Vogogo Inc. (VGO-CN)

(A Top Pick May 20/15. Down 93.21%.) The company had some technology that allowed for compliance and payment processing technology. They started in the Bitcoin area, which didn’t work out very well. They then moved on to high risk areas, which would be considered gaming. Recently announced a strategic review of the company, so are looking at other avenues. Management had over promised and under delivered.

(A Top Pick April 8/15. Down 90%.) This is in the payment processing and risk management technology for a number of different areas. A year ago they had hoped to be cash flow positive by now, and they still aren’t. They are still working on this for year end.

Has 2 separate types of businesses. The 1^st is dealing with Bitcoin, which the banks have not been interested in touching. The company has come up with the software algorithm which looks at a number of different data points and are able to verify things as far as anti-money laundering goes. They also do straight payment processing, and have a license in Europe to do payment processing, and have started to work with some higher risk areas such as online gambling. Feels that some time this year you are going to see this cash flow positive. There are huge margins in the business.

This is really exciting. News today indicated they have actually figured out who owns Bitcoin, which plays right in line with this company. Vogogo has compliance in money laundering technology that basically allows different process transaction providers to go out and look after all the anti-money laundering laws. Initially started off in the Bitcoin space doing transactions for Bitcoin. They discovered there are other transaction companies that are also able to use their technology, and just signed 2 of those deals, one in Europe and one in the US. Just turning the corner now to being cash flow positive. If you look at the adoption of the new money laundering laws, they are far and away ahead of their competitors. Feels 2016 is going to be a big year for them. Has been hit with tax loss selling, so over the next few weeks there is probably going to be a pretty big bounce in the stock price.

Not worried about this at all. In the payment processing business. They put about 20 different crypto clients into their payment processing platform. In the last quarter they said there would be no significant revenue, so we are going to see in this 4^th quarter that they are generating revenue from all their clients. Continuing to look at other areas as well, so they are in other payment areas such as crypto currency. Once they get their numbers out, the stock will really move.

This really hasn’t had any news which represents why the stock price is down as much is it is. The market wants to see stability, earnings and revenue, and this is not at that spot right now. They are close to ramping up and are going to report their earnings fairly soon. This should be the last quarter where they see revenues as not being very substantial. Have signed the majority of the big Bitcoin exchange as clients, and now it’s a function of bringing those clients on board. It will be a “show me” story as far as the market goes. As they see the cash flow and revenue ramp up, the stock will move higher.

From a business standpoint everything has gone exactly as he expected. Recently announced they had signed on Kraken, one of the big global exchanges, and are going to start to do the processing for Canada. This has taken a bit longer than he had expected. Because of their financing and the weak stock market, the stock has sold down. If you are nervous you could probably sell your position, but if you are looking at it from a longer-term perspective, now is a great entry point. This is going to be one where all of a sudden they start processing. They’ll have a one month period where they are not making any money and the next month will be in the black and growing their business on a cash flow and earnings standpoint.

Sold most of his position. They are trying to become a conduit between the customer, bitcoin processor and banks, and provide Bitcoin processors with the compliance and regulatory systems that they need so that banks will actually transact with them. There is a market for that, but he thinks the stock is a little ahead of itself.

In the payment processing for crypto currencies. One of those things that is extremely hard to understand. The management team actually did all the payment processing in the gaming business before, and so they have been through all this with online poker and have built a great track record. Just at the point now where they are rolling out some of the merchants. Management feels they could be processing $5 million per day by the end of this year, and a year from now processing $10 million per day. They get a 1% fee for generating that, and about 60%-70% flows to the bottom line. Only 40 million shares are outstanding and this could be extremely profitable by the end of this year.

Has a “payment in processing” technology that was in the online gaming business. Have now put this into crypto currencies. They supply compliance and regulatory services for crypto currency businesses. There is a massive move of businesses starting to use crypto currency to exchange money from one means to another, but they don’t have any regulatory or compliance arm, so this company provides them with that for a fee. They are just about ready to ramp up and roll out their processing in the US with a number of different banks. They get paid a 1% fee. CEO has just said they are going to be cash flowing and earnings positive by the end of this quarter, and a year from now can be doing $100 million of processing per day. There are only about 35 million shares outstanding.

A compliance platform for bit coin processing. He sold. It is the only bit coin play that is publicly traded and so the valuation is way ahead of the fundamentals. He is skeptical of the concept.