DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

Enercom AG is a company registered in Liechtenstein that intends to leverage the telecommunications and renewable energy industries. After their security token offering (STO), they plan to acquire 100% of the shares of API Mobile SIA, an established telecommunications company based in Latvia, to pay dividends to investors. They intend to use some of the proceeds from their enterprise to develop Rapsoil AG, a renewable energy licenced company looking to deploy a wind energy farm on the shoreline of Latvia.

Enercom issued an ERC20 token on the Ethereum blockchain called ENC, which is a representation of Enercom’s’ shares and is used to pay dividends to holders. We couldn’t find any 3rd party security audits on their smart contract.
The current management team is highly experienced and accomplished in the telecommunications industry, with a proven track record. The management team also features a well-connected affiliate with 13 years of experience in the renewable energies industry. Our researchers have not identified any considerable legal risks concerning the three companies. Rapsoil AG has obtained several licences for a wind turbine energy park, valid until 2024.

Enercom AG is looking to raise 20 Million EUR, equivalent to the valuation of API Mobile. A supply of 200,000 tokens will be issued, valuing each one in 100 EUR. Enercom doesn’t provide any discounts on this token sale. The token is considered a security, and the official Security Token Offering (STO) prospectus has been approved by the Financial Markets Authority (FMA) in Liechtenstein.
The company’s ultimate goal is to continue to expand its telecommunication efforts while investing in renewable energies, with solar parks that are ready to build or in early development phases.

Our researchers gave Enercom a final rating of 76.1/100. A breakdown of this rating is available at the end of the report.

PRODUCT DESCRIPTION

Enercom is not developing a product per se. Instead, they want to acquire two existing companies and bring them under one umbrella company. These two companies are API Mobile SIA and Rapsoil SIA.

API Mobile currently exists as a link interconnecting Tier 1 telecommunication companies with smaller ones that may not have the capital or the technological capability to operate with them. API Mobiles’ solution is more cost-effective and technologically simpler than concluding a co-operation agreement with an industry giant. These agreements may take about a year of system adaptation, including a long period of safety and technological compliance testing as well as large advance payments.

Rapsoil hasn’t been launched as a project but has all the necessary certificates and licences to immediately create a wind farm of 15 turbines along the Latvian coastline. Once the farm is finalised, produced electricity is expected to be sold to Nord Pool AS, which was the world’s first multinational exchange for electricity trading.

GOALS AND OBJECTIVES

Enercom is raising funds through a security token offering with the goal to acquire two companies in telecommunications and renewable energy industries respectively. Enercom’s goal is to combine the two companies in order to provide value to its investors with the profits from the already established API Mobile while developing Rapsoil with the intention to provide long term value for decades to come.

SUCCESS FACTORS

  • Based on an established and profitable business (API Mobile).
  • Expanding into a growing industry (renewable energy).
  • Fully compliant corporate structure.
  • All necessary permits and licences obtained.

MARKET CONDITIONS AND COMPETITION

MAKET CONDITIONS

Energy Market

The US Energy Information Administration (EIA) projects a nearly 50% increase in world energy usage by 2050, led by growth in Asia. The EIA also forecasts that generation from non-hydropower renewable energy sources, such as solar and wind, will grow by 15% in 2020—the fastest rate in four years.

It is safe to say that energy will always be in demand, but renewable energy is highly desirable, especially for younger generations. A 2018 study from Yale University showed that 85% of American registered voters support requiring electric utilities to transition to renewable energy.

Overall, and on average, Americans are willing to pay an additional $16.25 per month for renewable energy. Similarly, Europeans also prefer renewable electricity sources by a large extent.

Telecommunications Market

The market for mobile devices and the number of mobile phone users have been on the rise since the invention of this technology. According to Statista, mobile device users will increase to 7.33 billion by 2023, while smartphone users increased by 40% between 2016 and 2020. The count of mobile phone users in the world continues to grow at the expense of developing countries. At the same time, the decline in end-user costs prevents the market from experiencing significant revenue growth, remaining stable, nonetheless.

About the business model and objectives of the company, Enercom CEO, Kaspars Zvaigzne stated in an interview with STOcheck:
‘Since telecommunications are prone to technology change and are a tech-sensitive area, we are adding an energy sector (…) in order to reach necessary diversification (and) ensure Enercom AG remains profitable in the long term.’ 

COMPETITION

There are thousands of companies that directly compete with API Mobile and Rapsoil in the telecommunications and renewable energy industries, however, no companies currently combine these two in the way Enercom intends to.

When questioned about the amount of competition facing this enterprise, Kaspars Zvaigzne, the Founder of Enercom AG, said in an interview:
‘There are countless energy and telecom companies across the globe, we believe our experience,
track record and combination of both businesses is a solid base for Enercom AG becoming a
long-lasting market player.

Why is Enercom different from its competitors?

As a security token project, Enercom is different in that the combination of telecommunications and renewable energy provides a level of diversification rarely seen in STOs. Enercom’s strategy is to leverage a profitable business model to develop another business in a developing but quickly growing field.

TECHNOLOGY REVIEW

Smart Contract

Enercom issued its ERC20 token on the 2nd of December 2019. The token is called ENC. There are more advanced token protocols in the Ethereum network, such as ERC1400 and ERC1594. These protocols offer an array of advantages, such as the whitelisting of holders, forced transfers for legal actions and refunds, and inclusion of metadata to a token holder’s balance (such as shareholder rights or data for transfer restrictions).

An ERC20 token does not have these capabilities built into the code. Therefore the company needs to find solutions to some of these problems using other, most likely centralised means. For example, for whitelisting KYC/AML approved investors and distributing dividends, Enercom is using the services of other companies like BDO and Bank Frick.

Enercom stated that the smart contracts behind the project have been reviewed and verified as secure by an external audit.

API Mobile Technology

Api Mobile is engaged in the international wholesale of phone call and SMS transfer, which means that Api Mobile interconnects telecommunication companies and offers voice and SMS communication connections to various international destinations to its customers.

The company manages interconnections over a technical infrastructure and business support platform based on web-driven software built on telecommunication industry standards like H323, SIP and Frame Relay, SS7, and utilising industry equipment from CISCO, SANSAY, DIALOGIC, MERA and IVR Technologies, all of them under Session Border Controller (SBC) policies.

Rapsoil Technology

Rapsoil has received permits to build 15 turbines and one substation. From those, they expect to generate:

  • Total allowed wind park power: 72 MW.
  • 35% base capacity due to unique location and efficient turbine formation alone.
  • Average annual wind speed at hub height at 7.3 m/s.

The project entails the construction of a 110 kV substation on the territory of the wind park, with 110kV cable line connections for 2 km to and from the existing substation. The planned project development involves an equipment manufacturer delivering foundation works, and a civil construction company taking care of all civil and electrical connection works, including substation work. Indicative offers from several technology providers are available.

ROADMAP

There is no available roadmap for this project on the website. We were able to locate the following picture, containing API Mobile’s key objectives for 2019 and 2020.

TEAM

Kaspars Zvaigzne - Co-Founder and CEO

He has been in the management team of API Mobile since September 2014, and a member of its board of Directors since November 2016. He is also the managing director of Sporta Izglitibas Agentura, offering seminars and e-education programs for professionals in sports industries. Earlier in his career, Kaspars was a sales manager for nine years in the construction materials industry.

Stefano Antichi - Co-founder (also Managing Director of API Mobile)

He has served as a General Manager of SMS Transit Services at API Connect, in charge of starting the SMS side of the company. Previously, he worked as a Technical Support Engineer for a company called CallEnergis S.r.l in Italy for more than four years.
He has also operated as a telecommunications consultant on a freelance basis.

Kristaps Stepanovs - Head of the Renewable Energy Department of Enercom (responsible for Rapsoils’ wind farm implementation).

He is the CEO of Capital Solutions, a company that specialises in the development of wind parks, observing such projects in Latvia and Poland. He is also a Board Member of the Union of Producers in Latvia and a Board Member of the Wind Energy Association in Latvia.
Kristaps has a solid 13 years of experience in the renewable energy industry.

Miguel Cabanas - Head of Sales of API Mobile.

He has a 10 year experience in the telecommunications industry, and has served as CEO of Link Mobility, Head of Sales and Director of Mobile Business for Horisen, and Head of SMS Hubbing and Access Services for Jazztel.
Besides his proven record in the telecom industry, Miguel founded and serves as the CEO of Morgana Studios, an audiovisual production company in Madrid that specialises in visual graphics and effects.

TEAM TAKEAWAYS

  •  35+ years of combined experience in the telecommunications industry.
  • Successful development of other telecom projects.
  • 13 years of renewable energy experience.
  • Successful entrepreneurs outside of telecom and renewable energy industries.

LEGAL AND COMPLIANCE SPECIFICS

JURISDICTION

Enercom is an AG company registered in Liechtenstein, taking advantage of the DLT-friendly Liechtenstein Blockchain Act, which essentially allows legal entities to issue tokenized securities. The Liechtenstein company limited by shares (AG) is one of the most popular and common types of legal entities in Liechtenstein.

API Mobile and Rapsoil are SIA companies registered in Latvia. Enercom AG plansto acquire these companies after the completion of their STO. Latvia and Liechtenstein are both EFTA and EEA member states, which makes regulatory compliance generally easier (Latvia is also an EU Member State). SIA translates as “Limited Liability Company.”

PARTNERSHIPS AND LEGAL AGREEMENTS

The company has signed Letter(s) Of Intent (LOI) with both of the companies they intend to buy, as explained above. The letters express the intention of these companies to sell 100% of their shares to Enercom AG.

Enercom’s website lists four partners, listed as ‘banking, advisors, legal and sales partners’. Although most of them are reputable businesses, our research suggests that they could be acting as service providers rather than business partners. At the time of writing, we could not identify the fourth company, GTO Swiss, or the relationship between them and Enercom.

API Mobile is an operating business with a lot of business partners and B2B clients, as seen in the following picture:

Additionally, Rapsoil has clearly stated its intention to strike a deal with Nord Pool AS, the world’s first multinational exchange for electricity trading. Nord Pool offers day-ahead and intraday energy markets. 14 European countries participate in these markets, exchanging electricity on a daily basis.

LEGAL RISKS

Our researchers were unable to identify any considerable legal risks concerning these three companies. All of Rapsoil AG’s licenses in regard to a wind turbine energy park are valid until 2024.
The Prospectus for the tokenised share issue has been approved by FMA Liechtenstein.

LEGAL ADVISORS

SCHEIBER, and Enercom's Head of Legal Department

Additionally, Enercom’s team member Viesturs Brakovskis is an international lawyer with 20 years of experience in International Law, European Energy Law and Financial Law.
He currently is the Head of Litigation at Lawerton, an international law firm based in Latvia. He is also an advisor to the Latvian National Regulatory Authority. Previously, he was the Head of Litigation Unit of “Latvijas Krājbanka” and PWC Lawyer.

KYC AND AML

There is a very detailed diagram showing the KYC and whitelisting procedure before the investors can contribute, and how investors receive their dividend payments. There are four KYC stages, each one allowing and corresponding to an increased investment limit. The higher the KYC stage, the more demanding the requirements.

You can see the full diagram in better quality at: https://kyc.enercom.ag/-file/38a98b90-ec7a-4ee1-b54b-18fecf68ce38.pdf?origin=https://kyc.enercom.ag

TOKEN OFFERING

Enercom AG is looking to raise 20 Million EUR, corresponding to the valuation of API Mobile, which they intend to acquire.

They intend to issue 200,000 tokens, bringing the value of each token to 100 EUR. The company has issued only one price per token, with no space for discounts on investment. The token is classified as a security, and the consequent Security Token Offering (STO) Prospectus has been approved by the Financial Markets Authority (FMA) Liechtenstein.

Enercom’s Founder has stated that this amount will not be exclusively allocated towards this purchase, but also contribute to the development of the renewable energy fields. When questioned regarding the tokens’ future liquidity, and whether they have and agreement with exchanges for the token to be listed, he told our researchers:

‘We are evaluating – but digital (securities) asset exchanges are still in testing phase as well – you are able to freely transfer the token to whitelisted persons within our kyc.enercom.ag platform post offering for example, which helps us until we evaluated which exchange will have added value for us post-STO.’ [sic]

Additional questions were asked by our researchers on Telegram, attempting to understand some undiscussed aspects of the fund raise:

SOCIAL MEDIA AND VIRALITY

Enercom has 1388 followers on Twitter, and used to be very active (with posts almost daily.) However, they have not posted since the 9th of March, 2020. There is not much activity in Enercom’s Telegram channel, as it only has 134 members. However, we can highlight that this channel is kept by core team members, and one can easily find and interact with their Founder.

Enercom’s Youtube channel has 8 subscribers and 16 videos. All of them were posted 4-6 months ago.

REFERRAL PROGRAM

Enercom has started a referral scheme that awards anyone with 1% of the amount invested by the person they referred (paid in ETH). This means that, potentially, $200,000 could be distributed by referrals alone.

RATINGS

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence.

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