Hedera anticipates raising additional funds in the future by selling hbar coins, but there are currently no such sales planned in the near future. Since the Council must approve transfers of coins from Hedera’s Treasury, the Council would have to approve any such sales before Hedera could proceed to enter the contemplated agreements. Those sales would be included in the total number used to calculate the additional hbars to be distributed to SAFT holders who elected to participate in the SAFT Exchange Offer.
Hedera also may consider sales of coins under other structures that comport with applicable laws and regulations and that are consistent with Hedera’s plan for a slow release of hbars out of Treasury. Although Hedera also contemplates that at some point it will begin selling coins in a measured way directly through exchanges or via other third parties in order to fund ordinary ongoing operations, Hedera does not anticipate any such sale of coins in the immediate future. As above, any such sales would need to be approved by the Council, based on network usage, regulatory requirements, and other considerations. Those sales also would be included in the total number used to calculate the additional hbars to be distributed to SAFT holders who participated in the SAFT Exchange Offer.
In addition, Hedera has a contract with a proprietary trading firm, to whom Hedera sells hbars that are withheld from distributions to employees under coin compensation grants. Hedera deducts these coins from employee distributions to satisfy the withholding taxes due based on a 409A valuation of HBAR in effect at the end of each month. Hedera remits withholding taxes to the IRS from the proceeds of such sales of withheld coins or from Hedera’s cash reserves. Because these sales are of employee coins, not Hedera’s Treasury coins, they are not included in the Prior Period Sales used to calculate the additional hbars to be distributed to SAFT holders who participated in the SAFT Exchange Offer.