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THE ADVANCED ACCOUNTING LEDGER ON THE BLOCKCHAIN

PROJECT WHITE PAPER V.2.70JULY 2018

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ABSTRACT

1. EXECUTIVE SUMMARY

2. BACKGROUND OF THE ACCOUNTING INDUSTRY2.1 OVERALL MARKET SIZE2.2 CURRENT INDUSTRY STATUS2.3 INDUSTRY FRAUD

3. BLOCKCHAIN 3.1 TECHNOLOGY OVERVIEW3.2 COMPARISON OF CENTRALIZED AND DECENTRALIZED LEDGERS

4. VISION AND MISSION4.1 VISION4.2 MISSION4.3 TARGET AUDIENCE

5. LEDGERIUM BLOCKCHAIN5.1 APPLICATION AREAS5.2 TRIPLE ENTRY ACCOUNTING5.3 THE SYSTEM OVERVIEW5.4 IDENTITY, SECURITY AND PRIVACY5.5 AUDITING AND ACCOUNTING WITH LEDGERIUM

6. ARCHITECTURE6.1 THE APPLICATION6.2 THE BUSINESS MODEL AND ECOSYSTEM

7. DEVELOPMENT ROADMAP

8. TEAM

9. TOKEN SALE - LGUM DETAILS9.2 DISTRIBUTION9.3 FUND ALLOCATION

10. DISCLAIMER

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ABSTRACT Blockchain is a distributed digital ledger that can record transactions between parties efficiently in a verifiable and permanent way. This allows the participants to verify and audit transactions instantly and inexpensively.

The merits of the Blockchain technology are exactly the current accounting and auditing industry needs, such as: • Decentralized and distributed• Immutable• High security• Digital formation • And much more

Ledgerium is a company that brings Blockchain to the accounting and audit industry. We aim to create a decentralized Blockchain ledger through a triple entry accounting system; some of our features are listed below:

Ledgerium believes the trust mechanism of Blockchain could revolutionize the traditional accounting and audit procedure and allow more businesses to use high-quality financial services, ensuring a more efficient business world can be built.

LEDGERIUM FEATURES

Smart Contract

Triple entries distributed ledger

Immutable data

Live data

Automation

Audit trail

Encrypted transactions

Big data-based financial services

Digital currencies

Open source feedback

Data verification

Credit rating mechanism

LEDGERIUM BENEFITS

Fast transaction low administration cost

More reliable transparent data

Integrity of the data

Instant reporting and real time audit

Spend more time on the important thing

Highly accurate of the transaction history

High security

Trend analysis and make decision

Offer more choice for users

Constantly listen to the market and improve

Less audit work

Ecosystem of trust

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EXECUTIVE SUMMARY There are countless cases of auditing fraud globally, occurring to different firms, in different industries. As the current system in the industry has serious defects related to conflicts of interest and the issue of trust, a better system needs to be found.

For these issues, it could be said that Blockchain technology is an ideal solution. What lies behind the suitability for a Blockchain in both accounting and auditing industries, is its breakthrough technology. Mathematical proof and decentralised databases eliminate the mistrust toward unaudited financial statements. The Blockchain includes decentralised and distributed data security, transparency, and immutability; all features presently needed by the accounting industry.

Our vision is to protect the public’s interests by focusing on innovation using the latest technology, in order to create sustainable, low-risk and highly dependable financial data. The mission that we take is to revolutionise traditional accounting procedures; building a stable credit mechanism; reforming the accounting industry, and developing achievable and more efficient social resource collaborations.

The market for Ledgerium consist of those companies with a large number of debtors and creditors in their database; business and non-business entities that need to be audited; small and medium business that need investments; certified public accountants and Blockchain related business.

We can achieve this by using the triple entry accounting system which consists of decentralized and distributed ledger; the triple entry accounting system can overcome the drawbacks of the traditional double entry accounting.

Ledgerium is building this renovative Blockchain platform. It can be deployed in various industry, entities and even just as a procedure alone. It has three major components: Ledgerium identity platform; Ledgerium file system and the Ledgerium Blockchain including the accounting auditing application.

Ledgerium will utilize a proof of stake model for reaching consensus. The Ledgerium ecosystem provides a decentralised and efficient way of managing accounting ledgers between any given parties.

Overall Ledgerium is a company that brings Blockchain to the accounting and audit industry. We aim to create a decentralised ledger through a triple entry accounting system and revolutionise the traditional audit procedure. We believe that the trust mechanism of Blockchain could lower accountancy costs and allow more small and medium businesses to use high-quality services like auditing, ensuring a fairer, more transparent business world can be built.

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BACKGROUND OF THE ACCOUNTING INDUSTRY

2.1 OVERALL MARKET SIZE

The accounting industry is a vital industry, reflected in the 1.3 million accounting businesses that combine earn $495 billion USD in 2017, and directly employ more than 6 million people.

Industry growth was underpinned by steady economic growth in developed nations as well as continued strength in many emerging nations. In addition, rising global equity values, an increase in investor optimism and an increase in demand for capital market advisory work helped propel revenue growth for the entire Global Accounting Services industry. Over the five years to 2022, a projected expansion in the global economy and global equities market will foster revenue growth for the industry’s audit and assurance services.SOURCE: https://www.ibisworld.com/industry-trends/global-industry-reports/business-activities/accounting-services.html

Accounting firm Deloitte, PwC, EY and KPMG of the world are generally known as the ‘big 4’. They are currently the major market players, research has been done every year to indicate the key trend of this four companies.

SOURCE: https://www.statista.com/statistics/250935/big-four-accounting-firms-breakdown-of-revenues/

Due to the fee structure and risk involved, audit & assurance services are taking up a smaller percentage of the total revenues than before. After the Enron scandal, which lead to the breakdown of the Arthur Andersen accounting firm and their disappearance from the ‘big 5’ map, the services of big 4 was restructured as what we see nowadays. Nevertheless, audit & assurance of the grey areas in the chart above, is still the number one segment within the revenue structure of the big 4 accounting firms.

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AUDIT/ASSURANCE/AERS* ADVISORY/ CONSULTING**

TAX OTHER***

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SOURCE: https://www.statista.com/statistics/250944/big-four-accounting-firms-geographical-breakdown-of-revenues/

The Americas is the dominant market area for the Big 4 accounting firms. The EMEA region consists of more land mass than any of the other business regions (APAC, AMER, or LATAM). The EMEA region also spans 4 continents, Europe, Africa, Asia, and Greenland North America, which makes it a future area for growth.

COMBINED REVENUE OF THE BIG FOUR ACCOUNTING / AUDIT FIRMS WORLDWIDE FROM 2009 TO 2017.

SOURCE: https://www.statista.com/statistics/473959/big-four-accounting-firms-global-combined-revenue/

The accounting industry is considered to be one of the steadiest with 3.4% annual growth from 2012-2017, impressive considering the problems of the 2008 global financial crisis.

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93.8

2009

95.1

2010

103.6

2011

110.3

2012

113.7

2013

120.3

2014 2015

127.75

2016

134.28

2017

40

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125

150

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19.315.75

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11.34

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14.31

5.84

12.3

5.2

123.66

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2.2 CURRENT INDUSTRY STATUS

With the accelerating process of digital information storage and the early application of big data and cloud, auditors can examine the overall operation status of a company through data at different levels and angles. The application of these advanced technologies has greatly increased the efficiency of auditing. However, as far as the data is concerned, the provider of the data is the audited company. If the relevant entities are deceitful and falsely submitting the data, then this lack of integrity in auditing means that the results are equally meaningless.

‘The Future of Blockchain’, an article of Chartered Accountant of Australia and New Zealand indicates lots of big corporations are exploring the Blockchain philosophy to some extents. The graphic seen below displays some of them shown in the article:

In the foreseeable future, accounting software and accounting firms need to keep pace with market developments. Otherwise how is possible for a consultant to give advice for something that he or she does not know? It is impossible for an auditor to perform the tests on those applications that he or she doesn’t understand.

Furthermore, current accounting software is not designed to cater for the cryptocurrencies and related businesses, as they are so unique in application. And there are some drawbacks of the traditional double entry accounting software system as well. The triple entry accounting concept is considered as an improvement on the traditional system, which will be explored more in the chapter 5.2.

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ANZWESTPAC

ASXWEBJET.COM.AU

ENOME.IONZX

AUSTRALIA POSTPOWER LEDGER

CAPGEMINILEDGER ASSETS

COINJARFULL PROFILE

COMMONWEALTH BANKIBMDATA61

ORGANISATIONS EXPLORING

BLOCKCHAIN

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2.3 INDUSTRY FRAUD

The CFEs estimated that the typical organization lost 5% of revenue in 2016 as a result of fraud. The total loss caused by the cases in the study exceeded $6.3 billion, with an average loss per case of $2.7 million. SOURCE: https://www.acfe.com/rttn2016/about/executive-summary.aspx

For instance, an accounting firm was fined £5.1 million, following an investigation in RSM Tenon which went bankrupt in 2013. The misconduct is linked to five specific audit areas, ranging from the accrual of bonus payments to “certain aspects in relation to the recognition of work in progress and amounts recoverable on contracts”. SOURCE: http://www.telegraph.co.uk/business/2017/08/16/pwc-hit-largest-ever-fine-financial-watchdog-rsm-tenon-audit/

Another accounting firm had been fined more than $US6.2 million by the SEC for failing to properly audit an energy company that grossly overstated the value of its assets. Miller Energy Resources, the company had overvalued various assets bought in Alaska by 100 times their real worth. SOURCE: https://www.businessinsider.com.au/kpmg-fined-sec-pwc-fined-frc-2017-8?r=UK&IR=T

Audit risk is the risk that the financial statements are materially incorrect, even though the audit opinion states that the financial reports are free of any material misstatements. The auditor’s job is to provide reasonable assurance regarding the client’s financial information including the non-financial findings that might affect investors’ decisions.

There are numerous fraud cases around the world, that have happened to different firms. And it is not surprising that it will keep happening again and again, as the current industry system has serious defects, the reasons being the ‘conflict of interest’ and ‘trust’.

Auditors involved in verifying the accuracy of financial statements are in a strange position because they perform the audit by charging the clients. This behaviour creates a problem: the audited financial information may be compromised by the auditor in order to please the clients. Auditors only need to provide a reasonable assurance according to the risk assessment of a certain materiality level, and do not provide a complete guarantee of the figures.

Accounting and financial transactions are ultimately made due to trust and transparency. The ability to back trace, modify and to issue false sales or manipulate the profits have led investors to have an inherent lack of trust in the business. With the development of society, accounting and auditing standards are constantly revised to meet the social requirements for the quality of financial information. The fight between auditing and fraud will continue in a modern centralized financial system, but the emergence of decentralized blockchain technology provides a good solution to this mystery.

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BLOCKCHAIN IS THE FUTURE

3.1 TECHNOLOGY OVERVIEW

Blockchain with mathematical proof and decentralized databases is a solution to the above issues. The features of the Blockchain are its game changing technology.

Any digital form of asset certification, recording, registration, storage, trading, payment, circulation can be achieved through the Blockchain. The main advantage of the Blockchain is that it requires no intermediary participation, the process is efficient and transparent, the cost is low, and the data is highly secure. Blockchain technology can be applied to accounting and auditing, which is likely to benefit from the reduced errors and fraud stemming from Blockchain, creating a new anti-fraud mode.

Blockchain technology is undoubtedly the most powerful tool available so far, that can be used to document and prove transactional consistency and a company’s financial accuracy. Therefore, it is our focus to meet the expectations of investors and general users, in terms of audit effectiveness, accuracy and timeliness.

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COMPANY A COMPANY B

BLOCKCHAIN

BLOCKCHAIN ENTRY SERVES IN BOTH COMPANIES’ ACCOUNTING

COMPLETE, AUTOMATED AUDIT OF ALL TRANSACTIONS

EVERY TRANSACTION BECOMES “NOTARIZED”

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3.2 COMPARISON OF CENTRALISED AND DECENTRALISED LEDGERS

Decentralized and distributed - Different nodes on the Blockchain network continuously monitor and accept the status of the distributed ledgers. This approach ensures consistency while eliminating the risk of the blockchain suffering from a compromised node.

CENTRALISED SYSTEM

DECENTRALISED BLOCKCHAIN

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3.2 COMPARISON OF CENTRALISED AND DECENTRALISED LEDGERS

Data security - One of the hallmarks of Blockchain technology is that it has an extremely complex pre-verification and verification process before each transaction is added to a distributed ledger. Users are in control of all their data, not the software provider, and the data are validated, traceable, encrypted and complete.

Transparency and immutability - Thanks to the timestamp, the timeline of all transactions are recorded in chronological order.

Ecosystem - as more and more counterparties enter the chain, an ecosystem of trust could be built to the benefit of debtor and creditor credit ratings, which could also lower the audit risk.

03RECORD KEEPING

ORIGINAL RECORD

Hash string is written into the

blockchain

Search for the identical hash string

Hashing is used to verify the integrity of the blockchain records. Hashing is in built in the blochchian and it could ensure that the original information cannot be seen by unauthorized party. We perform the audit by searching for the hash string in the blockchian, if the search is successful, record must have remained unmodified.

AUDITING

AUDITED RECORD

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VISION AND MISSION

4.1 VISION

Ledgerium is the company that shall bring Blockchain to the accounting and audit industry. We aim to create a decentralized ledger through a triple entry accounting system and revolutionise the traditional audit procedure. We believe in the trust mechanism of Blockchain that will allow small and medium businesses to access auditing and other high-level accounting services previously only available to large companies, allowing a fairer, more transparent business world to flourish.

At present, the biggest problem of the Blockchain is its poor practical application value, and that people outside the Blockchain society do not understand enough of the basic concept of Blockchain. On the other hand, insiders do not understand specific industries, specific business and how to apply Blockchain to everyday life.

In Ledgerium, we strongly believe abiding by a strong Blockchain philosophy will make life better for businesses and society. Ledgerium is an organisation consisting of three previously separate groups working as a team: academic researchers from the accounting departments of leading universities, Blockchain technology experts and accounting firms. Blockchain technology has great potential in the accounting and auditing industry. Coupled with our expertise on its application and solution, Ledgerium is the next step in integrating Blockchain with auditing and assurance.

4.2 MISSION

REVOLUTIONIZE TRADITIONAL PROCEDURES

Blockchain technology does not completely subvert the traditional system, but speeds up the optimization of traditional systems. For enterprises, we can strengthen the decentralized, secure and credible data environment by taking away some of the traditional system functions and replace them with Blockchain related interfaces. We can also reengineer business processes for internal risk control. As a new technology, the relationship between the Blockchain and other emerging technologies is mutually reinforcing. Cloud computing and artificial intelligence will be enhanced and receive several benefits based on the Blockchain data.

BUILDING A CREDIT MECHANISM

Blockchain can reduce the risk of mistrust between companies. Building a credit mechanism through the Blockchain, small and medium businesses will reap huge benefits, as most of them cannot afford a regular audit and therefore have difficulty attracting investors. Delivering reliable, accurate and credible financial services to millions of small and medium size businesses will enable them to do what would otherwise be possible only for large enterprises.

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REFORM THE ACCOUNTING INDUSTRY

Auto reconciliation of debtors and creditors will happen in the future. The traditional industry accounts receivable and account payable still cost a lot of manpower and resources. With accounts payable and accounts receivable recorded in the Blockchain, the use of smart contracts can be an unmanned operation.

The existing business of accounting firms is still mainly based on auditing. The development of Blockchain technology will force business firms to increase business management and tax consultancy, and further explore non-traditional services.

Internal control would be stronger. The decentralization of Blockchain technology and the universal bookkeeping function can greatly reduce the company’s need for internal accounting auditing and checking books. At the same time, internal auditors can devote a great deal of energy into the auditing of operation and management and internal control, so as to reduce the cost of the company and at the same time further enhance the operational efficiency of the company.

MORE EFFICIENT SOCIAL RESOURCES COLLABORATION

Blockchain systems reduce the regulatory costs of government and society. A transparent distributed ledger will see most of the information authenticity verification transferred to social supervision, greatly reducing the workload of the regulatory authorities and improving regulatory convenience.

4.3 TARGET AUDIENCES

A COMPANY WITH A LARGE NUMBER OF DEBTORS AND CREDITORS

By using the triple entry accounting report, counter parties’ transaction will be written down in the Blockchain, enabling reconciliation in seconds. Imagine a large wholesale corporation with thousands of suppliers and customer, the workload they will save will be mind blowing. With smart contracts and cryptocurrency, account payable and account receivable will be no longer exist. As when both parties enter the smart contracts on the Ledgerium platform, details of trade have been recognized, once the conditions meet the system requirements, the currency will be automatically transfer from one party to the other.

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BUSINESS ENTITIES NEED TO BE AUDITED

Entities such as listed companies, needs to be audited in regular terms to present the performance to the public. Blockchain technology could be used to ensure the integrity of financial data, which are permanent and unchangeable. It can also help external auditors to audit in real-time, greatly improving audit efficiency. External auditors can also monitor any unusual changes in the company’s accounts in real time. In addition, the irreversibility of Blockchain technology and the function of time stamps have greatly reduced the workload of auditors.

NON-COMMERCIAL SUBJECTS NEED TO BE AUDITED

Entities such as government departments and non-profit organizations are audited regularly for public interest. Through the application of Blockchain technology in public asset management, the government can effectively realize the openness and transparency of assets. Each public asset can be recorded on the Blockchain as a set of authentic, unforgettable information. Through this distributed data network, all citizens can check the details of state-owned assets, assess the actual value of state-owned assets, examine each transaction related to it, and understand the specific whereabouts of the assets so as to supervise the public assets. In such a highly open and transparent account, all transactions will be exposed in broad daylight, and embezzlement of state assets will be made much more difficult.

SMALL AND MEDIUM BUSINESS NEED INVESTMENT

There are very few growing businesses are fortunate enough to attract investments, and not to mention the start-up companies. One of the reasons is that they do not have proven track records of financials figures, and is such a burden to get them audited regularly. With the Ledgerium blockchain, business can provide instant tracked records with high level of assurance, which will lower the financial services cost for all the businesses and more opportunities could be created.

CERTIFIED PUBLIC ACCOUNTANTS

The trust mechanism of Blockchain technology will weaken the role of external auditing. At the same time, this change will promote the diversified development of accounting firms. The development of the Blockchain technology will reduce the audit business on one hand, forcing the accounting firm to increase the business of management consulting and taxation services. On the other hand, with the widespread application of Blockchain technology, the public have doubts about the credibility, compliance and security of Blockchain technology application. This objectively requires the certified public accountant to provide an audit on the application of Blockchain technology itself.

BLOCKCHAIN RELATED BUSINESS

Currently in the world there is no suitable software that can cater for the reporting needs of the Blockchain industry. As the industry grows at its expected rate, the market will need a product like Ledgerium.

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LEDGERIUM BLOCKCHAIN

5.1 APPLICATION AREAS

· An accounting data Blockchain with a distributed ledger across many nodes in the Ledgerium Blockchain, which can also keep record of cryptocurrencies.

· A Debtor and Creditor ecosystem with smart contract functionality, to optimise the traditional accounts payable and receivable function.

· Real-time auditing of Blockchains, and the use of artificial intelligence to achieve auditing automation.

· The internal control of Blockchains, including inventory, supply chain, ownership of tangible assets, ownership of intangible assets, internal procedures, etc.

· A complete solution for accounting and Blockchain auditing software in the future.

5.2 TRIPLE ENTRY ACCOUNTING

Triple entry bookkeeping is an alternative accountancy system comes to the people’s attention lately with the blockchain technology. It is a proposed alternative to double entry bookkeeping. A simple example as showed below.

SAMPLE TRIPLE ENTRY LEDGER

PARTY A

COMMON LEDGER

PARTY B

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DEBIT DEBIT

LEDGER A

$100,000

$100,000 $100,000

$100,000

CREDIT CREDIT

LEDGER B

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Triple entry accounting: Rather than keeping and adjusting records of the same transactions in a privately managed, independent database, both parties are also recorded in a shared book. This, and the ability to record transactions in real time, enables the Blockchain to end the traditional invoices, documents, contracts and payment processes of large businesses and industries.

Triple entry accounting as evolved in Ian Grigg’s paper in 2005. Grigg proposed a third entry by cryptographically sealing the transactions between counterparties. Grigg’s concept focuses on the digitally signed receipt which could provide strong audit trail evidence leading to more reliable financial data. SOURCE: http://iang.org/papers/triple_entry.html

5.3 SYSTEM OVERVIEW

Ledgerium is developed as a decentralised accounting ledger system providing Blockchain as a Service (BaaS), which includes the following three major components:

LEDGERIUM IDENTITY PLATFORM (LIP) - handles identification, verification and authentication within the system. It is a platform to provide identity management, verification and system authentication service as the foundation of the Ledgerium system.

LEDGERIUM FILE SYSTEM (LFS) - based on IPFS’ distributed file system to provide secure, efficient file store to users across Ledgerium.

LEDGERIUM BLOCKCHAIN (LGUM CHAIN) - a consortium Blockchain and an accounting and auditing application layer to allow selected parties to participate in the chain. The selected parties will be deciding the access and type of access to the Ledgerium ledger.

LEDGERIUM IDENTITY PLATFORM

LEDGERIUM FILE SYSTEM

LEDGERIUM BLOCKCHAIN

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5.4 IDENTITY, SECURITY AND PRIVACY

Security and Privacy are major concerns for all networked systems. Ledgerium consists of a digital identity platform; the Ledgerium Identity Platform (LIP), which allows users, including individuals, companies, accountants, institutions and governments to register to the Ledgerium network, having authenticated accesses through our website or mobile application.

IDENTITY VERIFICATION

When users set up their digital identity on our systems, they will have to verify the legitimacy of their identity. This can be done, for example, using a Driver’s License, or TFN, ABN, ACN (Australia), SSA, SEC (US), NCI, SAIC (China), and so on. To allow automation, data transparency and security, LIP contains two types of IDs: Public and Private.

PUBLIC ID - Like a Business ID and Business Name, this will be available to search on the Blockchain, via the LIP. This would work much like a traditional business number lookup, however, with file only being able to be obtained through authorisation via the LIP.

PRIVATE ID - Only hash of ID detail, and ID file can be viewed from Blockchain, any access on ID detail will need authorisation from owner via LIP.

USER AUTHENTICATION

A user would start by providing one or more forms of identification from within the Ledgerium web or mobile application. Documents would then be signed and send through Ledgerium or a third party for verification. On the user’s device, the key data is protected by using high-end encryption, biometric security (e.g. fingerprint, face ID), and 2 factor authentication (2FA). A typical user login would be verified using the LIP and their hash ID on the Blockchain.

When the identification verification is done, a confirmation will be sent to Ledgerium’s Blockchain, and the document will be encrypted and stored in the LFS, the user always having full control of their data.

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USER LEDGERIUM IDENTITY PLATFORM

1. Login with client ID & ID hash

3. Login Response

2. Verify ID Hash

BLOCKCHAIN

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ACCESS REQUEST AUTHORISATION

When a requester requires access to user’s data and/or identification, the user will be provided with a QR code, and a push notification prompting the user to review a request, and the exact information which has been requested. (A requester can be a registered and verified Accountant, Financial Institution, Government agency etc.)

Once a request is reviewed and accepted, the Ledgerium web or mobile application will generate a contract that allows particular sets of data and LFS files to be access by the requester. All access requests can include agreed conditions (e.g. timeframe, attempts. etc.)

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NON-CLIENT USER AUTHORISATION

There are occasions where a registered user will be conducting transactions with Non-Client Users (NCUs). In such a case, an external request can be initiated from web and mobile apps. To achieve this, a registered user has the following option:

· Generate a QR Code containing the link to the Ledgerium Website with the requested hash · Send Email with link to register from Ledgerium Website with request hash

After registration, a new user can opt to choose not to subscribe to the service, meaning they can view and respond to any transaction requests by a requester, but cannot initiate new transactions or other requests.

USER

BLOCKCHAIN

LEDGERIUM IDENTITY PLATFORM LEDGERIUM OR IDENTITY PARTNER

1. Upload Identification

3. Identity Verified

4. Hash & Encrypted ID

2. Verify Identification

USERDATA / IDENTITY REQUESTER BLOCKCHAIN

LEDGERIUM IDENTITY PLATFORM

1. Request Identity or Data 2. Approve Request

3. Check data authenticity4.Access Data Request

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5.5 AUDITING AND ACCOUNTING WITH LEDGERIUM

As previously mentioned, the objective of Ledgerium is to take advantage of Triple Entry Accounting as the core of the system. Smart Contracts and the LFS are implemented to decentralise the data, whilst maintaining efficiency and security.

A normal transaction is conducted between two parties, one sells goods, services and/or other assets, to the other party, for either a monetary and/or non-monetary (shares, etc.) payment.

A smart contract instance can be created by a buyer or seller, with the hash, details and conditions of the transaction proposed, and encrypted with counterparty’s public key. The transaction initiator can then include related files (e.g. system generated invoices) to the LFS that links to the smart contract, if required. Files will be signed and encrypted on Ledgerium’s web or mobile app with the counterparty’s key.

The counterparty of the transaction will be notified of an incoming request, which the party can verify the authenticity of, request a hash, and accept the transaction. When the party has accepted the transaction, an inverse part of the encrypted transaction will be sent back to Blockchain, thus a common ledger between the parties having been formed. Due to Blockchain immutability, the common ledger cannot be changed; any subsequent amendment will be a new transaction between both parties.

CLIENT NON-CLIENT

LEDGERIUM IDENTITY PLATFORMBLOCKCHAIN

1. QR Code or Link With Hash

3. Respond to Request 2. Register and Verify

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When common Ledger data is requested by another registered party in the consortium, an access request contract is created based on the LIP. The targeted party can then review and respond to the request from the LIP. Once a requested is accepted, the data on the ledger that the requester requires will be accessible. The requester can verify the authenticity of a transaction via the hash stored in Blockchain at the creation of each original transaction or targeted party. (Refer to LIP - request on identity and data.)

05 PARTY A PARTY BSMART CONTRACT

BLOCKCHAIN

1. Initiate Transaction2. Accept Transaction

3. Finalise Contract

4. Record Encrypted Ledger, Hash File Store (IPFS)

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THE ARCHITECTURE

Ledgerium utilises a proof of stake (PoS) model for reaching consensus. Three tiers of nodes will be appointed across the system:

CONSORTIUM PEER - provides the ability to maintain the state of, and update transactions to the Blockchain. A typical consortium peer can be Ledgerium, a financial institution, an accountant, or a government agency.

MAIN NODE - provides the ability to facilitate communication, maintains the integrity of Ledgerium. Ledgerium will provide tokens as a reward for those subscribers who become a main node and contribute their computer calculating power to maintain, verify and write transactions into the Ledgerium blockchain.

CLIENT - someone who submits transactions to the consortium peer and Main Node for consensus.

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LEDGERIUM IDENTITY PLATFORM CONSORTIUM PEER

CLIENT MAIN NODE

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APPLICATION FEATURES

• Register, identification verification

• User authentication

- Biometric authentication (Fingerprint, Facial ID) - mobile app only

- 2 Factor Authentication - web, mobile app

• Creation of transactions and smart contracts

- Supports all currency types and asset types

- Search public IDs via LIP from the Blockchain

- Allow transaction against non-client users (refer to NCU authorisation)

• Digital signing and uploading of files through IPFS

• Management of previous transactions

• Accepting authorisation requests

- QR Code, push notifications - mobile app only

- 2 Factor Authentication - web, mobile App

• Apply, renew and change subscriptions

- LGUM and Fiat currency based subscription options

• Purchase of LGUM tokens using major digital currency (BTC, LTC, ETH)

• Bank statement for automatic transaction reconciliation using artificial intelligence

- Possible matching transactions will be offered to user for confirmation

• Big data-based financial advice (user consent required)

• Registration of a new smart device, and account migration

• Data and documents search in the accounting auditing application (user consent required)

066.1 THE APPLICATION

The Ledgerium ecosystem provides a decentralised and efficient way of managing accounting ledgers between any given parties. To allow easy access to the platform, Ledgerium consists of mobile apps for Android, IOS and compatibility with mobile-friendly websites.

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6.2 THE BUSINESS MODEL AND ECOSYSTEM

To allow healthy growth and development of the system, all tokens acquired via the subscription service will be fully re-invested into the business, also the nodes that write transactions and form part of the consensus structure. Ongoing adjustments to the above distribution will be performed to achieve optimally efficient business development.

06CLIENT CLIENT CLIENTCLIENTCLIENTCLIENT

SUBSCRIPTION TOKEN SUBSCRIPTION MONEY

TOKEN CONVERSION

TOKEN POOL

CONSORTIUM PEER

CONSORTIUM PEER

CONSORTIUM PEER

BURNING R&D COSTS

MAIN NODE MAIN NODE

CONSORTIUM NODE POOL

MAIN NODE

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DEVELOPMENTAL ROADMAP

2018 QUARTER 4

Implement wallet & blockchain look up features.

Complete cross platform frontend for smart contract execution.Release on ethereum main-net for testing.

Marketing campaign in Asia-pacific region, including the US, Canada, Australia and China.

2019 QUARTER 2

Release IOS and Android application.Main-net going live, token swap.Implementation of Ledgerium Identity Services.

Marketing campaign in Europe region.

2019 QUARTER 3

Full public release of complete platform globally.

Design and implement on further features and design milestone for next iteration - Internal Control.

2019 QUARTER 1

Implementation of Proof of Stake with masternood support. Implement number of supporting EIPs.

Marketing campaign in Asia-pacific region, including the US, Japan, South Korea and Singapore.

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08TEAM

Ledgerium is an organisation consisting of professionals from three areas working as a team. This includes academics conducting research in the field of accounting, Blockchain technology experts, and accounting firm professionals.

CEO - ADAM WANG CA

Chartered accountant of Australia and New Zealand; Adam started as an accountant, gathering 14 years of experience in the financial industry, super funds, F&B, and software development. Adam previously held a management role in a self-managed super fund (SMSF), and has managed over 800 million AUD in super fund assets at top-tier companies. Adam was a Director of HR at Chunky Town Australia, a committee member of the Australian Macau Business Council, a member of the Taiwanese Chamber of Commerce, a committee member of the Australian Chinese Jockey Club (ACJC) and holds his own regular radio show in Australia.

MANAGEMENT TEAM

COO - RAY WANG

Ray has been a professional accountant for more than 10 years, has experiences in both commercial and public accounting industries including working in financial compliance and internal control, budgeting, forecasting areas in Top 500 companies for many years and wide range of experience in many business and taxation accounting firms. Ray also has memberships in many business associations and sports clubs.

CTO - FAISAL MEHMOOD

Faisal aka “electo” is also very active in trading communities and provides a lot of technical feedback and education around bitcoin and trading in general. Faisal has worked with many of the top 100 fortune companies creating and implementing prediction based models based on both machine learning (AI) and trend analysis. He codes in C++, C#, Perl, Python and JavaScript. He also actively contributes and provides consultancy for a lot of crypto projects including Litecoin, Filecoin, ConsenSys, Hyperledger and other projects. He started his career with Verizon and has since worked in both start-ups and enterprises. His previous start-up was involved with mobile strategies for Starbucks App, ZipCar, Billboard and the Nike Run app.

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CIO - KELLSON MA

MCSE, MCDBA, MCP; Co-Founder of ChinaDsl.net - One of the largest Chinese broadband support community. Kellson has more than 12 years of experiences in software development for education, multinational Telco & Energy Corps. With extensive experiences in leading project in CRM, ERP, and Telco & Energy back-end systems, Kellson is highly motivated on providing strategy , technology and methodology capable solutions to multiple enterprise projects covering but not limits to Service Compliance, Payment Platform, Debt Collection and Service Provisioning.

US REGIONAL MARKETING MANAGER – EUTESE BARNES

Eutese Barnes is a highly sought after start-up sales pitching agent. He is the holder of numerous successful IP rights in the collegiate & professional sports marketing space. In the product licensing industry, his colleagues call him the “Nostradamus,” of sports promotional products. His work includes raising seed money for a Hollywood feature film called “The President”. He has over 25 years of management training, customer service training, and leading employees. He has personally developed the “skeleton execution theory,” for start-ups before they launch their company’s. The theory places emphasis on customer sales, in-house prototyping, crunching the numbers and lastly having 5 marketing sales channels. On his University of Washington Foster Business school entrance test, he scored in the top 97.5 percentile of the 1400 students who took the test. He lives part-time in Atlanta, Georgia, and Australia.

MARKETING EXECUTIVE - MICHAEL SCOTT

An inspiring leader and change agent with twenty-one years of impressive commercial and marketing outcomes that have been delivered across diverse industries within world-class organizations such as Virgin Australia, Nike, McDonald’s, Coles Myer and the Australian Football League.Michael personifies the modern-day executive and is renowned for his progressive leadership of the commercial and marketing agendas. He has consistently proven himself to be a high quality strategic practitioner who is anchored to business imperatives, consumer behaviour, the acceleration of enabling platforms such as digital/social technologies and the burgeoning role of branded content.

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LEAD UX/UI DESIGNER – LUIS SAAVEDRA

Luis is a user experience and Digital designer with a passion for stylish digital products and applications for humans. He’s been designing digital products collections of websites and web applications since 2007. His experience with entities like Victoria University, Boroondara council, Movistar, Samsung and digital agencies demonstrates familiarity with the different type of implementations of digital products.Luis studied Industrial and Product design with major in Digital design He also studied User Experience design in General Assembly. His also brings a diversity of thought and in-depth knowledge of the teams he works including age, cultural identity and environment of the users as part of the solution.

DR BLAINE WANG

Blaine has a Bachelor’s Degree in Economics and a PhD in Computer Science. He is an experienced senior IT executive with experience in telecommunications, banking and finance. He has In-depth experience in CRM technical management, all aspects of big data mining, analysis, database management and administration. He was the business information development manager for the institutional arm of the ANZ bank, providing key business performance, financial and risk management reports across the bank. Blaine has also worked on major projects for NBN Co, University of Melbourne, Lumo Energy and Commercial Bank of China (ICBC) the world’s largest bank. He has over 10 years’ experience leading strategic technological planning helping business achieve their goals by leveraging technology. He specialises in developing long range IT architecture to all areas of an organisation’s operations from back office through to interactions with customers and suppliers. His expertise includes risk management, governance processes, telecommunications, networks, programming, data management.

HONGKONG REGIONAL MARKETING MANAGER – MAXI CHAN

Maxi is a professional sales consultant with 10 years of experience in the telecommunications industry and the antique art industry. Maxi worked as sale consultants in leading Telecommunication Company in Hong Kong. Also he has in depth understanding and extensive experience of the antique art market and market development.

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JAYDEN WEI

As the executive director of CollinStar Capital, Jayden is an experienced fund manager with a demonstrated history of working in the financial services industry. He is also the manager of Australia’s first Blockchain venture capital fund. Being an early investor in Blockchain industry, he has extensive experience in Blockchain and cryptocurrency investments. He is proficient in the analysis of Token Sale projects, book building and the process of Token Sale projects. He holds a masters degree in both finance and accounting from Monash University.

CHAIRMAN LEO HUANG CA

Chartered accountant of Australia and New Zealand; Master of professional accounting; Bachelor of finance; Managing partner of INP group. As a leading principal in his firm, Mr. Huang has extensive knowledge and experience in various industries, including cryptocurrency exchanges and large international corporations.

JASON WEBB

Jason is a Blockchain, technology and business thought leader with over 28 years of experience delivering cutting edge projects. Jason combines international Blockchain industry experience with leadership, legal, technology, and strategic commercialisation opportunities for both enterprises and new ventures. Jason’s skills include Blockchain strategy, Token Sales delivery, Digital Economy Ideation, partnerships, Blockchain implementation and project management.Jason is an early pioneer of the mobile content industry, fractionalised real estate and also fin tech. He established the world’s first crypto – sports sponsorship deal with NEM Foundation and Rytas (Lithuanian professional basketball club based Lithuania). Jason is the founder of The Frontier Group, including Blockchain Frontier Pty Ltd, Token Frontier Pty Ltd and Frontier X (Launching in North America 2018).

ADVISORY BOARD

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GEOFF SIMKISS CA

Geoff is a Chartered Accountant and Certified Internal Auditor providing Risk Management (RM) and Internal Audit consulting services. With more than 25 years’ experience in the Chartered profession, as a partner with BDO and previously at KPMG, Geoff’s clients included public and private corporations, government and NFP organisations. Core experience is in the delivery of internal audit, risk management, compliance and governance services.

PROF. SINCLAIR DAVIDSON

Sinclair Davidson is researcher of RMIT Blockchain Innovation Hub, Professor of Institutional Economics in the School of Economics, Finance and Marketing at RMIT University, a Senior Research Fellow at the Institute of Public Affairs, and an Academic Fellow at the Australian Taxpayers’ Alliance. He is a member of the Centre for Independent Studies Council of Academic Advisers.Sinclair has published in academic journals such as the European Journal of Political Economy, Journal of Economic Behavior and Organization, Economic Affairs, and The Cato Journal. He is a regular contributor to public debate.His opinion pieces have been published in The Age, The Australian, Australian Financial Review, The Conversation, Daily Telegraph, Sydney Morning Herald, and Wall Street Journal Asia.

MIKE YANG

Mike is highly regarded in political and business circles as a leader between China and Australia acting as a former Senior Advisor to Victorian Premier Daniel Andrews and currently advising two Cabinet Ministers on Trade, Innovation and Small Businesses; Visitor Economy, Sports and Major Events respectively. He has led delegations of Federal Members of Parliament (Labor and Liberal) and prominent Australian business figures across Asia Pacific and was instrumental to some of the well-reported commercial deals between Asia and Australia in sports and property.

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MUJAHID ABBAS

Abbas is a senior managing partner at ADHERE Inc. Prior to joining ADHERE, Abbas had experience in risk management consulting and has worked as Subject Matter Expert for different Federal agencies including the US Department of Labor, Library of Congress and Department of Transportation, where he led a cyber-security team. His teams advised clients on Risk Management, Security, Compliance, Incident Management, Disaster Recovery, Business Continuity, NIST, FISMA and FedRAMP. He is certified in various technologies including CISSP, CRISC, CISM, CCSK, ITIL, Cisco, and Microsoft and holds a BS in Computer Science.

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09TOKEN SALE - LGUM DETAILS

9.1 TOKEN SALES DETAILS Ledgerium is releasing maximum of 8,000,000,000 LGUM (8 Billion) token.and planning to sell 30,000 ETH worth of LGUM token.

A fixed number of tokens will be created during the sale, and no more will be created once maximum limit is reached. The Token is use for accessing the Ledgerium accounting and audit service.

SEED ROUND (COMPLETED)

Total 10,000 ETH, 1 ETH = 100,000 LGUM, plus 65% bonus 65,000 LGUM

Lock-up Rule: 50% of total for 6 months 50% of total for 12 months

FIRST ROUND

Total 10,000 ETH, 1 ETH = 100,000 LGUM, plus 35% bonus 35,000 LGUM

Lock-up Rule: 50% of total for 12 months

SECOND ROUND

Total 10,000 ETH, 1 ETH = 100,000 LGUM

Lock-up Rule: 50% of total for 6 months

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SUBSCRIBER

9.2 DISTRIBUTION The distribution of LGUM will be carried out as follows:

50% for the Subscriber

30% for the Ledgerium research foundation

15% for Developers, founders and advisors

5% for the Marketing channel

DISTRIBUTION

LEDGERIUM RESEARCH FOUNDATION

FOUNDERS AND ADVISORS

MARKETING CHANNEL

RESEARCH AND DEVELOPMENT

9.3 FUND ALLOCATION The usage of fund will be carried out as follows:

65% Research and development of Ledgerium Blockchain and application

20% Operation expenses including management, IT, legal and consulting

15% Marketing costs

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FUND ALLOCATION

OPERATION EXPENSES

MARKETING COST

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10DISCLAIMER

Ledgerium token is a digital token that will be used to power the Ledgerium blockchain.

Ledgerium token can be used to purchase services that the Ledgerium system provides such as writing transactions to the Blockchain, creating smart invoices, performing audits, internal control, and so on.

Ledgerium is a utility token and is not to be used as an investment.

Ledgerium tokens do not provide any ownership, rights, shares or security relating to the Ledgerium system or related platforms.

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LEDGERIUM TEAM

ledgerium.net

info@Ledgerium.net