BitGold Paper

INVESTMENT RESEARCH
BitGold Inc.
Watch List
(TSX.V:XAU, $4.65)
A Golden Payment System with Global Scalability

Estimates (C$)
2015e
2016e
2017e
2018e
Revenue (MM)
N/A
N/A
N/A
N/A
EBITDA ($MM)
N/A
N/A
N/A
N/A
EBITDA Margin
N/A
N/A
N/A
N/A
Diluted EPS
N/A
N/A
N/A
N/A
Market Data
Previous Close
C$4.65
52-Week High - Low
C$8.00 - C$2.35
Avg. Daily Vol. (3-month)
1,106,644
Shares Basic / Diluted (MM)
35.4 / 40.6
Mgmt & Dir. Ownership
57.8%
Market Cap (C$MM)
$188.7
Net Cash (C$MM)
$6.6
Enterprise Value (C$MM)
$182.2
Fiscal Year End
Sep-30
$7.00
2,000
$6.00
1,500
$5.00
1,000
$4.00
Ma y -15
F eb-15
$2.00
Nov -14
500
Aug -14
$3.00
Ma y -14
We are adding BitGold to our investment

Watch List. BitGold allows people of
any means the ability to purchase
physical gold, and soon use it as a
currency within the global payments
infrastructure.
S ourc e: F ac tS et P ric es
Company Profile
BitGold is an early-stage internet technology business
that facilitates the buying and selling of bullion-grade
gold for accountholders. Once fully operational, the
Company's platform is intended to provide various
transaction capabilities, including instant cross-border
gold payments, merchant invoicing and processing for
gold, and utilization of gold as currency online and at
retail points of sale.
The pending $51.7MM purchase

of GoldMoney transforms BitGold into
the worlds #2 pureplay gold vault
service with US$1.2B of assets. It also
provides immediate entry into the US
market.
BitGolds payment platform
could offer network effect opportunities
that create a virtuous circle of user and
merchant growth. When PayPal achieved
this network effect, its average customer
acquisition cost fell to a few cents each
as it built a base of over 160 million
users.
Physical gold as account currency
combines the allure of owning gold and
the potential benefits of holding USDdenominated assets. The payment
platform transforms the gold into a
highly liquid asset and enables fast, lowcost
payments,
remittances
and
withdrawals.
There are two business lines with

potential for network effect growth to global scale: an asset repository and payment
system for those seeking to hold gold and USD-denominated assets, especially in
restrictive or economically volatile regions, and the US$440 billion international
remittance market.
Growth catalysts this summer include the close of the GoldMoney acquisition,
launch of the standalone mobile app, and deployment of the linked debit and
prepaid credit cards.
Please refer to the final page(s) of this report for required disclosures.
May 25, 2015
Noel Atkinson, CFA (416) 343-3352
BitGold Inc.
TABLE OF CONTENTS
SUMMARY ............................................................................................................................................................................ 3
COMPANY BACKGROUND ................................................................................................................................................ 3
BUSINESS OPPORTUNITIES WITH POTENTIAL TO ACHIEVE NETWORK EFFECT GROWTH TO GLOBAL
SCALE ................................................................................................................................................................................... 9
COMPETITIVE ENVIRONMENT ....................................................................................................................................... 19
RECENT CORPORATE EVENTS ....................................................................................................................................... 23
MANAGEMENT AND DIRECTOR BIOGRAPHIES ......................................................................................................... 24
May 25, 2015 / p.2
BitGold Inc.
SUMMARY
BitGold has an opportunity to disrupt two enormous industries the US$1 trillion consumer
payments sector and the US$400 billion international remittances sector with its innovative
gold-based asset repository and payments network. It allows anyone in more than 180 countries
and territories an opportunity to buy and sell physical gold in increments as little as one cent with
very low fees, and actually have physical ownership of that gold in one of 6 Brinks (NYSE:
BCO, NR) vaults worldwide. Its payment system then transforms the gold into a liquid, highly
mobile currency, with zero fee payments between accountholders and linking to debit and
prepaid credit cards to use that gold within the global retail infrastructure.
BitGold has announced the $51.7 million acquisition of GoldMoney, the #2 pureplay precious
metals vaulting service in the world with nearly 22,000 accounts and over US$1.2 billion of
assets in custody. GoldMoney gives BitGold a foothold in the US market, creates scale that
boosts legitimacy to potential customers and merchant service partners, and delivers US$1.2
billion of customer assets that can be monetized through the payment platform.
We believe BitGold has the potential to ride network effect growth to global scale as:
1. An asset repository effectively denominated in US Dollars and providing accountholders
with access to physical gold but with cash-like liquidity and mobility, driving merchants
to accept BitGold as a payment method and in turn accelerating customer growth at very
low cost; and
2. A platform for self-directed instantaneous peer-to-peer remittances with little to no
transfer fees, which forces the recipient to become an accountholder (zero acquisition
cost for BitGold) and utilize the platform.
COMPANY BACKGROUND
CREATING A GLOBAL ASSET REPOSITORY AND PAYMENTS PLATFORM BASED ON PHYSICAL GOLD
BitGold was incorporated in August 2014. The Company completed a reverse merger in April
2015 and became freely trading on the TSX Venture exchange in May 2015. It is based in
Toronto with an office in Milan, Italy that in part houses much of the platform development
team. The BitGold platform completed its beta and went live worldwide on May 4, 2015.
The Company is developing a global asset repository and online payments platform that
leverages the benefits of physical gold as a store of value. In turn, this should offer:
an inexpensive way for people worldwide to diversify their investible asset portfolio by
purchasing and holding physical gold rather than synthetic proxies such as gold ETFs,
mining company stocks or gold derivative contracts; and
a very low-cost and highly mobile method of undertaking transfers (and also merchant
purchases) using their physical gold as a liquid currency.
May 25, 2015 / p.3
BitGold Inc.
Regardless of the name, BitGold is not a virtual currency. It does not utilize a Bitcoin-like
distributed blockchain and does not require users to have virtual wallets nor go through unknown
exchanges of dubious security.
What BitGold is embracing from the virtual currency sector is an escape from the costs and
systemic friction of conventional banks and payment networks. It also adds an allure of having
assets backed by gold which can be attractive for people concerned by inflation, government
encroachment, or who have otherwise been holding gold, or bitcoin or other cryptocurrency.
This is a very big idea building a global online platform with full underlying infrastructure
for managing the physical gold, handling debits and credits into a BitGold account from
established bank and credit systems and in global payment networks, and managing the antimoney laundering (AML) and know-your-customer (KYC) requirements to remain in
compliance with international Financial Action Task Force (FATF) requirements. Recent
funding rounds for the Company have included sophisticated investors (Soros Brothers) and
gold-related companies (Sandstorm Gold [TSX: SSL, NR] and Sprott Inc. [TSX: SII, NR]).
PENDING ACQUISITION TRANSFORMS BITGOLD INTO #2 PUREPLAY GOLD VAULTING SERVICE
WITH US$1.2B OF CUSTOMER ASSETS THAT CAN BE MONETIZED ON THE PAYMENT PLATFORM
On May 22, 2015, BitGold announced an agreement to acquire GoldMoney Network Ltd., which
is the second-largest pure-play gold vaulting service in the world. The Company will pay
11,169,794 shares (worth $51.9 million as of the announcement) for GoldMoney.
GoldMoney, based in Jersey (UK), was the first successful firm to offer people of all means the
ability to purchase and store gold in a segregated custodial account. Founded in 2001, it has
nearly 22,000 active accounts and serves as custodian for US$1.2 billion of precious metals and
cash in customers accounts.
GoldMoney offers customers access to vaults in the UK, Switzerland, Hong Kong, Canada and
Singapore, and provides fully online onboarding for customers residing in 44 countries. Notably,
it has registered as a money service business in Jersey. More importantly, it operates in the US
and provides BitGold with an immediate and sizable foothold in the US market for at least the
precious metals vaulting service.
BitGold reported that GoldMoney generated revenues of 185.6 million (C$340.1 million) in
FY2015 (ended March 31), as compared to 325.2 million (C$545.4 million) in FY2014. The
businesss strength has generally correlated to gold price volatility, with a reported peak of
873.0 million (C$1.38 billion) in FY2012. However, we stress that most of this revenue is
purchases and sales of precious metals to and from the customer base at relatively small margin.
Gross margin was 2.9 million (C$5.4 million) in FY2015 versus 4.2 million (C$7.0 million) in
FY2014. GoldMoney recorded a loss of about 800,000 (C$1.5 million) in FY2015, but BitGold
management believes there could be some synergies and cost savings that could move the
business to profitability in relatively short order.
GoldMoney will have the right to appoint 3 directors to BitGolds board for three years after
closing. Mr. Mahendra Naik will join the board of directors immediately upon the closing of the
May 25, 2015 / p.4
BitGold Inc.
acquisition, and James Turk and Hector Fleming will be nominees for directorships at a
shareholder meeting of BitGold to be held within 90 days of closing. More details on the
proposed director additions are in a summary section at the end of this report.
Exhibit 1: Summary Annual Financials of GoldMoney, FY2012-FY2015 (FYE March)
In Millions of British Pounds
Sales of Gold Grams and Currencies
Sales of Silver Ounces and Currencies
Sales of Platinum and Currencies
Sales of Palladium Grams and Currencies
Storage Fee Income
Total Revenue
Cost of Sales
Gross Profit
Net Profit (Loss)
Cash Flow from Operations
FY2012
431.1
421.0
13.1
2.2
5.5
873.0
854.9
18.1
7.3
0.9
FY2013
224.7
174.9
6.6
1.9
5.3
413.5
404.8
8.7
0.3
2.2
FY2014
194.0
122.4
4.3
2.0
2.5
325.2
321.0
4.2
(9.4)
(1.6)
FY2015
107.3
69.2
3.9
3.1
2.1
185.6
182.7
2.9
(0.8)
(0.8)
In Millions of CAD
Sales of Gold Grams and Currencies
Sales of Silver Ounces and Currencies
Sales of Platinum and Currencies
Sales of Palladium Grams and Currencies
Storage Fee Income
Total Revenue
Cost of Sales
Gross Profit
Net Profit (Loss)
Cash Flow from Operations
FY2012
$683.3
667.2
20.8
3.5
8.7
1383.5
1354.8
28.7
11.6
1.5
FY2013
$355.5
276.7
10.5
3.1
8.4
654.2
640.3
13.8
0.5
3.4
FY2014
$325.3
205.3
7.2
3.3
4.1
545.4
538.4
7.0
(15.8)
(2.6)
FY2015
$196.6
126.8
7.1
5.7
3.9
340.1
334.7
5.4
(1.5)
(1.5)
Note: GoldMoney experienced certain gains and losses on unhedged metals inventories and a software asset
writedown in FY2014. BitGold does not intend to hold unhedged precious metals inventories. Conversion from
GBP to CAD uses monthly average GBP/CAD exchange rate for the corresponding fiscal years.
Source: Clarus with data from BitGold and X-rates.com.
HOW BITGOLD WORKS
An individual has to visit the BitGold website (www.bitgold.com) to register for an account. A
standalone mobile app for onboarding and account service is slated to go live this summer. Users
in over 180 countries and territories can access the BitGold platform; residents in the US and its
territories are currently not supported. The few other countries not supported by BitGold are
either on the US State Department list for state-sponsored terrorism or are considered by FATF
to have weak AML and terrorist financing restrictions.
Creation of an account requires multifactor verification through email, and a user also has to take
a photo of their drivers license, passport or national ID card and upload it to BitGold to initiate
the AML/KYC compliance process.
Once onboarded, an accountholder can purchase gold for their account. The Company deals in
14 base currencies; it also shows conversion into 146 other currencies, but users of those other
currencies must convert into a base currency before a purchase can occur. Funds deposited are
May 25, 2015 / p.5
BitGold Inc.
automatically converted into physical gold within 1% of the spot price utilizing BitGolds
proprietary Aurum pricing platform. The Company has developed relationships with several
bullion dealers to obtain institutional pricing for gold, and sales (redemptions) back to currency
also occur within 1% of the spot price. The Company retains the net fee spread (trading turn)
between the buy and sell prices. BitGold can also generate foreign exchange spread fees when
accountholders are depositing a currency other than the 14 base currencies.
Exhibit 2. Mobile App Development Screen Shots Onboarding, Account Status, Transactions
Source: BitGold.
Our research suggests BitGold offers a broader range of methods to deposit and redeem funds
than any other gold repository or payments processor:
Bank wire;
Debit card Interac, Visa Debit, and China UnionPay;
Credit card Visa, MasterCard, American Express, Discover, and JCB; and
Bitcoin (deposit only currently; withdrawal capability coming soon).
Another important distinction is that BitGold provides users with far more asset liquidity and
mobility for redemptions. Accountholders can use a wire to any bank in which the holder has an
account, and use a different method of redemption than deposit (i.e. deposit via bank wire,
redeem in Bitcoin or credit card). The only restriction (to be able to track flow of funds) is that
redemptions to a credit card must correspond to prior deposits from the same credit card.
A BitGold accountholder can allocate purchased gold to be stored in six Brinks gold vaults
(Toronto, Zurich, Singapore, Hong Kong, London and Dubai). around the world. These vaults
are operated by Brinks Global Services, which handles all storage and transport of the physical
gold for the Company. GoldMoney also uses Brinks vaults in Toronto and Singapore, and has
precious metals held in six additional vaults in London, Hong Kong, Zurich and Singapore
operated by other large security firms.
BitGolds custodial arrangement theoretically allows customers to quickly move their ownership
of physical gold from one continent or country to another without the cost and security issues of
actually transporting bullion. The accountholder can redeem his holdings in one country and then
purchase gold again via the platform in a different country.
May 25, 2015 / p.6
BitGold Inc.
Exhibit 3. List of Available Gold Vaults on BitGold Platform
Note: These are likely to be the vault cities after the GoldMoney acquisition as well. GoldMoney also utilizes Brinks vaults in
Toronto and Singapore, and uses six additional vaults in London, Zurich and Singapore operated by other security companies.
Source: BitGold.
BitGold and GoldMoney both allow people of all means to own and store physical gold:
Buy physical gold for your account at spot rates before fees, as compared to gold coins
that typically have sizable markups versus their true value in gold;
Minimum purchase of just 0.001 gram (~US$0.04) at BitGold and 1 gram at GoldMoney
(US$39); and
Little to no monthly storage/account fees (0.12%-0.18% of account value per year at
GoldMoney, no such fees charged by BitGold).
BitGold offers accountholders the ability to redeem funds in their account and take possession of
physical gold. The Company has developed a unique 10-gram, .9995% pure GoldCube worth
about US$382 and also offers a 1-kilogram gold bar worth about US$38,200. GoldMoney
offers delivery but only in 100-gram or 1-kilogram gold bars.
Exhibit 4. BitGold 10-Gram GoldCubes
Source: BitGold.
May 25, 2015 / p.7
BitGold Inc.
THE NEXT STAGE TRANSFORMING GOLD INTO A LIQUID, MOBILE CURRENCY
BitGold offers an appealing structure for holding assets denominated in gold. However, BitGold
seeks to generate velocity of account holdings through transfers and payments and transform
gold sitting in a vault into a cash-like, highly liquid and mobile currency that can be used for
transfers, remittances, and purchases online and in retail stores.
Management seeks to add the following capabilities this summer:
Linked debit/credit cards;

Merchant payments;
Micropayments; and
ATM transactions.
Linked Debit and Credit Cards. BitGold intends to start offering a debit card linked to the
holders account and a MasterCard-branded prepaid credit card during this summer. The debit
card and credit card will provide users the ability to use assets in their BitGold account to make
online and retail purchases, as well as withdraw funds. As we understand it, the accountholder
will be able to preset a minimum amount of funding on the prepaid cards; once the card funds
drop below the preset floor, the gold account will automatically sell some gold from the account
and reload the card which is similar in concept to a linked transit pass or other solution.
BitGold expects to generate net per-transaction fees of 1% of value for debit card and 2% for
credit card transactions.
This is highly innovative, as we have not found any competitor that allows for direct use of
gold in the account as a liquid currency; all other gold-backed accounts typically force
customers to first manually sell gold in their account to create cash in a second account that then
is preloaded onto the debit or prepaid card for use. As with a bank, customer retention and
velocity of money (transaction fees) should increase as BitGold users sign up for these additional
features. We expect these cards to appeal to accountholders with lower balances, especially if
they are using BitGold as a vault for proceeds from virtual currencies, and to customers that
want to access BitGold account funds as a source of funds for day-to-day activities.
Merchant Payments. The Company intends to launch a formal merchant services program,
whereby merchants can accept online payments in BitGold at a fee of 1% of transaction value.
The benefit for BitGold customers is that fees for payments are allocated to the merchant rather
than the accountholder. We would expect BitGold to be responsible for fraud and chargeback
expenses, but if linked to a prefunded BitGold account we doubt this would become a
meaningful cost. Cost to the merchants should in line or lower than what they typically pay for
credit card transaction fees. Merchants should be willing to accept BitGold if they feel there is
scale of users and security and credibility of the BitGold program; the GoldMoney acquisition
should help enormously in this regard. This type of merchant program has been the main driver
for PayPals enormous growth in users, transaction volume, and revenue, and BitGold believes
merchant acceptance can do the same for the Company.
PayPal is currently the worlds largest alternative merchant payment platform, with customers
using PayPal primarily as a privacy firewall to make online purchases without disclosing their
credit card or bank account details. Its services are available in 26 currencies and 193 countries
May 25, 2015 / p.8
BitGold Inc.
and territories worldwide. PayPals net total payment volume (TPV) grew 27% year-over-year
in 2014 to US$228 billion, with merchant services rising 33% and eBay-related volume up 3%.
Mobile transactions reached US$46 billion (up 70% year-over-year). PayPal gained 18.9 million
users in 2014 to end the year with 162 million worldwide, who undertook more than 3.6 billion
transactions in the year. Total revenue was US$7.9 billion, up 19% from 2013 with adjusted
EBITDA of US$1.6 billion and free cash flow of US$1.4 billion (18% of sales). eBay provided
guidance of PayPal revenue to exceed US$9 billion in 2015 with gross margin between 24% and
25%. eBay estimated that PayPal handled about 1 of every 6 dollars transacted online in 2013.It
appears from the PayPal financial data that the company achieves extremely high operating
leverage, as total cash operating expenses appear to be less than 5% of revenues. eBay intends to
spinoff PayPal in the second half of 2015.
Micropayments. Micropayments are online or point-of-sale transfers of small amounts of money
through a financial network rather than in cash. They represent a rapidly growing segment for
conventional banks and credit card systems, with major credit card companies adding RFID
functionality to their cards for one-tap interactions for small point-of-sale purchases. PayPal
has been the leader in online micropayments. It charges merchants a processing fee equal to 5%
of a micropayment value plus $0.05.
It can also serve as a mechanism to send small payments within a social network. The BitGold
platform can send as little as one cent of gold to a recipient with zero transaction fees.
Management believes there is a market opportunity to incorporate its micropayments into social
networking platforms, such as happy birthday wishes with a small payment of gold. This may
have particularly strong resonance with social networking users in countries where gold is a
highly prized gift. Recipients would have to create an account to access these gifts, so this could
be a very low-cost mechanism for BitGold to expand its registered user base.
ATM Network. The Company has devised custom free-standing ATMs that are able to accept
cash deposits and withdrawals. It has installed three BitGold ATMs in downtown Toronto. An
ATM network could make it much easier for users to redeem their gold holdings for cash, and in
turn generate more transaction fees for BitGold. However, we believe the network would have to
have meaningful scale to be more than a curiosity. This could be an expensive undertaking in
terms of capex and logistical oversight, particularly if the Company wants to maintain a global
operating footprint, unless it partners with existing ATM operators.
BUSINESS OPPORTUNITIES WITH POTENTIAL TO ACHIEVE NETWORK EFFECT

GROWTH TO GLOBAL SCALE
COMPANIES THAT ACHIEVE GLOBAL SCALE THROUGH LOW-COST NETWORK EFFECT
GROWTH CAN REALIZE MASSIVE VALUATIONS
Network effect means that the utility or value of a product or service to a user increases as
more users begin to use the service. Many of the most successful (in terms of users) online
companies think Waze, WhatsApp, Airbnb, Facebook (NASDAQ: FB, NR), eBay (NASDAQ:
EBAY, NR), and LinkedIn (NASDAQ: LNKD, NR) have ridden the network effect wave to
May 25, 2015 / p.9
BitGold Inc.
build enormous global user bases. Optimally, a company can build network effect virally by
people telling their friends, coworkers and family, who in turn sign up and repeat the
dissemination cycle. When marketing goes viral a dollar invested in marketing to attract an
initial customer ultimately results in that customer driving at least one more customer to sign up
for no additional ad spend then the business has the potential to build a very large user base.
This sounds theoretically simple, but the execution is incredibly difficult which is why private
companies that achieve global-level network effect can enjoy multi-billion-dollar valuations
before even generating any revenue. Some online services are able to scale to global usage levels
with a very lean infrastructure instant messaging platform WhatsApp claimed to have just 55
employees serving 400 million users (and adding 1 million new users each day) when it was sold
to Facebook in 2014 for US$19 billion.
The online platform needs a compelling service that can drive network effect and viral
marketing, and normally a baseline version is offered for free to drive that user growth. It is not
uncommon that companies intentionally drive usage to tens or hundreds of millions of users
before attempting to create a revenue model, and are able to base investor expectations and
company valuation on user metrics rather than conventional revenue and profitability. Once at
global scale these companies attempt to pivot and create a sustainable revenue model or sell to a
large, established tech company.
PAYPAL ENJOYED TWO SEPARATE NETWORK EFFECTS TO BECOME THE GLOBAL ONLINE
PAYMENTS LEADER
PayPal (the resultant entity of a merger between Elon Musks x.com and Peter Thiels Confinity)
launched an online (email-based) payments service in October 1999. Its team included many of
todays tech legends: Musk, Thiel, Max Levchin, David Sacks, and Reid Hoffman, to name a
few. PayPal is the proof of concept that you can have global-scale, virtual network growth in
financial services with a fully-formed revenue model in place from the start.
PayPal launched its online payments service in October 1999 by its 24 employees sending email
payments to their friends. The company grew virally because the recipient had to open a PayPal
account to get the payment while transfers were free and instantaneous. It was also novel in its
ability to protect the financial privacy of the sender. At the end of 1999, PayPal had 10,000
accounts, which grew geometrically to 100,000 by early February 2000 and 824,000 by the end
of March 2000. We note that BitGold had over 20,000 prelaunch signups, suggesting that
the Company could organically grow even faster than PayPal in its first couple of months
of service, not including the 21,000+ accounts to be added via the GoldMoney acquisition.
The second rocket stage for PayPal was its decision in mid-2000 to add merchant services,
whereby merchants could accept payments directly from PayPal accounts and be protected
against fraud and chargebacks by PayPal great for the nascent online market and particularly
embraced by eBay and other auction sites. Fees were lower than credit cards, and PayPal
customers paid no transaction fees. Merchant accounts grew from zero at the end of March 2000
to 14,000 at the end of June, and reached 800,000 accounts by the end of December 2000. At the
same time, users saw merchants accepting PayPal and signed up with zero promotional cost from
PayPal. Its average customer acquisition cost plummeted to less than a dollar per new user and it
May 25, 2015 / p.10
BitGold Inc.
steadily added 15,000 to 30,000 users per day from mid-2000 until it was acquired by eBay in
late 2002.
eBay acquired PayPal in 2002 for approximately US$1.4 billion in stock. The transaction was
valued at about 6.5x PayPals annualized revenue run-rate of about US$216 million and 0.2x
annualized transaction volume run-rate of nearly US$6.5 billion. In the 12 years following the
acquisition, PayPal effectively grew transaction volume and revenue more than 35-fold
(including the effect of some subsequent acquisitions folded into PayPal).
Exhibit 5. PayPal Quarterly Operating Metrics from Launch until Acquisition (in US$ Millions)
in Millions except as noted
Total Accounts
Personal Accounts
Merchant Accounts
Total Payments in Quarter
Total Payment Volume (TPV)
Average Payment Amount ($)
Average Payments/Account/Quarter
Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02
0.0
0.8
2.2
3.7
5.5
7.2
8.8
10.6
12.8
12.2
14.1
0.0
0.8
2.2
3.4
4.7
5.9
7.1
8.5
10.2
9.0
10.4
0.0
0.0
0.0
0.3
0.8
1.3
1.7
2.1
2.6
3.2
3.7
1.0
5.5
9.4
12.3
13.5
15.1
18.0
22.3
26.6
28.8
$46 $249
$423
$544 $643 $747
$925 $1,206 $1,460 $1,615
$45
$46
$45
$44
$48
$50
$51
$54
$55
$56
1.2
2.5
2.5
2.2
1.9
1.7
1.7
1.7
2.2
2.0
Gross Merchant Sales

Merchant Sales as % of TPV
$0
0%
Fee Revenue
Fee Revenue as % of TPV
$2
1%
$56
13%
$336
62%
$547
85%
$663
89%
$815 $1,071 $1,314 $1,449

88%
89%
90%
90%
0
$0
0.0% 0.0%
$1
0.2%
$7
1.4%
$13
2.0%
$19
2.5%
$29
3.1%
$39
3.3%
$48
3.3%
$54
3.3%
Source: Corporate filings (SEC EDGAR).
BITGOLD HAS AT LEAST TWO NETWORK EFFECT OPPORTUNITIES WITH GLOBAL APPEAL
We believe BitGold has two service offerings that incorporate network effect opportunities and
could realistically drive significant viral coefficients:
1. A global online asset repository effectively denominated in US Dollars and providing any
acceptable accountholder with access to physical gold plus cash-like liquidity and
mobility; and
2. Self-directed cross-border remittances with little to no transfer fees, nearly instant
execution (once users are onboarded) and undertaken from a computer or mobile device.
Each of these user segments is global in scope and scale. We believe the Company could be
highly successful if either of these service offerings can scale.
OPPORTUNITY 1: GLOBAL ONLINE USD-DENOMINATED ASSET REPOSITORY WITH ACCESS
TO PHYSICAL GOLD AND HIGH ASSET LIQUIDITY/MOBILITY
BitGold offers people in more than 180 countries and territories the ability to purchase physical
gold and have it stored at any of six vaults available worldwide. We see many benefits of the
BitGold platform to a user as an asset repository:
Virtually zero financial barrier to entry for ownership of physical gold;
Ownership of a USD-denominated asset;
High liquidity between gold and a redemption currency;

May 25, 2015 / p.11
BitGold Inc.
No upside limit on ownership amount;
No storage fees (for the time being); and
Ability to purchase goods and services with investment assets with minimal friction.
In terms of potential users, the lowest-hanging fruit likely is investors that seek to hold a portion
of their assets in gold. Gold ETFs are today the most common way to purchase exposure to
physical gold. According to ETFDB.com, the top 10 gold ETFs and ETNs had aggregate assets
of US$35.8 billion as of May 12, 2015. The SPDR Gold Shares (NYSE: GLD, NR) is the
industry heavyweight shareholders receive beneficial fractional ownership in an underlying
trust that owns more than 23.4 million troy ounces (worth US$28 billion). Purchase of an ETF
requires setup of an investment account at a brokerage, and transaction fees for individual
investors on self-directed trading systems are typically $9.95 to $19.95 to buy and sell one or
more shares, plus monthly or annual fees for accounts not meeting minimum size requirements.
Cash settlement to a users account for sale of a ETF typically takes three business days.
Investors do not actually have any direct beneficial ownership in the trusts gold holdings, and a
share sale cannot settle in physical gold held by the trust. Purchases and sales of ETFs can only
occur during trading hours. In addition, shareholders incur sponsors and marketing agents fees
of up to 0.3% of assets per year, plus 0.4% of assets for trust expenses. Finally, foreign investors
may have restrictions on the purchase of ETFs listed on US exchanges.
Exhibit 6. Daily Closing Spot Gold Price, in USD per Troy Ounce, May 2005-May 2015
Ma y -15
Ma y -13
Ma y -11
Ma y -09
Ma y -07
Ma y -05
$2000.00
$1800.00
$1600.00
$1400.00
$1200.00
$1000.00
$800.00
$600.00
$400.00
$200.00
S ourc e : F ac tS et P ric es
Source: FactSet.
The other common alternative for physical ownership of gold by retail investors is gold coins.
They can be purchased from government mints, banks or metals dealers. The coins tend to have
sizable purchase markups and shipping costs, and can have poor liquidity and high transaction
costs (i.e. discounts on value) in an urgent sale. New issuance of gold coins by government mints
tends to be geographically restricted. Coins do offer a meaningful benefit of being able to touch
and hold the gold asset, can be as much as 99.99% pure, and can also have incremental value
beyond the inherent gold if a coin is rare.
May 25, 2015 / p.12
BitGold Inc.
BitGold offers anyone the ability to own physical gold. Purchases and redemptions can occur
24/7/365, settle instantly, and is available to customers worldwide using a wide variety of
payment and redemption methods. People can also redeem funds in 10-gram physical GoldCubes
or in 1-kg gold bars. Fees are relatively low. We believe there could be several million retail
investors worldwide who are interested in purchasing gold as a basic component of their
investment portfolio, and BitGold appears to offer a very inexpensive way for gold bugs to
purchase gold if they seek protection against perceived inflationary or geopolitical concerns.
A USD-DENOMINATED ASSET REPOSITORY AND PAYMENT SOLUTION
We believe BitGolds platform has a large greenfield opportunity to serve as a USDdenominated asset repository with cash-like asset liquidity and easy cross-border usage for
people of all wealth levels living in countries with capital expatriation restrictions, weak local
currency trends, high inflation or other structural barriers that make savings accounts or
investment ownership in local currency a poor investment or there is a desire to move assets to
foreign countries to support a future personal migration to the recipient country.
We think of countries such as Argentina, Russia, Ukraine, Venezuela and Zimbabwe. These five
countries (combined 274 million population) have experienced serious depreciation of their
currency versus the USD recently, and face government-imposed restrictions on currency
conversions, geopolitical turmoil, international sanctions or all of the above. Capital flight from
Russia alone in 2014 was estimated to exceed US$123 billion. Being able to store value in USD
while the local currency depreciates would be a valuable tool for people in these countries. If a
Russian purchased gold with rubles at the end of 2009, it would have been a strong performer in
his/her portfolio during the currency crisis in 2014, and still be up 80% versus the purchase price.
In comparison, an American buying gold at the end of 2009 would have less than 6% return as of
the end of April 2015. We believe there is some potential value in having the gold appreciate, but
BitGold can be a much more powerful tool to protect wealth in times of local currency volatility.
Exhibit 7. Relative Appreciation of Gold in Russian Rubles and USD, Monthly 12/31/2009 to
4/30/2015 (12/31/2009 = 100)
240
220
200
180
160
140
120
100
in Rubles
3/1/2015
9/1/2014
12/1/2014
6/1/2014
3/1/2014
12/1/2013
9/1/2013
6/1/2013
3/1/2013
9/1/2012
12/1/2012
6/1/2012
3/1/2012
9/1/2011
12/1/2011
6/1/2011
3/1/2011
9/1/2010
12/1/2010
6/1/2010
3/1/2010
12/1/2009
80
in USD
Source: Clarus using data from World Gold Council.
May 25, 2015 / p.13
BitGold Inc.
OFFERS THE ABILITY TO MORE AFFORDABLY OWN AND GIVE GOLD

Gold is a common gift worldwide for major events but academic research shows gold jewelry
and coins given as gifts in Middle Eastern and Asian cultures typically are high karat with an
underlying association that the gifts can be easily sold and converted back to base gold.1 Most of
the largest countries for consumer gold demand fall into this category.
Exhibit 8. Consumer Gold Demand in Metric Tons, 2014
India
China
USA
Turkey
Germany
Thailand
Russia (2013)
Vietnam
UAE
Saudi Arabia
Egypt
Indonesia
Switzerland
UK
0
200
400
600
800
1000
Source: Clarus using data from Statistica.
BitGold can allow people to give money that can be directly redeemed by the recipient into
GoldCubes or even gold bars. GoldCubes have an innovative design and are branded, suggesting
that they could become status symbols.
CHINA ALONE COULD DRIVE SUBSTANTIAL DEPOSIT GROWTH
China represents a very intriguing market for BitGold. A 2014 report by Capgemini and RBC
Wealth Management estimated there were 758,000 people in China with at least US$1 million of
liquid investible assets.
Gold and foreign currency are important asset holdings for a meaningful portion of the wealthy
population in China. According to a 2014 survey of its private wealth clients, the Bank of China
found that 40% considered gold a favoured asset holding, and 23% felt the same regarding
foreign currency. We note that BitGold offers exposure to both assets, in that customers gold
holdings are also always priced in USD.
A January 2014 article from BloombergBusiness stated that imports of gold bullion to China
reached an all-time high in 2013 even as the gold price fell.2 Brinks SVP for Asia-Pacific stated
in the article that the company was adding space in Hong Kong and mainland China to meet
1
Ertimer and Sandikci, Giving Gold Jewelry and Coins as Gifts: the Interplay of Utilitarianism and Symbolism, Advances in
Consumer Research, Volume 32 (2005); pp. 322-327.
2
Larkin et.al., Gold flows east as bars recast for Chinese defying slump, BloombergBusiness, January 28, 2014.
May 25, 2015 / p.14
BitGold Inc.
growing storage demand for gold. A reputable storage firm called Malca-Amit Global opened a
vault in Shanghai in late 2013 that can store 2,000 tons. The article also references that banks in
China are selling gold bars to people that feel owning a bar or two (a standard bar is 400 troy oz,
or about US$480,000 each) is a good long-term investment. We believe the BitGold platform,
with ability to own physical gold in a secure fashion while having easy liquidity to convert back
to currency, could be highly attractive to Chinese consumers.
Exhibit 9. Estimated High Net Worth Individuals in China, 2008-2013
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2008
2009
2010
2011
2012
2013
Note: High Net Worth Individual defined as owning at least US$1 million of investible assets, excluding primary residence.
Source: Capgemini/RBC Asia-Pacific Wealth Report 2014.
Exhibit 10. Bank of China Private Wealth Client Survey Favoured Asset Holdings (June 2014)
Equity Funds
63%
Real Estate
60%
Chinese Stocks
52%
Insurance
45%
Gold
40%
Foreign Exchange
23%
Bonds
19%
Foreign Stocks
15%
Other Precious Metals

Commodities
Futures
11%
7%
4%
Source: Julius Baer/Bank of China.
The BitGold platform also makes a useful platform for Chinese nationals that seek to have USDdenominated assets stored outside China. Property markets in Australia, Canada, the UK and
even now the US have experienced sharp capital inflows from China as wealthier people seek to
move assets out of China and potentially gain residency or citizenship in the foreign country.
May 25, 2015 / p.15
BitGold Inc.
However, people that seek to move themselves or family out of China to the foreign country also
will require liquid assets in the destination country. BitGold can be a powerful way for these
people to build a pool of USD-denominated assets that then can be easily converted to local
currency on demand. The upcoming debit and credit cards would also provide easy mechanisms
to utilize those asset bases on demand.
If BitGold gains awareness with the Chinese middle class, its user base could grow very quickly.
A 2014 report by Ernst & Young estimated there were over 25 million Chinese households with
annual income over US$35,000 (thereby seeking consumer products and investible assets), and
projected a trebling to nearly 80 million households by 2022.3
There are several other emerging markets besides China with rapidly-expanding middle classes,
a cultural affinity for gold ownership, and have experienced currency volatility in the recent past.
These countries together have tens of millions of households who could utilize BitGold today,
and their middle classes are expected to grow nicely over the next several years.
Exhibit 11. Households with US$35,000+ Income, Selected Countries 2012-2022E (Millions)
Source: Oxford Economics; Haver Analytics; Ernst & Young.
OPPORTUNITY 2: SELF-DIRECTED INTERNATIONAL REMITTANCES

Remittances money transfers by people to friends and family in foreign (typically developing)
countries represent an enormous opportunity for BitGold, if it can resolve issues of onboarding
the recipients in developing countries. Remittances are a huge global business. According to UN
agency IFAD, there were an estimated 1.5 billion remittance transactions worldwide in 2013. A
total of US$440 billion was transmitted during the year, most often for US$200 at a time, and it
cost the senders US$37 billion in fees. The World Bank estimated in April 2015 that the global
EY Rapid-Growth Markets Forecast, published February 2014.

May 25, 2015 / p.16
BitGold Inc.
average cost to send an international remittance was nearly 8% of the amount sent.4 Remittance
cost has been slowly declining over the past decade (11% in 2005, 9% in 2012), but pricing has
remained stubbornly high even with the advent of online money transfer services.
The majority of remittances are sent from developed countries (North America, Europe, and
Japan) to developing countries. There are wide differences in average remittance fees between
G8 countries; Russias average international remittance fee was 3% of the amount sent in
Q1/2015, as compared to 6% in the US, 8% for most large EU countries, almost 10% in Canada
and over 13% in Japan. Elsewhere there are some pockets of very high fees; transfer costs within
Africa still average 20% and those attempting to move money in or out of Venezuela were
charged fees equal to 90% of the amount sent.
Exhibit 12. International Remittance Flows (2013)
Source: UN International Fund for Agricultural Development.
Remittances are usually undertaken through money transfer companies such as Western Union
(NYSE: WU, NR) and MoneyGram (NYSE: MGI, NR) that have a network of local agents
worldwide to send and receive money. Fees are generated through a combination of origination
fees and foreign exchange spreads.
4
Massimo Cirasino (World Bank), The Global Effort in the Remittances Arena: Updates from the World Bank, presented April
16, 2015.
May 25, 2015 / p.17
BitGold Inc.
Online services have led to much faster delivery times and lower fees than traditional bankinitiated transfers, but even online services can result in very high fees. As shown in Exhibit 13,
we believe BitGold could be one of the lowest-cost methods for cross-border remittances.
Exhibit 13. Total Transaction Fee Percentage for CAD200 Remittance from Canada to Selected
Destinations, as of May 2015
Service Provider
BitGold
PayPal
PayPal
Online/Branch Service
Online User-to-User
Online (PP or Linked Bank Acct)
Online (Linked Credit/Debit Card)
Transaction Speed
Instant
Instant
Instant
India
2.0%
4.0%
7.6%
Jamaica
2.0%
4.0%
7.6%
Kenya
2.0%
4.0%
7.6%
Philippines
2.0%
4.0%
7.6%
WorldRemit
Online - bank pickup
Less than one hour
4.2%
5.0%
8.4%
6.2%
RBC
Branch-initiated Bank Transfer
3-6+ business days
24.0%
24.0%
24.5%
25.4%
MoneyGram
Agent to Agent
Less than one hour
6.4%
11.3%
10.0%
5.6%
Western Union
Agent to Agent
Less than one hour
8.0%
11.9%
12.1%
4.6%
Note: Costs include origination fee and foreign exchange spread. PP = PayPal.
Source: Clarus using World Bank remittance survey data (February 2015), WorldRemit and PayPal corporate data.
However, a BitGold funds transfer recipient needs to be onboarded, and therefore requires
personal identification and some way to redeem the transfer into a usable currency. This can be a
significant issue in developing countries where bank infrastructures are weak outside of higherincome neighborhoods. If recipients had a smartphone, they could be onboarded with a national
ID card or passport, and then use a mobile-money platform as a method of redeeming funds from
the BitGold system. Smartphone penetration is rising quickly in the developing world, and
mobile money platforms have gained traction in many emerging markets. A mobile money
platform allows the registered user to make bill payments and buy top-up airtime with SMS
codes and visit an authorized agent (usually a small store) to receive cash transfers.
The most successful mobile money platform is M-Pesa, operated by Vodafone (LSE: VOD, NR).
In its home country of Kenya, over 19 million people (more than half of all Kenyans age 15 and
older) had an M-Pesa account and there were 13.9 million active users with monthly fee ARPU
of KSH209 (US$2.18). Over 85,000 agents and stores in Kenya accept M-Pesa payments.5
Exhibit 14. Top Destinations for International Remittances (US$ Billions) and Adult Smartphone
or Other Internet Users (Millions), 2013
India
China
Philippines
France
Mexico
Germany
Pakistan
Bangladesh
Belgium
Ukraine
2013
Remittance
Receipts
(US$B)
70.0
38.8
26.7
23.3
23.0
15.8
14.6
13.9
11.1
9.7
Adult
2013
Smartphone
Adult
Owners or
Population Internet Users
(MM)
%
816.7
20%
1084.4
63%
58.6
42%
50.2
82%
80.4
50%
69.4
84%
108.2
8%
99.9
11%
8.8
82%
37.3
53%
2013 Adult
Smartphone or
Internet Users
(MM)
163.3
683.2
24.6
41.2
40.2
58.3
8.7
11.0
7.2
19.8
Source: World Bank, UNICEF, Pew Research Center, ITU.
Business Daily (Kenya), No respite in M-Pesa tariffs as talks on fees begin, May 10, 2015.
May 25, 2015 / p.18
BitGold Inc.
Seven of the top 10 countries for remittance receipts in 2013 (with a collective US$148 billion of
remittances received that year) had adult smartphone or internet usage penetration over 40%,
suggesting viable markets for online peer-to-peer remittance services, subject to regulatory
restrictions. Perhaps surprisingly, four of the top ten recipient countries were actually in Europe.
We also believe India could be a viable market for online peer-to-peer remittances because it is
by far the largest recipient of international remittances worldwide, and more than 160 million
adults had a smartphone or other access to the Internet.
FORT KNOX INSTEAD OF MT. GOX
Another way that BitGold could grow its account base quickly is to serve as a low-cost vault for
holders of virtual currencies such as Bitcoin. This solution appears useful for people who are
being paid in virtual currencies, want to store that value outside the traditional financial systems,
are concerned about the security and recourse issues inherent in blockchain-based financial
systems, and who are not interested in speculating on the virtual currencys price movements.
There have been several high-profile instances including Mt. Gox in Japan, BitStamp in
Europe, BTER in China, and Canadian Bitcoins of hacking or administrative errors that led to
sizable losses for those exchanges accountholders. The distributed blockchain structure of
Bitcoin and most other virtual currencies means that there is zero ability to recover stolen or
otherwise lost funds. As the virtual currency sector grows and matures, we believe there will be
an expanding population of users that seek to diversify their holdings into a less volatile
alternative currency with greater protections such as BitGold.
Management is pursuing partnerships with companies already paying employees or contract staff
in Bitcoin to offer payment in BitGold instead. We believe these users could be a sweet spot for
BitGold frequent deposits and payments, highly accustomed to alternative financial platforms,
perhaps otherwise underbanked and could find debit and prepaid credit cards appealing, and be
active users of social networks that may drive viral marketing.
COMPETITIVE ENVIRONMENT
COMPETING AGAINST BULLIONVAULT IN PURE-PLAY PHYSICAL GOLD STORAGE PROVIDER
BitGolds first service to customers is as a storage vehicle for physical gold. GoldMoney was the
first pureplay gold vaulting service. It has a minimum gold bullion purchase requirement of 1
gram, which costs about US$39 at spot price. Fees of up to 2.49% are charged for agency
purchases of gold on the customers behalf, along with a storage fee of less than 0.2% of the
value of the gold per year, which basically covers the vault and insurance cost incurred by an
institutional custodian utilizing Brinks or other vault providers. There are no fees charged for
gold sales back to GoldMoney at the spot price.
The pending acquisition of GoldMoney will add over 650,000 troy ounces of customer gold in
custody, plus over 27 million ounces of silver, platinum and palladium. GoldMoney also had
almost US$60 million of various currencies in customer accounts as of April 30, 2015.
May 25, 2015 / p.19
BitGold Inc.
Exhibit 15. GoldMoney Assets in Custody at April 30, 2015
Asset
Gold
Silver
Platinum
Palladium
Total Precious Metals
Currency
Total Customer Assets
Troy Ounces
629,663
27,141,887
17,271
9,413
27,798,233
USD Value
$756,746,512
$450,315,115
$19,679,089
$7,318,346
$1,234,059,062
$59,926,383
$1,293,985,445
Source: GoldMoney.
BullionVault, based in London, UK, has taken the GoldMoney concept and added an internal
marketplace for registered accountholders to buy and sell gold from each other. Founded in
2003, the company holds about US$1.3 billion of gold (plus about US$175 million in customer
cash accounts) for more than 53,000 active customers from 175 countries. Approximately onethird of the companys customers are located in the US. Minimum purchase size is 1 gram of
gold. BullionVault holds almost 1.1 million troy ounces of gold in custody at vaults in Canada,
Switzerland, the UK, the US and Singapore. Fees are much less than GoldMoney, with up to
0.5% fee for bullion purchase and sale transactions on the open market plus a 0.3% currency
spread when customer cash accounts are not in USD (most are not), and a 0.12% annual storage
fee. The company also takes a 0.55% commission fee on its internal market, and can step in front
of customers to act as buyer or seller to capture a deal priced out of step with the spot market.
Euro Pacifics offshore bank also offers a gold-backed debit card program. It requires a USD
cash account and a gold storage account at the bank. The debit card is prefunded from the USD
account, and the USD account can be funded by requesting gold sales from the storage account.
The minimum initial deposit is US$500 and via wire transfer only. The debit card costs US$150
and takes up to three weeks for delivery. The bank takes a fee of 4% for gold purchases and sales
in customer accounts for instant fills; the commission drops to 3% or less if transacted during
Australian office hours and minimum US$5,000 order.
As mentioned earlier, large banks and private wealth management firms may offer gold custodial
services to their clients and some also offer custom-branded gold bullion down to 1 gram in size.
Vault services are typically limited to clients with at least US$1 million in investible assets, and
offer storage and direct or agency bullion purchases/sales only. Theoretically, anyone could
purchase gold coins or bullion from a dealer and store it in a safety deposit box in a bank.
There are a variety of smaller gold bullion agents and storage providers worldwide, but they
typically have sizable minimum initial account requirements. Sprott Money would be a
representative example; it requires a minimum $15,000 invested within the first 12 months, and
charges between 0.45% and 0.65% of the account value per year ($200 minimum). Bullion (bars
or coins) must be purchased from Sprott Money at about 2.5% markup from spot price. Sales are
at spot price back to Sprott except for gold bars, which incur a 0.55% fee. One such provider of
note, Las Vegas-based AnthemVault, provides storage at a single vault in Salt Lake City for
about 600 troy ounces of customer gold and claims to be developing a gold-backed
cryptocurrency called the Hayek that would use the Bitcoin-style administrative blockchain.
May 25, 2015 / p.20
BitGold Inc.
Exhibit 16. Comparison of BitGold, GoldMoney and Competitors
Source: BitGold, GoldMoney, BullionVault, eBay, corporate filings.
PLANNED SPIN-OUT OF PAYPAL TO PROVIDE A STRONG PUBLIC COMPARABLE

What we took away from our discussions with management was their desire to build a global
payments platform that provides deposit stability in the form of USD-denominated physical gold,
and leveraging that real asset base to permit customers to engage in online, point-of-sale and
peer-to-peer transactions with unsurpassed flexibility. While management focused on prerevenue global-scale businesses as templates for considering a valuation for BitGold, we think
perhaps the best comparable could be PayPal once BitGold achieves some scale with its
platform. Moreover, eBay intends to spin off PayPal in the second half of 2015, which will
provide a direct publicly-traded comparable.
As shown in Exhibit 16 above, BitGold appears highly competitive with PayPal in terms of fees
and ease of moving funds in and out of the account and undertaking peer-to-peer payments.
May 25, 2015 / p.21
BitGold Inc.
PayPal has created a strong business of serving as a firewall for credit card payments to retail
sites when users are concerned about security. A 2014 market research project by Ipsos Vantis
with more than 17,000 consumers in 22 countries (funded by PayPal), found that the top two
reasons that consumers used their preferred cross-border payment method (credit card, PayPal or
other) were safer way to pay and purchase protection.
Whether it is in competition with PayPal for payments, BullionVault and GoldMoney for gold
storage, or Western Union for remittances, we believe BitGold could be successful with its
platform if it can:
Maximize transactional security, and keep hackers (and therefore regulators) away;
Continue to add bank/credit/debit partners, particularly mobile payments such as m-Pesa

and credit/debit/bank options outside Canada and China; and
Offer maximum possible integration into global retail payment networks to engage
accountholders in transactional activities.
We note the survey found a willingness by online cross-border purchasers worldwide to try
alternative payment platforms that meet consumers core security and transactional needs, as
well-known, trusted brand and habit were cited less often than security and convenience.
Exhibit 17. PayPal Cross-Border Research 2014 Project: Most Common Reasons for Preference of
Online Cross-Border Payment Preference (Any Method)
Safer way to pay
54%
Purchase protection
49%
More convenient way to pay
44%
Payment processed quickly
31%
Does not divulge details to seller
28%
Accepted by most retailers
28%
Faster checkout
24%
Well-known, trusted brand
24%
No fees/commission on foreign purchases
13%
Better currency conversion rate
11%
Habit
11%
Receiver rewards or cash back
10%
0%
10%
20%
30%
40%
50%
60%
Note: Survey of 4,670 cross-border shoppers who had used more than one payment method in the past.
Source: PayPal.
We also have to watch other payment platforms that seek to capture market share as a payment
expeditor or firewall from PayPal. Most notable is Apple Pay, which works on iPhone 6 phones
and Apple watches. It offers one-touch purchases at online retailers and also facilitates purchases
from a linked bank/credit account at integrated retailer points of sale. It launched in the US in
October 2014, and is expected to arrive in Canada in late 2015 and expand throughout Europe
and Asia thereafter. Apple Pay could achieve meaningful market share in areas where Apple
May 25, 2015 / p.22
BitGold Inc.
phones have strong sales (US, Canada, China), but having the system linked only to Apple
devices probably minimizes its penetration rate in the rest of the world where the smartphone
installed base predominantly uses Android.
RECENT CORPORATE EVENTS

BitGolds recent corporate events of significance have included:
August 14, 2014: Predecessor company incorporated. Private placement completed for
15,750,000 million common shares at $0.033 per share for gross proceeds of $525,000.
Appointed Roy Sebag as President and CEO, Joshua Crumb as Chief Strategy Officer, and
Daniel Crandall as Chief Financial Officer. Company acquires certain IP from CEO Roy Sebag
for 3,000,000 million common shares at a deemed issue price of $0.033 per share.
September 30, 2014: Appointed Alessandro Premoli as Chief Technology Officer.
December 11, 2014: Completed a non-brokered private placement of debentures worth an
aggregate total of $800,000. These debentures converted into common shares pari passu with the
Amalgamation (see below) at a conversion price of $0.211, which resulted in the issuance of
3,987,600 shares.
December 31, 2014: Completed a non-brokered private placement of 4,554,952 common shares
at a price of $0.44 per share for aggregate gross proceeds of $2,004,179.
February 19, 2015: Completed a brokered private placement of 7,777,777 Subscription Receipts
at a price of $0.90 per Subscription Receipt for gross proceeds of approximately $7,000,000.
Each Subscription Receipt included one common share and one half of one warrant with an
exercise price of $1.35 per share.
February 23, 2015: Entered into Amalgamation Agreement with shell company.
April 22, 2015: Completed brokered private placement of 504,000 common shares at $0.90 per
share for gross proceeds of $453,600, and a non-brokered private placement of 140,000 common
shares at $0.90 per share for gross proceeds of $126,000.
April 29, 2015: Amalgamation with shell company completed.
May 4, 2015: BitGold platform exits beta phase and is publicly launched.
May 13, 2015: BitGold common shares commenced trading on TSX Venture Exchange. At
commencement of trading, BitGold had 36,619,885 common shares, 3,888,888 investor warrants
($1.35 exercise price), 462,346 agents warrants ($0.90 exercise price), and options for
1,974,428 common shares outstanding. Roy Sebag, President and CEO, owns 50.4% of the
outstanding common shares plus 504,000 warrants and 265,165 options.
May 22, 2015: BitGold announces pending acquisition of privately-held precious metal vault
service GoldMoney for 11,169,794 common shares ($51.9 million).
May 25, 2015 / p.23
BitGold Inc.
MANAGEMENT AND DIRECTOR BIOGRAPHIES

Roy Sebag Chairman, President, Chief Executive Officer and Director
Roy Sebag is a co-founder of BitGold and has served as its Chief Executive since 2014. Mr.
Sebag previously served as founder and Managing Principal of Braavos Capital, Ltd. an
international private investment organization engaged in value-oriented investments across a
variety of asset classes and industries. From 2004 through to 2010 Mr. Sebag
was the Founder and Portfolio Manager of Essentia Equity, Ltd., an investment partnership that
engaged in fundamental long and short equity investing in distressed, event-driven, and natural
resource related opportunities. He is also the Founder, Chairman and Chief Executive Officer of
Natural Resource Holdings, Ltd., an investment company engaged in the acquisition,
development and ownership of natural resource assets in North America.
Joshua Crumb Chief Strategy Officer and Director
Mr. Crumb is a co-founder of BitGold and has served as its Chief Strategy Officer and Director
since 2014. Mr. Crumb was previously an Executive Director at Goldman Sachs (NYSE: GS,
NR) - the Senior Metals Strategist in the Global Economics, Commodities and Strategy Research
Division in London; a co-founder and Chief Financial Officer of Coffee Flour, and a Director of
Corporate Development at the Lundin Group of Companies. Mr. Crumb holds a Master of
Science in Mineral Economics, a Graduate Certificate in International Political Economy, and a
Bachelor of Science degree in Engineering from the Colorado School of Mines.
James Eaton Director
James Eaton has been an Independent Director of BitGold since 2014. Mr. Eaton is the President
of Weatons Holdings Inc., a Canadian private holding company, and has been active in the
founding, growth and divestiture stages of the Weatons portfolio companies across a wide
variety of industries. Mr. Eaton serves on the boards of JC Clark Ltd., Defyrus Inc., Dream Hard
Asset Alternatives Trust, Syncordia Technologies and Healthcare Solutions Inc. and Ceviche.
Mr. Eaton also serves on the boards of the Canadian Art Foundation, the True Patriot Love
Foundation, and is a trustee of the John David and Signy Eaton Foundation. Mr. Eaton holds a
Bachelor of Arts from the University of Colorado at Boulder.
Dennis Peterson Director
Dennis Peterson has been a director of BitGold since 2014. Mr. Peterson has 25 years of
experience as a corporate securities lawyer specializing in corporate finance matters. Most of Mr.
Peterson's practice focuses on emerging public companies, and he has extensive experience with
all aspects of prospectus financings, private placements, mergers and acquisitions. Companies he
has worked with are listed on the Toronto Stock Exchange and the TSX Venture Exchange.
Alessandro Premoli Chief Technology Officer
Mr. Premoli is the Chief Technology Officer of BitGold. He is the architect of the BitGold
proprietary platform, and leads the BitGold development team in Milan, Italy. Over the last
decade, he has developed encrypted storage and messaging systems for highly sensitive, dataintensive organizations, gaining comprehensive experience in security, cryptography and digital
signature solutions. Mr. Premoli has been an important member of the cryptocurrency
May 25, 2015 / p.24
BitGold Inc.
community for several years and has been involved in the Ripple financial protocol since its
early days. He holds a Masters Degree in Informatics from the University of Milano-Bicocca.
Daniel Crandall Chief Financial Officer
Mr. Crandall is a CPA, CA and is the CFO of BitGold. He has provided CFO, accounting,
regulatory compliance, and management advisory services to numerous issuers on the TSX,
TSX-Venture and other Canadian and US exchanges. Previously, he was a Manager at Collins
Barrow Toronto LLP, a public accounting firm where he worked for over five years. He holds an
Honours Bachelor of Accounting (Co-op) degree from Brock University.
GoldMoney Nominees to BitGold Board of Directors upon Completion of Acquisition:
Mahendra Turk, CA, CPA Mr. Turk will join the Board immediately upon the closing of the
GoldMoney acquisition. He is a CPA with more than 32 years of financial accounting, mining
and investment company experience. Mr. Naik is President and CEO of FinSec Services Inc., a
private management services company, and a director of GoldMoney. He practiced as a
Chartered Professional Accountant for nine years with a major Canadian accounting firm. Mr.
Naik is a director and member of the Audit and Finance Committee of IAMGOLD Corporation
(TSX: IMG, HOLD), and Chairman of the Board and Chairman of the Audit Committee of
Fortune Minerals Inc. (TSX: FT, NR). In addition, Mr. Naik is a director of several large private
companies. Mr. Naik will be appointed as Chair of the Audit Committee of BitGold. He holds a
Bachelor of Commerce degree from the University of Toronto.
Mr. James Turk Mr. Turk will be a nominee for election of directors at a shareholder meeting
to be held within 90 days of closing of the GoldMoney acquisition. Mr. Turk has over 40 years
experience in international banking, finance and investments. He began his career at The Chase
Manhattan Bank with assignments in Thailand, the Philippines and Hong Kong. In 1983, he was
appointed as manager of the Commodity Department of the Abu Dhabi Investment Authority.
After leaving that post in 1987, he went on to hold various advisory roles in money management.
In 2001 he co-founded GoldMoney and remains a director of the group. Mr. Turk makes regular
conference appearances around the world, provides commentary for numerous publications and
newswires as well as producing articles for his website and GoldMoney.
Mr. Hector Fleming Mr. Fleming will be a nominee for election of directors at a shareholder
meeting to be held within 90 days of closing of the GoldMoney acquisition. Mr. Fleming is a
founder of Fleming Wulfsohn Africa Limited, a private investment company, and has over 10
years of private equity experience across Africa and other emerging markets. He is a director of
The Johannesburg Land Company Limited, Clover Alloys SA Limited, GoldMoney Network
Limited and Netagio Holdings Limited. Mr Fleming is a former director of Standard Chartered
Banks (LSE: STAN, NR) private equity coverage team with a central focus on Sub-Saharan
Africa and was previously in the banks private equity group, investing growth capital from the
banks balance sheet and third party funds into private equity opportunities in emerging Asian
economies. He holds a B.A. (Hons) degree from the University of Newcastle upon Tyne.
May 25, 2015 / p.25
BitGold Inc.
Clarus Securities Equity Research Disclosures
The analyst has visited the Companys corporate offices in Toronto, Ontario. No payment or reimbursement was received from the issuer for the
associated travel costs.
Within the last 24 months, Clarus Securities Inc. has managed or co-managed a public offering of securities of this Company.
Within the last 24 months, Clarus Securities Inc. has received compensation for investment banking services with respect to the securities of this
Company.
General Disclosure
The information and opinions in this report were prepared by Clarus Securities Inc. (Clarus Securities). Clarus Securities is a wholly-owned
subsidiary of Clarus Securities Holdings Ltd. and is an affiliate of such. The reader should assume that Clarus Securities or its affiliate may have
a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.
The opinions, estimates and projections contained in this report are those of Clarus Securities as of the date of this report and are subject to
change without notice. Clarus Securities endeavours to ensure that the contents have been compiled or derived from sources that we believe are
reliable and contain information and opinions that are accurate and complete. However, Clarus Securities makes no representation or warranty,
express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever
for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to Clarus Securities or its affiliate
that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. No part of this report
may be reproduced or re-distributed without the written consent of Clarus Securities.
Conflicts of Interest
The research analyst and/or associates who prepared this report are compensated based upon (among other factors) the overall profitability of
Clarus Securities and its affiliate, which includes the overall profitability of investment banking and related services. In the normal course of its
business, Clarus Securities or its affiliate may provide financial advisory and/or investment banking services for the issuers mentioned in this
report in return for remuneration and might seek to become engaged for such services from any of such issuers in this report within the next three
months. Clarus Securities or its affiliate may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis.
Clarus Securities, its affiliate, and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities
discussed herein, or in related securities or in options, futures or other derivative instruments based thereon.
Analysts Certification
Each Clarus Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the
recommendations and opinions expressed in the research report accurately reflect the research analysts personal views about the company and
securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research
analyst and (ii) no part of the research analysts compensation was, is, or will be directly or indirectly, related to the specific recommendations or
views expressed by such research analyst in this report.
Equity Research Ratings
Buy: Attractively valued and expected to appreciate significantly from the current price over the next 12-18 months.
Speculative Buy: Expected to appreciate significantly from the current price over the next 12-18 months. Financial and/or operational risk is
high in the analysts view.
Accumulate: Attractively valued, but given the current market price, is expected to appreciate moderately over the next 12 -18 months.
Hold: Fairly valued and expected to trade in line with the current price over the next 12-18 months.
Sell: Overvalued and expected to decline from the current price over the next 12-18 months.
Under review: Pending additional review and/or information. No rating presently assigned.
A summary of our research ratings distribution can be found on our website.
Dissemination of Research
Clarus Securities Equity Research is available via our website and is currently distributed in electronic form to our complete distribution list at
the same time. Please contact your Clarus institutional sales or trading representative or investment advisor for more information. Institutional
clients may also receive our research via THOMSON and REUTERS.
Business Continuity Planning
Our clients funds and securities are maintained at our carrying broker, NBCN (250 Yonge Street P.O. Box 19, Toronto, ON M5B 2L7, phone
number 416-542-2200, Website: www.nbcn.ca). In the event of a significant business disruption, should you not be able to communicate with
your Clarus representative, please contact the following representative at NBCN for access to your funds and securities: Mike Tate (416-5422255 or michael.tate@corrnet.com) or in the event that Mike Tate cannot be reached: Laurie Smuk (416-542-2212 or lsmuk@corrnet.com). To
help facilitate your request, please have your account number ready.
For additional disclosures, please visit our website. Clarus Securities Inc. 2015.
Clarus Securities may occasionally publish reports on companies on which it has not initiated coverage, such as the
company in this report, and provides no target price or rating.
May 25, 2015 / p.26
BitGold Inc.
This page was intentionally left blank.
May 25, 2015 / p.27
BitGold Inc.
May 25, 2015 / p.28
BitGold Inc.
May 25, 2015 / p.29
EXCHANGE TOWER, 130 KING STREET WEST, SUITE 3640, TORONTO, ON CANADA M5X 1A9
ROYAL BANK BUILDING, 335 8TH AVENUE SW, SUITE 1220, CALGARY, AB CANADA T2P 1C9
TEL: 416-343-2777
INFO@CLARUSSECURITIES.COM
FAX: 416-343-2799
WWW.CLARUSSECURITIES.COM

BitGold Paper

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

BitGold Paper

Enviado por

Direitos autorais:

Formatos disponíveis

INVESTMENT RESEARCH

A Golden Payment System with Global Scalability

52-Week High - Low

Avg. Daily Vol. (3-month)

Shares Basic / Diluted (MM)

Mgmt & Dir. Ownership

Market Cap (C$MM)

Net Cash (C$MM)

Enterprise Value (C$MM)

Fiscal Year End

We are adding BitGold to our investment

The pending $51.7MM purchase

There are two business lines with

May 25, 2015

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.2

Noel Atkinson, CFA (416) 343-3352

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.3

May 25, 2015 / p.4

Noel Atkinson, CFA (416) 343-3352

HOW BITGOLD WORKS

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.5

May 25, 2015 / p.6

Noel Atkinson, CFA (416) 343-3352

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.7

Linked debit/credit cards;

May 25, 2015 / p.8

Noel Atkinson, CFA (416) 343-3352

BUSINESS OPPORTUNITIES WITH POTENTIAL TO ACHIEVE NETWORK EFFECT

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.9

May 25, 2015 / p.10

Noel Atkinson, CFA (416) 343-3352

Gross Merchant Sales

$815 $1,071 $1,314 $1,449

Source: Corporate filings (SEC EDGAR).

Virtually zero financial barrier to entry for ownership of physical gold;

Ownership of a USD-denominated asset;

High liquidity between gold and a redemption currency;

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.11

No upside limit on ownership amount;

No storage fees (for the time being); and

May 25, 2015 / p.12

Noel Atkinson, CFA (416) 343-3352

Source: Clarus using data from World Gold Council.

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.13

OFFERS THE ABILITY TO MORE AFFORDABLY OWN AND GIVE GOLD

Source: Clarus using data from Statistica.

May 25, 2015 / p.14

Noel Atkinson, CFA (416) 343-3352

Other Precious Metals

Source: Julius Baer/Bank of China.

Noel Atkinson, CFA (416) 343-3352

May 25, 2015 / p.15

Source: Oxford Economics; Haver Analytics; Ernst & Young.

OPPORTUNITY 2: SELF-DIRECTED INTERNATIONAL REMITTANCES

EY Rapid-Growth Markets Forecast, published February 2014.

May 25, 2015 / p.16