Coin Rivet recently conducted a Q&A with Timeless Luxury Group CEO Michael Gössl to learn more about the company’s Digital Security Offering (DSO) and how it complies with SEC regulations.
For our readers, and in your own words, could you describe what Timeless Luxury Group is?
Timeless Luxury Group AG is a Swiss-based company focused on offering luxury holiday villas, resorts, and lifestyle products.
We consist of four divisions – Timeless Hideaways, which plans to develop and operate luxury chalets and villas; Timeless Resorts, which plans to develop and operate high-end resorts; Timeless Yachts, which plans to offer luxury Yachts for charter; and Timeless Selection, which plans to develop a licensing division with a range of luxury goods including high-quality spirits, wines, and cigars.
Overall, the business plans for the Timeless Luxury Group are based on various predecessor entities, of which I am the majority owner and were formed in 2013, that evaluated the viability of my concept of creating luxury vacation escapes. As part of this process, these separate entities, which we referred to as the Concept Entities, acquired and developed the two Hideaway Concept Properties. These are party to a purchase agreement, whose condition to closing is the receipt of a building permit for the Resort Property.
What is most attractive about the cryptocurrency space for you?
To be clear, we are not currently active in the cryptocurrency space. Our offering is a Digital Security Offering (DSO) – our tokens are securities built to an ERC-20 standard and are not cryptocurrency like Ethereum or Bitcoin.
In general, I think the digital security space is hugely disruptive for businesses such as ours, which require capital to grow. Of course, it adds flexibility in how we structure an offering, but by issuing a digital security, it brings us closer to our investors in a way that the traditional markets don’t facilitate.
This is particularly attractive to us because we believe many of our investors are also likely to be our customers, and so we can structure a token that rewards them for this too. DSOs democratize the capital raising process for investors and provide the ability to issue fractional ownership.
I believe in the near future; the digital security space will sit alongside traditional forms of equity and debt fundraising as an alternative route for both investors and businesses.
Timeless has foregone traditional financing routes – what has prompted this sudden turn to digital securities?
I wouldn’t say it’s a sudden turn, as we have carefully planned how we are facilitating our DSO. It’s very important to get the regulatory side right, so it’s been a relatively long process to be happy on that side.
However, it’s true that the predecessor companies raised €20 million through issuing corporate bonds on the Dusseldorf Stock Exchange, and so we know that it’s a rigid process and doesn’t offer us much flexibility in how we want to reward our investors.
In your own words, can you describe what your Digital Security Offering (DSO) will be?
Our DSO structure offers investors the opportunity to participate in the future profits and sales of Timeless Luxury Group.
We provide our investors with the right to earn a specified percentage of certain future company profits. Holders of our tokens are entitled to receive 40% of the earnings before taxes, depreciation, and amortization per annum from the Timeless Hideaways and Timeless Resorts business segments, if the properties are transferred. They are also entitled to 10% of revenues of the Timeless Yachts and Timeless Selections divisions, as well as the planned global franchise concept.
It is important to note that while Timeless Luxury Group does not currently own any assets, upon raising approximately $1 million in this offering, we expect that the management, operation, and revenues from the concept properties will be transferred from the predecessor companies to Timeless Luxury Group.
Unlike some ICOs of the past, we’re not pretending that our token is going to be used in a new ecosystem to buy holidays or luxury goods – it is purely a security token that should appeal to investors that share our vision.
Timeless has ensured it will be fully compliant with SEC guidelines – what measures have you taken to ensure this?
This is where it gets technical. At a high level, we are undertaking a private placement offering pursuant to Section 4(a)(2) of the Securities Act of 1933, and/or Rule 506 of Regulation D for US accredited investors. In addition, we are concurrently conducting an offering to non-US investors pursuant to Regulation S.
Regulation D is an exemption to registration with the SEC for accredited investors – meaning that our investors must meet minimum criteria for income and net worth. Regulation S is an exemption for foreign investors that does not require they be accredited.
There is a lot more information and legal text on our website. With private placements such as ours, transparency and compliance are our goals.
Have there been any difficulties adhering to SEC guidelines?
There still isn’t complete clarity in the SEC guidelines, that’s the primary issue. You can conform to the standards as they are today, but it is possible they will move the goalposts – so we’d like to see more from the SEC. But it’s not just the SEC, there are so many jurisdictions around the world.
That’s why we have taken a pragmatic approach. As well as closely following what guidelines there are, we have gone a step further, ensuring the risks are clearly communicated in investor literature and carrying out stringent due diligence on investors in the form of anti-money laundering (AML) and Know-Your-Customer (KYC) checks.
Are there key differences between traditional fundraising routes and crypto funding – particularly in light of SEC guidelines?
Traditional fundraising is a well-trodden path and one that we know well. The fees are high and there’s a lot of paperwork in order to satisfy the requirements of the exchanges. It also takes a long time to process the paperwork – although fundraising in general isn’t quick these days either.
I think the main difference is the Listing Rules for traditional fundraising are very clear and well understood. In contrast, the SEC guidelines for things like digital security fundraising are still in their infancy and constantly evolving. Time will tell what additional guidelines are necessary for this industry, but offerings like ours that do their best to be compliant will pave the way for regulation of similar future offerings.
With Timeless’ products being catered toward upmarket audiences, how do you see the move impacting the crypto space? Is your aim to attract the crypto whales, or the entirety of the crypto space?
I think every token offering is looking to attract crypto whales and crypto venture capital funds – that is certainly where the opportunity is. With DSOs, the larger funds are able to take a more traditional approach to investment by modelling cash flows and estimating returns.
Finally, is there anything upcoming you would be able to divulge to Coin Rivet?
We are always open to new partners who can move our business forward, share our vision, and add value beyond providing equity. We are therefore engaged in intensive discussions with other strategic investors who may expand our shareholder base in the near future in order to effectively achieve our growth targets.