its applications, including the Platform and POWR tokens. Regulatory actions could negatively impact the Platform and POWR tokens in various ways, including, for purposes of illustration only, through a determination that POWR tokens are a regulated financial product or instrument that attracts registration or licensing requirements. Power Ledger may cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction. The Platform and Power Ledger could be impacted by one or more regulatory enquiries or regulatory action, which could impede or limit the ability of Power Ledger to continue to develop the Platform. Political or economic crises may motivate large-scale sales of POWR tokens, which could result in a reduction in the price and adversely affect the value of POWR. Cryptographic tokens such as POWR tokens, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralised means of transacting, and it is unclear how such supply and demand will be impacted by geopolitical events. Large-scale sales of POWR tokens would result in a reduction in the liquidity of such tokens. 10. RISKS ARISING FROM TAXATION The tax characterization of POWR tokens is uncertain in many jurisdictions. You must seek your own tax advice in connection with purchasing POWR tokens, which may result in adverse tax consequences to you, including but not limited to withholding taxes, income taxes and tax reporting requirements. You bear the sole responsibility for any taxation requirements, in purchasing, using and holding POWR tokens. 11. RISK OF ALTERNATIVE PLATFORMS It is possible that alternative platforms could be established that utilize the same open source Power Ledger Pty Ltd Copyright © 2017 12

code and protocol underlying the Platform and attempt to facilitate services that are materially similar to those intended to be delivered through the Platform. The Platform may be in competition with these alternative platforms, which could negatively impact the Platform and POWR tokens. 12. RISK OF INSUFFICIENT INTEREST IN THE PLATFORM It is possible that the Platform will not be used by a large number of external businesses, individuals, and other organisations and that there will be limited public interest in the use of POWR tokens for peer-to-peer energy trading. Such a lack of interest could impact the development of the Platform for global release. Power Ledger cannot predict the success of its own marketing efforts or the efforts of other third parties. It is possible that, due to any number of reasons, including without limitation, the failure of business relationships or marketing strategies, that the Power Ledger Platform and all subsequent marketing of the sale of POWR tokens from Power Ledger, may fail to achieve success. 13. RISK OF AN UNFAVOURABLE FLUCTUATION OF ETHER AND OTHER CURRENCY VALUE Power Ledger intends to use the proceeds from selling POWR tokens to fund the maintenance and development of the Platform. The proceeds of the POWR sale will be denominated in BTC or ETH, and can be converted into other cryptographic and fiat currencies. In addition, some sales of POWR may also be denominated in fiat currencies. If the value of BTC, ETH or other currencies fluctuates unfavourably during or after the Sale Period, Power Ledger may not be able to fund development, or may not be able to develop or maintain the Platform in the manner that it intended. 14. RISK OF DISSOLUTION OF POWER LEDGER It is possible, due to any number of reasons including, but not limited to, an unfavourable fluctuation in the value of Ether (or other cryptographic and fiat currencies), decrease in the Platform’s utility, the failure of commercial relationships, or intellectual property ownership challenges, that the Platform may no longer be viable to operate and Power Ledger may dissolve or be wound up or face an uncertain or changing regulatory regime. Power Ledger Pty Ltd Copyright © 2017 13

15. RISKS ARISING FROM LACK OF GOVERNANCE RIGHTS As ownership of a POWR token confers no governance rights of any kind with respect to the Platform or Power Ledger, all decisions involving the Platform or Power Ledger will be made by Power Ledger at its sole discretion, including, but not limited to, decisions to discontinue the Platform, to create and sell more POWR tokens for use in the Platform, or to sell or liquidate Power Ledger. These decisions could adversely affect the Platform and any POWR tokens you hold. 16. RISKS INVOLVING CLOUD STORAGE As Power Ledger uses a decentralised cloud storage service to host the Platform and related Applications, the Platform is susceptible to a number of risks related to the storage of data in the cloud. Such data may include large amounts of sensitive and or proprietary information, which may be compromised in the event of a cyber attack or other malicious activity. Similarly, the Platform may be interrupted and files may become temporarily unavailable in the event of such an attack or malicious activity. As users can use a variety of hardware and software that may interface with the Platform, there is the risk that the Platform may become unavailable or interrupted, based on a failure of interoperability or an inability to integrate these third- party systems and devices that Power Ledger does not control with the Platform. The risk that the Platform may face increasing interruptions and additional security vulnerabilities could adversely affect the Platform, and therefore the future utility of any POWR tokens that you hold. 17. CRYPTOGRAPHIC TOKENS MAY EXPERIENCE RISK OF EXTREME PRICE VOLATILITY As noted above, POWR tokens are not intended to represent any formal or legally binding investment. Cryptographic tokens that possess value in public markets, such as ETH and BTC, have demonstrated extreme fluctuations in price over short periods of time on a regular basis. You should be prepared to expect similar fluctuations, both down and up, in the price of POWR denominated in ETC, BTC or USD, or currencies of other jurisdictions. Such fluctuations are due to market forces and represent changes in the balance of supply and demand. As mentioned, exchanges are independent of and not operated by Power Ledger, therefore use of exchanges is at your own risk and Power Ledger cannot and does not guarantee market liquidity for POWR tokens and therefore there may be periods of time in which POWR tokens are difficult to buy or sell. Additionally, due to different regulatory requirements in different jurisdictions and the inability of citizens of certain countries to open Power Ledger Pty Ltd Copyright © 2017 14

accounts at exchanges located anywhere in the world, the liquidity of POWR tokens may be markedly different in different countries and this would likely be reflected in significant price discrepancies. By purchasing POWR tokens, you expressly acknowledge and represent that you fully understand that POWR tokens may experience volatility in pricing and will not seek to hold any of Power Ledger, its directors, officers, agents and advisors liable for any losses or any special, incidental, or consequential damages arising from, or in any way connected to, the sale of POWR tokens. It is also possible that the value of BTC or ETH will drop significantly in the future, depriving Power Ledger of sufficient resources to continue to operate. It is possible that a competing cryptographic token other than POWR tokens could have features that make it more desirable to a material portion of the cryptographic token user base, resulting in a reduction in demand for POWR tokens, which could have a negative impact on the use and price of POWR tokens generally. It is possible that a comparable product could become materially popular due to either a perceived or exposed shortcoming of the Platform that is not immediately addressed by Power Ledger, or a perceived advantage of a comparable product that includes features not incorporated into the Platform. If this product obtains significant market share, it could have a negative impact on the demand for, and price of POWR tokens. The Platform is a new product, thus contributing to price volatility that could adversely affect the value of POWR tokens. There are many factors affecting the further development of the cryptographic token industry, as discussed throughout this section. These risks can include, but is not limited to, continued worldwide growth in the adoption and use of POWR tokens and other tokens; changes in consumer demographics, public tastes and preferences; general economic conditions; and the regulatory environment relating to the Platform, POWR tokens and other tokens. 18. RISK OF INTELLECTUAL PROPERTY RIGHTS CLAIMS Intellectual property rights claims may adversely affect the operation of the Platform. Third parties may assert intellectual property ownership claims relating to the holding and transfer of cryptographic tokens and their source code. Regardless of the merit of any intellectual property claim or other legal action, any threatened action that reduces confidence in the Platform’s long- term viability or the ability of end-users to hold and transfer POWR tokens, may adversely affect the value of POWR. Additionally, a meritorious intellectual property claim could prevent you from accessing the Platform, holding or transferring your POWR tokens. Power Ledger Pty Ltd Copyright © 2017 15

19. UNANTICIPATED RISKS Cryptographic tokens such as the POWR tokens are a new and relatively untested technology. In addition to the risks noted above, there are other risks associated with your purchase, holding and use of POWR tokens, including those that Power Ledger cannot anticipate. Such risks may further materialise as unanticipated variations or combinations of the risks set out above. Power Ledger Pty Ltd Copyright © 2017 16