Binary.

com ICO
Value Analysis
BY NISHANT SAH

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Cut the Crap

Blockchain Hype /ICO /BITCOIN/

GOLDCOIN/ GOLDMINE/
1000000x/ Magic/ VOODOO

*If youre looking for the above, sorry. Go GAMBLE.

Else read
ICO on
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Binary.com Profile & History

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Company Profile

Registered in: British Virgin Islands Company Secretary: Louise Wolf

Website: Binary.com Independent Auditors: Grant Thornton

Directors: Jean-Yves Christian Sireau Reporting Accountants: Grant Thornton

Joanna Frendo
Jim Mellon

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Company Structure

Binary Limited was started in October 1999.

It is now a subsidiary of Binary Group Limited (incorporated on 8th June

2017 for the purpose of the ICO).

Binary Group Limited is now effectively Binary Limited and a little more.

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What Binary.com Does

1. Gives clients a platform to trade on derivatives.

2. The tick size goes from a couple dollars to really large amounts.
3. Binary options: you either win an amount specified beforehand or lose
your initial stake.
4. Company revenue in the last six months stands at USD 459.6 million.

Over 20 odd years, the company has built a very robust backend.
The business model is scalable without any marginal costs.

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 Jargons/Definitions

This section can be skipped by well-versed readers

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Introducing the Blockchain
With the blockchain, now it is possible to have a public ledger of all financial transactions
(even if were not there yet, were moving there pretty fast).

So the blockchain can store the information of companys shareholdings without the need
of an exchange/depository/third party.

Blockchain is a chain of blocks (of data) one after the

other. Each block contains the information of the
previous blocks. The data is saved on computers
across the world which makes hacking/manipulating
data very difficult. There is no central server and hence
no need for a central exchange.
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Environment for ICOs
Mostly fraudulent companies and people
Only intent is to fly with the money floating on the hype of ICOs
No business, no work, no model, no employees
USD 10 million market cap seems like nothing
Its a definite reminder of the bubble were in
Very few companies are really valuable. Most of it is froth
A friend says Its another Wild Wild West!
People have unjust expectation of the returns. Most people want 10x returns
minimum in a year
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How is an ICO different from a
conventional IPO
A place where your
No need for a depository participant shares/bonds/mutual funds
Your coins are your shares are digitally stored
You get dividends almost the same way as you do
for conventional shares
Practically, it is just like an IPO, except you will
Initial Public Offering (IPO):
trade the coins on Lykke.com, and not the New
Publicly selling the shares of
York Stock Exchange or London Stock Exchange the company, effectively
or Bombay Stock Exchange making the shareholders part
owners of the company

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Binary.com ICO

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Binary.com ICO

Issue of 3-10 million additional shares (equivalent to coins)

- Currently: 210 million shares are issued

- Minimum Price: USD 1.35 per coin

Tokens will be sold through a Dutch auction*

*The mechanism for a Dutch auction will be explained later

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Purpose of the ICO
Binary.com aims to raise fresh capital for the purposes of:
1. New international offices and new licence applications
2. Provision of working capital for the Japan office to support its growth plans
3. Enhancement of technology infrastructure to support its competitive advantage in
products and platform technology
4. Increase online marketing budget to strengthen its brand and marketing
capabilities
5. Further development of its operational presence through significant expansion of
its technical, support, and business development functions

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Major Benefits of the ICO (my opinions)
Most of the companies in the ICO space get a lot of visibility due to the hype
Binary.com will greatly benefit in terms of visibility:
Because only a handful of companies in the crypto space have tangible
results to show
Gives a lot of free press to the companies that are really good which could
give a huge boost to the revenues of the standalone business
The cash generated will help in growth and help expand the Japan business (as
mentioned by Binary.com in its Information Memorandum)
Only 4% equity dilution! Gives space for future IPOs which should benefit the
existing shareholders (token holders)
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Timeline of the ICO

Start of token End of token

Token listing on
auction: 15th auction: 25th
LYKKE:
November December
January 2018
2017 2017

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Post-Dilution

Authorised shares: 500 million Ordinary Shares

Pre ICO Issued shares: 210,257,430 Ordinary Shares
Post ICO Issued shares: 220,257,430 Ordinary Shares
(Assuming maximum number of tokens are sold)

Market cap post-ICO @ USD 1.35 per share: 297 Million

USD
Market cap post-ICO @ USD 1.5 per share: 330 Million USD

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Risks (my opinions)

The companys Information Memorandum states a lot of risks

Most of them I feel are obligatory and defensive in nature
The risks listed in its Information Memorandum would also be there for
any other company in this domain

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Past Growth

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Technical definitions/jargons (can be skipped)

The Binary.com coins are smart tokens based on the ERC20 protocol.
1. Its a way to store tokens on the Ethereum blockchain.
2. Several crowdfunding companies use this methodology to get listed.
3. You can think of ERC20 as a set of rules that simplify the conversion of
financial assets into blockchain-based digital assets.

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What is a Dutch Auction?

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Dutch Auction

Example 1:

A company has 100 vacancies and 1000 applicants,

It chooses the top 100 applicants and give them the same salary.

Note: Who was interviewed first does not matter. Better applicants dont
get better salaries.
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Dutch Auction

Example 2:

A town has 10,000 people. One thousand of the poorest are given an
equal amount of help by a charity.

Note: Who came first to receive the donation does not matter! Each one
gets the same amount.

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Dutch Auction Binary.com ICO

1,000 coins on offer.

100,000 people made bids above the minimum price.

The top 1,000 bids will be chosen.

Among these the lowest successful bid price decides the price for
everyone.
All successful bidders pay the same amount as the lowest
successful bidder.

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Dutch Auction Binary.com ICO

If the top bid is USD 1,000

But if the 1,000th guy bids USD 2, and the remaining 9,000 bid
below USD 2
Then all the top 1,000 guys pay USD 2. The bottom 9,000 have
their bids refunded. The top guy gets a refund of USD 998.
Simple!

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Dutch Auction

It is like a price discovery method. The market pays what it wants to pay.

In conventional IPOs, the company decides how much money to ask.

Trivia: The most famous Dutch auction was the one performed by Google
(now Alphabet)

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Valuations

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Earnings Per Share (EPS)

EPS should easily be above USD 0.1 for the year 2017.

Note: EPS is the earning made by a company per

share.
So for every coin, the company earns USD 0.1 today.

The company is asking you to bid at 1.35 USD per coin.

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Price Earnings (PE) Ratio

PE is the multiple that the market is ready to pay for companies

If a company earns $10 per share and the price is $200, PE is 200/10=20
Low PE is generally an indication that the people are getting the
companys shares at a low value.
If two companies have same risks/outlook/management etc, then a lower
PE value is better
PE of Binary.com ICO: 13.5

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PE Ratio Comparison
PE of the Binary.com ICO: 13.5

Company Current PE (lower is cheaper)

Binary.com 13.5

Alphabet (Google) 34.93

Apple 18.63

S&P 500 25.14

Nasdaq 100 26.13

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PE Ratio Peers
Company Current PE (lower is cheaper)
Binary.com 13.5

TD Ameritrade Holding Corp. 29.93

GAIN Capital Holdings Inc. 23.57

MarketAxess Holdings Inc. 45.31

E*TRADE Financial Corp. 20.67

Among similar companies, lower PE is cheaper.

Some peers are giants so they should have far a lower potential to grow.

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Valuations by Present Value Method

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Assumption 1

25% annualised growth for the next 10 years.

Assume present value of the business at USD 0 (which might seem

strange but lets keep it tight)

Annual discounting at three different rates: 5%, 7%, and 10%

Note: From 2014 to 2017, the increase of profit has been 36% annualised

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Present value based on the assumptions

5% discounting 7% discounting 10% discounting

USD 627 million USD 554 million USD 464 million

Market cap post-ICO @ USD 1.35 USD a piece: USD 297 million
Market cap post-ICO @ USD 1.5 USD a piece: USD 330 million

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Assumption 2
25% annualised growth for the next 5 years.
15% annualised growth for 5 years after that.
Assume present value of the business at USD 0 (which might
seem strange but lets keep it tight)
Annual discounting at three different rates: 5%, 7%, and 10%

Note: From 2014 to 2017, the increase of profit has been 36% annualised

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Present value based on the assumptions

5% discounting 7% discounting 10% discounting

USD 525 million USD 468 million USD 397 million

Market cap post-ICO @ USD 1.35 a piece: USD 297 million

Market cap post-ICO @ USD 1.5 a piece: USD 330 million

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Notes

1) Apply discounting based on the personal taxes you pay in your

country

2) Discounting should be used on the interest rates applicable in your

country

3) Calculations here

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Buy/Sell Verdict

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Should One Join the Binary.com ICO?

Conservative Valuation: USD 397 million

Aggressive Valuation: USD 627 million
ICO values the company at USD 297 million

The company holds promise of becoming a giant, but it takes

years of relentless effort.

For me, it is a buy.

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How to Participate?

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Next Steps

1) Bid on the tokens. Go to ico.binary.com

2) Wait to claim the coins in the last week of December. Meanwhile,

complete document verification, a very standard process

3) Trade on Lykke.com by the end of January 2018

a) Stay invested if you like the fundamentals like I do

b) Sell and move out if the listing price is very high

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Bidding Process
Pay 5%
Now

Till 25th Track Histogram

Check Cut off Bid
December Change Bid

Post 25th If successful, Pay the rest

Listing on Lykee
Dec
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About Me/ Disclaimer
I am an investor with more than 15 yrs experience in investment. Studied Mechanical
Engineering from IIT Kharagpur; primarily:
1. Indian Stock markets
2. One companys ICO (Lykke) (Too much froth in ICO space. So no recommendations there)
3. One Cryptocurrency (BITCOIN) cant call myself an investor here since it is all speculation today)
What I gain from this?
1. I am applying for the ICO on my own, my wifes and my parents accounts.
2. I have signed up for the Affiliate account of the Binary ICO. The links in the PPT give
me the benefits given to any affiliate of the ICO.

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Disclaimer:

I have interests in the company

(I and my immediate relatives, Wife, Mother, Father are all
investing in the ICO)
There are lot of simplifications and assumptions stated.
I am only liable to my personal losses
Kindly check all the claims/ calculations independently
Feel free to mail me nishantsah[at]gmail[dot]com

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Thank You

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