We recently had the unfortunate duty to inform you about the passing of one of our founders. As you might expect, his passing impacted this project in more ways than one. As such, we’ve been discussing how to address the various topics that have come about as a result.
What are the consequences?
As we have frequently stated, this project did not conduct an ICO. Furthermore, since all XBY coins were distributed from the start (and we only distributed XFUEL to project contributors), we did not rely on a BTC or fiat development fund to pay for team expenses. As Dave was confident about the project’s success, he paid for most of these expenses out-of-pocket. With his passing, we must now find a new way to secure project funding.
XTRABYTES legal entities
The XTRABYTES project has 2 legal entities attached to it:
- XTRABYTES Ltd., a Seychelles offshore company set-up to handle all real world business contacts and contracts.
- XTRABYTES Intellectual Properties, a Canadian- based company set-up to safeguard the project’s intellectual property ownership (patents, trademarks, copyright, …).
Both Dave and Borz founded the above companies and served as sole board members on each. Moreover, Dave and Borz operated as majority shareholders in both companies (as they retained equal ownership in both companies). With Dave’s passing, we now need to reconsider the operation and existence of these companies.
On December 24 2019, we announced the filing of our first 3 provisional patents for our PoSign technology. These patents were filed through XTRABYTES Intellectual Properties and gave the project 12 months to apply for non-provisional patents (from the December 24 2019 initial filing date).
Before the provisional patents expired, an applicant had multiple options:
- file for non-provisional patents: the cost associated with filing non-provisional patents differs from jurisdiction to jurisdiction, for example:
- United States: $9000 per patent + legal fees
- European Union: €12000 per patent + legal fees
- start an international filing process: this would provide the applicant with an additional 18 months to decide which countries to file the patents in. The cost for starting such a process is $5000 per patent + legal fees and does not include any filing fees in the individual countries. Such fees would need to be paid separately upon their filing in these countries.
- do nothing: by not doing anything we would lose the initial filing date of December 24 2019. A new provisional patent can be applied for giving you a new initial filing date. The costs associated with filing a new provisional patent for a small company are $70 per patent + legal fees.
What steps have we taken so far?
After Dave’s passing, we needed immediate legal clarification as to how to maintain XTRABYTES Ltd and XTRABYTES Intellectual Properties (before year’s end). Since we did not have that luxury, we decided not to file for non-provisional patents through XTRABYTES Intellectual Properties. Securing the full rights to these patents could result in a lengthy legal process (with Dave’s share in this company most likely going to his estate). Instead, we strongly believe that filing for new provisional or non-provisional patents through a new legal entity is the best way forward. It will also ensure that the rights to these patents remain secure. Before we can proceed, however, we need to properly close these two companies so that no disputes arise afterward.
For now, a number of team members have stepped forward to pay the monthly expenses that would otherwise be covered by Dave. However, we’re still exploring several options to secure proper funding for the project.
What options exist to ensure the project’s future?
We have been reviewing several options to ensure the project’s continuation, many of which might surprise you. That’s because they include ideas we previously voiced opposition against. These options include:
- Attracting outside funding. We have always advocated against this option so as to keep the project free from outside influences. However, since we’re now forced to explore all funding options, we decided to gain the advice of individuals who have experience with attracting outside funding. We believe that we can still secure the vision of this project while allowing outside investors to step in and help propel the project forward. Nonetheless, this will require us to make changes to our coin metrics so as to allow for attractive investment opportunities from outside investors.
- Coin merger. Probably the most controversial thing included in this document. With ample justification, we have always defended the need for multiple coins/blockchain in the development of our technology. Having multiple coins (and subsequently multiple blockchains) would simplify the development process. It would also make it easier to let the network evolve from what it is now to what we eventually intend it to be. However, we cannot deny that having multiple coins comes across as complicated. It also tends to scare off potential investors for a number of reasons. And we have to admit that, after three years of trying, our attempt to self-fund this project through a dedicated coin has failed. We were unable to attract sufficient developers to help speed up the development process. And we were unable to instill enough confidence in our project to allow the price of the coin to reach a level where contributors felt they were receiving a fair return for the time and skill they invested. Consequently, we’re proposing a coin merger to simplify things and hopefully help us attract outside investors
- Creating new legal entities. In order to secure the project’s Intellectual Property rights (by means of patents) and instill confidence in potential investors, we are reviewing whether we need to restructure the project and its legal entities. The most likely path to allow for this is to create a foundation registered in a crypto-/blockchain-friendly country. Doing so would also ensure that the initial vision of the project is safeguarded. On top of that, we’re exploring whether to create a company that is employed by the foundation as a way to manage the project.
How far along are we?
Attracting outside funding
We have performed an extensive analysis of our coin metrics and what changes we need to make so as to ensure interest from outside investors. At the same time, we want to make sure that everybody who is currently invested in the project is not left out in the cold. These changes include:
- minting additional coins so the team has something to offer to these investors
- organizing private and public sales to raise funds for the project
- lowering node requirements to make it easier for “early” adopters to secure a node
Work has begun to create a proof of concept for the merger along with the changes we want to implement for the new and improved chain. The upgraded chain will be based on the code of the XFUEL blockchain and include changes to the fee structure (fixed fees). This new chain will allow for the minting of new coins, the creation of various pools for funding and rewards, and better governance of the chain.
Creating new legal entities
We have sought advice from professionals who have experience setting up these types of legal entities (foundation and managing company) within the crypto-space. However, our first priority is to close the existing companies so we can take a fresh start with the new legal entities we intend to set up.
What can you do?
Hopefully, this situational report offers you some insight into what the team is doing/has been doing since the last announcement. Obviously, these are not changes that can be done overnight. The details of these decisions and the changes we will be making will be communicated to you as we move forward. At some point, you may need to take action to ensure your holdings will be secured for the future. However, these actions will be communicated to you well in advance so that you can do what is necessary. In the meantime, we ask you that you be patient with us while we resolve all of these challenges one by one. In the end, we hope to create a better and more solid foundation for the project so that it can achieve great success.