1. business and industrial

Coinworks Limited
Private offering of shares
Executive Summary
The story of bitcoin is well known - a revolutionary new form of money for the internet that turned its
early adopters into multi-millionaires. What is less well known is the breakthrough technology behind
bitcoin – a ground-breaking system of record-keeping known as the blockchain. Blockchain technology
has a myriad of potential applications that go beyond alternative money systems - in financial markets,
communication, law, accountancy, trade, financial markets, registration, and social networking. Some
even argue it will change the way the internet currently works.
Coinworks Limited has been established to invest early in the cycle in a small and focused portfolio of
leading edge companies within the digital currency, blockchain and fintech ecosystem. Coinworks
anticipates an early listing on the Alternative Investment Market of the London Stock Exchange.
Coinworks will work with the companies it invests in to accelerate commercialisation of their products
and services, effectively offering an incubation service in addition to seed capital. This will involve
active monitoring as an advisor to the company, help with managing professional services and
appropriately structuring the business to allow the founders to focus on product development and
commercialisation of the product.
Currently the company is in discussions to make investments in 3 businesses. Following the listing of
Coinworks on AIM the directors anticipate investing in a portfolio of 7-10 companies. These companies
are likely to be involved in various sectors within the digital currency space including remittance and
money transfers, market making, micropayments, security, and payment processing.
Coinworks believes that as the sector matures opportunities will arise to develop the Company into an
investment manager and merchant bank for the sector.
Details of the offer and use of proceeds
The Company is offering up to 5,000,000 ordinary shares in priced at £0.05 a share for a total
subscription of £250,000, representing 33% of the company’s capital. The subscription amount will be
held in the client account of DMH Stallard LLP, Solicitors to the Company, pending the completion of
the issue. The minimum uptake to the issue will be £150,000.
The net proceeds will be used to undertake initial investments within the sector, for general working
capital and for preparatory work and costs ahead of the intended listing on the AIM market.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Bitcoin and cryptocurrencies
Bitcoin is the first decentralised, digital currency. Bitcoin is an internet currency, a protocol that enables
the transfer of value directly from person to person on a decentralised, trustless basis. There is no
central authority or issuer. The code is open source – it can be viewed by anybody and it is maintained
by the community. Bitcoin is held in a wallet that is directly controlled by the user on a personal device
or on a web wallet on the internet. Bitcoin is secured by cryptography: each address has a public key,
which is published, and a private key, which is kept secret. Putting the 2 keys together unlocks the
bitcoin and permits access and transmission to the holder of the private key.
The genius of bitcoin is that by design it is decentralised by allowing for trust to be distributed – you
do not have to trust any central authority and if one or several nodes in the system fail that does not
bring down the system as a whole. This distributed trust is achieved by the introduction of the concept
of the block chain, an invention that is arguably even more radical than bitcoin itself. The block chain
is effectively a public ledger where transactions and holdings of bitcoin are recorded and new
transactions are confirmed independently and continuously by network participants known as miners.
Miners are seeking to harvest newly created bitcoins by a mining process that involves verifying bitcoin
transactions whilst seeking to solve a mathematical algorithm to find a specified value. Finding this
value unlocks the current block and releases the newly created bitcoins. The protocol releases new
bitcoins at a predefined rate, which adjusts automatically depending on the amount of mining
participants on the network. If there are many miners difficulty rises, if there are fewer it falls. The
total number of bitcoins is capped at 21 million, and to date almost 14 million have been mined – the
rate at which they are to be issued is scheduled to fall progressively over time until it reaches the cap.
Hence bitcoin is deliberately designed to be deflationary as well as decentralised and trust less - it is
designed to be a store of value as well as a digital medium of exchange.
Following bitcoin hundreds of other digital currencies (cryptocurrencies) have been invented,
attempting to improve on bitcoin. Whilst there has been much innovation no successor cryptocurrency
has yet managed to establish a network effect sufficient to challenge bitcoin – to such an extent that
bitcoin continues to account for over 90% of total crypto currency market capitalisation and daily
trading volume.
The invention of bitcoin means that traditional financial institutions and intermediaries are no longer
necessary in order to make payments or transact digitally and remotely with other human beings. Bitcoin
is cash for the internet – enabling digital value transfer over time and space. What once required the
authority of a central bank can now be achieved through open, distributed cryptographic algorithms.
Bitcoin is the distributed trust network that the Internet has always needed and has never had – Internet
2.0.
The far reaching implications of this invention are still not widely understood but, in our view, promise
to dramatically change the entire international financial system.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Who uses Bitcoin and how
There are almost 100,000 businesses and merchants that use and transact in Bitcoin including

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Microsoft
Dell
PayPal
Time Inc
Amazon
Expedia
Subway
Home Depot
Tesla
Whole Foods
Sears
Overstock
As adoption increases, larger numbers of companies are enabling their customers and clients to acquire
their goods and services online. Bitcoin can now be used to buy anything from food to cars to insurance.
The vast majority of transactions are paid online, however smartphone apps enable people to pay for
goods and services face to face.
The number of daily transactions exceeded 100,000 a day up from around 60,000 a day in March 2014
with daily average transaction values of $50,000,000 per day*. (Source; blockchain.info)
UK regulatory position
The UK government has taken an enlightened position on the regulation of cryptocurrencies. Rather
than rushing to impose burdensome regulation the UK has adopted a wait and see approach such that
bitcoin and cryptocurrency transactions have not been brought into any official regulatory framework
yet. Similarly HMRC has taken a sensible approach in providing measured and helpful guidance which
effectively classifies bitcoin as similar to a foreign currency (without being one).
The UK government is firmly committed to embracing technological innovation in financial services
as a means of preserving the UK’s lead in financial services and also in order to ensure that innovation
that may significantly improve the financial and payments system is not quashed by overly zealous
regulation. In order to inform its approach the UK Treasury published a call for information at the end
of 2014 in which it asked for views from the public and industry participants on regulation and potential
regulatory approaches. We await the outcome of this review but would expect the UK’s position to
emerge as one of measured and sensible regulation where necessary.
Generally it is notable that some of the largest and most successful cryptocurrency businesses, such as
blockchain.info, have opted to domicile their operations in the UK as a result of this forward thinking
and positive approach by the UK government. We expect the UK to emerge as the leading international
centre for digital currency innovation.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Recent investments and transactions within the Crypto currency world
Increasing levels of investment is being made into the sector. 2014 saw over $430m usd of investment
received and 2015 began with a significant investment of $75m into Coinbase, the largest US based
bitcoin wallet provider and exchange. This investment is particularly important not just in terms of the
scale but because the investors included the NYSE, Spanish bank BBVA and Japanese Telco NTT
DoCoMo.
2015 examples
Company
business model
investment size
lead investor
9th February
Bit Pesa
diaspora cash remitance
$1.1m
Pantera Capital
3rd February
KnCminer
Bitcoin miner
$15m
Accel Partners
3rd February
NeuCoin
Micropayments
$1.25m
Patrick Stymne
28th January
Biflyer
Market
$1.1m
Bit Coin Opportunity Corp
26th January
Coinbase
Exchange
$75m
New York Stock Exchange
Large Transactions 2014
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Directors and Management
Adam Cleary; Director
Adam Cleary is the Founder of Bullion Bitcoin Limited which operates bullionbitcoin.com - a bitcoin
to gold bullion exchange platform. He is also the Chief Executive of Coin Capital Limited, a regulated
investment management firm investing in digital currency businesses and a Director and Founder
Member of the UK Digital Currency Association, the trade association that promotes digital currencies
in the UK. Adam is a leading figure in the UK digital currency sector. Prior to becoming involved in
financial technology and digital currency Adam worked as an investment manager and research analyst
at a number of investment banks in London and Hong Kong. Adam’s role will be to source and assess
potential investments, and work with investee companies to monitor the digital currency technology
proposition and the business as a whole.
Christian West; Director
Christian has worked in the capital markets as both a fund manager and broker since 1998. He is and
has been a director of a number of financial mining and natural resources companies, both private and
public. He is a Director of RDP Limited, a venture capital group specializing in natural resource
investments. Christian’s role will be to assess potential investments and work with investee companies
to develop their brand and promote business development and commercialisation.
David Hutchins; Non-Executive Chairman
David (“Sam”) Hutchins has over 30 years of investment experience in Australia and the UK and is
currently a partner in RDP Fund Management LLP, the investment manager for London listed Global
Resources Investment Trust plc. He has been a director of numerous public and private companies,
including “start-up” companies, such as www.minesite.com, a resource industry specific news related
website and conference business. David is Member of the Chartered Institute for Securities &
Investments and a Member of the FTSE Gold Mines Index Committee.
Dominic Frisby: Non-Executive Director
Dominic is the author of two books - Life After The State ("fascinating, alarming, contentious" James
Harding) and Bitcoin; the Future of Money? ("Read it and glimpse into he future", Sir Richard
Branson).He writes a weekly column for MoneyWeek magazine, as well as various other publications,
and is MoneyWeek's commentator on gold, cryptocurrencies and commodities. As an investor, he has
a long history investing in small caps, particularly junior resource companies and tech. He is the
presenter and producer of Frisby's Bulls & Bears - an internet radio show in which he discusses financial
and economic matters with leading lights of the sector.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Summary
Coinworks offers the opportunity to participate in one of the fastest growing sectors in the fintech space.
1. Daily transactions are increasing
Source;
coinbase.com
2. Users are increasing
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
3. Investment is increasing
As adoption, usage and acceptance of cryptocurrency increases, companies and technologies with a first
mover advantage, combined with the adoption of a rigorous business plan and an understanding of the
fast moving environment within which they work, will be able to cement a strong competitive
advantage.
Coinworks sees the opportunity space as an incubator and investor to grow with the sector, advising
investee companies as they transition from concept through development and commercialisation of their
ideas and products. Coinworks will look to invest in a core portfolio of between 7-10 companies
enabling a close working relationship and involvement with the companies. Coinworks will seek to
crystalise its investments though eventual, listing or sales of its interests which will be managed
carefully andin conjunction with the investee company. As the sector develops the management believe
opportunities will arise to generate significant additional value for shareholders through opening other
income streams
The current team has significant experience in the sector and a background in investment and finance
that will enable them to evaluate the opportunities on both their technical merit and their ability to
crystallise and commercialise their ideas within a disciplined framework. The team will grow and
evolve as investments are undertaken and discussions are underway with a number of candidates with
a complimentary skill set.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
Disclaimer
This executive summary does not purport to be all-inclusive or necessarily contain all the information that a
prospective investor may desire in considering an investment in Coinworks and the matters described in the
executive summary, and may be subject to updating, revision or amendment. This executive summary is not
intended to form the basis of any investment decision by a prospective investor and does not outline all legal,
financial, taxation, regulatory, accounting and other risks or consequences of making any investment in
Coinworks. Interested parties should carry out their own investigations and analysis of the executive summary
and of the data referred to in the executive summary and should consult their own advisers before proceeding with
any investment. The information contained in this executive summary will not constitute or form any part of any
offer for subscription nor will any such information form the basis of any contract in respect thereof. Any investor
must rely on the terms and conditions contained in such a contract subject to such limitations and restrictions as
may be specified therein.
The opinions and information contained in this executive summary have not been verified by Coinworks or its
advisers nor has it been independently verified as to its accuracy. No representation or warranty, express or
implied, is given by Coinworks or any of their respective directors, officers, affiliates, employees, advisers or
agents (and any warranty expressed or implied by statute is hereby excluded) as to the accuracy or completeness
of the contents of this executive summary or any other document or information supplied at any time or any
opinions or projections expressed therein, nor is any such party under any obligation to update the executive
summary or correct any inaccuracies or omissions in it which may exist or become apparent.
Any financial illustrations are projections based on judgmental estimates and assumptions made about
circumstances and events, which have not yet taken place. Accordingly, there can be no assurance that any
projected returns will be attained. In particular, no representation or warranty whatsoever is given in relation to
the reasonableness or achievability of any illustrations contained in this executive summary or in relation to the
bases and assumptions underlying such illustrations and you must satisfy yourself in relation to the reasonableness,
achievability and accuracy thereof. No responsibility or liability is accepted for any loss or damage howsoever
arising that you may suffer as a result of this executive summary and any and all responsibility and liability is
expressly disclaimed by Coinworks and their respective directors, officers, affiliates, employees, advisers and
agents.
This executive summary has not been approved by the Financial Conduct Authority (FCA), nor is it intended that
any further versions of this executive summary will be so approved. Any sale of shares in Coinworks will only be
made to qualified investors for the purposes of and as defined in section 86(7) of Financial Services and Markets
Act 2000 (FSMA) and accordingly this executive summary does not constitute, and Coinworks is not making an
offer to the public within the meaning of sections 85(1) and 102B of FSMA.
For the purpose of Section 21 of FSMA, this executive summary constitutes a financial promotion which has been
issued by Coinworks, but whose content has not been approved by any person authorised by the FCA.
Accordingly, it may only be used as a communication made to (i) persons authorised under FSMA and other
categories of “investment professional” defined in accordance with article 19 of FSMA (Financial Promotion)
Order 2005 (the Order); (ii) “certified high net worth individuals” as defined in accordance with article 48 of the
Order; (iii) high value entities as referred to in article 49(2) (a), (b) and/or (c) of the Order (or individuals in their
capacities as directors, officers or employees of such entities); (iv) “sophisticated investors” as defined in
accordance with article 50 of the Order; and (v) “self-certified sophisticated investors” as defined in accordance
with article 50A of the Order. Coinworks has not sanctioned the use of this executive summary for a financial
promotion to any person not falling under articles 19, 48, 49, 50 or 50A of the Order and no such person should
place reliance upon this executive summary for any purpose. Use of this executive summary other than in
accordance with this restriction is not permitted and may contravene FSMA.
This executive summary is not being distributed to persons outside the United Kingdom, and the distribution of
this executive summary into jurisdictions other than the United Kingdom may be restricted by law. Any failure to
comply with any of the restrictions may constitute a violation of the securities law of any such jurisdiction
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)
(Restricted Jurisdiction). In particular this executive summary should not be distributed in or into, forwarded to
or transmitted to the United States or any other Restricted Jurisdiction.
The shares in Coinworks have not been, and will not be, registered under the United States Securities Act 1933
or under the securities laws of any state, district or other jurisdiction of the United States, or under the securities
laws of any other Restricted Jurisdiction or any state, province or territory thereof or any other jurisdiction outside
the United Kingdom. There will be no public offer in any Restricted Jurisdiction. Accordingly, the shares of
Coinworks may not be taken up, offered, sold, resold, delivered or distributed, directly or indirectly, through
CREST or otherwise, within, into or from the United States or any of the other Restricted Jurisdictions or to, or
for the account of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen
of such jurisdictions or to any person in any country or territory where to do so would or might contravene local
securities laws or regulations except pursuant to an applicable exemption.
This executive summary does not and will not constitute an offer to sell or the solicitation of any offer to buy
shares of Coinworks or any other securities in any jurisdiction in which such offer or solicitation is unlawful. No
action has been taken by Coinworks that would permit an offer of shares in Coinworks or possession or
distribution of this executive summary where action for that purpose is required. Persons into whose possession
this executive summary comes should inform themselves about and observe any such restrictions. Any failure to
comply with these restrictions may constitute a violation of the securities law or other laws of any such
jurisdictions.
No reliance may be placed for any purpose whatsoever on the information or opinions contained in this executive
summary or on its completeness, accuracy or fairness, save that Coinworks shall not exclude any liability for, or
remedy in respect of, fraudulent misrepresentation in this executive summary.
Forward Looking Statement
All statements other than statements of historical facts included in this executive summary, including, without
limitation, those regarding Coinworks’s financial position, business strategy, plans and objectives of management
for future operations or statements relating to expectations in relation to sales, earnings, profits or dividends or
any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”,
“intends”, “plans”, “will”, “may”, “anticipates”, “would”, “could” or similar expressions or the negative thereof,
are forward-looking statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond Coinworks’s control that could cause the actual results,
performance, achievements of or dividends paid by, Coinworks to be materially different from future results,
performance or achievements, or dividend payments expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Coinworks’s present and future
business strategies and the environment in which Coinworks will operate in the future. These forward looking
statements speak only as of the date of this executive summary.
If you have not received this executive summary directly from Coinworks, your receipt is unauthorised.
Please return this executive summary to Coinworks immediately.
Smaller Company Capital Ltd (No. 672403) is an appointed representative of Vicarage Capital Ltd which is Authorised and Regulated by the FCA (No. 455300)