Topic: Robocoin Bitcoin ATM Ownership Shares - US Purchase and Placement (Read 4879 times)

How did your auction go last year?  Did you secure your funding?

Regards,

Kevin

Auction is over.

Thanks!

8 minutes left in Auction.

1 hour and 50 minutes left in the Auction.

That makes 3 bids at 10 btc each.

We have in order of bidding:

Chenchunyu88@10
Landstander@10
Coinmuse @ 10

Bidding clarification:  If two bidders have the same bid then the person who bid first will be deemed the winner of that stake. Additionally, bids of a higher value will replace the most recent bidders. I.e. the first person to bid will be the last person to be overtaken by an increasing bid price.

Further, any bid within 5 minutes of the end of the auction will be automatically extend the auction another 5 minutes. 

OK - I'm in for a bid of 10 BTC

I thought you weren't interested

The winners of the auction will be made privy to my name and can verify my legal standing with the State Bar. 

No worries. Thanks. 

You are a lawyer? Great. How can I validate that?
The biggest hurdle to any Bitcoin company in the USA now is the regulatory issues. Good luck.

50% cut in the transaction fee? too high. I won't be joining in. good luck.

We have two bids at 10 btc each.

I'm in for 10btc. Thanks!

15 hours left in the auction. Thanks!

Just got an email from Mr. Kelly who said that we can add a provision stating that the transaction fee percentage will not be changed absent the acceptance of both parties.

Discussions ongoing.

Thanks for posting that. Please see my comments below. I'll answer each in the order in which it is listed from top to bottom, with 1 being the top comment.

1. BoA is a very large bank that does business with many businesses. There is nothing wrong with the fact they use BoA.

2. The transaction fee is not immoral or criminal. The purchase of the ATM costs $20k. That is for the actual ATM, the scanning equipment and the other hardware involved. It also includes a the setting up of the ATM with its relevant software. This software is proprietary to Robocoin and is used to effectuate the sale and purchase of bitcoin. It is further set-up to provide industry leading KYC services that are REQUIRED to run a legal Bitcoin related company in the US. Think of the shared transaction fee as a software license. By paying that fee you get to use this software, have Robocoin manage your data in regards to the KYC requirements and have them support the software as it is being used. Further, Robocoin has it in their best interests to keep the ATM running and up to date as it is the key to their profit.

3. I'm not sure what is wrong with this. An ATM and this software is an incredibly complex piece of machinery. This is normal business practice and appears to be inline with industry standards. To be frank I was shocked that it was only $1,000 a year. Further, this gives you same day maintenance service from Robocoin. That is pretty good.

4. This is not a big issue. A company is trying to make money on a service contract. Further, by not using Robocoin for service and maintenance for a period of time and then using them, they are essentially on the hook for any errors or problems that occurred during the time they were not contracted for service and maintenance.

5.  No issue here. This is a boilerplate contract sent to multiple companies and purchasers in various jurisdictions. They are not going to be able to spell out each and every circumstance.

6.  No issue here. This is a contractual agreement that requires payment. Further, no refunds is normal when making purchases of this size. A company expends valuable time and resources in purchase agreements such as this. They need to make sure their buyers have skin in the game prior to moving forward.

7. See #5.

8. Why wouldn't we, as the owners of the kiosk, be responsible for the data contained in it? There is no issue here. Further, the comment regarding providing upfront costs and liabilities is inappropriate. Robocoin is providing a product with proprietary software. The owners of the kiosk are responsible for the operational costs of the ATM and actually running it. Robocoin does not provide a service running the ATMs. They just provide the ATMs.

9. One year manufacturers warranty is normal. Especially for a potentially high use machine. No issue here.

10.  This is something that requires further clarification and which I will be emailing Jordan Kelly about. I do not have a problem with them changing the terms of the agreement secondary to an exclusion for the fee percentage between the operators and robocoin. I do not want them coming back and saying, "we're taking 80% of the transaction fee now." That being said, Robocoin is providing a unique product and service. They have the power here and the contract will favor them. I think that if we can get the transaction fee % made concrete then this provision is acceptable.

11. There is a need for a large cash reserve with this process. There are a couple of ways this can be managed. We can perform a couple of soft-opens for the ATMs with a limited daily sells and purchases until a reserve is built up, via short-term loans, via additional capital investment.

Part of the reason I am doing this auction is to provide a jump-start for these reserves.

All exchange fees will be part of the bitcoin purchase price. I believe the bitcoin ATM in Vancouver is charging 30-40$ more than the bitstamp price for any given transaction.

My review of the contract has also revealed one issue that does require further clarification. In provision 18 it discusses Termination and Suspension. It states that:


(ii) and (iii) is a serious issue for me. I have requested clarification from Jordan Kelly their CEO. I do not know what "protect the Company's rights" means or what "harm to the Company or others" entails. I think it is fair that they can terminate or suspend the rights if we don't satisfy the agreement, however there is nothing regarding the reinstatement of services or a process in which a resolution can occur given a conflict. There is a resolution process for any breaches of the agreement, but not for termination as a result of "harm to the Company".

This is why I suggest using escrow for the auction winners. The escrow holder can hold the funds secondary to a signing of the purchase agreement. If these terms are not resolved satisfactorily the purchase will not be completed and the auction winners will receive all of their funds back.

Further, the LLC entity will be signing the purchase agreement, not any purchasers. There will be limited liability as a result of the incorporation of the business.

Hope this helps.

Locations are not set at this date, however the general vicinity would include The Loop Chicago and either O'Hare/a suburban location.

Location costs would be taken out the gross proceeds of the ATM. I am hopeful that we will be able to place the downtown ATM in a location for little to no rent. The Vancouver location has benefited greatly from the ATM placement there so I would like to use this as a business opportunity for the location as well as us as the operator.

Operating Costs could include: ATM servicing company to deal with fiat withdrawals and deposits, maintenance of fiat supplies in the machine for BTC sales (this may involve taking out short-term loans), lease/rent for ATM location, licensing fees, bonding fees, legal fees, auditing fees (we will need to retain a CPA in order to make sure we are complying with all regulations), etc.

Reinvesting Profits: This is a good question and will be determined by the success of the ATMs. This is also why I want the company to own 2 ATMs in that it will provide a significant amount of market coverage while allowing us to determine if there is a demand for further machines. Once the initial investment is paid back, i.e. the capital cost of the machines, regulatory/licensing fees and attorney and accountant costs, then we will be better able to determine what the company will be able to do going forward. I will admit that if we are able navigate the morass of licensing in IL and the machines are profitable, we will be in a fantastic position to expand the business throughout the State or into different jurisdictions.

Estimated profit: This is unknown at this time. The ATM makes money by charging a fee % on each transaction. This % is set by the operator with a suggested % of 5%. The Vancouver atm has a 7%. That transaction fee % is split with Robocoin secondary to the use of their proprietary software in the ATM. That split is 70/30 (70% to the operator) up until the cost of the machine is recouped. Once that has been reached the split is 50/50.

The Vancouver ATM made back its capital investment in 14 days. They have processed $800,000 in transactions in 26 days. It is unknown if the Chicago market will be more or less excited about bitcoin.

Profits to Owners: owners may be able to be paid in bitcoin or fiat. That choice is up to them. Distributions will be made on a monthly basis after net profits are calculated. This may be changed to a quarterly basis depending upon the tax consequences of the operation. We will be paying all Federal and State taxes on this money and the distributions made to the Owners will be noted on the Company's balance sheet. The tax implications of taking payment in Bitcoin are somewhat muddy, so we will learn as we go. I myself will likely be taking distributions in a 50/50 split of bitcoin and fiat.

Thanks for the questions! If you need further clarification please let me know.

I implore you to check out the reddit thread regarding this - it's a very standard agreement in my opinion -> http://www.reddit.com/r/Bitcoin/comments/1re65f/i_received_this_from_a_business_partner_today

Do you have locations for the two machines you're ordering?  Are the location costs fixed or a percentage of transactions?  What other operating costs do you foresee (i.e. armored car for cash deposits and withdrawals)?  Do you plan on reinvesting profits into buying more machines?  What's your estimated profit over the next year?  Do you plan to pay out profits to owners in bitcoin or dollars?

This is for a ownership stake in the company entitling the winner to 10% of net profits from 2 atms. There are additional costs to bring them to market outside of just the purchase price.