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1TBZ1VNaAbNXefjUHERgqMqF4qPzshroAThe continued growth and development of our payment processing activities will depend on our ability to anticipate and adapt to changes in consumer behavior. For example, consumer behavior may change regarding the use of credit card transactions, including the relative increased use of cash, crypto-currencies, other emerging or alternative payment methods and credit card systems that we or our processing partners do not adequately support or that do not provide adequate commissions to Independent Sales Organizations such as us. Any failure to timely integrate emerging payment methods (e.g. ApplePay or Bitcoin) into our software, anticipate consumer behavior changes, or contract with processing partners that support such emerging payment technologies could cause us to lose traction among our subscribers, resulting in a corresponding loss of revenue, in the event such methods become popular among their consumers.
Shopify Payments (Currently available in the United States, Canada and the United Kingdom): An integrated payment processing solution that allows merchants to accept credit cards at attractive rates. In addition, directly from the Shopify platform, merchants can dispute any chargebacks and have full visibility of cash transfers to their bank account. It also provides flexibility to allow merchants to accept PayPal, Bitcoins and other alternative payment methods. We provide Shopify Payments under payment services provider agreements with Stripe. These agreements renew every 12 months, unless either party provides a notice of termination prior to the end of the then current term. Under these agreements, we pay Stripe monthly fees based on the value of orders processed through Shopify Payments.
While we maintain the MJM business, we are also exploring a transition to the Bitcoin and crypto-currency business. We are looking to partner with an established Bitcoin exchange in order to offer integrated currency exchange services both online and through our ATMs.
Bitcoin is a digital currency that uses cryptography combined with a public ownership and transaction ledger to provide the first truly safe means of transferring property over the internet. Bitcoin may be used to buy things electronically, like any other currency, which are also traded digitally. What makes Bitcoin different from conventional money is that it is decentralized. No single institution or country controls the Bitcoin network.
Bitcoin automatic teller machines (“ATMs”) are appearing in Seattle (WA), Austin (TX) and Vancouver (BC). We are also looking at partnering with manufacturers that use open source software with the objective of expanding beyond traditional ATM offerings of simply purchasing or selling Bitcoins.
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We may not be able to find a partner.
There are a number of risks and uncertainties associated with our intention to partner with a bitcoin or crypto-currency business. For example, we may not find a suitable partner or we may be unable to finalize terms with potential partners. If we are unable to negotiate a partnership, we will not be able to enter the crypto-currency industry.
Business opportunities that we believe are in the best interests of our company may be scarce or we may be unable to obtain the ones that we want. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may go out of business. If we go out of business, investors will lose their entire investment in our company.
We are, and will continue to be, an insignificant participant in the number of companies seeking a suitable business opportunity or business combination in the crypto-currency industry. A large number of established and well-financed entities, including venture capital firms, are actively seeking suitable business opportunities or business combinations which may also be desirable target candidates for us. Virtually all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we do. We are, consequently, at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. We will also compete with numerous other small public companies seeking suitable business opportunities or business combinations in the crypto-currency industry. If we are unable to obtain a business opportunity that we believe is in the best interests of our company, we may not be able to enter the bitcoin industry.
If we are successful at partnering with a bitcoin or other crypto-currency business, our business will be subject to the risks and uncertainties with the industry. The development and acceptance of Bitcoin and other crypto-currencies is subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of crypto-currencies may adversely affect our ability to partner with a company.
Using Bitcoins and other crypto-currencies to buy and sell goods and services is a new and rapidly evolving industry of which the Bitcoin Network is a prominent, but not unique, part. The growth of the Bitcoin Network in particular, is subject to a high degree of uncertainty. Factors affecting the further development of the Bitcoin Network, include:
continued worldwide growth in the adoption and use of Bitcoins;
government or quasi-government regulation of Bitcoins and their use, or restrictions on or regulation of access to and operation of the Bitcoin Network;
the maintenance and development of the open-source software protocol of the Bitcoin Network;
changes in consumer demographics and public tastes and preferences;
the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using currencies; and
general economic conditions and the regulatory environment relating to digital currency.
A decline in the popularity or acceptance of the Bitcoin Network could adversely affect an investment in the Company in the event we partner with a bitcoin business.
(New York, NY) – May 19, 2015 - Conexus Cattle Corp., (OTC: CNXS) announced today the acquisition of a 51% membership interest in Bitcoin Direct LLC, Nevada limited liability company (“Bitcoin” or the “Company”), which provides bitcoin transaction solutions for consumers in what we believe is a rapidly expanding industry, still in its infancy. Bitcoin’s initial focus is aimed at installing and servicing its ABMs (Automated Bitcoin Machines) in multiple locations. The ABMs provide consumers with the ability to instantaneously purchase bitcoins through their mobile devices. Currently, the Company has installations serving the major metropolitan centers of New York City and Montreal. The Company anticipates rapidly expanding its network of Company owned ABMs in the coming months.
In addition to operating its own bitcoin ABMs, the Company also anticipates partnering with local operators to create an integrated bitcoin distribution network in high traffic locations across North America. The Company, through its relationships with leading bitcoin miners, plans to supply bitcoins, as well as provide ABM equipment to these local operators.
Bitcoin plans to offer a full range of bitcoin transaction solutions to a wide variety of industries, including remittance and gaming, among others.
Under the terms of the transaction, Conexus, Bitcoin, and all of the members of Bitcoin, entered into a Securities Exchange Agreement, pursuant to which Conexus acquired memberships interests representing 51% of Bitcoin in exchange for 500 shares of the Conexus’s Series H Preferred, with an aggregate stated value equal to $500,000 (the “Exchange Agreement”). In accordance with the terms of the Exchange Agreement, Conexus agreed to provide a working capital facility to Bitcoin in an amount up to $300,000 to be utilized by Bitcoin as needed, and to be repaid by Bitcoin from working capital generated from Bitcoin’s operations. In addition, the Exchange Agreement provides an option to the members of Bitcoin for a period of five years to repurchase from the Conexus 10% of the Bitcoin membership interests held by Conexus for $250,000. Addition details of the transaction are included in the Conexus’ Current Report on Form 8-K filed today with the U.S. Securities and Exchange Commission.
Conrad Huss, President of Conexus commented: “We are excited to have acquired the majority interest in Bitcoin Direct LLC, along with its experienced management team. Our strategy is to provide sound, profitable, bitcoin transaction solutions to consumers, and to assist a variety of industries as they grow their markets. The Company is ready to help pioneer and promote the consumer adoption of bitcoin through automated solutions across North America.”
On January 23, 2014, the Company entered into a Know-How and Asset Purchase Agreement, with VTG and Gold Globe Investments Limited, a BVI company (“GGIL”). VTG and GGIL are engaged in the development of web technology and have jointly developed both an E-store and a virtual exchange platform that facilitate trading of virtual items and casino credits as well as bitcoins. The Company acquired these assets to assist the Company to continue to build and support its marketing and support business for online casinos and social games.
Stormy Simon - Overstock.com, Inc. - President and Director
This is a hard question, but I'm going to ask it, because Tom sent it in. It says, hi, Patrick. Why are you investing $5 million of our money into a risky Bitcoin VC investment? If people would like VC exposure, then they will invest in a VC firm. Our money must be spent on projects in which you have direct control.
Patrick Byrne - Overstock.com, Inc. - CEO and Director
You know, that's a very fair point. And I know I think of myself as the steward of your capital. In this case there's an opportunity that has come our way. There's a number of opportunities coming our way -- and we've have actually missed for years. And I'll tell you my honest-to-God thinking.
We were on the forefront of so many new companies with new technologies. For years we have known about emerging technologies before the world seemed to know. And we've had partnerships, and we've provided a lot of value.
We are basically -- I'm not sure if this is true anymore. But at one point we were the largest pure play who was integrating with third parties. If you got bigger than us, you just built everything internally. We integrated with a lot of third parties. And in the process we got to find out whose technology worked and whose didn't.
In addition, Stormy, being quite the demanding customer, brings a lot of value to some of these relationships. For example, there's a partner who had some great customer service software but worked with us for years. And I would say Stormy drove a lot of the development of their technology. And they ended up selling to somebody for $1.5 billion a couple years ago. There are more stories in our rearview mirror like that than I care to think of. And so I do want to start finding a way to monetize this front-row seat on a lot of technologies.
Now, the Bitcoin thing was a bit different in that it's not directly tied to our business. And you have a fair complaint. But I will put it this way. An opportunity came to me, as with some of the leading lights in Silicon Valley. We're behind a company that -- and some names I know and some people I know -- and I would have sure felt, if I had taken this investment myself, which I could have, it would have been a usurpation of corporate opportunity, but this $5 million bet is a bet on a portfolio of -- this is a very high -- this is a group of really fancy folks in Silicon Valley who were in the crypto-revolution, who are thinking about it the same way that I am. And this lets us make one broad-spectrum bet on the crypto-revolution.
The Company established its subsidiary, Bitcoin Bidder, Inc. in June, 2014 for the sole purpose of bidding on bitcoins which had been seized by the FBI and were sold at auction June 27, 2014. In connection with this, the Company issued notes aggregating $2,150,000 under a Securities Purchase Agreement. Bitcoin Bidder, Inc. was not successful at the auction and $1,950,000 in borrowings was repaid to the lenders on June 30, 2014. The remaining $200,000 was repaid to the lenders in July, 2014 without any penalty or interest charges to NaturalNano. The Company dissolved Bitcoin Bidder, Inc. in 2014.
In the event financial service providers do not accept accounts or transactions related to the marijuana industry, it is possible that Royalty Producers may seek alternative payment solutions, including but not limited to crypto currencies such as Bitcoin. There are risks inherent in crypto currencies, most notably its volatility and security issues. If the industry was to move towards alternative payment solutions and accept payments in crypto currency the Company would have to adopt policies and protocols to manage its volatility and exchange rate risk exposures. The Company's inability to manage such risks may adversely affect the Company's operations and financial performance.
The emergence of “virtual currencies” could result in competitive trading platforms which may reduce transaction volume and revenues
Virtual currencies are receiving increasing interest from investors, businesses and governments. Examples include private virtual currency or payment systems such as Bitcoin, Ripple, and Litecoin. As peer-to-peer currencies, they rely on a system of mutual trust and do not rely on a central bank, a third party or other intermediary to effect transactions or act as guarantor in the event the currency collapses. They do not have the status of legal tender. However, increased popularity or government acceptance of virtual currencies could encourage competitors to utilize virtual or community currencies or the exchange of online credits for goods and services. Our potential competitors could enjoy advantages, including greater financial resources and access to capital, a wider geographic presence, more accessible branch office locations, more aggressive marketing campaigns, better brand recognition, the ability to offer a wider array of services or more favorable pricing alternatives. If other virtual or community currencies gain widespread merchant acceptance, to the extent that we cannot compete effectively, it may adversely affect our business operations and financial performance.
The emergence of increased regulation related to virtual currencies could increase our costs by requiring us to update our products and services; or subject us to operational requirements that result in substantial compliance costs which would adversely affect our business
Innovation in the payments industry has led to a variety of virtual currencies, community currencies and reward points, and federal and state regulatory regimes are seeking to revise antiquated currency provisions. The increased attention to virtual currencies could result in changes in federal or state regulations or the adoption of new regulations that could affect us as well as many companies transacting in credits that might be called “virtual currency.” For example, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Treasury, as the delegated administrator of the Bank Secrecy Act (“BSA”) issued interpretive guidance in March 2013 to clarify the applicability of regulations to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. Although we do not believe we as a payment processor are currently subject to the BSA requirements that could potentially change with new regulation. Registering with FinCEN and complying with FinCEN’s regulations would be burdensome, as would getting licensed as a money transmitter and complying with the money transmission regulatory regimes in each state. Changes to existing laws or regulations or adoption of new laws or regulations relating to the use of virtual currencies could require us to incur significant costs to update our products and services, significantly increase our compliance costs or may impose conditions that we are unable to meet. This could make our business cost-prohibitive in the affected state or states and could materially adversely affect our business.
Additionally, the continued growth in electronic payment methods could result in a reduced need for cash in the marketplace and ultimately, a decline in the usage of ATMs. New payment technology and adoption of such technology such as Apple Pay or Square® mobile payment technology, virtual currencies such as Bitcoin, or other new payment method preferences by consumers could reduce the general population’s need or demand for cash and negatively impact our transaction volumes in the future.
So for example, Bitcoin. Bitcoin costs us directly -- we figure about $400,000 to get integrated and live with all of the people we had on it and such. We might allocate another $400,000 to that totallying $800,000.
It was a bit of a disappointment incidentally, Bitcoin. I thought we would do at least $6 million or $7 million this year. And after the first month of sales, that seemed plausible. I thought at least four would come domestically (or five) another will be a couple from international, and the truth is nothing international showed up, almost no international sales, and the domestic sales came in at $3 million. So a bit of a disappointment. That was worth $400,000 in other ways.
Written transcript of the live presentation made at the InsideETFs.com 2015 Conference on Monday, January 26, 2015.
The following transcript was provided by ETF.com for filing with the Securities and Exchange Commission under Rule 433.
Session: 12:25 pm - 12:50 pm: “Bitcoin, ETFs & the Future of Digital Currency”.
Interview with Cameron Winklevoss and Tyler Winklevoss; Jessica Toonkel, Reuters, reporter; and Matt Hougan, ETF.com, President.
see the full transcript at the quote URL
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