May 4, 2021
To our shareholders and stakeholders,
Thank you for your continued support. Our progress continues to be tremendous. This letter provides you with an update on key and material developments at Total Network Services, in keeping with our commitment to maintaining active and transparent shareholder communications.
As you know, our charter is to develop and commercialize technologies that enable the blockchain economy. To that end, we continue to advance our technology stack with a multi-prong strategy centered on our flagship Digital Names solution, to open greenfield revenue streams at both the retail consumer and enterprise levels (see “Digital Names in the Retail Market” below). In addition, we are identifying market verticals (see “Digital Names in the Enterprise – Telecom” below) that face challenges that our products and services are uniquely positioned to address.
Recent years have witnessed a continual rise in the spread of information and communication technologies (ICT) infrastructure and a growing demand for ICT goods. The production of these goods is knowledge-intensive, and the industry relies extensively on intellectual property (IP) rights. This strong and growing demand for ICT goods and their IP dependences makes them an attractive target for counterfeiters.
The total estimated value of global trade in counterfeit ICT goods is $143 billion. On average, 6.5% of global trade in information and communication technology (ICT) goods is in counterfeit products.
Nearly one in five mobile phones shipped internationally is fake. The high value of smartphones and ICT accessories and insatiable demand makes them a lucrative target. Other ICT goods representing a large percentage of counterfeits includes video games, controllers, media players, remote controls, laptops, desktops, tablets and batteries.
Mobile phone manufacturers and operators use Mobile Equipment Identifiers (MEIDs) which are globally unique for a physical piece of mobile station equipment to track and audit equipment. Any device that connects to the global telecommunications network (smartphone, laptop, tablet, gaming station, etc.) is classified as mobile station equipment. MEIDs are “burned” into a device and should be resistant to modification. They are used to facilitate mobile equipment identification and tracking. Additionally, MEID multi-mode assignments are coordinated with International Mobile Equipment Identifiers (IMEIs), facilitating global roaming and harmonization between 3G, 4G and 5G technologies as a universal mobile equipment identifier.
Blockchain can enable more transparent and accurate end-to-end tracking in the supply chain. Organizations can digitalize physical assets and create a decentralized immutable record of all transactions.
Another key driver to our market opportunity is that U.S. telecommunications service providers will need this capability to respond to the recently passed Congressional "rip out and replace" mandate. This legislation applied $1.9 billion to fund a program to remove telecom network equipment the U.S. government says poses national security risks. This mandate was a part of a $900 billion COVID-19 relief bill. In April, we filed a provisional patent that will bolster our strategy to capture a portion of this $1.9B opportunity by delivering a more reliable means of tracking and auditing telecom equipment by applying our Digital Name technology to mobile equipment identifiers and recording them onto the blockchain.
We believe our Company is well-positioned to deliver a real-world solution to this massive market challenge.
In Q4, 2020, Kevin Jackson joined our team and has led our effort to partner with the Telecommunications Industry Association (TIA), laying the groundwork for our Digital Name / MEID strategy. We are incredibly excited to have Kevin's leadership in this area, given his deep experience and credibility in the industry, which will serve us well in opening doors into the global ICT logistics and supply chain markets, starting with mobile devices.
The TIA relationship is a cornerstone of our strategy. In addition to being the sole administrator of MEIDs for all connected devices to the telecom markets, TIA creates standardization and protocols for the entire telecommunications industry. It works with government agencies worldwide to advocate for emerging technologies and solutions addressing industry-wide challenges and opportunities.
We have entered into a strategic partnership with TIA that we believe will reinforce the TNS / Digital Name value proposition to the industry for device tracking and counterfeit prevention. We also believe that this will lay the groundwork to offer additional blockchain solutions to industry players.
We believe the key to success here is education on the potential of blockchain as a next-generation technology that enables better asset and risk management and how the Digital Name / MEID solution can anchor that dynamic. We intend to support our education campaign, with TIA, through a proactive marketing plan to maximize awareness at industry trade events and conferences, industry media and press, and channel partners.
The markets for digital assets and digital securities are evolving rapidly. They are also driving developments in blockchain technologies.
More consumers are adopting cryptocurrencies as part of their overall financial strategies, which means that our business' fundamental value proposition and founding principle, to make digital currency and digital asset transactions easier on the blockchain, is more relevant than ever.
We are preparing a broad marketing campaign, starting in Q2 of this year, to promote the Digital Names solution across social media, amongst key influencers to a broad consumer base via event promotions and conventional marketing channels.
In addition, we have engaged third-party partners dedicated to selling Digital Names downstream through their proprietary consumer channels. We are also working with strategic partners to develop consumer applications and use cases designed to demonstrate the utility of Digital Names with the goal of driving consumer adoption.
We expect that this year will be transformational in terms of establishing and expanding the subscriber market for our flagship product and we look forward to keeping you informed about the various initiatives that we are undertaking.
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To capitalize our plan for growth, we are preparing to commence with a Series B offering of our digital securities. We intend to remain opportunistic in our development of products synergistic to our corporate strategy, which includes identifying special situations for investment and M&A activity. We have identified and are currently vetting potential transactions. If our Board deems it to be in the Company, the Company’s shareholders, and stakeholders’ best interests, we will advance these efforts to more formal stages. In addition, as we grow, we will be building our team with the addition of world-class-caliber individuals that will enable us to maintain velocity while ensuring our ability to execute.
Our Series B offering will be up to $25 million, at an anticipated post-money market cap that is anticipated to be a material step-up valuation to the $5 million Series A, which we have recently closed at an approximate $40M post-money valuation. If you would like to receive a draft of our Series B disclosure document either for informational purposes or to participate, please email , and we will be happy to get that out to you.
In closing, we are committed to building Total Network Services Corp. into a market leader and believe that we are on our way to accomplishing that goal. Your continued support going forward is much appreciated. We believe in good governance and maintaining an open line of communications with our shareholders and stakeholders, so please feel free in the future to reach out directly to me at [email protected]. I will do my best to be responsive to you.
Chairman and CEO
This presentation, like many written and oral communications presented by Total Network Services Corp and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try” or future or results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results. Readers are cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Except as required by applicable law or regulation.
Unless otherwise specified, all return figures shown above are for illustrative purposes only, and are not actually customer or model returns. Actual returns will vary greatly and depend on personal and market circumstances. Investments in Total Network Services Corp and its affiliates are not FDIC insured, not bank guaranteed and may lose value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives, charges and expenses. Total Network Services Corp. services are not intended to provide comprehensive tax advice or financial planning, with respect to every day aspects of a client’s financial situation, and do not incorporate specific investments that clients hold elsewhere. For more details, please see token purchase agreements, regulatory filings, and other disclosures. Past performance does not guarantee future results and the likelihood of investment outcomes are hypothetical in nature. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdiction where Total Network Services Corp. is not registered. The information provided by Total Network Services Corp. is educational only and is not investment or tax advice.