Accounting and Income Tax

eDemocracy DAO Coop (the “Coop”) is a for-profit cooperative.

eDemocracy Network Society (the ”Society”)is a non-for-profit corporation

Thelos are considered inventory of the Society, and proceeds received for issuance of Thelos will be recorded on income account.

Klismos are considered equity of the Coop, and proceeds received for issuance of Klismos will be recorded as shareholder equity.

Thelos and other tokens used to pay a Decision Stake are recorded as earnings on income account of the Coop.

Thelos paid out to Workers are recorded as an expense of the Coop.

Initial payment of Thelos to Ethelo under the services agreement an expense of the Coop.

Ongoing payments of Thelos to Ethelo under the services agreement are expenses of the Coop.

Initial value of Thelos issued upon launch of eDemocracy DAO should correspond to investments made under SAFTs.

Receipt of initial issuance of Thelos to Ethelo and its employees will be a taxable event.

Securities Regulation

Thelos are not securities. Thelos are the native currency of eDemocracy DAO.

Membership shares and Klismos (investment shares) are securities and will be issued in compliance with securities laws.

Several exemptions from the prospectus requirement exist for issuances of shares in BC coops:

1. Co-op exemption: Membership shares may be issued on an unlimited basis, as investment shares may be issued to up to 150 investors, each investing up to C$10,000
2. Accredited investor exemption
3. Crowdfunding exemption: Up to C$1.5 million of capital may be raised, provided that Klismos are distributed through a regulated crowdfunding portal
4. Offering memorandum exemption: Investment caps for different categories of investor, strict form requirements and audited financial statements are required