Samuel Lee is one of the three executive directors of Bitcoin Group, who own 60.6 per cent of the company between them. Photo: Paul Jeffers
Bitcoin Group, the second bitcoin company to attempt a listing on the ASX, has been forced to release a third supplementary prospectus and delay its float for a fifth time, until mid-January.
The latest change adds to a string of missteps and rebukes from corporate watchdog Australian Securities and Investments Commission.
The latest stems from Bitcoin Group’s second supplement to a replacement prospectus, which put the listing date – then on January 6 – too long after the replacement prospectus was lodged with ASIC on September 4.
Listing rules state that if the listing is more than three months after the prospectus is lodged, the company must return all the money it has raised to investors.
Bitcoin Group, which is looking to raise $20 million at 20¢ a share, is a bitcoin “miner”. This involves procuring the digital currency by solving complicated equations to record the transaction on to blockchain, which functions as an official and distributed ledger.
In 2014-15, the company mined almost $2 million worth of the crypto-currency.
Bitcoin is notoriously volatile, so the prospectus outlines a range of forecasts, pricing the unit between $250 and $550 a coin.
Second bitcoin start-up to list
If it lists successfully, it will have a market valuation of almost $33 million and will become the second bitcoin start-up to list on the ASX, after digitalBTC. The latter joined the ASX through a $9.1 million reverse listing in 2014.
ASIC has issued two stop orders on Bitcoin Group’s initial raising efforts. The first was within a fortnight of receiving the original prospectus – which put the listing date at September 2 – and the second, after the group was found to be promoting the fundraising round on a Chinese social media platform, WeChat, before the prospectus was approved and lodged.
The company’s third prospectus says 90 per cent, $18 million, of funds raised will go towards developing operations conducted mostly across three sites in China, one in Iceland and a newer facility in Australia.
A maximum of $500,000 or 5 per cent of capital raised, whichever is less, from the raising will go to a bonus pool if the IPO is fully subscribed. This must be distributed within 60 days of the listing.
Directors will be repaid $230,000 in loans to the company. An individual can get a maximum of $150,000 from the pool. But even if the company manages to raise only $10 million, the bonus pool remains the same.
Pay net profit as bonuses
After the 2015-16 financial year the company will pay up to 20 per cent of net profit as bonuses if it reaches a net profit after tax goal of $10 million.
Revenue from bitcoins mined was $1.73 million in the year to June 2015 and total profit was $10,000.
It is focused on building facilities in jurisdictions with low electricity costs, given the huge amount of power required to run the sophisticated computers to solve the bitcoin encryption puzzles.
The remaining 10 per cent of funds raised will go towards repaying start-up loans made by the three directors, which total $230,000, marketing and the listing process cost.
ASX shareholders will own more than half the company, 60.6 per cent, when the offer is complete. The three executive directors – Samuel Lee, Ryan Xu and Allan Guo – will own 8.6 per cent in total.
Most of the company’s revenue, 98.5 per cent, is produced through Chinese operations. The prospectus lists this as a key risk in the undertaking, as well as the fluctuating bitcoin price and the relatively new industry finding its way.