Translation from German into English
Listing Prospectus
dated May 13, 2015
for the admission of
12,000,000 bearer shares
to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange
and
for the public offering of
12,000,000 no-par value bearer shares
from the holdings of the shareholders,
each such share representing a notional interest in the share capital of CHF 0.20 and carrying full dividend rights as from January 1, 2015,
marketed by the Company in the Federal Republic of Germany and in the Grand Duchy of Luxembourg in conjunction with the intended admission to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange
("Existing Shares")
of
Cashcloud AG Basel, Switzerland
Applicant for admission
VEM Aktienbank AG, Munich, Federal Republic of Germany
ISIN CH0132106482 WKN A14NYB Cashcloud AG - 2 -
Table of Contents
1. SUMMARY 7
Section A – Introduction and warnings 7
Section B – Issuer 8
Section C – Securities 13
Section D – Risks 14
Section E – Offer 17
2. RISK FACTORS 19
2.1. Sector-related risks 19
2.2. Risks relating to the Issuer 23
2.3. Risks relating to the shares 27
3. GENERAL INFORMATION 29
3.1. Responsibility for the content of the Listing Prospectus 29
3.2. Forward-looking statements 29
3.3. Note regarding sources 29
3.4. Documents on display 30
4. OFFERING 31
4.1. Subject matter of the offering 31
4.2. Terms and conditions of the offer and offer price 31
4.2.1. Terms and conditions of the offer 31
4.2.2. Offer price 32
4.3. Dividend and voting rights 32
4.4. Transferability 32
4.5. ISIN/WKN 32
4.6. Legal provisions and legal basis for the creation of the Existing Shares 32
4.7. Rights attached to the Existing Shares 33
4.7.1. Dividend rights 33 Cashcloud AG - 3 -
4.7.2. Voting rights 33
4.7.3. Subscription rights 33
4.7.4. Share in any liquidation surplus 33
4.7.5. Subsequent capital contributions 34
4.8. Paying agent and depositary 34
4.9. Takeover offers / squeeze-out provisions 34
4.10. Offer restrictions 34
4.11. Costs of the offering 34
4.12. Interests of persons involved in the offering 35
4.13. Selling securities holders 35
4.14. Reasons for the offering 35
4.15. Dilution 35
5. ADMISSION TO EXCHANGE TRADING AND DEALING ARRANGEMENTS 36
5.1. Admission to exchange trading and commencement of trading 36
5.2. Existing admissions to regulated or equivalent markets 36
5.3. Designated Sponsor 36
5.4. Stabilization measures 36
5.5. Lock-up agreements 36
6. TIMETABLE FOR THE PUBLIC OFFERING AND ADMISSION OF THE EXISTING SHARES 37
7. INFORMATION ON THE COMPANY 38
7.1. General Information 38
7.1.1. Company name, domicile and commercial register information 38
7.1.2. Formation 38
7.1.3. Term, fiscal year and corporate purpose 38
7.1.4. Legal form, governing law, address 38
7.1.5. Publications 38
7.2. Auditor 38
7.2.1. Auditor 38
7.2.2. Change in auditors 39 Cashcloud AG - 4 -
7.3. Corporate history 39
7.4. Corporate Governance 39
7.5. Dividend policy 39
7.6. Group structure 39
8. OVERVIEW OF BUSINESS ACTIVITIES 41
8.1. Principal activities 41
8.2. Development of new products and services 42
8.3. Strategy and business plan 42
8.4. Principal markets 43
8.5. Extraordinary factors 44
8.6. Competitive position 45
8.7. Research and development, dependence on intellectual property rights or agreements 45
8.8. Investments 45
8.8.1. Most significant past investments 45
8.8.2. Most significant ongoing investments 46
8.8.3. Most significant future investments 46
8.9. Environmental issues relating to property, plant and equipment 46
8.10. Litigation and administrative proceedings 46
8.11. Employees 46
8.12. Material agreements 47
9. GOVERNING BODIES OF THE COMPANY 51
9.1. Board of Directors and senior management 51
9.1.1. General provisions 51
9.1.2. Board of Directors 51
9.1.3. Senior management 54
9.1.4. Potential conflicts of interest 55
9.1.5. Rights of nomination or appointment 55
9.1.6. Additional information 55
9.2. General Meeting 55 Cashcloud AG - 5 -
10. SHAREHOLDER STRUCTURE 58
10.1. Overview of the shareholder structure 58
10.2. Shareholders' voting rights 58
10.3. Control relationships 58
10.4. Future changes in control relationships 58
11. RELATED-PARTY TRANSACTIONS 59
12. INFORMATION ON THE CAPITAL AND ARTICLES OF INCORPORATION 60
12.1. Capital 60
12.1.1. Share capital and shares 60
12.1.2. Development of subscribed capital 60
12.1.3. Treasury shares 60
12.1.4. Convertible securities, exchangeable securities or securities with warrants 60
12.1.5. Contingent capital 61
12.1.6. Authorized capital 61
12.2. The Company's Articles of Incorporation 62
12.2.1. Corporate purpose 62
12.2.2. Changes to shareholder rights 62
12.2.3. Change in the Company's control 62
12.2.4. Shareholding disclosure thresholds 62
12.2.5. Articles of Incorporation relating to changes in capital 62
13. DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION 63
13.1. Notes regarding financial information and financial position 63
13.1.1. Financial information 63
13.1.2. Other audited information 65
13.1.3. Material changes in the Issuer's financial or trading position 65
13.2. Selected financial information 66
13.3. Discussion and analysis of the Cashcloud Group's financial condition and results of operations 67
13.3.1. Net assets 68 Cashcloud AG - 6 -
13.3.2. Results of operations 69
13.3.3. Financial position 71
13.3.4. Restrictions on the use of capital resources 72
13.4. Discussion and analysis of Cashcloud AG's financial condition and results of operations 72
13.4.1. Net assets 73
13.4.2. Results of operations 74
13.5. Working capital, capitalization and debt 75
13.5.1. Working capital 75
13.5.2. Capitalization and Debt 76
14. TAXATION 78
14.1. Introduction 78
14.2. Taxation in Switzerland 78
14.3. Taxation in Germany 78
14.4. Taxation in Luxembourg 81
15. FINANCIAL SECTION 83
15.1 Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2013 (audited) 84
15.2 Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2014 (audited) 122
15.3 Separate financial statements of Cashcloud AG (Swiss Audit Standard) for the fiscal year ended December 31, 2014 (audited) 159
16. TREND INFORMATION 164
16.1. Significant recent trends 164
16.2. Recognized trends in the current fiscal year 164
17. GLOSSARY G-1
SIGNATURE PAGE S-1
Cashcloud AG - 7 -
1. Summary
This summary consists of the minimum required information or "elements". These elements are set out in sections A – E and numbered (A.1 – E.7).
This summary contains all those elements required for inclusion in a summary for the type of securities and issuer involved here. Please note that there may be gaps in the numbering sequence due to the fact that some elements need not be addressed.
Even in those cases where an element may be required to be included in this summary based on the type of securities and issuer, it is possible that no relevant information is available with regard to such element. In such cases, a brief description of the element and the words "not applicable" have been inserted in the summary.
Section A – Introduction and warnings
A.1 Warnings This summary is intended only as an introduction to this Listing Prospectus. Investors should base any decision to invest in the shares of the Company on an examination of the Listing Prospectus in its entirety. In the event claims are asserted before a court of law based on information contained in this Listing Prospectus, the investor appearing as plaintiff may be required to bear the costs of translating the Listing Prospectus prior to the commencement of legal proceedings in compliance with the national laws of the individual Member States of the European Economic Area. Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland (hereinafter also referred to as the "Issuer" or the "Company", and together with its three wholly owned subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Germany, and Cashcloud Technology Services S.R.L., Romania, referred to as the "Cashcloud Group"), and VEM Aktienbank AG, Prannerstraße 8, 80333 Munich, Germany, assume responsibility for the content of this summary pursuant to Section 5 (2b) no. 4 of the German Securities Prospectus Act (Wertpapierprospektgesetz, "WpPG"). However, those persons who assume responsibility for this summary or who have issued it may only be held liable for its content if the summary proves to be misleading, inaccurate or inconsistent when read together with other parts of this Listing Prospectus or if does not provide, when read together with other parts of this Listing Prospectus, all requisite key information.
A.2 Approval by the Issuer or Not applicable. This Listing Prospectus has not been the person responsible for approved by the Issuer or the person responsible for producing the Listing producing the Listing Prospectus for use in conjunction Prospectus to use the with any subsequent re-sale or final placement of Listing Prospectus for any securities by financial intermediaries. subsequent re-sale or final placement of securities by financial intermediaries Cashcloud AG - 8 -
Section B – Issuer
B.1 Legal and commercial name The Company's name is "Cashcloud AG". The Company of the Issuer also uses the commercial designation "cashcloud".
B.2 Domicile and legal form of The Company is domiciled in Basel, Switzerland. The the Company, governing law Company is currently entered in the commercial register and country of of the Canton of Basel-City under no. CHE-375.837.130. incorporation The Company was incorporated in the Swiss Confederation. The Company is organized as a stock corporation (Aktiengesellschaft) under Swiss law. The Company is governed by the laws of Switzerland.
B.3 Nature of the Issuer's The Cashcloud Group, which consists of the Issuer as current business operations the parent and its three wholly owned subsidiaries and its principal activities, Cashcloud AG, Luxembourg, Cashcloud Deutschland including the key factors GmbH, Germany, and Cashcloud Technology Services relating thereto S.R.L., Romania, operates in the newly developing "eWallet" market. Since 2013, it has been offering private users the "cashcloud eWallet" app for smartphones with Apple iOS and Google Android. This smartphone app is an all-in-one solution for mobile and contactless payments. This new channel – mobile payment via smartphone – complements traditional banking services and online banking. The Company offers its users the "cashcloud Prepaid MasterCard NFC sticker" for contactless payments in stores via smartphone (Near Field Communication (NFC) is an international communication protocol used in the contactless exchange of data via radio technology over short distances). In the future, this function will be integrated in smartphones Payment services are performed by licensed e-money institutions in each case. The Cashcloud Group provides the technical infrastructure and programs the user functions. The Company also offers "cashcredits", its own virtual marketing currency. Partner companies from the gaming, publishing or advertising sectors can use "cashcredits" to increase user loyalty and activity with user-centered promotions. "Cashcredits" can be redeemed with the Company in exchange for e-money once a certain minimum amount has been reached. The resulting amount is credited to the e-money account in the "eWallet". This credit can either be used for purchases, sent to friends or family, or transferred to the user's own bank account. The Company offers retailers guaranteed payments, which prevents credit card payments from being reversed (chargeback risk). Retailers can also use the "cashcloud eWallet" to offer customers a simple and secure payment method. Besides the technical and regulatory requirements, a key factor for the principal activities of the Cashcloud Group is that people who grew up in the digital age in particular ("digital natives") will be increasingly willing to replace their traditional wallet and embrace digital Cashcloud AG - 9 -
options via smartphone.
B.4a Most significant recent In fiscal year 2015 thus far, both the number of trends affecting the Issuer registered users of the "cashcloud eWallet" app and the and the industries in which number of transactions processed using it have it operates increased. With respect to the industry, the Company believes that the market for mobile payments will continue to gain momentum particularly as a result of the increased involvement of major providers such as Apple ("Apple Pay"), Samsung (acquisition of "Loop Pay") and Google (acquisition of "Softcard" and partnerships with mobile network operators AT&T Mobility, T-Mobile USA and Verizon Wireless). There have been no further significant trends.
B.5 Description of the group and Cashcloud AG is the parent company of the Cashcloud of the Issuer's position Group, which consists of the Issuer as the parent and its within the group three wholly owned subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Germany, and Cashcloud Technology Services S.R.L., Romania. Cashcloud AG is the strategic management and financial holding company of the Cashcloud Group and performs central control functions. Its focus is on the management and financing of its equity holdings. Its entire operating business is conducted at the respective subsidiaries, specifically Cashcloud AG, Luxembourg.
B.6 Persons who hold, directly The shareholder structure as it stands to the Company's or indirectly, an interest in knowledge is presented in the following table: the Issuer's capital or a portion of the voting rights Shareholder Shares in % (subject to notification (approx.) requirements applicable to the Issuer under national SPP Capital AG* 4,000,000 33.33 law), including the amount of the interest held by the Cybernet Capital Limited** 2,390,000 19.92 individual persons (to the extent known to the Issuer). FORESIGHT FOUNDATION*** 2,230,000 18.58 Free float (other shareholders and 3,380,000 28.17 treasury shares, each with less than 5%) Total no. of shares 12,000,000 100
* SPP Capital AG's sole shareholder is Bluestar Capital Trust. ** Cybernet Capital Limited's sole shareholder is Mr. Steffen Korbach. *** The ultimate beneficiary of the FORESIGHT FOUNDATION is Board of Directors member Sven Donhuysen.
Statement on whether Each share in the Company carries one vote at the differing voting rights exist General Meeting. There are no restrictions on voting rights; all shares carry the same voting rights. Cashcloud AG - 10 -
Statement on whether the To the Company's knowledge, the aforementioned Issuer is directly or major shareholders of Cashcloud AG currently hold a indirectly owned or total of approximately 71.83% of the voting rights in the controlled, by whom, and Company. They therefore hold a sufficient number of the nature of any such voting rights to be able to adopt certain resolutions at the control. General Meeting if they vote unanimously (depending on attendance at the Company's General Meeting), and they may therefore be able to exercise control over the Company. They collectively hold a sufficient number of voting rights to be able to pass resolutions requiring a simple majority. Depending on attendance at the specific General Meeting, the major shareholders may also under certain circumstances hold a sufficient number of voting rights to pass resolutions requiring a three-quarters majority. They may exert control by exercising their voting rights to bring about or prevent the adoption of resolutions at the General Meeting. In general it is not possible to restrict rights to vote at the General Meeting. There is therefore no action that can be taken to prevent the aforementioned shareholders from misusing their controlling influence.
B.7 Selected key historical The table below contains selected financial information financial information of the from the audited consolidated financial statements of Issuer, presented for each Cashcloud AG, prepared in accordance with fiscal year of the period International Financial Reporting Standards (IFRSs) for covered by the historical the fiscal years ended on December 31, 2013 and financial information; December 31, 2014 (in thousands of Swiss francs, significant changes to the abbreviated "CHF '000"): Issuer’s financial condition and operating results during or subsequent to the period covered by the historical key financial information
Period 1/1/2014-12/31/2014 1/1/2013-12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited)
Revenue 1.6 0.4
Other operating income 124.2 12.1
Costs for purchased services and consumables 261.9 235.1
Employee benefit expenses 978.9 766.4
Other operating expenses 2,143.0 1,353.4
Net cash flows from operating activities -2,953.9 -1,639.8
Net cash from/used in investing activities 0.2 -4.2
Cash and cash equivalents at the end of period 1,580.5 455.1 Cashcloud AG - 11 -
Period 1/1/2014-12/31/2014 1/1/2013-12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited)
Operating profit or loss -3,268.5 -2,349.6
Financial result -112.4 -6.3
Profit or loss before tax -3,380.9 -2,355.9
Net profit or loss for the period -3,384.3 -2,363.6
Total comprehensive income -3,300.4 -2,389.7
Reporting date 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited)
Non-current assets 34.1 36.9
Current assets 1,693.5 521.3
Total assets 1,727.5 558.2
Equity 280.6 329.8
Non-current liabilities 0.0 0.0
Current liabilities 1,446.9 228.4
Total equity and liabilities 1,727.5 558.2
The increase in other operating income from CHF 12.1 thousand in 2013 to CHF 124.2 thousand in 2014 resulted primarily from services rendered to the customer PPRO Financial Services Ltd. The increase in other operating expenses from CHF 1,353.4 thousand in 2013 to CHF 2,143.0 thousand in 2014 was due in particular to an increase in IT development activities and marketing measures and an increased employee headcount. The change in net cash flows from operating activities from CHF -1,639.8 thousand in 2013 to CHF -2,953.9 thousand in 2014 was due primarily to the fact that the operating loss for fiscal year 2014 was greater than that for fiscal year 2013. Cash and cash equivalents at the end of the period increased by CHF 1,125.4 thousand from CHF 455.1 thousand in fiscal year 2013 to CHF 1,580.5 thousand in fiscal year 2014, particularly as a result of the capital increase which was implemented in November 2014 and loans granted to the Company by related parties. The increase in current assets from CHF 521.3 thousand in 2013 to CHF 1,693.5 thousand in 2014 was due to the CHF 21.0 thousand increase in trade and other receivables as well as the CHF 1,125.4 thousand increase in cash and cash equivalents. The change in equity from CHF 329.8 thousand in 2013 to CHF 280.6 thousand in 2014 was due on the one hand to the CHF 3,200 thousand capital increase carried out in fiscal year 2014. On the other hand, the negative total comprehensive income of CHF -3,300.4 thousand in 2014 resulted in an opposing material negative effect on equity overall. The increase in current liabilities from CHF 228.4 thousand in 2013 to CHF 1,446.9 thousand in 2014 was due in particular to loans granted by related parties (CHF 979.4 thousand) as well as to an increase in trade Cashcloud AG - 12 -
accounts payable as of the balance sheet date and an increase in provisions. There have been no material changes in the Cashcloud Group's financial or trading position since December 31, 2014.
B.8 Selected key pro forma No applicable. The Issuer has not entered into any financial information transactions giving rise to the requirement to produce pro-forma calculations.
B.9 Profit forecasts and Not applicable. Cashcloud AG has not published any profit estimates forecasts or estimates.
B.10 Qualifications in the audit Not applicable. The audit reports with respect to the historical reports financial information did not include any qualifications by the relevant auditors who audited the financial information. However, the audit opinions for the 2013 and 2014 consolidated financial statements expressly noted that the Company had disclosed in the notes to the consolidated financial statements the need to generate additional capital in order to secure the Company's ability to continue to operate as a going concern. Moreover, in the audit opinion for the 2014 annual financial statements the auditor noted that it might become necessary in the coming 12 months for the Issuer to write down or write off a loan granted to Cashcloud AG, Luxembourg, as well as its equity interest in Cashcloud AG, Luxembourg.
B.11 Explanation if the Issuer's As of the date of this Listing Prospectus, the Cashcloud Group working capital is not does not have sufficient working capital to satisfy all payment sufficient for the Issuer's obligations as they fall due within the next twelve months. present requirements These payment obligations which, as of the date of this Listing Prospectus, are expected to fall due result in particular from current personnel expenses, IT development, the provision of "eWallet" related services, sales and marketing activities and collateral provided to e-money institutions. The Issuer estimates that a total of approximately CHF 6.7 million in funds is required for this. In addition, existing loans from related parties amounting to a total of CHF 0.9 million will fall due in the next 12 months. The total amount of CHF 7.6 million will be financed as follows: • The Company's own funds (current cash and cash equivalents of approximately CHF 0.2 million); • Loans taken out with related parties in the amount of the working capital required for each month until the capital increase has been successfully implemented; • Capital increase in the second half of 2015, although it remains to be determined whether the capital increase will be conducted by way of a public offering or a private placement. It is the Company's assumption that by June 1, 2015 it will no longer have sufficient funds to satisfy payment obligations as they fall due within the next twelve months unless it is possible to secure this foreseeable working capital requirement by taking out loans from existing investors. At present, there is no alternative financial plan. Nor is the Cashcloud AG - 13 -
Company considering selling off Company assets to finance its investments. The Company is confident that the existing investors will continue to ensure that the Company has sufficient funds until such time as a capital increase can be successfully implemented by way of a placement in the second half of 2015. However, should it not be possible to successfully raise bridge financing and implement the capital increase, the likely consequence is the insolvency of the Company, with the complete loss of capital invested by the shareholders.
Section C – Securities
C.1 Description of the type The subject matter of the Listing Prospectus relates to and the class of the 12,000,000 no-par value bearer shares in Cashcloud AG securities being offered originating from the holdings of the shareholders, each such and/or admitted to share representing a notional interest in the share capital of trading, including any CHF 0.20, which are to be admitted to trading on the regulated security identification market (General Standard) of the Frankfurt Stock Exchange number ("Existing Shares") in conjunction with marketing measures in the Federal Republic of Germany and the Grand Duchy of Luxembourg. The ISIN (International Security Identification Number) is CH0132106482, the WKN (German security identification number) is A14NYB.
C.2 Currency of the The offered securities are denominated in Swiss Francs securities issue (CHF).
C.3 Number of shares issued The share capital of the Company currently amounts to and fully paid; the par CHF 2,400,000.00 and is divided into 12,000,000 bearer value per share, or shares, each such share representing a notional interest in statement that the the share capital of CHF 0.20. shares have no-par value All shares are fully paid in.
C.4 Description of the rights Dividend rights attached to the shares The General Meeting resolves on the appropriation of profits. The right to payment of dividends arises upon entry into effect of the resolution on the appropriation of profits. Shareholders are entitled to net retained profit, except to the extent it is prohibited from distribution to the shareholders by law, the Articles of Incorporation, resolution of the General Meeting or as an additional expense under the resolution on the appropriation of profits. Voting rights Each no-par value share carries one vote at the Company's General Meeting. Subscription rights Cashcloud AG shareholders generally have statutory preemptive subscription rights, which entitle them to subscribe for new shares originating from any capital increase in proportion to the respective interest they hold in the existing share capital. The statutory subscription right also extends to any new convertible bonds, warrant-linked bonds, profit participation rights and participating bonds to be issued. Subscription rights are freely transferable. Subscription rights may be restricted or excluded by Cashcloud AG - 14 -
resolution of the General Meeting; however, a qualified majority of at least two thirds of the voting shares represented and an absolute majority of the nominal value of the shares represented is required. Share in the liquidation surplus Except in the case of insolvency, the Company may be dissolved by resolution of the General Meeting. The assets of the Company remaining after discharging its liabilities (liquidation surplus) will be distributed among the shareholders in proportion to the respective interest they hold in the share capital, i.e., in accordance with the number of shares they hold. Subsequent capital contributions No duty to pay subsequent capital contributions exists.
C.5 Description of any Not applicable. The Existing Shares in the Company are freely restrictions on the free transferable in accordance with the legal provisions transferability of the applicable to the transfer of bearer shares. shares
C.6 Indication as to whether The shares in the Company have not previously been the securities offered are admitted to any regulated market. All Existing Shares in the or will be the object of an Company are expected to be admitted to trading on the application for regulated market (General Standard) of the Frankfurt Stock admission to trading on Exchange on the basis of this Listing Prospectus. a regulated market and the identity of all the regulated markets where the securities are or are to be traded.
C.7 Description of dividend To date, the Company has not reported in its annual financial policy statements any net retained profit, the appropriation of which the General Meeting could have resolved. The determination and distribution of future dividends will be proposed by Cashcloud AG's Board of Directors and resolved by the General Meeting. In the event profits are generated in the future, Cashcloud AG generally intends to initially reinvest the income and use it to finance growth and further develop the business.
Section D – Risks
D.1 Key information on the • The Cashcloud Group's strategy is focused on key risks that are specific developing and expanding its "eWallet" business. eWallet to the Issuer or its is an electronic wallet whereby a single smartphone industry application ("app") gives users access to all the important functions necessary for making purchases and payments and earning bonus points. This strategy assumes that people who have grown up in the digital age ("digital natives") are increasingly willing to use their smartphone as an electronic wallet. This strategy pursued by the Cashcloud Group may prove unsuccessful. • The development of the "cashcloud eWallet" app may be a misguided enterprise or prove uncompetitive or fail to gain the acceptance of the market, and therefore fail to generate profit. • The Cashcloud Group's apps may fail to meet users' Cashcloud AG - 15 -
demands, which are continuously changing as a result of technological change and new trends, or may fail to comply with regulatory changes. • The Cashcloud Group operates in a market environment which it believes will become increasingly competitive, and a market that will be entered by companies which in some cases have substantially greater financial, technical and human resources. • It may not be possible to launch new technological developments on the market in time. • The Cashcloud Group depends on its IT systems being functional. IT system failures or disruptions could have a material adverse effect on the Cashcloud Group's business. • There are regulatory risks to contend with. When the app offered by the Cashcloud Group is used, payment services are settled by licensed e-money institutions engaged for this purpose. Any changes to the regulatory requirements or in the administrative practice of the regulators could call into question the legality of certain or all transactions, or even the legality of the manner in which these e-money institution transactions are settled. The Cashcloud Group does not hold the requisite license to operate as an e-money institution, so it depends on e-money institutions, credit institutions or other payment service providers categorized and authorized under the Payment Services Directive ("PSD") to settle payments. • There is considerable reliance on the "Apple iTunes Store" and the "Google Play Store", since the "cashcloud eWallet" app is sold almost exclusively via these sales platforms. Accordingly, if these sales channels are discontinued or become even partially unavailable, or if these sales channels discontinue the sale of the "cashcloud eWallet" app, this could have a very significant negative impact on sales of the "cashcloud eWallet" app to the point of an almost total loss of the sales channels. The reliance described above also entails the risk that the Company might be compelled to accept less favorable conditions in order to continue selling its app via these sales channels. • Risks may arise if the commissioned e-money institutions Ingenico Payment Services and PPRO Financial Services cease to operate. Accordingly, if these e-money institutions are no longer able to manage the accounts and cards or can only manage them in part, or if these e-money institutions cease to provide their services in general or even just cease to provide services for to the Cashcloud Group, this could have a very significant negative impact on the management and execution of the services offered by the Cashcloud Group, even to the point of an almost total loss of the ability to provide payment services. This also entails the risk that the Company might be compelled to accept less favorable conditions to ensure that both commissioned e-money institutions continue to provide payment services. The loss of one or both e-money institutions would have a material adverse effect on the execution of the services offered by the Cashcloud Group, and thus also on its business, until such time as a new e-money institution, credit institution or other payment service provider categorized and authorized under the Payment Services Cashcloud AG - 16 -
Directive ("PSD") can be found. In such a case, the Cashcloud Group might be unable to provide its services, or might only be able to provide them subject to delays. The Cashcloud Group could also be compelled to accept less favorable conditions from any new payment service provider it commissions to replace its previous service providers. • Risks may arise if the companies commissioned to program the software for the products offered by the Cashcloud Group cease to operate, in particular CIKLUM S.A. and MOELIA DEVELOPMENT S.L. The Cashcloud Group could face increased prices to procure these programming services. It is possible that one of its contracting parties will cease to operate, or the contractual relationship with these companies will deteriorate. This could substantially delay the development of the services offered by the Cashcloud Group. Consequently, it may not be possible to launch new products or upgrades to existing products, or may only be possible to do so subject to delays. The Cashcloud Group could also be compelled to accept less favorable conditions from new companies that it commissions to program the software. • Risks may arise if the support services provided by the Romanian subsidiary, Cashcloud Technology Services SRL, deteriorate significantly or are no longer provided. • However, as at the date of this Listing Prospectus, the Company does not have sufficient business capital to be able to cover its currently anticipated business needs over the coming twelve months. The Issuer estimates that it will require total funds of approximately CHF 6.7 million over the coming 12 months. Moreover, existing loans from related parties totaling CHF 0.9 million will mature in the coming 12 months. Unless it can borrow additional funds and/or raise additional equity, the Company expects that it will no longer have sufficient business capital from June 1, 2015, onwards. The Company is therefore heavily dependent on securing additional debt and/or equity financing in order to cover the anticipated business needs described above. Apart from raising equity, the Company plans to cover its anticipated business needs by borrowing from related parties and by increasing the Company's share capital in the second half of 2015. If the Company is unable to cover its anticipated business needs through additional borrowing and/or equity raising, the Company risks becoming insolvent, and shareholders risk losing their entire investment. • Reliance on key people entails risks. The Cashcloud Group's development depends heavily on the expertise, experience and contacts of the current members of the management team, particularly the Managing Director of the subsidiary Cashcloud AG (Luxembourg), Mr. Olaf Taupitz. The Cashcloud Group also relies on other skilled professionals and executives, particularly in the areas of finance and IT.
D.3 Key information on the • Future capital increases may have an adverse effect on key risks that are specific the share price. The Issuer already has specific plans to to the securities finance its anticipated business needs over the coming 12 months by implementing a capital increase in the Cashcloud AG - 17 -
second half of 2015.
Section E – Offer
E.1 Total net proceeds and an Because no new shares will be issued under the public estimate of the total offering, the Company will not generate any net income. expenses of the issue/offer The total costs of the public offering and the admission of the Existing Shares to trading on the regulated market of the Frankfurt Stock Exchange will amount to approximately CHF 300,000.00 and will be borne by the Company.
E.2a Reasons for the offer, use Once the Listing Prospectus is published, the Company of proceeds, estimated net intends to take specific measures to market the Company amount of the proceeds and the shares issued by it in Germany and Luxembourg. For example, once the Listing Prospectus has been published, the Company plans to initiate extensive investor relations activities and thereby promote the tradability of the shares on the regulated market, specifically by posting regular notifications on the Company's website and by publishing notifications through information channels relating to the capital market, by regularly participating in capital market conferences, and finally by providing regular information on the tradability of the shares to customers, business contacts as well as employees and their families. The intended opportunity to purchase shares on the regulated market (General Standard) of the Frankfurt Stock Exchange in conjunction with those marketing measures constitute a public offering. The measures to market the public offering serve to increase the Company's level of recognition in investor circles and to position it on the capital market, because the Company plans to finance itself by tapping the capital market in the medium and long-term. Because no new shares will be issued under the public offering, the Company will not generate any net income.
E.3 Description of the terms The subject matter of the Listing Prospectus relates to and conditions of the offer 12,000,000 no-par value bearer shares in Cashcloud AG originating from the holdings of the shareholders, each such share representing a notional interest in the share capital of CHF 0.20, which are to be admitted to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange ("Existing Shares"). Only those shares already existing will be publicly offered. No new shares will be issued under this offering. The Existing Shares are acquired in accordance with the Exchange Rules for the Frankfurt Stock Exchange (Börsenordnung) and other adopted dealing arrangements. Buy orders from interested investors may be issued via any bank admitted to the Frankfurt Stock Exchange. The Existing Shares may be purchased in denominations of one share or more. There is no minimum or maximum limit for buy orders. No new shares are up for subscription under this public offering. The Existing Shares will be delivered concurrently upon payment of the offer price by crediting the investor's respective securities account. Cashcloud AG - 18 -
E.4 Description of any interest The current shareholders of the Issuer have an interest in that is material to the offer the offering because it will allow improved tradability of their including conflicting shares via a stock exchange and, assuming a positive interests performance on the part of the Issuer, potentially increase the value of the investment in the Issuer. VEM Aktienbank AG is in a contractual relationship with Cashcloud AG in connection with the admission of the shares to the regulated market (General Standard) of the Frankfurt Stock Exchange. It will be paid a standard market fee for its services. No conflicts of interest exist in this respect.
E.5 Name of the person or Cashcloud AG will only be offering the 12,000,000 Existing entity offering to sell the Share under the public offering. Cashcloud AG expressly security; lock-up advises that those Existing Shares are not held by it, but agreements and period of rather by its shareholders. the lock up Cashcloud AG has no knowledge of any major shareholders or members of any administrative, management or supervisory body or other persons wishing to acquire more than 5% of the offering. No lock-up agreements exist.
E.6 Amount and percentage of Investors who had not previously held an equity interest in immediate dilution the Company could experience a dilution in the value per resulting from the offer share in a comparison of the net book value per share at the time of acquisition to the acquisition price (e.g. the share price when purchased on the stock market). Existing shareholders could likewise experience a dilution in the value per share in a comparison of the net book value per share at the time of sale to the sale proceeds generated. A dilution in the existing shareholders' interest in the share capital in the event of a sale results in a corresponding reduction in their administrative rights, in particular voting rights, and pecuniary rights, in particular dividend rights. As of December 31, 2014, based on the balance sheet prepared in accordance with IFRS, the net book value of the Cashcloud Group amounted to CHF 280.6 thousand. This net book value is derived from the total of all assets less liabilities as of that reporting date. Based on the actual number of 12,000,000 shares as of the date of the Listing Prospectus, the net book value per share amounts to CHF 0.0234.
E.7 Estimated expenses Not applicable. Cashcloud AG is not offering any new charged to the investor by shares. As such, Cashcloud will not be charging any the Issuer or the offeror expenses to investors. However, investors may be charged a customary bank commission by their respective custodian bank for the subscription of the Existing Shares.
Cashcloud AG - 19 -
2. Risk Factors
Before deciding to purchase shares in Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland (hereinafter also referred to as the "Issuer" or the "Company", and together with its three wholly owned subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Germany, and Cashcloud Technology Services S.R.L., Romania, referred to as the "Cashcloud Group"), investors should carefully read and consider the risk factors described below along with the other information contained in this Listing Prospectus. The occurrence of one or more of these risks, whether individually or in combination with other circumstances, could have a material adverse effect on Cashcloud AG's business and on its financial condition and results of operations, and investors could lose all or part of the funds they invest in the Company. In addition, there may be further risks and issues of which Cashcloud AG is not aware at present. The risks described below are considered the material risks. The order in which the following risks are presented is no indication of the likelihood of their occurrence or the magnitude of the associated economic consequences. Investors should consider all of the information contained in this Listing Prospectus and consult their advisors if necessary.
2.1. Sector-related risks
The strategy pursued by the Cashcloud Group may prove unsuccessful.
The Cashcloud Group's strategy is focused on developing and expanding its "eWallet" business. eWallet is an electronic wallet whereby a single smartphone application ("app") gives users access to all the important functions necessary for making purchases and payments and earning bonus points. This strategy assumes that people who have grown up in the digital age ("digital natives") are increasingly willing to use their smartphone as an electronic wallet. This strategy pursued by the Cashcloud Group may prove unsuccessful either in whole or in part. For example, it is possible that there will be no demand for the "cashcloud eWallet" app offered by the Cashcloud Group and the functions developed in association with the app, or that demand will be lower than projected, and that the business will not develop as expected. In particular, it may not be possible to permanently allay users' concerns surrounding data security and privacy. Consequently, the Cashcloud Group's strategy could prove unsuccessful, which would have a material adverse effect on its business and on its financial condition and results of operations.
The development of the "cashcloud eWallet" app may be a misguided enterprise or prove uncompetitive or fail to gain the acceptance of the market, and therefore fail to generate profit.
The mobile "cashcloud eWallet" app developed by the Cashcloud Group faces the risk that it will turn out to be a misguided enterprise or uncompetitive, particularly as far as the development of additional functions is concerned. Delays in updating the app could also mean that functions for which there is market demand might not be able to be launched in time. There is also the risk that "cashcloud eWallet" updates will fail to gain market acceptance for other reasons and will therefore fail to generate profit. In all of these cases, the development costs expended and the revenues budgeted in connection with those costs will be wholly or partially lost. This could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The Cashcloud Group may be unable to protect its developments and know-how or keep them confidential.
The Company regards the know-how associated with the Cashcloud Group's business, and particularly the know-how created in the process of developing and updating the "cashcloud eWallet" app, as crucial to the Cashcloud Group's competitiveness. Among other things, the competitiveness of the Cashcloud Group particularly depends on its ability to protect its innovations and the associated know-how. The Cashcloud Group's developments and know-how are not, however, protected under intellectual property laws, for example they are not protected by patents, nor has patent protection been applied for. The ability to keep this know-how confidential in the long term is therefore a risk, and there is also a risk that third parties will obtain and use trade secrets and copy all or some of the Cashcloud Group's products, specifically the "eWallet" app.
If employees, particularly those involved in developing the "cashcloud eWallet", leave the Company and/or switch to a competitor, there is a risk that this know-how will be lost to the Cashcloud Group Cashcloud AG - 20 - and/or be made available to competitors. If the Cashcloud Group is unable to protect its know-how or keep it confidential, this could have a material adverse effect on its financial condition and results of operation.
The Cashcloud Group's apps may fail to meet users' demands, which are continuously changing as a result of technological change and new trends, or may fail to comply with regulatory changes.
The "eWallet" sector in which the Cashcloud Group is marketing its app is still in its infancy and not yet widespread in the market. According to the Company, this market is in the early stages of development. It is influenced by different technological solutions and potential applications, and overall by as yet unforeseeable user requirements and regulatory changes, such as in the area of privacy law. The success of the Cashcloud Group therefore depends greatly on its ability to make timely predictions of new trends and developments in the "eWallet" sector and on continually upgrading and improving existing apps in order to be able to adapt to changing technologies, regulations and user requirements. This requires an investment of technical, human and financial resources. Every time the launch of improved or new apps in connection with the "cashcloud eWallet" is delayed or impeded, or the apps fail to gain market acceptance or there is a lag before they gain market acceptance, there is a risk that this will have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The Cashcloud Group operates in a market environment which it believes will become increasingly competitive, and a market that will be entered by companies which in some cases have substantially greater financial, technical and human resources.
Even though the market for "eWallet" apps is still in its infancy and it cannot yet be said that an established market exists, there are companies with in some cases significantly greater financial, technical and human resources that are working to create their own "eWallet" apps, particularly in the European countries in which the Cashcloud Group already offers its apps and wishes to continue doing so in future. Such companies particularly include large mobile network operators and banks. These companies might be able to respond more quickly than the Cashcloud Group to new and changing market conditions, engage in more extensive and cost-intensive development projects and adopt a more aggressive pricing policy, and they may also be able to offer more attractive terms to users. It is also possible that competitors will offer apps that are superior to those offered by the Cashcloud Group, or that competitors' products will gain broader market acceptance. Competitors may also be able to make cheaper offers or gain market share by entering into partnerships or alliances with other providers or third parties, thereby negatively affecting the Cashcloud Group's competitive position. There is no guarantee that the Cashcloud Group will be able to survive in the market long term given that the environment is expected to become increasingly competitive in the future.
Competition can also have a negative impact on pricing and the margin able to be achieved by the Cashcloud Group.
The occurrence of any of the risks described in connection with competitors could have a material adverse effect on the Cashcloud Group's business, and consequently on its financial condition and results of operations.
It may not be possible to launch new technological developments on the market in time.
There is a great deal of pressure to be innovative in the "eWallet" market sector. The Cashcloud Group's capacity for innovation and its ability to seasonably identify and implement technological trends is a crucial factor in enabling it to stand out in the competitive environment in which "eWallet" providers operate.
If the Cashcloud Group is unable to seasonably identify and implement technological trends, this could have a material adverse effect on its financial condition and results of operation. Cashcloud AG - 21 -
The Cashcloud Group's business could be affected by disruptions, including IT system failures, which adversely affect its information technology.
The Cashcloud Group offers a mobile "cashcloud eWallet" app. The use of this app largely depends on data being constantly available, rapid data transmission and a technically reliable and functional Internet connection. Key functions of the "eWallet" are dependent on computerized applications and cannot be executed if there are problems with the IT system. Computer and data processing systems are generally susceptible to disruptions, damage, power outages, computer viruses, fire and the like. It is possible that system failures and disruptions (e.g., program errors, hacker attacks, incidences of data espionage, process errors) or faults in the connection with other companies (such as e-money institutions) will disrupt the use of the app offered by the Cashcloud Group. Accordingly, disruptions and failures could have a material adverse effect on the Cashcloud Group's business and thus its financial condition and results of operations.
The Cashcloud Group depends on its IT systems being functional.
The Cashcloud Group operates IT systems in connection with its business. Specifically, it uses servers in Luxembourg. The Cashcloud Group depends on its IT systems being functional in order to provide its services. The functioning of the servers used by the Company and the associated hardware and software infrastructure is critical to the Company's business, its reputation and its appeal as far as users are concerned. It is impossible to rule out errors and weaknesses in the existing hardware and software. IT system failures or disruptions as a result of the destruction of hardware, system crashes, software bugs, viruses, system hacks or similar disruptions could have a material adverse effect on the Cashcloud Group's business.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The Cashcloud Group is exposed to site and country-specific risks as a result of its presence in other countries and its global business relations, particularly geopolitical risks and risks stemming from differences in the respective legal and tax systems.
The Cashcloud Group currently has subsidiaries in Luxembourg, Germany and Romania and procures programming services from Ukraine and Spain, and further intends to start offering its services over the coming months in other countries, especially in Europe. Consequently, the Cashcloud Group is exposed to certain site and country-specific risks such as geopolitical risks (particularly in Ukraine) and risks stemming from differences in the respective legal and tax systems. In certain circumstances, foreign subsidiaries or foreign service providers may be temporarily prevented from providing their services, or limited in their capacity to do so. In addition, the integration of foreign financial accounting systems may require a substantial investment of time and expense. The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The Cashcloud Group is exposed to product liability and warranty claims.
The Cashcloud Group procures hardware products (servers) from manufacturers or retailers, and in so doing depends on the products being of a high quality and satisfying the relevant specifications and quality standards. Where defects are discovered during the warranty period, the Cashcloud Group can generally seek indemnification from its suppliers. However, given the lag between the Cashcloud Group's purchase of goods from suppliers and users' use of the services, there is a risk that users will assert warranty claims against the Cashcloud Group which it cannot then seek indemnity for, meaning there is a risk that the Cashcloud Group will be forced to assume the warranty risk in full.
In addition, the Cashcloud Group engages third parties to develop the software for its products. Where software defects are discovered during the warranty period, the Cashcloud Group can generally seek indemnification from the software developer. However, given the lag between the Cashcloud Group's purchase of programming services and users' use of the Cashcloud Group's products, there is a risk that users will assert warranty claims against the Cashcloud Group (e.g., if an e-money institution is unable to execute payment transactions because of software bugs) which it cannot then seek indemnity for, meaning there is a risk that the Cashcloud Group will be forced to assume the warranty risk in full. Cashcloud AG - 22 -
There is also a risk that users will be unable to use some or any of the functions of the products offered or unable to use them properly due to malfunctions or faulty settings. The Cashcloud Group may find itself facing compensation claims from users as a result of such failures, or the disruptions could result in a loss of contracts.
The occurrence of any one of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
There is risk associated with the violation of privacy laws.
The Cashcloud Group's use of data, particularly the data of app users, is governed by the privacy laws of the various countries concerned. If third parties gained unauthorized access to the data processed by the Cashcloud Group, or the Cashcloud Group itself violated privacy laws, it could lead to compensation claims and could damage the reputation of the Cashcloud Group. Both could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
There are regulatory risks to contend with.
Use of the electronic wallet app offered by the Cashcloud Group ("cashcloud eWallet") enables mobile payments to be made using a smartphone. In addition, contactless payments can be made using the "Cashcloud prepaid MasterCard NFC sticker" or, in future, the NFC chip. These payment services are settled by licensed e-money institutions commissioned for this purpose. E-money institutions are subject to extensive regulatory requirements. These regulatory requirements could change, imposing additional obligations on the commissioned e-money institutions or, in extreme cases, even preventing the e-money institution from continuing to operate as such. Independently of any such direct change to the regulatory requirements, the various regulators could change their administrative practice with regard to the payment services offered by e-money institutions, or the regulatory environment could change. Any changes to the regulatory requirements or in the administrative practice of the regulators could call into question the legality of certain or all transactions, or even the legality of the manner in which these e-money institution transactions are settled. The Cashcloud Group does not hold the requisite license to operate as an e-money institution, so it depends on e-money institutions to settle payments. The Cashcloud Group is therefore also indirectly dependent on the regulatory environment in which e-money institutions operate.
There is also a risk that the licenses issued to the commissioned e-money institutions will be restricted or completely revoked, which could have a material adverse effect on the Cashcloud Group's business.
Furthermore, any changes to the regulatory requirements or in the administrative practice of the regulators could significantly increase the administrative costs of the commissioned e-money institutions, which they could in turn pass on to the Cashcloud Group.
The occurrence of any one of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
There are exchange rate risks to contend with.
Investors whose reference currency is not the euro may be exposed to exchange rate risks if they invest in Cashcloud AG shares. Cashcloud AG's capital is denominated in Swiss francs, and all dividends are distributed in Swiss francs. Investors whose reference currency is not the Swiss franc but rather the euro, for example, may be exposed to adverse exchange rate fluctuations if the Swiss franc loses value against the reference currency. Such investors could also incur transaction costs when exchanging Swiss francs for euros and vice versa.
The Cashcloud Group itself is exposed to exchange rate risks, because the vast majority of its revenues are generated in euros. By contrast, it procures services in foreign currencies as well as in euros. For example, the programming services procured from Ukraine are paid for in US dollars. This gives rise to an exchange rate risk, which could adversely affect the Cashcloud Group's financial condition and results of operations. Cashcloud AG - 23 -
2.2. Risks relating to the Issuer
The Issuer's activities as a holding company entail risks.
Cashcloud AG is the strategic management and financial holding company of the Cashcloud Group and does not run its own operating business. The operating business is the responsibility of the subsidiaries, meaning that Cashcloud AG's commercial success depends on the commercial success, financial condition and results of operations of its subsidiaries, particularly Cashcloud AG, Luxembourg. If the subsidiaries fail to transfer adequate or any profit or fail to distribute adequate dividends, this could have a material adverse effect on the Company's financial condition and results of operations. The worst case scenario if there is no inflow of liquidity from the subsidiaries is that the Company's continued existence would be jeopardized. If one or more subsidiaries or other companies in the Cashcloud Group incur losses either temporarily or permanently, default entirely or become insolvent, this could also have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
There is considerable reliance on the "Apple iTunes Store" and the "Google Play Store".
The "cashcloud eWallet" app is sold almost exclusively via the "Apple iTunes Store" and "Google Play Store" sales platforms. As a result, there is a very significant dependence on these two sales channels. Accordingly, if these sales channels are discontinued or become even partially unavailable, for example as a result of technical disruptions, or if these sales channels discontinue the sale of the "cashcloud eWallet" app, this could have a very significant negative impact on the sale of the "cashcloud eWallet" app to the point of an almost total loss of the sales channels.
The reliance described above also entails the risk that the Company might be compelled to accept less favorable conditions in order to continue selling its app via these sales channels.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
Risks may arise if the commissioned e-money institutions Ingenico Payment Services and PPRO Financial Services cease to operate.
The Cashcloud Group's payment services are carried out by licensed e-money institutions, which also manage the accounts and deposits of users and are subject to regulatory supervision. The Cashcloud Group provides the technical infrastructure and programs the user functions. At the moment, the licensed e-money institution Ingenico Payment Services, Belgium, manages the accounts linked to the "cashcloud eWallet" app, while PPRO Financial Services, United Kingdom, is responsible for managing the MasterCard accounts.
Accordingly, if these e-money institutions are no longer able to manage the accounts and cards or can only manage them in part, for example due to technical disruptions or bans imposed as a result of regulatory violations, or if these e-money institutions cease to provide their services in general or even just cease to provide services for the Cashcloud Group, this could have a very significant negative impact on the management and execution of the services offered by the Cashcloud Group, to the point of an almost total loss of the ability to provide payment services.
The reliance described above also entails the risk that the Company might be compelled to accept less favorable conditions to ensure that both commissioned e-money institutions continue to provide payment services.
The loss of one or both e-money institutions would have a material adverse effect on the execution of the services offered by the Cashcloud Group, and thus also on its business, until such time as a new e-money institution, credit institution or other payment service provider categorized and authorized under the Payment Services Directive ("PSD") can be found. In such a case, the Cashcloud Group might be unable to provide its services, or might only be able to provide them subject to delays. The Cashcloud Group could also be compelled to accept less favorable conditions from any new payment service provider it commissions to replace its previous service providers. Instead of commissioning another licensed payment service provider to settle payments, the Cashcloud Group has considered the option of itself becoming licensed to operate as an authorized e-money institution or payment service provider. However, this would only be possible at considerable effort and expense. Cashcloud AG - 24 -
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
Risks may arise if the companies commissioned to program the software for the products offered by the Cashcloud Group cease to operate.
The Cashcloud Group has outsourced software programming for its products to third parties, in particular CIKLUM S.A. and MOELIA DEVELOPMENT S.L. The Cashcloud Group relies on these companies to develop the software.
The Cashcloud Group could face increased prices to procure these programming services.
It is possible that one of its contracting parties, particularly CIKLUM S.A. and/or MOELIA DEVELOPMENT S.L., will cease to operate, or the contractual relationship with these companies will deteriorate. This could substantially delay the development of the services offered by the Cashcloud Group. Consequently, it may not be possible to launch new products or upgrades to existing products, or may only be possible to do so subject to delays.
The Cashcloud Group could also be compelled to accept less favorable conditions from new companies that it commissions to program the software.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
Risks may arise if the support services provided by the Romanian subsidiary, Cashcloud Technology Services SRL, deteriorate significantly or are no longer provided.
The subsidiary Cashcloud Technology Services SRL, Sibiu, Romania, provides important support services for the Cashcloud Group. These services particularly include market research, product management, customer service and testing.
Any deterioration or even cancellation of the support services provided by Cashcloud Technology Services SRL (for example due to regulatory or court action, property damage at the company's headquarters in Romania, etc.) could therefore have a material adverse effect on the Cashcloud Group's business.
If the support services deteriorate significantly or are no longer provided, the Cashcloud Group could be compelled to accept less favorable conditions from third parties it commissions to provide support services.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The expansion of business internationally entails risks.
The Company plans to expand or develop its business in other countries. The expansion of business to other countries may be restricted by a range of factors such as the general political, economic, infrastructure, legal and tax situation, unexpected changes in political, macroeconomic and regulatory conditions and tariffs, restricted protection for intellectual property, or the government subsidization of competitors. Particularly when it comes to entering new markets, it is possible that the general conditions described above and their financial impact on the operating companies will be incorrectly appraised.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
There are financing, liquidity and credit risks to contend with.
To date, the Cashcloud Group has funded its business by means of debt and equity financing. However, as at the date of this Listing Prospectus, the Company does not have sufficient business capital to be able to cover its currently anticipated business needs over the coming twelve months. As at the date of Cashcloud AG - 25 - this Listing Prospectus, the Company's anticipated business needs include financing for negative cash flow, particularly that arising from ongoing personnel expenses, IT development, the operation of "eWallet" services, sales and marketing activities and the security deposits furnished to e-money institutions. The Issuer estimates that it will require total funds of approximately CHF 6.7 million over the coming 12 months. Moreover, existing loans from related parties totaling CHF 0.9 million will mature in the coming 12 months. Unless it can borrow additional funds and/or raise additional equity, the Company expects that it will no longer have sufficient business capital from June 1, 2015, onwards.
The Company is therefore heavily dependent on securing additional debt and/or equity financing in order to cover the anticipated business needs described above. Apart from raising equity, the Company plans to cover its anticipated business needs by borrowing from related parties and by increasing the Company's share capital in the second half of 2015.
If the Company is unable to cover its anticipated business needs through additional borrowing and/or equity raising, the Company risks becoming insolvent, and shareholders risk losing their entire investment.
To the extent that the Company intends to borrow into the future in order to fund its business, there is a further risk that it will not always be possible to borrow the amount it needs on commercially acceptable terms, and that any refinancing will be completely unsuccessful or only successful in part. Both internal and external factors play a role here. The internal factors include the market's assessment of the Company's creditworthiness based on its results of operations, or management's ability to manage existing and potential lenders. External factors include general market interest rates, the lending policy of banks and other lenders, and legislative changes. There is also a risk that the interest rate under refinancing arrangements will move in an unfavorable direction and that borrowing costs will increase as a result of interest rate hikes. The Cashcloud Group also faces the general risk that it will not be possible at all, or to the desired extent, to extend existing loans, refinancing arrangements or acquisition financing, or that it will only be possible to do so on commercially unattractive terms, and it also faces the risk that loans could be called in early, forcing the Cashcloud Group to accept the realization of security it has provided. There is also a risk that the Cashcloud Group will be unable to implement corporate action to strengthen its equity base, in particular because shareholders and/or new investors will not be prepared to participate in such corporate action.
If the Cashcloud Group is unable in the future to secure the funds its needs by borrowing and/or equity raising, it could become more difficult or even impossible to finance the Cashcloud Group and enable its growth.
Furthermore, it cannot be completely ruled out that the Cashcloud Group will be forced to write off significant amounts in bad debts.
The occurrence of one or more of these risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
Reliance on key people entails risks.
The successful implementation of the Cashcloud Group's business strategy and corporate objectives and thus its development depends heavily on the expertise, experience and contacts of the current members of the management team, particularly the Managing Director of the subsidiary Cashcloud AG (Luxembourg), Mr. Olaf Taupitz, who is largely responsible for the success and development of the Cashcloud Group due to his experience in the industry and specialist expertise, his contacts and strategic abilities. There is a risk that the dynamic pace of business development will slow and/or critical know-how will be lost if Mr. Taupitz leaves Cashcloud AG (Luxembourg). The departure of Mr. Taupitz could therefore adversely affect the business.
The Cashcloud Group also relies on other skilled professionals and executives, particularly in the areas of finance and IT. Competition for skilled professionals and executives in the above areas is comparatively fierce, so it may not be possible for the Cashcloud Group to retain or recruit skilled professionals and executives. The departure of skilled professionals and executives or difficulties finding suitable new and/or other skilled professionals and executives could have a negative impact on the Cashcloud Group's ability to compete and its business performance. Cashcloud AG - 26 -
The occurrence of one or more of these risks could have an adverse effect on the Cashcloud Group's financial condition and results of operations.
Unexpectedly high salary increases for Cashcloud Group employees could have a negative impact on salary structure and give rise to additional costs.
The employment agreements entered into with employees generally contain a salary indexation clause linked to the wage price index in Luxembourg. There is therefore a risk that salaries will be subject to a mandatory rise if there is a significant increase in the wage price index. Such salary increases could have a material adverse effect on the Cashcloud Group's business and thus its financial condition and results of operations.
Risks may arise in the event of the (alleged) infringement of third party intellectual property rights.
The Cashcloud Group is unaware of any instances of its products infringing the intellectual property rights of third parties. However, it cannot be ruled out that the Cashcloud Group may infringe third party intellectual property rights, third parties may bring actions against the Cashcloud Group for the infringement of intellectual property rights, or that the Cashcloud Group may be sued as a co-defendant in litigation. As a result, the Cashcloud Group may become liable to pay royalties and/or it may be prevented from or delayed in commercially exploiting its own inventions. The Cashcloud Group may be required to pay substantial sums in damages if claims for patent infringement are successfully brought against it. Such litigation could also require a considerable investment of time, staff and financial resources. Due to the crucial role played by intellectual property in the sector in which the Cashcloud Group operates, even just an allegation that the Cashcloud Group has infringed third party intellectual property rights could cause it to sustain economic loss. Third parties could use the actions of the Company or its employees as the basis for claims for patent infringement or the infringement of other intellectual property rights and could file suit against the companies in the Cashcloud Group or its partners. The occurrence of the above risks could have a material adverse effect on the Cashcloud Group's financial condition and results of operations.
The organizational structure of the Cashcloud Group entails risks.
The continual development of internal organizational structures and management processes creates new challenges for the Cashcloud Group and ties up a substantial portion of its management resources. The systems in place at the Cashcloud Group for budgeting for, managing and controlling its business do not currently fully meet the requirements and organizational structure that would be appropriate for the Cashcloud Group's intended size and business activities. These systems must be established or, where they already exist, adapted and expanded. The management team of Cashcloud AG will also be subject to stricter requirements by virtue of the post-admission obligations that will apply once the shares are admitted as planned to the regulated market (General Standard) of the Frankfurt Stock Exchange.
There is a risk that the Cashcloud Group will be unable to upgrade its internal budgeting, management and control systems within a reasonable time. If errors occur while the systems are being upgraded, there is also the risk of undesirable commercial and administrative developments or poor decisions. There is also a risk of breach of the obligations applicable after the shares are admitted to the regulated market (General Standard) of the Frankfurt Stock Exchange, which could negatively affect the share price.
The Cashcloud Group relies on a functional risk management system.
The Cashcloud Group employs a risk management system in order to identify and assess risks early and to devise countermeasures. The purpose of the system is to prevent risks associated with the business of the subsidiaries from arising in the first place, or to enable prompt action to be taken to counter undesirable developments. The Company cannot guarantee that all risks will be identified or that identified risks will be appropriately responded to, particularly since the Company relies on its subsidiaries for information and in specific situations must trust that certain information is objective. Shortcomings in risk management could thus result in undesirable developments at individual subsidiaries or also for the Cashcloud Group itself. Such circumstances could, either individually or Cashcloud AG - 27 - collectively, have a material adverse effect on the Cashcloud Group's business and its financial condition and results of operations.
There are internal risks to contend with.
Rapid company growth creates the risk that management structures and internal structures and procedures will not be able to keep up, which can be detrimental to the management of the Group as a whole. This could negatively influence the Cashcloud Group's business and have a material adverse effect on its financial condition and results of operations.
There are risks due to the lack of insurance cover or insurance cover available on reasonable terms.
There is a risk that existing insurance cover will be inadequate. It is also possible that adequate insurance cover will not be available for certain risks, or not available on reasonable terms. If loss is sustained and it is not covered by insurance or insurance cover is inadequate, this could have an adverse effect on the Cashcloud Group's financial condition and results of operations.
Tax law risks may arise.
The Cashcloud Group has not to date been subject to any tax audits by the tax authorities (with the exception of a special VAT audit directly after the formation of Cashcloud Deutschland GmbH). It is possible that in the course of future tax audits, the tax authorities will not accept the Issuer's or its subsidiaries' tax treatment of certain business transactions, and the Cashcloud Group will be required to make back payments of tax. The tax authorities may also come to the conclusion in this or that case that the tax returns prepared with the help of tax advisors are incomplete or incorrect, and therefore the provisions already set aside for tax liabilities in previous fiscal years may prove insufficient. Moreover, tax law may be amended by the legislature in such a way that loss carryforwards are unable to be offset against subsequent profits to the same extent as previously. There is also a risk that tax rates will increase and that new taxes will be introduced.
The occurrence of one or more of these risks could have an adverse effect on the Cashcloud Group's financial condition and results of operations.
2.3. Risks relating to the shares
There are risks associated with the volatility of the share price.
There is a risk that the price of the listed shares may fluctuate substantially due to changes in the Issuer's company results and the results of its competitors, or due to changes affecting the general environment in the sector, the overall economy, the political and legal environment and the financial markets. The Issuer itself has very little influence over these factors and their combined effect. In general, securities markets have experienced considerable price and transaction volume fluctuations in the past. Such fluctuations could be beneficial or detrimental to the price of the listed shares in future, regardless of the Issuer's financial condition and results of operations.
There is a risk inherent in all securities that the shares will fall in value or, in the extreme case, that the entire amount invested in the shares will be lost.
There is no certainty that a liquid market will develop for the shares.
Despite the inclusion of the New Shares in the regulated market of the Frankfurt Stock Exchange (General Standard), there is no guarantee that the Company's shares will be actively traded. If the shares are not actively traded, investors may not be in a position to sell their shares quickly or at the current price.
The share price could be influenced by analysts' opinions and other opinions expressed in online forums, stock market newsletters or other media.
The Issuer's share price may be heavily influenced by analysts' opinions, public comments made in investor forums, for example, recommendations in stock market newsletters and opinions expressed in Cashcloud AG - 28 - other media. Such third party recommendations can have a substantial negative effect on the share price. In recent years, the prevalence of fax and e-mail spam has also increased markedly, and this can also pose a significant threat to the share price. There is also a risk that the regulatory and issuing authorities might de-list the shares as a result of spam activity or commence investigations, which could limit the Issuer's operations and even cause damage to the Issuer.
Future capital increases may have an adverse effect on the share price.
The Issuer plans to potentially finance the further expansion of its business by issuing new shares. The Issuer already has specific plans to finance its anticipated business needs over the coming 12 months by implementing a capital increase in the second half of 2015, although it is yet to be decided whether the capital increase will be by way of a public offering or by way of a private placement. The issue of new shares or securities carrying conversion rights could have a material adverse effect on the share price and, if existing shareholders are not offered preemptive subscription rights, would dilute the economic rights and voting rights of existing shareholders. Since the timing and nature of any future offerings depend on the market conditions at the time of the offering, it is not possible to comment on the volume, timing or nature of any future offering. Shareholders therefore face the risk that future offerings may negatively affect the share price and/or dilute their interest in the Company. Dilution may also occur if other companies are taken over or an interest in other companies is acquired in return for newly issued shares in the Company, or if employees of the Issuer exercise stock options received pursuant to future stock option plans, or shares are issued pursuant to future employee profit-sharing plans.
Risks arising from the concentration of share ownership/future sale of shares
As far as the Company is aware, the major shareholders of Cashcloud AG currently hold a total of approximately 71.83% of the voting rights in the Company. They therefore collectively hold a sufficient number of voting rights to be able to adopt certain resolutions at the General Meeting if they vote unanimously (depending on attendance at the Company's General Meeting), and they may therefore be able to exercise control over the Company. They collectively hold a sufficient number of voting rights to be able to pass resolutions requiring a simple majority. Depending on attendance at the specific General Meeting, the major shareholders may also under certain circumstances hold a sufficient number of voting rights to pass resolutions requiring a three-quarters majority. They may exert control by exercising their voting rights to bring about or prevent the adoption of resolutions at the General Meeting. In general it is not possible to restrict rights to vote at the General Meeting. There is therefore no action that can be taken to prevent the aforementioned shareholders from misusing their controlling influence. The sale of large blocks of shares by the major shareholders could also cause the share price to drop sharply. Cashcloud AG - 29 -
3. General Information
3.1. Responsibility for the content of the Listing Prospectus
Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland (hereinafter also referred to as the "Issuer" or the "Company", and together with its three wholly owned subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Germany, and Cashcloud Technology Services S.R.L., Romania, referred to as the "Cashcloud Group"), and VEM Aktienbank AG, Prannerstraße 8, 80333 Munich, Germany, assume responsibility for the content of this Listing Prospectus pursuant to Section 5 (4) of the German Securities Prospectus Act (Wertpapierprospektgesetz, "WpPG") and state that, to their knowledge, the information contained in this Listing Prospectus is true and correct and that no material facts have been omitted.
In the event that claims are asserted by an investor before a court of law based on information contained in the Listing Prospectus, the investor appearing as plaintiff may be required to bear the costs of translating the Listing Prospectus prior to the commencement of legal proceedings in compliance with the national laws of the individual Member States of the European Economic Area.
3.2. Forward-looking statements
The Listing Prospectus contains certain forward-looking statements. Forward-looking statements are any statements made as of the date of the Listing Prospectus that do not relate to current or historical facts or events. Forward-looking statements particularly include statements in the Listing Prospectus about future earning capacity, plans and expectations related to the business and management of Cashcloud AG, about growth and profitability and about general economic and regulatory conditions and other factors with which Cashcloud AG must contend.
These forward-looking statements are based on current estimates and assumptions made by Cashcloud AG according to the best of its knowledge. However, inherent in these forward-looking statements are known and unknown risks, uncertainties and other factors which may cause actual future results, the financial condition, the performance or services of Cashcloud AG or the relevant sector to differ materially from or be less favorable than the results, financial condition, performance or services expressly or implicitly assumed in such forward-looking statements. These factors include: investor behavior, general economic, legal and tax conditions, competition from other companies, Cashcloud AG's capital requirements, financing costs, the ability to recruit and retain qualified employees, uncertainties arising from the business operations of Cashcloud AG and other factors referred to in this Listing Prospectus.
Cashcloud AG's business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or projection to become inaccurate. In light of the risks, uncertainties and assumptions made, the future events referred to in the Listing Prospectus may not even come to pass. Therefore, neither Cashcloud AG nor its management are able to accept responsibility for the future accuracy of the opinions presented in the Listing Prospectus or for the actual occurrence of forecast developments.
Please also note that Cashcloud AG assumes no obligation to update its forward-looking statements or to bring them into line with future events or developments, unless it is required to do so by law. There is a statutory obligation under Section 16 WpPG to update the Listing Prospectus to reflect important new events or to correct false information or inaccuracies, all of which must be published in a supplement to the Listing Prospectus.
3.3. Note regarding sources
All information regarding market share, market developments and trends, growth rates, revenues in the markets described in this Listing Prospectus and Cashcloud AG's competitive environment are based on publicly available sources or Cashcloud AG's estimates. The respective sources are cited in the appropriate places in the Listing Prospectus. Cashcloud AG - 30 -
Where the information provided is based on Cashcloud AG's estimates, these may differ from the estimates of Cashcloud AG's competitors or from the results of future surveys conducted by market research institutes or other independent sources.
If and to the extent that this Listing Prospectus reproduces information from publicly available sources or from third parties either in complete or extract form, whether verbatim or paraphrased, it is hereby confirmed that such information has been accurately reproduced and that, as far as Cashcloud AG is aware and able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
However, Cashcloud AG has not checked the figures, market data and other information contained in publicly availably sources and assumes no responsibility for the accuracy of the figures, market data and other information taken from these public sources. It should also be noted that market studies and surveys are often based on third party assumptions and information and are by nature speculative and forward-looking. Investors should take into account the fact that some of Cashcloud AG's estimates are based on such market studies conducted by third parties.
3.4. Documents on display
For the period during which this Listing Prospectus is valid, in other words for 12 months after it is approved, hard copies of the following documents will be on display at Cashcloud AG and may be viewed during regular business hours at the Company's offices at Steinenberg 19, 4051 Basel, Switzerland:
. this Listing Prospectus . the Company's Articles of Incorporation; . consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2013, accompanied by the audit opinion of the auditor of the consolidated financial statements; . consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2014, accompanied by the audit opinion of the auditor of the consolidated financial statements; . annual financial statements of Cashcloud AG (Swiss Audit Standards) for the fiscal year ended December 31, 2014, accompanied by the audit opinion of the auditor of the annual financial statements.
The approved Listing Prospectus and the documents referred to in the Listing Prospectus are also published in the "Investor Relations" section of the Company's website, www.cashcloud.ag. Once the Listing Prospectus is approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht), investors may request a hard copy of the Listing Prospectus from the Company free of charge. Cashcloud AG - 31 -
4. Offering
4.1. Subject matter of the offering
The subject matter of the Listing Prospectus relates to 12,000,000 no-par value bearer shares in Cashcloud AG originating from the holdings of the shareholders, each such share representing a notional interest in the share capital of CHF 0.20, which are to be admitted to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange ("Existing Shares").
The Issuer expressly advises that the Existing Shares are not held by it, but rather by its shareholders. As such, potential offers to purchase the Existing Shares are not made by the Company, but by its shareholders.
The intended admission of the Existing Shares in the Issuer to the regulated market (General Standard) of the Frankfurt Stock Exchange in conjunction with the Company's marketing measures constitutes a public offering. Once the Listing Prospectus has been published, the Company intends to inform the broader public in Germany and Luxembourg about the admission of the Existing Shares to the regulated market (General Standard) of the Frankfurt Stock Exchange by various means, specifically by publishing regular corporate news, with the aim of gaining recognition on the capital market and enabling an indefinite number of investors to make a decision on the purchase of the Existing Shares in the Company.
4.2. Terms and conditions of the offer and offer price
4.2.1. Terms and conditions of the offer
The subject matter of the Listing Prospectus relates to 12,000,000 no-par value bearer shares in Cashcloud AG originating from the holdings of the shareholders, each such share representing a notional interest in the share capital of CHF 0.20, which are to be admitted to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange ("Existing Shares"). Only those shares already existing will be publicly offered. No new shares will be issued under this offering.
The public offering is expected to commence on May 14, 2015, and end on May 13, 2016, and is irrevocable. Cashcloud AG reserves the right to shorten the offer period for the public offering. The Existing Shares are acquired in accordance with the Exchange Rules for the Frankfurt Stock Exchange (Börsenordnung) and other adopted dealing arrangements. Buy orders from interested investors may be issued via any bank admitted to the Frankfurt Stock Exchange. The Existing Shares may be purchased in denominations of one share or more. There is no minimum or maximum limit for buy orders.
No new shares are up for subscription under this public offering. Whether or not buy orders may be modified or withdrawn will depend on the terms and conditions of the respective bank via which investors are settling their orders. The same applies with respect to notifications as to whether or not a buy order was executed.
No preferential rights exist in relation to the sale of the Existing Shares. Buy orders that are not filled will expire in accordance with the terms and conditions interested investors have arranged with their banks. The Existing Shares will be offered to all interested investors on the same terms. No distinctions will be made based on different categories of potential investors. Nor are there any plans to break the offering down into tranches, e.g., for institutional investors, retail customers or employees of Cashcloud AG. No priority will be given to any individual interested investors. Cashcloud AG will not be able to make any minimum allotment, because buy orders will be filled and thus allotted by the commissioned pricing specialists on the stock exchange. No overallotment option exists. Any interested investor is free to simultaneously issue multiple buy orders. No restriction exists in this regard.
The Existing Shares will be delivered concurrently upon payment of the offer price by crediting the investor's respective securities account. The Company will not be offering any new shares under this public offering, which means that the Existing Shares will be acquired from an existing shareholder of the Company. As such, the proceeds from the sale of the Existing Shares will not accrue to the Company, but solely to the respective selling shareholder. Cashcloud AG - 32 -
Cashcloud AG has no knowledge of any major shareholders or members of any administrative, management or supervisory body or other persons wishing to acquire more than 5% of the offering.
4.2.2. Offer price
Offer price
The offer price for the Existing Shares originating from the holdings of the shareholders reflects the relevant share price based on supply and demand for the buy and sell orders settled via the stock exchange. It will be set by the specialists responsible for pricing under the exchange rules and regulations with the aim of achieving the best possible balance between buy and sell orders. Offer prices will be published in daily newspapers, news services (Reuters, Bloomberg) or online and can generally be found or obtained by searching or providing the securities identification number ISIN CH0132106482. Interested investors may also obtain price information from their own banks by providing this identification number. In addition to the purchase price, buyers must pay the customary bank fees and commissions. Payment of the purchase price for the Existing Shares plus bank fees and commissions will be settled between the seller's bank and the buyer's bank. Book-entry transfer of the securities will be effected at SIS SIX AG, Baslerstraße 100, 4600 Olten, Switzerland, by debiting the securities account with the seller's bank and crediting the securities account with the buyer's bank.
Offer price as compared with transactions of executives
No shares in the Company have been acquired by the sole member of the Board of Directors nor the member of senior management nor any related party during the last 12 months, with the following exception:
Confortune Europe AG, Liechtenstein, as a related party of the Company, subscribed for the new shares originating from the capital increase at an issue price of CHF 1.00 per share pursuant to the resolution adopted by the Board of Directors on November 10, 2014.
4.3. Dividend and voting rights
The Existing Shares carry dividend rights as from January 1, 2015. Each new share1 carries one vote at the Company's General Meeting. There are no restrictions on voting rights. The Company's existing shareholders hold the same voting rights as do all other shareholders.
4.4. Transferability
The Existing Shares in the Company are freely transferable in accordance with the legal provisions applicable to the transfer of bearer shares.
4.5. ISIN/WKN
The securities identification numbers of the Existing Shares in Cashcloud AG are as follows:
ISIN CH0132106482 WKN A14NYB
4.6. Legal provisions and legal basis for the creation of the Existing Shares
7,500,000 of the Existing Shares, each with a par value of CHF 0.20, were created upon formation of the Company pursuant to Article 629 et seq. of the Swiss Code of Obligations (Obligationenrecht, "OR").
Pursuant to Article 650 et seq. OR, a further 500,000 Existing Shares, each with a par value of CHF 0.20, originated from the cash capital increase dated February 15, 2013; a further 800,000 Existing Shares, each with a par value of CHF 0.20, originated from the cash capital increase dated July 16,
1 Translator's note: This is a literal translation of the German; according to information elsewhere in this section, no new shares are being issued under the offering. If this is a quote from the Articles of Incorporation, the term "new shares" should not be capitalized as if it were a defined term for purposes of this prospectus. Cashcloud AG - 33 -
2013; and a further 3,200,000 Existing Shares, each with a par value of CHF 0.20, originated from the cash capital increase dated November 10, 2014.
4.7. Rights attached to the Existing Shares
4.7.1. Dividend rights
The shareholders' share in the Company's distributable profit (dividend) depends on the respective proportionate interest they hold in the share capital. The General Meeting shall be responsible for deciding on the appropriation of net retained profits, in particular for determining the amount of any dividend. Shareholders shall be entitled to any dividends approved by the General Meeting in proportion to the respective interest they hold in the share capital. As dividends may only be paid from net retained profit, the net retained profit recognized in the annual financial statements prepared in accordance with the Swiss Code of Obligations (OR) shall constitute the maximum distributable amount. Shareholders shall be entitled to net retained profit, except to the extent it is prohibited from distribution to the shareholders by law, the Articles of Incorporation, resolution of the General Meeting or as an additional expense under the resolution on the appropriation of profits.
The claim to the payment of dividends shall become time-barred five years after expiration of the year in which the General Meeting adopted the resolution on the appropriation of profits. If the claim to payment of dividends becomes time-barred, the Company may nevertheless elect to pay the dividend to the shareholder whose claim has become time-barred, but shall not be obligated to do so.
There are no restrictions on dividends. Under Swiss law, there are no restrictions on foreign shareholders receiving dividends from Swiss companies. Dividends will be disbursed in accordance with the clearing system rules of SIS SIX AG, Baslerstraße 100, 4600 Olten, Switzerland, and transferred via the Company's central paying agent to the shareholders' accounts with the respective custodian bank. However, the Company has no control over whether dividends may be transferred to foreign (securities) accounts at any time or how they are to be treated for tax purposes.
Details as to any dividends resolved by the General Meeting and the paying agents nominated by the Company in each case will be published in the Swiss Official Gazette of Commerce (Schweizer Handelsamtsblatt).
4.7.2. Voting rights
Each no-par value share carries one vote at the Company's General Meeting.
4.7.3. Subscription rights
Cashcloud AG shareholders generally have statutory preemptive subscription rights, which entitle them to subscribe for new shares originating from any capital increase in proportion to the respective interest they hold in the existing share capital. The statutory subscription right also extends to any new convertible bonds, warrant-linked bonds, profit participation rights and participating bonds to be issued. Subscription rights are freely transferable.
Subscription rights may be restricted or excluded by resolution of the General Meeting; however, a qualified majority of at least two thirds of the voting shares represented and an absolute majority of the nominal value of the shares represented is required.
4.7.4. Share in any liquidation surplus
Except in the case of insolvency, Cashcloud AG may be dissolved by resolution of the General Meeting to be adopted by a qualified majority (two thirds of the voting shares represented and an absolute majority of the nominal value of the shares represented). The assets of the Company remaining after discharging its liabilities (liquidation surplus) will be distributed among the shareholders in proportion to the respective interest they hold in the share capital, i.e., in accordance with the number of shares they hold. The Company has not issued any preferred shares. The liquidation process is governed by Article 742 et seq. OR. Cashcloud AG - 34 -
Inasmuch as Cashcloud AG does not have different classes of shares with varying dividend rights, each share has the same interest in the liquidation proceeds.
4.7.5. Subsequent capital contributions
No duty to pay subsequent capital contributions exists under the Swiss Code of Obligations.
4.8. Paying agent and depositary
The paying agent is Bankhaus Neelmeyer Aktiengesellschaft, Am Markt 14-16, 28195 Bremen, Germany.
The depositary for the Company's global share certificate is SIS SIX AG, Baslerstraße 100, 4600 Olten, Switzerland.
4.9. Takeover offers / squeeze-out provisions
The Company's shares have not previously been traded on any organized market. Therefore, until such time as the Company's shares are admitted to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange, neither the provisions of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, "WpÜG") nor those of the Ordinance of the Swiss Takeover Board on Public Takeover Offers (Verordnung der Übernahmekommission über öffentliche Kaufangebote) shall apply.
Once the Company's shares are admitted to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange, i.e., most likely from May 18, 2015, the provisions of the WpÜG and those of the Ordinance of the Swiss Takeover Board (TOB) on Public Takeover Offers shall apply.
No public takeover offers have been made with respect to the Company to date.
Nor do any special squeeze-out or sell-out rules apply in relation to the Company's shares.
4.10. Offer restrictions
The Existing Shares will be publicly offered in Germany and Luxembourg only. No public offering outside of Germany and Luxembourg, specifically no public offering in the United States of America, Japan or Canada, will be held.
The Existing Shares have not been and will not be registered under the provisions of the United States Securities Act of 1933 ("Securities Act") nor with any securities regulatory agencies of individual states of the United States of America. The new shares2 may not be offered or sold3 within or directly or indirectly delivered into the United States of America except pursuant to an exemption from the registration requirements under the Securities Act and the securities laws of the respective individual states of the United States of America.
4.11. Costs of the offering
The total costs of the public offering and the admission of the Existing Shares to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange will amount to approximately CHF 300,000.00 and will be borne by the Company.
Because no new shares will be issued under the public offering, the Company will not generate any net income. The proceeds from the sale of the Existing Shares will not accrue to the Company, but solely to the respective selling shareholder.
2 Translator's note; this is a literal translation of the German. The reference to new shares (particularly as a defined term) is incorrect based on the information contained elsewhere in this section to the effect that only the "Existing Shares" (Bestehende Aktien) are the subject of this offering. 3 Translator's note: this translation is based on the context, presumably an earlier version of the German text contained additional wording to the effect of "The New Shares and the subscription rights" ("sowie die Bezugsrechte") which was then deleted, but the author neglected to remove the verb "exercised" ("ausgeübt"). Cashcloud AG - 35 -
4.12. Interests of persons involved in the offering
The current shareholders of the Issuer have an interest in the offering because it will allow improved tradability of their shares via a stock exchange and, assuming a positive performance on the part of the Issuer, potentially increase the value of the investment in the Issuer.
VEM Aktienbank AG, Munich, Germany, is in a contractual relationship with Cashcloud AG in connection with the admission of the shares to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange. VEM Aktienbank AG will be paid a standard market fee for its services. No conflicts of interest exist in this respect.
4.13. Selling securities holders
The Existing Shares in Cashcloud AG are not held by the Company, but were issued to its shareholders. As such, potential offers to purchase the Existing Shares are not made by Cashcloud AG, but by its shareholders. As of the date of this Listing Prospectus, Cashcloud AG has no knowledge of any persons or institutions offering to sell shares in the Company.
4.14. Reasons for the offering
Once the Listing Prospectus is published, the Company intends to take specific measures to market the Company and the shares issued by it in Germany and Luxembourg. For example, once the Listing Prospectus has been published, the Company plans to initiate extensive investor relations activities and thereby promote the tradability of the shares on the regulated market, specifically by posting regular notifications on the Company's website under the Investor Relations section and by publishing notifications through information channels relating to the capital market (e.g., the German Council on Foreign Relations (DGAP), by regularly participating in capital market conferences which are also attended by retail investors, and finally by providing regular information on the tradability of the shares to customers, business contacts as well as employees and their families. The intended opportunity to purchase shares on the regulated market (General Standard) of the Frankfurt Stock Exchange in conjunction with those marketing measures constitute a public offering. The measures to market the public offering serve to increase the Company's level of recognition in investor circles and to position it on the capital market, because the Company plans to finance itself by tapping the capital market in the medium and long-term.
In this respect, both the Company and the shareholders have an interest in marketing measures and a positive share price performance.
Because no new shares will be issued under the public offering, the Company will not generate any net income.
4.15. Dilution
Investors who had not previously held an equity interest in the Company could experience a dilution in the value per share in a comparison of the net book value per share at the time of acquisition to the acquisition price (e.g., the share price when purchased on the stock market).
Existing shareholders could likewise experience a dilution in the value per share in a comparison of the net book value per share at the time of sale to the sale proceeds generated. A dilution in the existing shareholders' interest in the share capital in the event of a sale results in a corresponding reduction in their administrative rights, in particular voting rights, and pecuniary rights, in particular dividend rights.
As of December 31, 2014, based on the balance sheet prepared in accordance with IFRS, the net book value of the Cashcloud Group amounted to CHF 280.6 thousand. This net book value is derived from the total of all assets less liabilities as of that reporting date. Based on the actual number of 12,000,000 shares as of the date of the Listing Prospectus, the net book value per share amounts to CHF 0.0234. Cashcloud AG - 36 -
5. Admission to exchange trading and dealing arrangements
5.1. Admission to exchange trading and commencement of trading
Once this Listing Prospectus has been approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin"), the Company will apply for the admission of the 12,000,000 Existing Shares to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange. The Company has no influence over the Exchange's decision. The decision of the Frankfurt Stock Exchange on the admission of the Existing Shares is expected by May 18, 2015; assuming admission is granted, trading in the Existing Shares is scheduled to commence on May 26, 2015.
Trading in the shares in Cashcloud AG on the regulated market (General Standard) of the Frankfurt Stock Exchange is subject to the Exchange Rules and other adopted dealing arrangements.
5.2. Existing admissions to regulated or equivalent markets
The shares in Cashcloud AG have not previously been admitted to any regulated or equivalent market. The Existing Shares are scheduled to be admitted on the regulated market (General Standard) of the Frankfurt Stock Exchange on May 18, 2015; trading is scheduled to commence on May 26, 2015.
5.3. Designated Sponsor
Cashcloud AG does not have a Designated Sponsor.
5.4. Stabilization measures
No stabilization measures are planned.
5.5. Lock-up agreements
No lock-up agreements exist in relation to the Existing Shares to be admitted. Cashcloud AG - 37 -
6. Timetable for the public offering and admission of the Existing Shares
The projected timetable for the public offering and the admission of the Existing Shares to trading on the regulated market of the Frankfurt Stock Exchange is as follows:
April 28, 2015 Application for admission of the Existing Shares to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange
May 13, 2015 Approval of the Listing Prospectus by BaFin
May 13, 2015 Publication of the Listing Prospectus on the Company's website (www.cashcloud.ag) under "Investor Relations"
May 14, 2015 Commencement of the public offering
May 18, 2015 Admission of the Existing Shares to trading on the regulated market (General Standard) of the Frankfurt Stock Exchange
May 26, 2015 Commencement of trading in the Existing Shares on the regulated market (General Standard) of the Frankfurt Stock Exchange
May 13, 2016 Conclusion of the public offering
This Listing Prospectus is expected to be published on the Company's website (www.cashcloud.ag) under "Investor Relations" starting May 13, 2015. As of that date, copies of the Listing Prospectus will also be available free of charge during regular business hours at the offices of the Company at Steinenberg 19, 4051 Basel, Switzerland. Cashcloud AG - 38 -
7. Information on the Company
7.1. General Information
7.1.1. Company name, domicile and commercial register information
The Issuer's name is "Cashcloud AG". The Company also uses the commercial designation "cashcloud".
The Company is domiciled in Basel, Switzerland.
The Company is currently entered in the commercial register of the Canton of Basel-City under no. CHE-375.837.130.
7.1.2. Formation
The Issuer was founded on April 29, 2011 by Investor Intelligence Ltd., Ajeltake Road, Ajeltake Island, MH96960 Majuro, Marshall Islands, and entered in the commercial register of the Canton of Zug on May 3, 2011.
7.1.3. Term, fiscal year and corporate purpose
The Company has been established for an indefinite term.
The Company's fiscal year corresponds to the calendar year.
The purpose of the Company is the financing, formation, establishment, acquisition, administration and sale of enterprises and equity interests in enterprises both within Switzerland and abroad, including the holding and management of licenses and patents of any kind.
7.1.4. Legal form, governing law, address
The Company is organized as a stock corporation (Aktiengesellschaft) under Swiss law.
The Company is governed by the laws of Switzerland.
The Company's business address is: Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland. The Company may be reached by phone at +41 616382020.
7.1.5. Publications
Pursuant to the Company's Articles of Incorporation and to the extent not otherwise mandated by law, notices are to be published in the Swiss Official Gazette of Commerce (Schweizer Handelsamtsblatt). Pursuant to the Company's Articles of Incorporation, the Board of Directors is authorized to stipulate other journals of record. The Company has not exercised this authorization to date.
7.2. Auditor
7.2.1. Auditor
The Company's IFRS consolidated financial statements as of December 31, 2013 and December 31, 2014 were audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Schlossgartenstraße 1, 68161 Mannheim, Germany.
The Company's separate financial statements (Swiss Audit Standard) as of December 31, 2014 were audited by ACT Audit & Tax AG, Renggerstrasse 71, 8038 Zürich, Switzerland.
KPMG AG Wirtschaftsprüfungsgesellschaft is a member of the German Chamber of Public Accountants (Wirtschaftsprüferkammer), ACT Audit & Tax AG is a member of the Swiss Federal Audit Oversight Authority (eidgenössische Revisionsaufsichtsbehörde). Cashcloud AG - 39 -
No auditor has yet been appointed for fiscal year 2015.
7.2.2. Change in auditors
There has been no change in auditors since January 1, 2013.
7.3. Corporate history
The following summary presents the most important milestones in the history of Cashcloud AG:
Date Event September 2010 Cashcloud AG, Luxembourg, is founded April 2011 Cashcloud AG, Switzerland, is founded (then operating under the name Cashcloud Holding AG) September 2012 Cashcloud AG, Luxembourg, starts operations January 2013 Cashcloud Technology Services SRL, Romania, is acquired February 2013 Distribution of mobile and Internet-based apps in Germany starts March 2013 The "mobile cashcloud eWallet" is introduced April 2013 All shares in Cashcloud AG, Luxembourg, are contributed into Cashcloud AG, Switzerland July 2013 Cashcloud Deutschland GmbH is founded November 2013 The "cashcloud Prepaid MasterCard NFC Sticker" is introduced February 2015 Cashcloud Holding AG changes its company name to Cashcloud AG
7.4. Corporate Governance
The Company does not currently comply with the provisions of the Swiss Corporate Governance Code or those of the German Corporate Governance Code. It is not required to comply with either of these as it is not listed on any stock exchange. The Company has not issued any voluntary declaration of compliance to date.
7.5. Dividend policy
Cashcloud AG has not generated any net retained profit to date. Therefore, no dividends have been paid thus far. The determination and distribution of future dividends will be proposed by the Company's Board of Directors and resolved by the General Meeting. In the event profits are generated in the future, the Company generally intends to initially reinvest the income and use it to finance growth and further develop the business, and otherwise to distribute a dividend to shareholders. Determining factors will be, in particular, the Company's financial condition, capital requirements, business prospects and the general economic conditions.
It is expressly noted that there is no guarantee that Cashcloud AG will have any distributable net retained profits in the future.
7.6. Group structure
Cashcloud AG does not run its own operating business; it is the strategic management and financial holding company of the Cashcloud Group and performs central control functions. Its focus is on the management, financing and control of its equity holdings. Its operating business is conducted at the respective subsidiaries, specifically Cashcloud AG, Luxembourg. Cashcloud AG holds 100% of the shares and voting rights in all its subsidiaries.
The following organizational chart illustrates the structure of the Cashcloud Group: Cashcloud AG - 40 -
Basel, Switzerland
Luxembourg, Luxembourg Sibiu, Romania Darmstadt, Germany
Cashcloud AG - 41 -
8. Overview of business activities
8.1. Principal activities
Formed in 2011, Cashcloud AG (Switzerland) is a young company that launched a new eWallet, the mobile "cashcloud eWallet", including a payment system for smartphones with Apple iOS and Google Android in March 2013. This electronic wallet ("eWallet") offers all key functions related to making purchases, payments and earning bonus points in a single smartphone app. The focus is on the "cashcloud eWallet" electronic wallet for private customers. The Company's free cashcloud eWallet app is an all-in-one solution for mobile and contactless payments. This new channel – secure mobile payment via smartphone – complements traditional banking services and online banking. The "cashcloud eWallet" combines several important payment functions in a single solution: sending money is as easy as writing a message to a contact in the user's Facebook or cell phone address book, the cashcloud payment interface can be used to receive money from friends and parents with a click, a virtual credit card can be used in selected online stores and the NFC sticker or NFC chip in the smartphone or a physical prepaid credit card can be used to make contactless payments in selected stores.
Users can make mobile payments and control and manage these in a transparent way. To use the service, users must register using their Facebook login details or their e-mail address and cell phone number. To send or collect money from a Facebook friend, the user selects the friend from their contact list on Facebook. The Facebook friend receives a private message in a chat window informing them of the pending or completed transaction (once made). Money is transferred in real time and transfers are free of charge for private users. This payment method is of particular interest to young users due to the option to use Facebook and other social networks. Young users in particular, who do not have their own bank account or credit cards, have only limited opportunity to purchase digital goods or make cashless payments in brick-and-mortar stores. The Company offers a parental sub-account to be able to provide a secure service to the young user group. Parents can open a "cashcloud eWallet" account for their children and transfer their allowance to the electronic wallet. The parental sub-account gives them control over the account and their children's spendings.
The Company offers its users the "cashcloud Prepaid MasterCard NFC sticker" for contactless payments in stores. In the future, it will use the NFC chip function integrated in smartphones. Users can order these products/services directly via the app. This enables users to make cashless payments in retail stores. There are currently around two million terminals around the world that accept payment using the Company's NFC sticker. The "cashcloud Prepaid MasterCard NFC sticker" also includes a virtual MasterCard account, with which users can shop in all online stores that accept MasterCard as a payment method worldwide. In addition, the Cashcloud Group also offers a prepaid option – a physical prepaid credit card – for secure and transparent payments.
Payment services are performed by licensed e-money institutions in each case. These institutions also manage customers' accounts and funds and are subject to regulatory supervision. The Cashcloud Group provides the technical infrastructure and programs the user functions. The Group exclusively uses servers in Luxembourg (Europe).
Alongside the ability to order and make payments via smartphone, the Company offers "cashcredits", its own virtual marketing currency. "Cashcredits" are earned by referring a friend or for special activities such as sharing shopping and payment experiences, for example. Retailers, advertising networks and industry partners can use the "cashcloud eWallet" to promote interesting services and products to users, tailored to user behavior, and grant "cashcredits" for other deals (coupons, cashback promotions). Partner companies from the gaming, publishing or advertising sectors can use "cashcredits" to increase user loyalty and activity with user-centered promotions. "Cashcredits" can be redeemed with the Company in exchange for e-money once a certain minimum amount has been reached. The resulting amount is credited to the e-money account in the "eWallet". This credit can either be used for purchases, sent to friends or family, or transferred to the user's own bank account.
The Company offers retailers guaranteed payments, which prevents credit card payments from being reversed (chargeback risk). Retailers can also use the "cashcloud eWallet" to offer customers a simple and secure payment method. This offering by the Company is also an alternative to the classic cashless payment methods available to retailers for goods or services sold. Cashcloud AG - 42 -
The Company's offerings as described above can currently be used in full in Germany, France, Spain and the Netherlands.
To date, the Company has recorded more than 500,000 app downloads and around 100,000 registered users with an e-money account for the "cashcloud eWallet".
Since transferring money is free of charge for private users, the Company generates revenue from the following services:
Monetization of the app through marketing activities such as advertising banners, coupons or advertising videos tailored to the user; Payment fees from online retailers for each payment made using Cashcloud solutions; Issuing and processing fees for all MasterCard products and payments; Additional income from referring products and services, in particular in digital distribution.
8.2. Development of new products and services
Over the coming months, the Cashcloud Group plans to introduce functional improvements to the "cashcloud eWallet" app and to launch marketing and advertising campaigns. The Company is also currently investigating how the "cashcloud eWallet" application offering as well as e-money accounts can be expanded to all countries in which the euro is legal tender, as well as to Poland, Romania, Switzerland and the US. In addition, the Company is examining how and what other options for recharging e-money accounts could be implemented, for example SEPA Direct Debit. The Cashcloud Group also aims to expand its activities in issuing MasterCard products (NFC sticker, integrated NFC/HCE payment function) in the current and expanded region as specified above.
There are no key new products and/or services.
8.3. Strategy and business plan
The Cashcloud Group's strategic approach to revenue growth and the launch of new products and services is as follows:
The Company's strategic goal is to become an established provider of "eWallet" solutions, in particular on the European market, with its "cashcloud eWallet" application. "eWallet" solutions are designed to enable users to combine all key functions related to making purchases, payments and earning bonus points using a smartphone with a kind of electronic wallet. The Cashcloud Group's strategy also aims to enable its users to make contactless and cashless payments in stores with the "cashcloud Prepaid MasterCard NFC sticker" and the NFC chip integrated into the smartphone in the future, and to become an established provider in this respect as well. The goal is to establish this offering in retail and in the micropayment market in particular, i.e. for transactions with a purchase price of less than EUR 20. This all-in-one strategy for mobile and contactless payment via smartphone is targeted in particular at people who have grown up in the digital age ("digital natives"). As well as using the smartphone as an electronic wallet, the Cashcloud Group's strategy is also to offer users digitalized deals – such as coupons, bonus points or loyalty programs – in connection with payments. Furthermore, the social network components of Cashcloud's solutions are designed to simplify the payment process. In the past, users had to know the bank account details (IBAN) of each recipient. The "cashcloud eWallet" application enables users to access contact data from their smartphone address book or their friend lists on social networks. This means that user A, who wishes to make a payment, only has to send a message specifying that amount B should be transferred to friend C. Neither the sender nor the recipient needs an IBAN or other account number. The "cashcloud eWallet" app's software system performs the required data matching process and relays the user's request to the licensed e-money institution accordingly. As a result, making a transfer is like sending a text message.
This strategy is essentially based on the following assumptions:
1. The strategy of the Cashcloud Group as described above is primarily based on the assumption that people who grew up in the digital age in particular ("digital natives") want to have a smartphone and will be increasingly willing to also use this as an electronic wallet in the future, and that mobile and contactless payment via smartphone will therefore become established on the market. Cashcloud AG - 43 -
2. At the same time, the Cashcloud Group's strategy is based on the assumption that the technical and regulatory requirements for mobile and contactless payment via smartphone have been met and will continue to be met in the future.
3. In addition, the Cashcloud Group's strategy is based on the assumption that retailers are prepared to meet the technical requirements (e.g. in the form of terminals) to enable payment via smartphone. With respect to retailers, the Cashcloud Group's strategy is based on the assumption that these are interested in undertaking marketing activities for users of Cashcloud Group products, as well as in offering deals to these users.
4. Finally, the Cashcloud Group's strategy is based on the assumption that, from both a technical and regulatory perspective, it will be able to monetize the information and data of users of Cashcloud solutions for marketing activities by offering users tailored information and deals (e.g. advertising banners, coupons or advertising videos) from retailers, for example.
The Cashcloud Group anticipates the following competitive situation in terms of the strategy described above: the smartphone-based electronic wallet sector in which the Cashcloud Group operates is still in its infancy and is not yet widespread in the market. According to the Company, this market is in the early stages of development. To the Company's knowledge, there are therefore no reliable market data on the competitive situation. Based on its experience to date in the countries where the Cashcloud Group already markets its solutions (Germany, France, Spain and the Netherlands) in particular, the Cashcloud Group expects future competition from (large) mobile network operators, established banks and young companies similar to the Cashcloud Group.
The strategy described above is not dependent on a limited number of potential users or suppliers. Every smartphone owner is a potential customer. Furthermore, the Cashcloud Group does not expect that it will only be able to offer its solutions to customers in a few limited countries. Once the Cashcloud Group has provided the technical infrastructure and programmed the user functions (only), the Cashcloud Group does not see any dependence on particular suppliers, either. By contrast, the Group is dependent on "Apple iTunes Store" and "Google Play Store" for sales, since the "cashcloud eWallet" app is available almost exclusively from these two sales platforms.
According to the Cashcloud Group's assessment, once it has provided the technical infrastructure and programmed the user functions (only) for its solutions, there are no assets required for these solutions that are not owned by the Cashcloud Group.
8.4. Principal markets
To date, Cashcloud solutions have been available in Germany, France, Spain and the Netherlands. The Cashcloud Group plans to expand its solutions to the remaining eurozone countries over the coming months. Accordingly, the market relevant to the Cashcloud Group is therefore the eurozone.
The "eWallet" sector in which the Cashcloud Group markets its solutions is still in its infancy and is not yet widespread in the relevant market, the eurozone. Rather, this market is in the early stages of development. The Company is not aware of any relevant market studies on the development of the "eWallet" market in the eurozone.
A significant factor in the growth of the market for "eWallet" solutions is the number of smartphone users. This is because eWallet solutions like those offered by the Cashcloud Group can only be used on a smartphone.
Surveys conducted by US market research and consulting firm International Data Corporation (IDC) show that a total of 174 million cell phones were sold in Western Europe in 2014, down 5.2% on the previous year. According to IDC, Western Europe is now almost purely a smartphone market since the sales figures for feature phones – cell phones that are not as powerful as smartphones but that can do more than just make calls – declined by 39% to only 28.4 million units. This means that 84% or 145.8 million of all of the cell phones sold in Western Europe in 2014 were smartphones. The smartphone segment rose by 6.4% (source: IDC European Quarterly Mobile Phone Tracker, February 2015, available under http://www.idc.com/getdoc.jsp?containerId=prUK25438915, last accessed on May 11, 2015). A survey by Internet market research agency ComScore shows that December 2012 was the first month in which smartphones reached a market penetration of over 50% in all EU countries (source: Cashcloud AG - 44 -
ComScore, available under http://www.mobile-zeitgeist.com/wp-content/uploads/2013/03/ComScore_Smartphone_Penetration.jpg , last accessed on May 11, 2015).
According to the German online statistics portal, which operates under the brand name "Statista", smartphone sales in Germany rose from 10.4 million in 2010 to 23.6 million in 2014 (source: Statista 2015, available under http://de.statista.com/statistik/daten/studie/77637/umfrage/absatzmenge-fuer-smartphones-in-deutschl and-seit-2008/, last accessed on May 11, 2015). There were already 41.1 million smartphone users in Germany in May 2014, compared with 8.43 million users in January 2010 (source: Statista 2015, available under http://de.statista.com/statistik/daten/studie/198959/umfrage/anzahl-der-smartphonenutzer-in-deutschla nd-seit-2010/, last accessed on May 11, 2015).
Even if the market for eWallet solutions, or the replacement or digitalization of the physical wallet with the smartphone, expands beyond the ability to make mobile payments via smartphone, the mobile payment sector will have a significant impact on the market for smartphone uses above and beyond the classic functions (in particular making calls and messaging). As a result, the Company believes that the market for eWallet solutions will also be significantly influenced by the development of the mobile payment market.
Mobile end device-supported payment is one of the most important growth areas in the mobile Internet market (source: article entitled "Smartphones werden zu Geldbeuteln" ("Smartphones are turning into wallets"), Börsen-Zeitung from March 4, 2015, page 13). According to this article, experts are forecasting an increase of approximately USD 430 billion in total mobile payment transactions around the world, 22% higher than in 2014 (source: article entitled "Smartphones werden zu Geldbeuteln" ("Smartphones are turning into wallets"), Börsen-Zeitung from March 4, 2015, page 13).
The Company believes that the mobile payment market will gain momentum as a result of the increased involvement of major providers such as Apple, Samsung and Google. For example, US company "Apple" is expected to launch "Apple Pay", its payment system for mobile devices, in Europe over the coming months. "Apple Pay" was launched in the US for the iPhone 6 in October 2014. The Company also understands that Korean smartphone provider Samsung intends to compete with Apple in the mobile payment services sector with US company "LoopPay", which it acquired in February 2015. In the future, the "LoopPay" system will enable Samsung smartphone users to pay in stores with their mobile device instead of with cash or a credit card. Google has also joined with payment provider Softcard to boost its mobile payment service, "Google Wallet". Google has also entered into partnerships with mobile network operators AT&T Mobility, T-Mobile USA and Verizon Wireless for this purpose.
Another key factor in the expected growth of mobile payment is the fact that more and more retailers are making NFC-enabled terminals available in their stores. This is because retailers must have the appropriate terminals for payment via NFC to work. NFC-enabled terminals are not yet widespread. The Company expects this to change significantly over the coming years. MasterCard aims to have all devices converted by 2018, for example. According to a survey by the EHI Institute in Cologne, 43% of retailers expect NFC-enabled terminals to be widely available in their branches by 2016 and all mobile network operators are confident that over three quarters of all smartphones will be NFC-enabled in 2016. (source: article from September 10, 2014, available under http://www.sueddeutsche.de/digital/mobiles-bezahlsystem-apple-versucht-was-google-misslang-1.212 2721-2, last accessed on May 5, 2015). According to a publication dated May 12, 2014 from GS1 Germany GmbH, on behalf of which EHI Retail Institute GmbH conducted a survey among retailers in Germany, over half of the retailers polled will accept contactless payments at 50% of terminals at least in 2016, and 43% of retailers will even accept contactless payments at all terminals (source: publication by GS1 Germany GmbH from May 12, 2014, "Mobile in Retail 2014", available under https://www.gs1-germany.de/fileadmin/gs1/basis_informationen/GS1_Mobile_in_Retail_2014.pdf, last accessed on May 11, 2015).
8.5. Extraordinary factors
Neither the business activities nor the market situation were influenced by extraordinary factors. Cashcloud AG - 45 -
8.6. Competitive position
In the Company's opinion, a clear competitive structure has not yet been established, since the eWallet solutions market is only in its infancy. In addition, to the Company's knowledge, there are not yet any studies on the main competitors of the companies operating in the eWallet solutions sector and their respective market shares.
Based on its experience to date in the countries where the Cashcloud Group has offered its solutions to users (Germany, France, Spain and the Netherlands), its competitors are mainly large mobile network operators and banks, as well as young start-ups.
Although the eWallet solutions market is only in its infancy and the companies present in this sector of the (European) market offer different solutions and technologies, the Cashcloud Group classifies the following companies in particular as competitors in the European market: Deutsche Telekom AG with its "MyWallet" offering; "mpass", a service from O2, Telekom and Vodafone; "Paylib" from Paylib Services S.A.S., which belongs to Crédit Agricole; "Yapital", an Otto group company; "PayCash" from PayCash Europe S.A.; Vodafone GmbH's "SmartPass" offering; "Skrill" from Skrill Ltd., an e-money institution based in the UK.
8.7. Research and development, dependence on intellectual property rights or agreements
The Company does not conduct any research or development activities, nor does it hold any patents or licenses.
The "cashcloud eWallet" app is sold almost exclusively via the "Apple iTunes Store" and "Google Play Store" sales platforms. As a result, there is a very significant dependence on these two sales channels. Accordingly, if these sales channels are discontinued or become even partially unavailable, for example as a result of technical disruptions, or if these sales channels discontinue the sale of the "cashcloud eWallet" app, this could have a very significant negative impact on sales of the "cashcloud eWallet" app to the point of an almost total loss of the sales channels.
Above and beyond this, the business activities of Cashcloud AG are not dependent on any patents or licenses, industry, trade or financing agreements, or new manufacturing processes.
8.8. Investments
8.8.1. Most significant past investments
The following table provides an overview of the Cashcloud Group's most important investments in fiscal years 2013 and 2014, as well as in fiscal 2015 to date:
Period 2013 2014 1/1/2015 until the date of the CHF '000 CHF '000 Listing Prospectus (IFRS) (IFRS) CHF '000 (IFRS) Software licenses 1 2 0 Office equipment 6 0 0 Computer equipment 5 10 3
Investments in software licenses in 2013 and 2014 related to standard software for PCs at the subsidiary in Romania. No investments were made in software licenses in 2015 as of the date of the Listing Prospectus.
The CHF 6 thousand invested in office equipment in 2013 was attributable to furniture and access security. Of this amount, CHF 3 thousand was invested in Germany and CHF 3 thousand in Romania. No investments were made in office equipment in fiscal 2014 or in fiscal 2015 to date. Cashcloud AG - 46 -
Investments in computer equipment relate to employee computers and a server. Of the 2013 figure, CHF 2 thousand was attributable to Luxembourg and CHF 3 thousand to Germany. Of the 2014 figure, CHF 8 thousand was attributable to Romania and CHF 2 thousand to Germany. CHF 3 thousand was invested in computer hardware in fiscal 2015 as of the date of the Listing Prospectus, of which CHF 2 thousand in Romania and CHF 1 thousand in Germany.
8.8.2. Most significant ongoing investments
There are no significant ongoing investments.
8.8.3. Most significant future investments
No binding resolutions have been made on any significant future investments.
8.9. Environmental issues relating to property, plant and equipment
There are no environmental issues relating to existing property, plant and equipment.
8.10. Litigation and administrative proceedings
Temporary injunction by Cashcloud AG (Luxembourg) against EasyCall AG
Cashcloud AG, Luxembourg, petitioned for and was granted by order of the Regional Court (Landgericht) of Cologne on December 18, 2013, a temporary injunction against EasyCall AG, Zürich, Switzerland, according to which EasyCall AG shall refrain from operating an Internet-based cash register system under the name "CLOUDCASH" in Germany.
After EasyCall AG filed an objection to this temporary injunction in a pleading dated April 3, 2014, the Regional Court of Cologne upheld the temporary injunction in a judgment dated June 26, 2014.
EasyCall AG filed an appeal against this decision by the Regional Court of Cologne. In the hearing before the Higher Regional Court (Oberlandesgericht) of Cologne on February 25, 2015, the bench expressed the legal opinion that the temporary injunction had been wrongfully issued by the Regional Court of Cologne. Cashcloud AG, Luxembourg, thereupon withdrew its petition for the grant of a temporary injunction on the same date (February 25, 2015). Accordingly, the temporary injunction no longer exists.
Proceedings in the main action have not been instituted to date.
There are no other government interventions or court or arbitration proceedings (including proceedings that to the Issuer's knowledge are still pending or could be instituted) that existed/were resolved in at least the last 12 months and that have had, or will have, a material effect on the financial condition or profitability of Cashcloud AG (Switzerland) and/or the Cashcloud Group in the future.
8.11. Employees
The following tables show the average number of employees in the Cashcloud Group in fiscal years 2013 and 2014, as well as in the first quarter of fiscal year 2015, broken down by principal area of activity and location:
Principal area of 2013 2014 Q1 2015 activity
Customer service 6 9 13
Product management 3 3 3
IT 2 0 0 Cashcloud AG - 47 -
Finance 1 1 1
Sales/marketing 3 5 4
Management 4 4 4
Total 19 22 25
Location 2013 2014 Q1 2015
Switzerland 1 1 1
Luxembourg 2 2 3
Germany 6 6 4
Romania 10 13 17
Total 19 22 25
The Company did not employ any temporary workers in the last two fiscal years. The Cashcloud Group had 29 employees as of the date of the Listing Prospectus.
Employee profit-sharing plans
In 2013, the Company launched a stock option plan for selected employees and executives. This plan provides for the issue of stock options to selected employees and executives in a total of three tranches (February 15, 2014, February 15, 2015 and February 15, 2016). The number of stock options issued depends on the achievement of the targets defined for the previous fiscal year in each case.
To date, a total of 106,500 stock options were issued under this plan to selected employees and executives on February 15, 2014, and a total of 89,400 were issued on February 15, 2015.
265,000 stock options are expected to be vested to thirteen employees based on the target achievement for fiscal 2015. The exact number of stock options to be granted in 2016 depends on target achievement for fiscal 2015.
8.12. Material agreements
With the exception of the following agreements, no material agreements (with the exception of agreements entered into in the ordinary course of business) have been entered into by Cashcloud AG or companies of the Cashcloud Group in the last two years before the date of the Listing Prospectus. Furthermore, as of the date of the Listing Prospectus, no other agreements (with the exception of agreements entered into in the ordinary course of business) have been entered into by the companies of the Cashcloud Group that contain any provision pursuant to which a member of the Cashcloud Group enters into an obligation or acquires a right that is of material importance to the Cashcloud Group.
Cooperation agreement between Cashcloud AG, Luxembourg, and CIKLUM SA, Switzerland, dated November 16, 2012
Cashcloud AG, Luxembourg, entered into a cooperation agreement with CIKLUM SA, Switzerland, on November 16, 2012. The agreement covers their cooperation in the area of software development. To this end, CIKLUM SA shall provide Cashcloud AG, Luxembourg, with software development consultants and their workspaces according to Cashcloud AG's requirements, without specifying a particular outcome. The parties agreed on Ukraine, Belarus and Pakistan as the place of performance. In return, CIKLUM SA receives remuneration comprising the following three components: payment of consultant remuneration, payment of taxes incurred, as well as general remuneration. All remuneration components depend on the how many consultants are used at the request of Cashcloud AG, Cashcloud AG - 48 -
Luxembourg. The amounts vary depending on the location of the consulting services. The cooperation agreement is entered into for an indefinite term and may be terminated by either party giving three months' notice. Furthermore, a right to termination exists if Cashcloud AG, Luxembourg, ends the cooperation with more than seven consultants in a single month. Cashcloud AG, Luxembourg, has undertaken in this agreement not to compete with CIKLUM SA both during the term of the agreement and in the six-month period following the termination of the agreement. Accordingly, Cashcloud AG, Luxembourg, may not directly employ or otherwise enter into contractual relationships with CIKLUM SA's consultants. Any breach of this non-compete obligation 4 is subject to a contractual penalty (Vertragsstrafe). To the extent that Cashcloud AG, Luxembourg, is to be released from the non-compete obligation with respect to the solicitation of individual consultants, it has undertaken to pay the fixed compensation amounts specified in the agreement.
In addition, in connection with the above cooperation, CIKLUM SA shall also provide Cashcloud AG, Luxembourg, with a scrum master on the basis of a supplemental agreement dated November 22/23, 2012. This scrum master takes care of disruptions and obstacles within the scope of the activities of the different consultants and teams, including poor communication and cooperation as well as personal conflicts in consultant teams. As the coach, the scrum master is responsible for the process and for eliminating obstacles. CICKLUM SA shall receive monthly remuneration based on the size of the team supervised by the scrum master. This ranges from USD 2,500.00 for a team with 3 to 5 members to monthly remuneration of USD 4,500.00 for a team with more than 9 members.
To supplement this cooperation agreement, the parties also entered into a service agreement on November 29/December 6, 2012. The service agreement covers the provision of specific services by CIKLUM SA to Cashcloud AG, Luxembourg, relating to the consultant team working for Cashcloud AG, Luxembourg. In particular, these services include the provision of Internet access, administrator services with respect to the computer server, user account management, server monitoring and technical support. CIKLUM SA currently receives a monthly fee of USD 250.00 for these services.
Agreement between Cashcloud AG, Luxembourg, and PPRO Financial Limited, UK, dated February 26, 2013
Cashcloud AG, Luxembourg, entered into an extensive cooperation agreement with PPRO Financial Limited, London, UK, on February 26, 2013. PPRO Financial Limited is licensed by the UK Financial Services Commission as an e-money institution. The agreement covers the cooperation to jointly develop and implement (card) systems that enable users to make a wide range of payments (such as goods purchases, credit card payments, cash payments, money transfers, etc.). Under this cooperation, PPRO Financial Limited is responsible for issuing cards, account management and payment processing. The Cashcloud Group only provides the technical infrastructure and programs the user functions. To date, this extensive cooperation has focused on the issue of the "Cashcloud Prepaid MasterCard NFC sticker" and the NFC chip function. PPRO Financial Limited is remunerated for its services by Cashcloud AG, Luxembourg. This remuneration comprises various components (set-up fee, fees for issuing cards, reimbursement of recurring expenses, transaction fees as well as other fees).
Agreement between Cashcloud AG, Luxembourg, and Tunz.com S.A., Belgium, dated September 25/October 15, 2012
Cashcloud AG, Luxembourg, entered into an extensive cooperation agreement with Tunz.com S.A., Brussels, Belgium, on September 25/October 15, 2012. Tunz.com S.A. is licensed by the Belgian supervisory authorities as an e-money institution. Tunz.com S.A. has since merged with e-money institution Ingenico Payment Services and only appears in the market under Ingenico Payment Services. According to this agreement, Tunz.com S.A. (now Ingenico Payment Services) is responsible for all payment services arising from the use of the "cashcloud eWallet" app offered by the Cashcloud Group. In consideration for the performance of all payment services, Tunz.com S.A. (now Ingenico Payment Services) shall receive variable remuneration based on the transactions made using the Cashcloud Group's app, as well as fixed monthly remuneration. The agreement runs for an indefinite term and may be terminated for the first time by either party after 24 months by giving six months' notice.
4 Translator's note: This translation is based on the context; "non-compete obligation" (WettbewerbsVERBOT) was probably intended here. Cashcloud AG - 49 -
Service and consulting agreement between Cashcloud AG, Luxembourg, and MOELIA DEVELOPMENT S.L., Spain, dated November 12, 2013
Cashcloud AG, Luxembourg, entered into a service and consulting agreement with MOELIA DEVELOPMENT S.L, Fuente Alamo, Spain, on November 12, 2013. According to this Agreement, MOELIA DEVELOPMENT S.L. shall perform business development services for Cashcloud AG, Luxembourg, (including generating potential business contacts and investors, support in attracting strategic partners, negotiating partner agreements, developing business relationships with Spanish business partners, support in company presentations). In addition, MOELIA DEVELOPMENT S.L. shall support Cashcloud AG, Luxembourg, in web design and communications issues. MOELIA DEVELOPMENT S.L. shall receive monthly remuneration for its services. Furthermore, Cashcloud AG, Luxembourg, shall reimburse all expenses incurred. The agreement entered into force on November 16, 2013 and is entered into for an indefinite term. It may be terminated by either party giving two months' notice to the end of the month.
On July 1, 2014, the parties entered into a supplemental agreement on software development services. According to this supplemental agreement, MOELIA DEVELOPMENT S.L. shall provide Cashcloud AG, Luxembourg, with IT consultants to develop a new mobile app for Cashcloud AG, Luxembourg. MOELIA DEVELOPMENT S.L. is responsible for the operational management and organization of the IT consultants working for Cashcloud AG, Luxembourg. To this end, MOELIA DEVELOPMENT S.L. shall also provide the consultants with the required hardware and software. The remuneration is based on the actual hours worked by the IT consultants. The hourly rate varies according to the qualifications of the IT consultant in each case (between EUR 15.50 and EUR 22.50). At the same time, Cashcloud AG, Luxembourg, has undertaken to pay MOELIA DEVELOPMENT S.L. minimum remuneration in the amount of EUR 10,000.00 for the month of August 2014, EUR 15,000.00 for the month of September 2014 and EUR 2,500.00 for each consultant used in the months thereafter, independent of the actual hours worked.
Loan agreement between Cashcloud AG, Luxembourg, and SPP Capital AG, Liechtenstein, dated April 4, 2014
Cashcloud AG, Luxembourg, entered into a loan agreement with SPP Capital AG, Liechtenstein, on April 4, 2014. According to this agreement, SPP Capital AG, as lender, shall grant a loan in the amount of EUR 250,000.00 to Cashcloud AG, Luxembourg, as borrower. The loan is subject to interest of 3% p.a., payable in arrears. The loan agreement provides for a fixed term to December 31, 2015; however, SPP Capital AG is entitled to terminate the loan early and demand repayment if Cashcloud AG, Switzerland, or companies of the Cashcloud Group receive new funds in the amount of at least EUR 1 million in connection with capital increases or other financing. Cashcloud AG, Luxembourg, is entitled to make early repayment of the loan at any time.
Loan agreement between Cashcloud AG, Luxembourg, and SPP Capital AG, Liechtenstein, dated May 13, 2014
Cashcloud AG, Luxembourg, entered into a loan agreement with SPP Capital AG, Liechtenstein, on May 13, 2014. According to this agreement, SPP Capital AG, as lender, shall grant a loan in the amount of EUR 250,000.00 to Cashcloud AG, Luxembourg, as borrower. The loan is subject to interest of 3% p.a., payable in arrears. The loan agreement provides for a fixed term to December 31, 2015; however, SPP Capital AG is entitled to terminate the loan early and demand repayment if Cashcloud AG, Switzerland, or companies of the Cashcloud Group receive new funds in the amount of at least EUR 1 million in connection with capital increases or other financing. Cashcloud AG, Luxembourg, is entitled to make early repayment of the loan at any time.
Loan agreement between Cashcloud AG, Luxembourg, and Confortune Europe AG, Liechtenstein, dated June 24, 2014
Cashcloud AG, Luxembourg, entered into a loan agreement with Confortune Europe AG, Liechtenstein, on June 24, 2014. According to this agreement, Confortune Europe AG, as lender, shall grant a loan in the amount of EUR 150,000.00 to Cashcloud AG, Luxembourg, as borrower. The loan is subject to interest of 3% p.a., payable in arrears. The loan agreement provides for a fixed term to December 31, 2015; however, Confortune Europe AG is entitled to terminate the loan early and demand repayment if Cashcloud AG, Switzerland, or companies of the Cashcloud Group receive new funds in the amount of Cashcloud AG - 50 - at least EUR 1 million in connection with capital increases or other financing. Cashcloud AG, Luxembourg, is entitled to make early repayment of the loan at any time.
Loan agreement between Cashcloud AG, Luxembourg, and Confortune Europe AG, Liechtenstein, dated July 18, 2014
Loan agreement between Cashcloud AG, Luxembourg, and Confortune Europe AG, Liechtenstein, dated July 18, 2014. According to this agreement, Confortune Europe AG, as lender, shall grant a loan in the amount of EUR 150,000.00 to Cashcloud AG, Luxembourg, as borrower. The loan is subject to interest of 3% p.a., payable in arrears. The loan agreement provides for a fixed term to December 31, 2015; however, Confortune Europe AG is entitled to terminate the loan early and demand repayment if Cashcloud AG, Switzerland, or companies of the Cashcloud Group receive new funds in the amount of at least EUR 1 million in connection with capital increases or other financing. Cashcloud AG, Luxembourg, is entitled to make early repayment of the loan at any time. Cashcloud AG - 51 -
9. Governing bodies of the Company
9.1. Board of Directors and senior management
9.1.1. General provisions
Cashcould AG's governing bodies are the General Meeting and the Board of Directors. The functions and powers of these governing bodies are governed by the Swiss Code of Obligations, the Articles of Incorporation and the organizational regulations.
The Board of Directors is responsible for the ultimate direction of the Company. It manages the Company in accordance with the Swiss Code of Obligations, the Articles of Incorporation and the organizational regulations, taking into account the resolutions adopted by the General Meeting. In contrast to German stock corporation law, under which corporate control is based on a dualistic (two-tier) system with the management board as the executive and the supervisory board as the controlling body, Swiss stock corporation law is based on the so-called monistic (one-tier) system. Therefore the functions of the Company's management and supervision have been combined in a single corporate body, the Board of Directors.
The Board of Directors represents the Company in its dealings with third parties. The Board of Directors must ensure that appropriate risk management and internal oversight systems are established and operated within the Company in order to facilitate the early identification of developments that might jeopardize the continued existence of the Company.
If the Board of Directors consists of several members, it is self-constituting and elects its Chairman, Vice Chairman and a Secretary from among its members. The Secretary need not be a member of the Board of Directors ("Director") or a shareholder.
The Board of Directors must provide the General Meeting with a report on its activities and the course of business (annual report).
The Directors have fiduciary duties and duties of care toward the Company. In discharging these duties, a broad spectrum of interests, primarily those of the Company itself, but also those of its shareholders, employees, creditors and the general public must be taken into account.
Each member of the Board of Directors has the right to request information about the affairs of the Company in accordance with Article 715a of the Swiss Code of Obligations (Obligationenrecht, "OR").
The individual shareholders, like any other person, are prohibited from using their influence on the Company to cause a member of the Board of Directors to take any action that is detrimental to the Company. Whoever uses his or her influence to cause any member of the Board of Directors, commercial attorney-in-fact (Prokurist) or authorized agent to act in a manner that damages the Company or its shareholders is required to compensate the Company for the damage thereby suffered by it.
The members of the Board of Directors and all persons charged with managing the affairs of the Company shall be liable not only to the Company but also to the individual shareholders and the Company's creditors for the damage they may have caused as a result of any willful or negligent breach of their duties.
9.1.2. Board of Directors
General information on Cashcloud AG's Board of Directors
The Board of Directors consists of one or several members.
The General Meeting elects the individual members of the Board of Directors and its Chairman for a term of office up to the next Annual General Meeting, with re-election being possible. Cashcloud AG - 52 -
The General Meeting has the power to dismiss the Chairman of the Board of Directors. If the office of the Chairman of the Board of Directors is vacant, the Board of Directors shall appoint a new Chairman from among its members for the remainder of the term of office.
The Board of Directors appoints the Secretary who need not be a member of the Board of Directors.
The Board of Directors may take decisions on all matters that are not reserved to the General Meeting by law or the Articles of Incorporation.
The Board of Directors has the following non-delegable and inalienable functions:
1. ultimate direction of the Company and issuing the necessary instructions; 2. determining the organization; 3. structuring of the accounting system, financial controlling and financial planning to the extent required for the management of the Company; 4. appointing and dismissing the persons entrusted with the management of the business; 5. ultimate supervision of the persons entrusted with the management of the business, in particular with regard to compliance with the statutory provisions, the Articles of Incorporation, regulations and instructions; 6. preparation of the annual report and the compensation report in accordance with the statutory provisions, as well making preparatory arrangements for the General Meeting and implementing its resolutions; 7. notifying the judge in the event of overindebtedness.
The members of the Board of Directors shall jointly manage the business of the Company insofar as such management has not been validly delegated.
Subject to Article 716a OR, the Board of Directors is authorized to delegate the management of the Company, in whole or in part, to individual Directors or to third parties in accordance with a set of organizational regulations to be issued by it.
These regulations organize the management of the Company, determine the positions necessary for such management, define its duties and determine the reporting requirements.
The Board of Directors represents the Company in its dealings with third parties. Each individual Board member has the right to represent the Company unless the Board of Directors determines otherwise. It may transfer such right of representation to one or several Board members (delegates) or third parties (executives). At least one member of the Board of Directors must have the authority to represent the Company.
The Board of Directors appoints the authorized signatories and determines the manner in which they shall sign for the Company.
Meetings of the Board of Directors shall be convened by the Chairman, or in the event of the Chairman's prevention, by the Secretary, as often as business requires. Any member of the Board of Directors may request the Chairman to convene a meeting without undue delay, stating the reasons therefor.
The Board of Directors shall have quorum if the majority of its members are present.
It adopts its resolutions and conducts its elections by a majority of the votes cast. The Chairman participates in the voting. In the event of a tied vote, the Chairman's vote counts twice.
Unless a Board member requests an oral deliberation, resolutions may also be adopted by circular procedure provided they are unanimously approved.
The deliberations and resolutions of the Board of Directors will be recorded in the minutes, which must be signed by the Chairman and the Secretary.
The Board of Directors has not formed any committees. Cashcloud AG - 53 -
Current members of Cashcloud AG's Board of Directors
The Company's Board of Directors currently consists of one member:
Sven Donhuysen - member of the Board of Directors -
In pursuing his entrepreneurial activities for more than 15 years, Mr. Donhuysen has held a number of management positions. During this time he was active with building several global start-up companies, mainly in the global telecommunications and Internet sector. Today Mr. Donhuysen uses his vast experience to support international start-ups, including the Cashcloud Group.
In the past five years Mr. Donhuysen has held various positions as member of the board of directors, management board or supervisory board or partner of the following other companies or enterprises:
Existing positions:
03/2015 - present Managing Director of Blitz 15-37 GmbH (the future IPF Beteiligungs GmbH) 01/2015 - present Chairman of the Board of Directors of BIOPOWERTEC AG 01/2015 - present Chairman of the Board of Directors of Icewater AG 12/2014 - present Chairman of the Board of Directors of PETROC AG 12/2014 - present Managing Director of Euro Grundinvest Objekt 224 GmbH and Euro Grundinvest Property GmbH 11/2014 - present Managing Director of Euro Grundinvest Holding GmbH Euro Grundinvest Service GmbH OVT Odeon GmbH Euro Grundinvest Real Estate GmbH Euro Grundinvest Consulting GmbH Euro Grundinvest Management GmbH Euro Grundinvest Objekt Management Holding GmbH Euro Grundinvest Immobilien Vertrieb GmbH Euro Grundinvest Objekt München GmbH Euro Grundinvest Objekt 218 GmbH Bayern Palais Objekt Dachau GmbH Euro Grundinvest Objekt 222 GmbH Euro Grundinvest Objekt 226 GmbH Euro Grundinvest Objekt 217 GmbH Euro Grundinvest Objekt 219 GmbH Euro Grundinvest Objekt 221 GmbH Euro Grundinvest Objekt 223 GmbH Euro Grundinvest Objekt 225 GmbH Bayern Palais Bauträger GmbH IPF Austria GmbH Euro Grundinvest Objekt 227 GmbH Euro Grundinvest Real Estate Finance GmbH 11/2014 - present Member of the Management Board of Euro Grundinvest AG 10/2014 - present Member of the Board of Directors of WAM International AG 08/2014 - present Chairman of the Board of Directors of IPF AG 05/2013 - present Director of UNO Funds STC B.V. 08/2013 - present Member of the Management Board of Moelia Development S.L. 03/2013 - present Member of the Board of Directors of Global Internet Holding Ltd. 12/2012 - present Member of the Board of Directors of Troxxo Media AG 09/2012 - present Chairman of the Board of the FORESIGHT FOUNDATION 08/2012 - present Chairman of the Board of Directors of Cashcloud AG (Luxembourg) 07/2012 - present Member of the Board of Directors of Leo Equity AG 2010 - present Director of Henning Gold Mines Inc. 01/2004 - present Member of the Board of Directors of Megadon AG
These memberships continue to exist as of the date of this Listing Prospectus. Cashcloud AG - 54 -
Previously held positions:
08/2013 - 11/2013 Managing Director of INVESTAQ GmbH 09/2010 - 07/2011 Member of the Board of Directors of Jupiter Holding AG
Pursuant to a resolution adopted by the General Meeting on May 4, 2015, Mr. Donhuysen was most recently appointed member of the Board of Directors for a term of office up to the next Annual General Meeting.
Compensation of the Board member
Mr. Donhuysen received no compensation in fiscal year 2014.
Mr. Donhuysen has also not entered into any contract of employment with the Company. By the same token, there are no benefits that would be granted to Mr. Donhuysen in connection with the termination of an employment relationship.
Neither the Issuer nor any companies of the Cashcloud Group have any obligations arising from pension or similar commitments vis-à-vis the Board of Directors. Neither the Issuer nor any companies of the Cashcloud Group have recognized any reserves or provisions for this purpose.
At present, Mr. Donhuysen indirectly holds approximately 18.58% of the shares in Cashcloud AG via the FORESIGHT FOUNDATION, of which he is the ultimate beneficiary. There are no stock options in favor of Mr. Donhuysen.
The Board member can be contacted at the Company's business address: Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland.
9.1.3. Senior management
Olaf Taupitz works for the Cashcloud Group at the senior management level.
Olaf Taupitz - Head of Product and Innovation / Managing Director -
As senior manager, Olaf Taupitz draws from more than 20 years of experience in the prepaid industry from the telecommunications and payment system sector and an additional 5 years in the financial transactions sector. As business development manager, country manager and marketing director in the area of fixed-network and mobile telecommunications, mobile network operators and prepaid cards, he created and managed a number of projects.
In the past five years Mr. Taupitz has held positions as member of the board of directors, management board or supervisory board or partner of the following companies and enterprises:
since 08/2012 Manager and member of the Board of Directors of Cashcloud AG, Luxembourg since 11/2912 Managing Director of Cashcloud Technology Services SRL, Romania since 07/2013 Managing Director of Cashcloud Deutschland GmbH.
As of the date of this Listing Prospectus, Mr. Taupitz directly holds 225,000 shares of the Company. In addition, Mr. Taupitz holds 106,500 stock options.
The total compensation including non-cash benefits which Mr. Taupitz received from companies of the Cashcloud Group amounted to EUR 140 thousand in fiscal year 2014.
Neither the Issuer nor any companies of the Cashcloud Group have any obligations arising from pension or similar commitments vis-à-vis the senior management member. Neither the Issuer nor any companies of the Cashcloud Group have recognized any reserves or provisions for this purpose.
The member of senior management can be contacted at the company's business address: Cashcloud AG, Steinenberg 19, 4051 Basel, Switzerland. Cashcloud AG - 55 -
9.1.4. Potential conflicts of interest
The interdependencies of a legal, economic and personnel-related nature that are of significance are as follows:
As shareholders of Cashcloud AG, both Mr. Donhuysen and Mr. Taupitz have a personal interest in receiving as high a dividend distribution as possible, although it could well be in the interest of Cashcloud AG to hold the capital in the Company. However, this mainly involves merely a potential conflict of interest in view of the fact that Cashcloud AG has thus far not adopted a resolution on the appropriation of any net retained profits.
Moreover, with regard to the persons referred to under items 9.1.2 and 9.1.3, no other potential conflicts of interest exist between their obligations towards the Issuer and their private interests or other obligations.
9.1.5. Rights of nomination or appointment
No contracts or agreements have been entered into with major shareholders, customers, suppliers or other persons as a result of which the persons referred to under items 9.1.2 and 9.1.3 were appointed as member of the Board of Directors or as member of the senior management.
9.1.6. Additional information
None of the persons referred to under items 9.1.2 and 9.1.3 has entered into any agreements on selling restrictions with regard to the respective shares they hold in Cashcloud AG.
There are no family ties between the persons referred to under items 9.1.2 and 9.1.3.
None of the persons referred to under items 9.1.2 and 9.1.3 were convicted of the criminal offense of fraud in the past five years.
During the last five years, none of the persons referred to under items 9.1.2 and 9.1.3 have been subject to any public accusations and/or sanctions by statutory authorities or the regulatory authority (including certain professional associations). During the last five years, the persons referred to under items 9.1.2 and 9.1.3 have not been deemed unsuitable by a court of law for membership in an administrative, management or supervisory body of any issuer or for work in management or for managing the business of an issuer.
During the last five years, none of the persons referred to under items 9.1.2 and 9.1.3 has been involved in any insolvency, receivership or liquidation proceedings in connection with his or her position as a member of an administrative, management or supervisory body or as a member of senior management.
9.2. General Meeting
The General Meeting of Shareholders is the supreme governing body of the Company. It has the following non-delegable powers:
1. to adopt and amend the Articles of Incorporation; 2. to elect and dismiss the members of the Board of Directors, the Chairman of the Board of Directors, the members of the compensation committee, the independent proxy and the auditor; 3. to approve the management report and, to the extent legally required, the consolidated financial statements; 4. to approve the annual financial statements and resolve on the appropriation of the net retained profits, in particular to determine the amount of the dividend and the bonus; 5. to approve the compensation of the Board of Directors and management; 6. to ratify the acts of the Board of Directors and persons entrusted with the management of the Company; 7. to adopt resolutions on matters reserved for the General Meeting by law or the Articles of Incorporation or those which are submitted to it by the Board of Directors. Cashcloud AG - 56 -
The Annual General Meeting is held once in every year, not more than six months after the end of the fiscal year; extraordinary General Meetings shall be convened as required.
The General Meeting is convened by the Board of Directors and, if necessary, by the auditor. A General Meeting may also be convened at the request of one or more shareholders together representing at least 10% of the share capital; such requests shall specify the business to be transacted and the resolution proposals. Requests to convene a meeting shall be submitted to the Board of Directors in writing.
Shareholders representing shares with a par value of one million Swiss francs may submit a written request that an item be placed on the agenda by specifying the business to be transacted.
The annual report, compensation report and auditor's reports shall be made available for inspection by the shareholders at the registered office of the Company no later than twenty days prior to the Annual General Meeting. Any shareholder may request that a copy of such documents be sent to him or her without undue delay. The shareholders will be notified thereof in the manner prescribed by law and the Articles of Incorporation.
The General Meeting shall be convened by the Board of Directors and, if necessary, the auditors not later than twenty days prior to the date of the meeting by publication of a notice in the Company's journals of record. The notice of the meeting shall specify the items on the agenda as well as the proposals by the Board of Directors and the shareholders who have requested the holding of a General Meeting or that an item be placed on the agenda.
No resolutions can be adopted on matters that have not been duly announced in the notice of the meeting, unless they relate to any of the statutorily prescribed exceptions.
The membership rights can be exercised by persons who identify themselves as owners of bearer shares. Each share carries one vote at the General Meeting. In the case of resolutions concerning the ratification of the acts of the Board of Directors those persons who participated in management in any way shall not have a voting right.
Shareholders may be represented at the General Meeting by proxies (persons holding a written power of attorney) who need not be shareholders, or by the independent proxy. The Board of Directors shall make a final decision as to the validity of the proxy. In addition, the shareholders may also issue the independent proxy electronic powers of attorney and instructions, although the Board of Directors will determine the modalities thereof.
The General Meeting elects the independent proxy for a term of office up to the close of the next Annual General Meeting, with re-election being possible. Where the General Meeting does not have an independent proxy, the Board of Directors shall appoint such proxy for the next General Meeting.
The Chairman of the Board of Directors presides over the General Meeting or, in the event of the Chairman's prevention, the Vice Chairman or another Board member to be appointed by the General Meeting itself. Where no such Board member is available, the General Meeting will elect an interim chairman. The chairman of the meeting shall appoint a secretary to take the minutes and, if necessary one or more scrutineers; the secretary and the scrutineers need not be shareholders. The following shall be recorded in the minutes:
1. number, type, par value and class of shares represented by the shareholders, the governing bodies and the independent proxy; 2. the resolutions and election results; 3. the requests for information and the answers provided thereto; 4. the shareholders' statements requested to be recorded in the minutes.
The minutes shall be signed by the chairman and the secretary taking the minutes of the meeting. The shareholders shall have the right to inspect the minutes.
Unless the law or the Articles of Incorporation provide otherwise, the General Meeting adopts its resolutions and conducts its elections with the absolute majority of the voting shares represented. In this respect, any abstentions, blank and invalid votes shall not be taken into account in the calculation of the Cashcloud AG - 57 - majority. A resolution of the General Meeting adopted with at least two-thirds of the votes represented and the absolute majority of the nominal value of the shares represented shall be required for the following:
1. changes to the purpose of the Company; 2. the creation of shares with voting rights; 3. restrictions on the transferability of registered shares; 4. any authorized or conditional capital increase; 5. capital increases by recourse to equity, against non-cash contributions or for the acquisition of assets and the granting of special benefits; 6. restrictions or eliminations of subscription rights; 7. relocation of the Company's registered office; and 8. the dissolution of the Company. Cashcloud AG - 58 -
10. Shareholder structure
10.1. Overview of the shareholder structure
The shareholder structure as it stands to the Company's knowledge is presented in the following table:
Shareholder Shares in % (approx.)
SPP Capital AG* 4,000,000 33.33
Cybernet Capital Limited** 2,390,000 19.92
FORESIGHT FOUNDATION*** 2,230,000 18.58
Free float
(other shareholders and 3,380,000 28.17 treasury shares, each with less than 5%)
Total no. of shares 12,000,000 100 * SPP Capital AG's sole shareholder is Bluestar Capital Trust. ** Cybernet Capital Limited's sole shareholder is Mr. Steffen Korbach. *** The ultimate beneficiary of the FORESIGHT FOUNDATION is Board of Directors member Sven Donhuysen.
10.2. Shareholders' voting rights
Each share in Cashcloud AG carries one vote. There are no restrictions on voting rights; all shares in Cashcloud AG carry the same voting rights.
10.3. Control relationships
To the Company's knowledge, the major shareholders of Cashcloud AG specified in 10.1 currently hold a total of 71.83% of the voting rights in the Company. They therefore hold a sufficient number of voting rights to be able to adopt certain resolutions at the General Meeting if they vote unanimously (depending on attendance at the Company's General Meeting), and they may therefore be able to exercise control over the Company. In fact, they collectively hold a sufficient number of voting rights to be able to pass resolutions requiring a simple majority. Depending on attendance at the specific General Meeting, the major shareholders may also under certain circumstances hold a sufficient number of voting rights to pass resolutions requiring a three-quarters majority.
They may exert control by exercising their voting rights to bring about or prevent the adoption of resolutions at the General Meeting. In general it is not possible to restrict rights to vote at the General Meeting. There is therefore no action that can be taken to prevent the aforementioned shareholders from misusing their controlling influence.
10.4. Future changes in control relationships
At the present time, Cashcloud AG has no knowledge of any agreements that could result in a change of control at the Company in the future. Cashcloud AG - 59 -
11. Related-party transactions
There have been no related-party transactions since the end of the most recent reporting period on December 31, 2014, for which the audited consolidated financial statements have been published. Cashcloud AG - 60 -
12. Information on the capital and Articles of Incorporation
12.1. Capital
12.1.1. Share capital and shares
The share capital of the Company currently amounts to CHF 2,400,000.00 and is divided into 12,000,000 no-par value bearer shares (common shares), each such share representing a notional interest in the share capital of CHF 0.20. All of the 12,000,000 no-par value shares issued are fully paid in.
All shares of Cashcloud AG are part of the shareholders' equity of the Company.
12.1.2. Development of subscribed capital
The following table contains a summary of the development of the subscribed capital of Cashcloud AG since its formation on April 29, 2011.
Date Corporate action Changes in subscribed Number of Entry of corporate capital bearer shares action in the following register corporate action Amount of Share capital with each share capital following representing a increase or corporate notional interest decrease action in the share capital of CHF 0.20 Formation CHF CHF resolution dated Formation 7,500,000 April 29, 2011 1,500,000.00 1,500,000.00 April 29, 2011
Resolution of the Cash capital CHF CHF General Meeting of 8,000,000 February 15, 2013 increase 100,000.00 1,600,000.00 February 15, 2013
Resolution of the Cash capital CHF CHF General Meeting of 8,800,000 July 16, 2013 increase 160,000.00 1,760,000.00 July 16, 2013
Resolution of the Cash capital CHF CHF Board of Directors of 12,000,000 November 27, 2014 increase 640,000.00 2,400,000.00 November 10, 2014
12.1.3. Treasury shares
Cashcloud AG currently does not hold any own shares in treasury.
12.1.4. Convertible securities, exchangeable securities or securities with warrants
No convertible securities, exchangeable securities or securities with warrants exist.
Pursuant to the provisions of the Swiss Code of Obligations (Obligationenrecht, "OR") (Article 653 OR), the Company is at any time authorized to grant conversion and/or option rights which confer on the holders a right of exchange for shares of the Company. The statutory provisions do not provide for any restriction on the total nominal amount of the conversion and/or option rights granted. With regard to the restrictions of the contingent capital created for this purpose, reference is made to the information provided in chapter 12.1.5 below. Cashcloud AG - 61 -
12.1.5. Contingent capital
Under Article 3 (3) and (4) of the Company's Articles of Incorporation, two types of contingent capital exist.
Pursuant to Article 3 (3) of the Company's Articles of Incorporation, the Company's share capital may be increased by a maximum of CHF 695,000.00 through the issuance of a maximum of 3,475,000 bearer shares, to be fully paid in, each with a par value CHF 0.20, as a result of the exercise of conversion and/or option rights granted in connection with the issuance of bonds or similar debt instruments of the Company. The shareholders' subscription right shall be excluded. The respective holders of conversion and/or option rights will be entitled to subscribe to the new shares. The Board of Directors shall stipulate the conversion and/or option terms and conditions.
When issuing bonds or similar debt instruments that are connected with conversion and/or option rights, the Board of Directors is authorized to restrict or exclude the shareholders' preferential subscription right if such instruments are issued to finance or refinance the acquisition of enterprises, parts of enterprises or equity interests, or newly planned investments, and/or if the instruments are issued on national or international capital markets. Where the preferential subscription right is not directly or indirectly ensured pursuant to a resolution of the Board of Directors, the bonds, other financial market instruments and new shares shall be issued on prevailing market terms.
Pursuant to Article 3 (4) of the Company's Articles of Incorporation, the Company's share capital may be increased by a maximum of CHF 105,000.00 through the issuance of a maximum of 525,000 bearer shares to be fully paid in, each with a par value CHF 0.20, as a result of the exercise of employee options granted to the members of the Board of Directors of the Company and its subsidiaries. The shareholders' subscription rights and preferential subscription rights shall be excluded. Such options shall be issued to the employees or members of the Board of Directors of the Company and its subsidiaries in accordance with the plan rules issued by the Board of Directors.
12.1.6. Authorized capital
Pursuant to Article 3 (2) of the Company's Articles of Incorporation, the Board of Directors is authorized, at any time until February 12, 2017, to increase the Company's share capital by a maximum of CHF 1,200,000.00 through the issuance of a maximum of 6,000,000 bearer shares to be fully paid in, each with a par value CHF 0.20. Increases by way of firm underwriting as well as partial increases will be permitted. The relevant issue price, the time of the dividend entitlement, and the type of contribution will be determined by the Board of Directors. The Board of Directors will decide on the allocation of any subscription rights that are not exercised.
The Board of Directors is authorized to restrict or exclude the shareholders' subscription rights and allocate them to third parties in case the shares are used:
1. for the acquisition of enterprises, parts of enterprises or equity interests, the purchase of products, intellectual property rights or licenses for planned investments, including product development programs, or in the case of a share placement, for the financing or refinancing of such transactions or planned investments by virtue of a share placement with one or more investors; or
2. for the purpose of granting an interest to strategic partners (including in the case of a public takeover bid) or for the purpose of broadening the shareholder base in certain investor groups or markets, or as part of the listing of the shares on domestic or foreign stock exchanges, including for the purpose of delivering shares to the participating banks upon exercise of the over-allotment option; or
3. for granting an interest to compensating enterprises that provide services to the Company or any of its subsidiaries; or
4. for the purpose of rapid and flexible procurement of equity by way of a share placement which, in case of subscription rights, would only be possible with difficulty or at significantly worse conditions; or Cashcloud AG - 62 -
5. to ward off a takeover bid that has been submitted, threatened or may be possible and which the Board of Directors – following consultation with an independent financial advisor engaged for this purpose – has advised the shareholders not to accept since the Board of Directors does not consider such takeover bid to be fair to the shareholders from a financial perspective.
12.2. The Company's Articles of Incorporation
12.2.1. Corporate purpose
Pursuant to Article 2 of the Company's Articles of Incorporation, the purpose of the Company is the financing, formation, establishment, acquisition, administration and sale of enterprises and equity interests in enterprises both within Switzerland and abroad, including the holding and management of licenses and patents of any kind.
The Company is authorized to establish branches and subsidiaries both within Switzerland and abroad and engage in any transactions directly or indirectly associated with its corporate purpose The Company is authorized to acquire, mortgage, sell and manage real estate both in Switzerland and abroad. The Company may also arrange financing for its own or third party account and enter into guarantees and sureties for subsidiaries or third parties.
12.2.2. Changes to shareholder rights
The Company's Articles of Incorporation do not provide for any changes to shareholder rights in deviation of the statutory provisions.
12.2.3. Change in the Company's control
The Articles of Incorporation of Cashcloud AG do not contain any provisions relating to a change in the control of the Company.
12.2.4. Shareholding disclosure thresholds
As regards the duties of disclosure for shareholdings, the Articles of Incorporation of Cashcloud AG do not contain any specific provisions of its own.
Since the Company's shares will in the future have been admitted to the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (General Standard) the Company will, as from the date of admission, be subject to the provisions of the German Securities Trading Act (Wertpapierhandelsgesetz, "WpHG)" relating to the notification and disclosure of shareholdings for the reason that, in line with Section 2 (6) sentence 1 no. 1 b) 2nd half-sentence of WpHG, Cashcloud AG is to be treated as if it had chosen the Federal Republic of Germany as its country of origin, in view of the fact that Cashcloud AG has to date not chosen any other country as its country of origin.
In accordance with Section 21 (1) WpHG, any party whose shareholding in an issuer, whose home country is the Federal Republic of Germany reaches, exceeds or falls below 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the voting rights by purchase, sale or by any other means shall, without undue delay, and within four trading days at the latest, notify the issuer and simultaneously the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin") in writing of having reached, exceeded or fallen below the above-mentioned thresholds, and also of the amount of its share of voting rights.
12.2.5. Articles of Incorporation relating to changes in capital
Changes with respect to the Company's share capital, particularly any capital increases, capital reductions or the creation of Authorized or Contingent Capital shall, in accordance with the statutory provisions, be effected pursuant to a resolution of the General Meeting adopted with at least two-thirds of the voting shares represented and the absolute majority of the nominal value of the shares represented.
The Company's Articles of Incorporation and Certificate of Incorporation do not contain any provisions relating to changes in share capital that are more stringent than the statutory requirements. Cashcloud AG - 63 -
13. Discussion and analysis of financial information
13.1. Notes regarding financial information and financial position
13.1.1. Financial information
The financial statements of the Cashcloud Group for the fiscal years from January 1, 2013 to December 31, 2013 and from January 1, 2014 to December 31, 2014 were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union pursuant to Regulation (EC) No. 1606/2002 and audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Schlossgartenstraße 1, 68161 Mannheim, Germany, which issued the respective unqualified audit opinions reproduced in this Listing Prospectus.
KPMG AG Wirtschaftsprüfungsgesellschaft's audit opinion for the consolidated financial statements for the fiscal year from January 1, 2013 to December 31, 2013 and its audit opinion for the consolidated financial statements for the fiscal year from January 1, 2014 to December 31, 2014 each contain the following "emphasis of matter", which is quoted verbatim in each case:
"Without qualifying our opinion, we draw attention to management's explanations expressed in the notes to the consolidated financial statements. In note 22 "Going concern basis of accounting" management explains that the Company needs additional capital to meet its future cash requirements and to execute its business strategy, which requires that continuous successful financing by shareholders or other external parties is required until the group is able to generate sufficient operating cashflows that will allow the Company to continue as a going concern.
These conditions, along with other matters as set forth in note 2.2, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern."
Note 2.2, cited above in the "emphasis of matter" by KPMG AG Wirtschaftsprüfungsgesellschaft, was worded as follows in the consolidated financial statements for the fiscal year from January 1, 2013 to December 31, 2013:
"Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet mandatory repayment terms of the Group's debt facilities and other liabilities.
As described in the following, the Company needs additional capital to meet its future cash requirements and to execute its business strategy, which requires that continuous successful financing by shareholders or other external parties is required until the Group is able to generate sufficient operating cash flows that will allow the Company to continue as a going concern. The Company's lack of capital and existing debt defaults could require it to cease operations without further funding. To maintain its current level of business operations and meet its current debt obligations, the Company will be required to obtain additional capital through either equity or debt financing. There can be no assurance that additional equity or debt financing will be available to the Company on commercially reasonable terms or at all. Failure to obtain additional capital could result in insolvency, foreclosure and possible bankruptcy of the Company. These factors raise a material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern.
Based on the current economic development of the Group, management considers the current business plan as showing a realistic and achievable scenario that the Group will be able to maintain adequate resources to continue in operational existence for the foreseeable future. The main premises underlying this scenario include the assumptions that sufficient capital will be available in order to invest in planned marketing actions and development intensity. These premises will in a very directly manner determine the level of achievable business volume.
The Group has recognized a net loss of CHF 2.4 million for the year ended December 31, 2013, and an accumulated deficit of 3.4 million as of December 31, 2013. According to the business plan, the Group is not expected to achieve positive net income before January 2017, and the external funding requirements for the coming 24 months amount to CHF 11 million (excluding capital increase of 27 Cashcloud AG - 64 -
November 2014 described in Note 30 Events after the reporting date). This external financing – as usual with start-up companies – is at present not yet fully available. Based on cooperation with existing investors as well as the current negotiations with potential new investors, the board is convinced that the existence of the Group will be secured – especially in the next two years – and the correspondingly planned external financing rounds can be realized with sufficient amounts. This belief is supported by the fact that a capital increase was performed in November 2014 amounting to CHF 3.2 million (see Note 30 Events after the reporting date) by one major investor.
If, contrary to management's expectations, the economic development of the Group should develop less quickly than expected, management has the ability and intent to reduce the financing needs (e.g. through lower deposit requirements for payment transaction volume). As a consequence, even in a weaker scenario, the board is convinced that the Group will be able to raise the required external financing for at least the next two years.
Management acknowledges that a material uncertainty exists over the Group's ability to meet its funding requirements and to refinance or repay its debt facilities and other liabilities as they fall due. However, as described above, management has a reasonable expectation that the Group will be able to raise adequate resources to continue in operational existence for the foreseeable future. If for any reason the Group is unable to continue as a going concern, It could have an impact on the Group's ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements. The financial statements do not include adjustments that might result from the outcome of this uncertainty."
Note 2.2, cited above in the "emphasis of matter" by KPMG AG Wirtschaftsprüfungsgesellschaft, was worded as follows in the consolidated financial statements for the fiscal year from January 1, 2014 to December 31, 2014:
"Going concern basis of accounting
The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet mandatory repayment terms of the Group's debt facilities and other liabilities.
As described in the following, the Company needs additional capital to meet its future cash requirements and to execute its business strategy, which requires that continuous successful financing by shareholders or other external parties is required until the Group is able to generate sufficient operating cash flows that will allow the Company to continue as a going concern. The Company's lack of capital and existing debt defaults could require it to cease operations without further funding. To maintain its current level of business operations and meet its current debt obligations, the Company will be required to obtain additional capital through either equity or debt financing. There can be no assurance that additional equity or debt financing will be available to the Company on commercially reasonable terms or at all. Failure to obtain additional capital could result in insolvency, foreclosure and possible bankruptcy of the Company. These factors raise a material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern.
Based on the current economic development of the Group, management considers the current business plan as showing a realistic and achievable scenario that the Group will be able to maintain adequate resources to continue in operational existence for the foreseeable future. The main premises underlying this scenario include the assumptions that sufficient capital will be available in order to invest in planned marketing actions and the planned level of development efforts. These premises will in a very directly manner determine the level of achievable business volume.
The Group has recognized a net loss of CHF 3.4 million for the year ended December 31, 2014, and an accumulated deficit of CHF 6.8 million as of December 31, 2014. According to the business plan, it is not expected that the Group will be able to achieve a positive net income before January 2017, and the external funding requirements for the coming 24 months amount to CHF 10.0 million. This external financing – as usual with start-up companies – is at present not yet fully available. Based on cooperation with existing investors as well as the current negotiations with potential new investors, the board is convinced that the existence of the Group will be secured – especially in the next two years – and that Cashcloud AG - 65 - the Group will be able to successfully complete the necessary external financing rounds in order to raise capital that is sufficient to achieve this goal. This belief is supported by the fact that a capital increase was performed in November 2014 amounting to CHF 3.2 million by one major investor.
Management acknowledges that a material uncertainty exists over the Group's ability to meet its funding requirements and to refinance or repay its debt facilities and other liabilities as they fall due. However, as described above, management has a reasonable expectation that the Group will be able to raise adequate resources to continue in operational existence for the foreseeable future. If for any reason the Group is unable to continue as a going concern, it could have an impact on the Group's ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements. The financial statements do not include adjustments that might result from the outcome of this uncertainty."
The separate financial statements of Cashcloud AG for the fiscal year from January 1, 2014 to December 31, 2014 (Swiss Audit Standard) were audited by ACT Audit & Tax AG, Renggerstrasse 71, 8038 Zürich, Switzerland, which issued the unqualified audit opinion reproduced in this Listing Prospectus.
The audit opinion of ACT Audit & Tax AG with respect to the separate financial statements of Cashcloud AG contains the following "Emphasis of a situation":
"We would like to point out the comment made by the Board of Directors concerning the valuation of the loan given to Cashcloud AG, Luxembourg and the participation in Cashcloud AG, Luxembourg. The necessity of a depreciation of the loan to and the participation in Cashcloud AG Luxembourg is up to date uncertain as the values depend on its business performance in the next 12 months. Based on that and the underlying business plan the board of Directors abandoned a depreciation for these positions of the financial statements as of December 31, 2014. As the board of directors stated the valuation of these position [sic] in the notes of the financial statements we made no qualification in the audit opinion."
Each of the aforementioned sets of separate and consolidated financial statements is reproduced, along with the respective audit opinions, in Section 15 "Financial Section" of this Listing Prospectus
13.1.2. Other audited information
With the exception of the information taken from the audited financial statements reproduced in Section 15 "Financial Section", this Listing Prospectus does not contain any further information which has been audited by the auditor or in respect of which the auditor has issued an audit opinion. Any unaudited financial information included in this Listing Prospectus was provided by Cashcloud AG itself and is marked as being unaudited.
13.1.3. Material changes in the Issuer's financial or trading position
There have been no material changes in the Cashcloud Group's financial or trading position since December 31, 2014.
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13.2. Selected financial information
The table below contains selected financial information from the audited consolidated financial statements of Cashcloud AG, prepared in accordance with IFRSs for the fiscal years from January 1, 2013 to December 31, 2013 and from January 1, 2014 to December 31, 2014.
Period 1/1/2014-12/31/2014 1/1/2013-12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited) Revenue 1.6 0.4 Other operating income 124.2 12.1 Costs for purchased services and consumables 261.9 235.1 Employee benefit expenses 978.9 766.4 Other operating expenses 2,143.0 1,353.4 Net cash flows from operating activities -2,953.9 -1,639.8 Net cash from/used in investing activities 0.2 -4.2 Cash and cash equivalents at the end of period 1,580.5 455.1 Period 1/1/2014-12/31/2014 1/1/2013-12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited) Operating profit or loss -3,268.5 -2,349.6 Financial result -112.4 -6.3 Profit or loss before tax -3,380.9 -2,355.9 Net profit or loss for the period -3,384.3 -2,363.6 Total comprehensive income -3,300.4 -2,389.7 Reporting date 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 (audited) (audited) Non-current assets 34.1 36.9 Current assets 1,693.5 521.3 Total assets 1,727.5 558.2 Equity 280.6 329.8 Non-current liabilities 0.0 0.0 Current liabilities 1,446.9 228.4 Total equity and liabilities 1,727.5 558.2
The increase in other operating income from CHF 12.1 thousand in 2013 to CHF 124.2 thousand in 2014 resulted primarily from services rendered to the customer PPRO Financial Services Ltd. (CHF 123.8 thousand). This increase from 2013 to 2014 was due in particular to the fact that PPRO Financial Services Ltd. did not become a customer until the end of 2013 and therefore was not a customer for a full fiscal year until 2014. Moreover, PPRO Financial Services Ltd. has since gradually expanded its business activities.
The increase in other operating expenses by CHF 789.6 thousand from CHF 1,353.4 thousand in 2013 to CHF 2,143.0 thousand in 2014 was due primarily to an increase in IT development activities and marketing measures and increased staffing in connection with the expansion of business activities. Cashcloud AG - 67 -
The change in net cash flows from operating activities from CHF -1,639.8 thousand in 2013 to CHF -2,953.9 thousand in 2014 was due primarily to the fact that the operating loss for fiscal year 2014 was greater than that for fiscal year 2013, mainly as a consequence of higher other operating expenses and personnel expenses ("employee benefit expenses") caused by the larger average employee headcount.
Cash and cash equivalents at the end of the period increased by CHF 1,125.4 thousand from CHF 455.1 thousand in fiscal year 2013 to CHF 1,580.5 thousand in fiscal year 2014, particularly as a result of the capital increase which was implemented in November 2014 and loans granted to the Company by related parties. These measures more than offset the Group's negative cash flows.
The increase in current assets from CHF 521.3 thousand in 2013 to a total of CHF 1,693.5 thousand in 2014 was due to the CHF 21.0 thousand increase in trade and other receivables as well as the CHF 1,125.4 thousand increase in cash and cash equivalents.
The change in equity from CHF 329.8 thousand in 2013 to CHF 280.6 thousand in 2014 was due on the one hand to the CHF 3,200 thousand capital increase carried out in fiscal year 2014, as a result of which 3,200,000 new shares with a par value of CHF 0.20 were issued. The share capital thus increased by CHF 640 thousand to CHF 2,400 thousand as of December 31, 2014. On the other hand, the negative total comprehensive income of CHF -3,300.4 thousand in 2014 resulted in an opposing material negative effect on equity overall; however, this effect was more than offset by the capital increase.
The increase in current liabilities from CHF 228.4 thousand in 2013 to CHF 1,446.9 thousand in 2014 was due in particular to the increase in loans and borrowings by CHF 972.8 thousand; this change in loans and borrowings was caused by the granting for the first time, in 2014, of loans of this nature by related parties (CHF 979.4 thousand) and a net decrease of CHF 6.6 thousand in other short-term settlement accounts for services rendered by and for related parties. Current liabilities also increased as a result of a CHF 151.0 thousand increase in trade accounts payable, an CHF 89.9 thousand increase in provisions and a CHF 4.8 thousand increase in other current liabilities.
13.3. Discussion and analysis of the Cashcloud Group's financial condition and results of operations
The following presents the Cashcloud Group's financial position on the basis of consolidated balance sheet figures, which have been aggregated from a liquidity perspective. The consolidated balance sheet includes the parent, Cashcloud AG, Basel, Switzerland, as well as the subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Darmstadt, Germany, and Cashcloud Technology Services S.R.L., Sibiu, Romania. All subsidiaries were wholly owned by the parent over the duration of the entire period under review.
The fiscal year for all companies of the Cashcloud Group was identical to the calendar year, as was the previous fiscal year presented for comparison.
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13.3.1. Net assets
Reporting date 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 Current assets Inventories 49 22 Trade and other receivables 64 43 Prepayments and other current assets 0 2 Cash and cash equivalents 1,581 455 1,694 521 Non-current assets Intangible assets 2 0 Property, plant and equipment 20 22 Deposits 12 14 34 37 Total non-current assets 1,728 558
Current liabilities Loans and borrowings 998 25 Trade accounts payable 245 94 Other current liabilities 27 22 Provisions 178 88 1,447 228 Equity Share capital 2,400 1,760 Share premium 4,620 2,009 Translation reserve 54 -30 Accumulated deficit -6,794 -3,410 281 330 Total equity and liabilities 1,728 558
Inventories of CHF 49 thousand as of December 31, 2014 consisted of blank MasterCard cards and MasterCard NFC stickers.
Trade and other receivables amounted to CHF 42 thousand as of December 31, 2014 and consisted primarily of VAT receivables.
The increase in current assets from CHF 521 thousand in 2013 to CHF 1,694 thousand in 2014 was due to the CHF 21 thousand increase in trade and other receivables as well as the increase in cash and cash equivalents.
Intangible assets amounted to CHF 2 thousand as of December 31, 2014 and related to licenses for standard software.
Property, plant and equipment amounted to CHF 20 thousand as of December 31, 2014 and consisted primarily of computer hardware (CHF 16 thousand) and office equipment (CHF 4 thousand).
The change in equity from 2013 to 2014 was due in particular to the CHF 3,200 thousand capital increase carried out in fiscal year 2014, as a result of which 3,200,000 new shares with a par value of Cashcloud AG - 69 -
CHF 0.20 were issued. The share capital thus increased by CHF 640 thousand to CHF 2,400 thousand as of December 31, 2014.
Short-term financial liabilities ("Loans and borrowings") amounted to CHF 998 thousand as of December 31, 2014 and consisted of loans from related parties amounting to CHF 614 thousand granted by the majority shareholder SPP Capital AG, Liechtenstein, and CHF 366 thousand granted by Confortune Europe AG, Liechtenstein; these loans were taken out in 2014 and had a remaining term of less than one year as of the balance sheet date. Loans and borrowings also include the settlement account with the related party MOELIA DEVELOPMENT S.L., Murcia, Spain (CHF 18 thousand). MOELIA DEVELOPMENT S.L. offers development services for the Cashcloud Group under the terms of a service agreement.
Trade accounts payable amounted to CHF 245 thousand as of December 31, 2014 and related primarily to Cashcloud AG, Luxembourg's operating business. This item increased in 2014 from CHF 94 thousand in 2013 as a result of the expansion of the Group's business activities.
Other current liabilities amounted to CHF 27 thousand as of December 31, 2014 and included VAT, social security and wage tax liabilities.
(Current) provisions amounted to CHF 178 thousand as of December 31, 2014, and included provisions for accounting and auditing services (CHF 36 thousand), provisions for outstanding invoices for services (CHF 126 thousand) and provisions for bonus payments for 2014 (CHF 13 thousand). The increase from CHF 88 thousand in 2013 was attributable in particular to outstanding invoices for accounting services and legal advice.
13.3.2. Results of operations
Period 1/1/2014- 1/1/2013- 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 Revenue 2 0 Other operating income 124 12 Costs for purchased services and consumables 262 235 Employee benefit expenses 979 766 Depreciation and amortization expense 11 7 Other operating expenses 2,143 1,353 Operating loss -3,269 -2,350 Finance expense 150 23 Finance income 38 16* Financial result -112 -6 Profit or loss before tax -3,381 -2,356 Income tax expenses 3 8 Net profit or loss for the period -3,384 -2,364 *The item "finance income" in the 2013 consolidated statement of comprehensive income includes interest income (CHF 15 thousand) and other financial income (CHF 1 thousand).
Revenue amounted to CHF 2 thousand in the year under review (previous year: CHF 0 thousand). The Cashcloud Group generated commissions for the first time in 2014 which were directly related to the functionalities of the "cashcloud eWallet" app. In addition, the MasterCard/NFC function also generated revenue in connection with the "cashcloud eWallet" app in the form of annual fees and "interchange fees", which are charged as a percentage of the amount paid using the MasterCard.
Other operating income amounted to CHF 124 thousand (previous year: CHF 12 thousand) and resulted primarily from services rendered to the customer PPRO Financial Services Ltd. This increase Cashcloud AG - 70 - from 2013 to 2014 was due in particular to the fact that PPRO Financial Services Ltd. did not become a customer until the end of 2013 and therefore was not a customer for a full fiscal year until 2014. Moreover, PPRO Financial Services Ltd. has since gradually expanded its business activities.
Costs for purchased services and consumables amounted to CHF 262 thousand during the year under review (previous year: CHF 235 thousand) and resulted primarily from purchased services (CHF 248 thousand; previous year: CHF 209 thousand) which were directly related to the generation of revenue. This included costs for an external IT service provider, engaged to provide server-related services, as well as Ingenico Payment Services, to provide and manage electronic cash accounts, and PPRO Financial Services Ltd. as a MasterCard issuer, to provide and manage card accounts. This item also mainly included office materials related to the generation of revenue (2014: CHF 14 thousand; 2013: CHF 26 thousand).
Personnel expenses ("employee benefit expenses") amounted to CHF 979 thousand in the year under review (previous year: CHF 766 thousand) and consisted of wages and salaries (CHF 759 thousand; previous year: CHF 609 thousand), employer's social security contributions (CHF 132 thousand; previous year: CHF 100 thousand) and the anticipated costs of the employee stock option plan (CHF 88 thousand; previous year: CHF 57 thousand).
Depreciation and amortization amounted to CHF 11 thousand in the year under review (previous year: CHF 7 thousand) in relation to computer hardware and the associated standard software programs, as well as office and operating equipment.
Other operating expenses amounted to CHF 2,143 thousand in the year under review (previous year: CHF 1,353 thousand) and related to IT development services (CHF 818 thousand; previous year: CHF 548 thousand), marketing (CHF 709 thousand; previous year: CHF 232 thousand), legal advice, accounting and auditing (CHF 251 thousand; previous year: CHF 284 thousand), consulting services (CHF 78 thousand; previous year: CHF 94 thousand), travel expenses (CHF 61 thousand; previous year: CHF 61 thousand) and other expenses (CHF 226 thousand; previous year: CHF 134 thousand).
Finance expenses in the year under review amounted to CHF 150 thousand (previous year: CHF 23 thousand) and resulted primarily from loans from the related parties SPP Capital AG, Liechtenstein, and Confortune Europe AG, Liechtenstein, which were taken out for the purposes of bridge financing.
Finance income amounted to CHF 38 thousand in the year under review (previous year: CHF 16 thousand) and resulted from the temporary re-investment of temporary liquidity surpluses.
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13.3.3. Financial position
Period 1/1/2014- 1/1/2013- 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 1. Operating activities Net loss for the period -3,384 -2,364 Adjustments for: Depreciation of property, plant and equipment 4 7 Amortization of intangible assets 0 0 Finance income -38 -15* Finance expense 150 3 Share-based payment expense 88 57 Income tax expenses 3 8 Cash flow before changes in net current assets -3,176 -2,304 Increase/decrease in trade and other receivables -22 720 Increase/decrease in inventories -31 -22 Decrease/increase in trade and other payables 177 98 Decrease/increase in provisions and employee benefits 102 -125 Cash used in operations -2,951 -1,632 Income taxes paid -3 -8 Net cash flows from operating activities -2,954 -1,640 2. Investing activities Purchase (-) of property, plant and equipment -15 -13 Disposal (+) of property, plant and equipment 13 0 Purchase (-) of intangibles -2 -1 Security deposits 3 -6 Interest received 1 15 Net cash from/used in investing activities 0 -4 3. Financing activities Proceeds from borrowings 998 25 Repayment of borrowings -25 0 Interest paid -47 -3 Proceeds from issuance of share capital 3,163 2,090 Net cash flows from financing activities 4,089 2,112 Net increase in cash and cash equivalents 1,135 468 Cash and cash equivalents at the beginning of the fiscal year 455 13 Effect of exchange rate fluctuations on cash and cash equivalents -10 -26 Cash and cash equivalents at the end of the fiscal year 1,581 455 *The statement of cash flows in the 2013 consolidated financial statements only reports interest received amounting to CHF 15 thousand (and does not report any finance income).
The increase in finance expenses from CHF 3 thousand in 2013 to CHF 150 thousand in 2014 was attributable to the loans from the related parties SPP Capital AG and Confortune Europe AG for the purpose of bridge financing; these loans were repaid in part before the balance sheet date after the Cashcloud AG - 72 - capital increase in November 2014. This type of bridge financing was drawn down for the first time in 2014.
The change in cash flows from operating activities from CHF -1,632 thousand in 2013 to CHF -2,951 thousand in 2014 was due primarily to the fact that the operating loss for fiscal year 2014 was greater than that for fiscal year 2013, mainly as a consequence of the increase in IT development activities and marketing measures and increased staffing in connection with the expansion of business activities.
The increase in net cash from/used in investing activities from CHF -4 thousand in 2013 to CHF 0 thousand in 2014 was due in particular to the fact that the material office and operating equipment and computer hardware had already been acquired in 2013 and it was only necessary to procure additional hardware and equipment necessitated by the expansion of business activities.
During the fiscal year, the net amount of CHF 3,163 thousand accrued to the Group as a result of the capital increase in November 2014 through the issue of 3,200,000 new shares.
In addition, a net amount of CHF 973 thousand was received as financing from related parties. This included the loans from SPP Capital AG, Liechtenstein, and Confortune Europe AG, Liechtenstein, which amounted to CHF 979 thousand as of the balance sheet date.
Overall, taking into account currency translation effects, cash and cash equivalents increased in fiscal year 2014 by CHF 1,125 thousand from CHF 455 thousand in fiscal year 2013 to CHF 1,581 thousand in 2014.
13.3.4. Restrictions on the use of capital resources
There were no restrictions on the Group's ability to access its capital resources which have had or might have a direct or indirect material adverse effect on the business of Cashcloud AG.
13.4. Discussion and analysis of Cashcloud AG's financial condition and results of operations
The following presents Cashcloud AG's financial position on the basis of figures reported in the balance sheet and income statement contained in the separate financial statements prepared in accordance with Swiss Audit Standards (Swiss GAAP ARR (Accounting and Reporting Regulations)), which have been aggregated from a liquidity perspective.
The subsidiaries Cashcloud AG, Luxembourg, Cashcloud Deutschland GmbH, Darmstadt, Germany, and Cashcloud Technology Services S.R.L., Sibiu, Romania, are presented under fixed assets and are therefore not consolidated for the purposes of this presentation.
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13.4.1. Net assets
Reporting date 12/31/2014 12/31/2013 Swiss GAAP AAR Swiss GAAP AAR CHF '000 CHF '000 Current assets Cash and cash equivalents 1,051.3 36.3 Receivables from related parties 0.9 0.6 Other current assets 4.0 6.1 Prepaid expenses 0.0 0.0 1,056.2 43.1 Intangible assets Software development costs 28.7 28.7 28.7 28.7 Financial assets Investment in subsidiaries 540.1 541.6 Loans to Group companies 4,933.6 3,028.6 5,473.8 3,570.2 Total assets 6,558.6 3,641.9
Current liabilities Other current liabilities 0.0 0.0 Liabilities towards related parties 18.3 24.9 Accounts payable and accruals 125.2 26.5 143.5 51.4 Equity Share capital (par value CHF 0.20) 2,400.0 1,760.0 Share premium 4,868.7 2,342.9 Legal reserves 0 0 Accumulated profit/deficit -512.5 -150.4 Net profit/loss for the period -341.1 -362.1 6,415.1 3,590.4 Total equity and liabilities 6,558.6 3,641.9
Receivables from related parties amounted to CHF 0.9 thousand as of December 31, 2014 and consisted of a receivable from Megadon AG in relation to the provision of services.
Other receivables ("other current assets") as of December 31, 2014 related to a VAT receivable.
The increase in current assets from CHF 43.1 thousand in 2013 to a total of CHF 1,056.2 thousand in 2014 was due in particular to the increase in cash and cash equivalents from CHF 36.3 thousand in 2013 to CHF 1,051.3 thousand in 2014.
Software development costs as of December 31, 2014 amounted to CHF 28.7 thousand in relation to the development of IT systems used by the Company for investment management purposes.
Investments in subsidiaries amounted to CHF 540.1 thousand as of December 31, 2014 and consisted of the wholly owned subsidiaries Cashcloud AG, Luxembourg (CHF 510.0 thousand), Cashcloud AG - 74 -
Cashcloud Deutschland GmbH, Darmstadt, Germany (CHF 30.0 thousand) and Cashcloud Technology Services S.R.L., Sibiu, Romania (CHF 0.1 thousand).
Loans to Group companies amounted to CHF 4,933.6 thousand in 2014 and consisted entirely of the receivable from Cashcloud AG, Luxembourg, which was used to finance the current operating activities aimed at developing and marketing the Cashcloud app.
Liabilities towards related parties amounted to CHF 18.3 thousand as of December 31, 2014 and related to IT services rendered by MOELIA DEVELOPMENT S.L.
Accounts payable and accruals amounted to CHF 125.2 thousand as of December 31, 2014 and included provisions for invoices outstanding as of the balance sheet date, most of which were in relation to the intended listing.
The change in equity from 2013 to 2014 was due in particular to the CHF 3,200 thousand capital increase carried out in fiscal year 2014, as a result of which 3,200,000 new shares with a par value of CHF 0.20 were issued. The share capital thus increased by CHF 640.0 thousand from CHF 1,760.0 thousand in 2013 to CHF 2,400.0 thousand as of December 31, 2014.
13.4.2. Results of operations
Period 1/1/2014- 1/1/2013- 12/31/2014 12/31/2013 (IFRS) (IFRS) CHF '000 CHF '000 Income 0.0 0.0 Costs for purchased services 116.4 323.9 Accounting, legal and advisory services 195.7 24.1 Office and administrative expenses 2.6 1.4 Marketing expenses 8.5 23.2 Total operating costs -323.3 -372.6 Depreciation 0.0 -12.0 Earnings before interest -323.3 -384.6 Financial income 87.3 43.8 Financial expense 104.8 19.3 Net income before tax -340.8 -360.1 Provision for taxes 0.3 2.0 Net income/loss -341.1 -362.1
Costs for purchased services amounted to CHF 116.4 thousand in 2014 and related to IT development services performed by MOELIA DEVELOPMENT S.L. (CHF 23.1 thousand) and back-office services rendered by Megadon AG (CHF 93.3 thousand). This figure was lower than the CHF 323.9 thousand reported for the previous year 2013 in light of the fact that the Company has become established in the past year and there was less need for ramp-up efforts.
Accounting, legal and advisory services amounted to CHF 195.7 thousand in 2014, which was significantly higher than the CHF 24.1 thousand reported in the previous year. This increase was due to the preparations for the stock exchange listing and the associated requirements placed on the accounting department and the increased need for legal advice.
Marketing expenses amounted to CHF 8.5 thousand (previous year: CHF 23.2 thousand) were incurred as a result of the acquisition of Internet domains. This amount was lower than in the previous year because the domains had already been acquired in the past. Cashcloud AG - 75 -
Financial income amounted to CHF 87.3 thousand in the year under review (previous year: CHF 43.8 thousand) and resulted from the re-investment of temporary liquidity surpluses and book gains on euro-denominated loans with the related parties SPP Capital AG, Liechtenstein, and Confortune Europe AG, Liechtenstein.
Financial expenses amounted to CHF 104.8 thousand in the year under review (previous year: CHF 19.3 thousand) and resulted primarily from the exchange rate effects from the appreciation of the Swiss franc against the euro with respect to the euro-denominated loans to subsidiaries and from the related parties SPP Capital AG, Liechtenstein, and Confortune Europe AG, Liechtenstein.
13.5. Working capital, capitalization and debt
13.5.1. Working capital
As of the date of this Listing Prospectus, the Cashcloud Group does not have sufficient working capital to satisfy all payment obligations as they fall due within the next twelve months.
These payment obligations which, as of the date of this Listing Prospectus, are expected to fall due result in particular from current personnel expenses, IT development, the provision of "eWallet" related services, sales and marketing activities and collateral provided to e-money institutions. The Issuer estimates that a total of approximately CHF 6.7 million in funds is required for this. In addition, existing loans from related parties amounting to a total of CHF 0.9 million will fall due in the next 12 months.
The total amount of CHF 7.6 million will be financed as follows:
The Company's own funds (current cash and cash equivalents of approximately CHF 0.2 million); Loans taken out with related parties in the amount of the working capital required for each month until the capital increase has been successfully implemented; Capital increase in the second half of 2015, although it remains to be determined whether the capital increase will be conducted by way of a public offering or a private placement.
It is the Company's assumption that by June 1, 2015 it will no longer have sufficient funds to satisfy payment obligations as they fall due within the next twelve months unless it is possible to secure this foreseeable working capital requirement by taking out loans from existing investors.
At present, there is no alternative financial plan. Nor is the Company considering selling off Company assets to finance its investments.
The Company is confident that the existing investors will continue to ensure that the Company has sufficient funds until such time as a capital increase can be successfully implemented by way of a placement in the second half of 2015. However, should it not be possible to successfully raise bridge financing and implement the capital increase, the likely consequence is the insolvency of the Company, with the complete loss of capital invested by the shareholders.
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13.5.2. Capitalization and Debt
The following figures were calculated by the Company itself using its own bookkeeping analyses on a consolidated basis as of February 28, 2015 in accordance with IFRSs and have been neither audited nor reviewed.
Capitalization 2/28/2015 (IFRS) CHF '000 (unaudited)
Current liabilities 1,312 of which: - guaranteed 0 - collateralized 0 - not guaranteed/collateralized 1,312 Non-current liabilities 0 of which: - guaranteed 0 - collateralized 0 - not guaranteed/collateralized 0 Equity -160 of which: - subscribed capital 2,400 - share premium 4,565 - retained earnings -3,866 - net profit/loss for the period -1,128 - currency translation differences -2,131 - revaluation reserve 0 - minority interest 0 Total liabilities and equity 1,152
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Net indebtedness 2/28/2015 (IFRS) CHF '000 (unaudited)
A. Cash 897 B. Cash equivalents 0 C. Securities 0 D. Cash and cash equivalents (A)+(B)+(C) 897
E. Current financial receivables 0
F. Current bank loans 0 G. Current portion of non-current financial liabilities 0 H. Other current financial liabilities 896 I. Current financial liabilities (F) + (G) + (H) 896
J. Current net indebtedness (I)-(E)-(D) -1
K. Non-current bank loans 0 L. Bonds issued 0 M. Other non-current liabilities 0 N. Non-current financial liabilities (K)+(L)+(M) 0
O. Net financial indebtedness (J)+(N) -1
In addition, the Company has contingent liabilities amounting to CHF 366 thousand in total, resulting from current contractual relationships with suppliers (CHF 344 thousand) and from office lease agreements (CHF 22 thousand).
The Company does not have any indirect liabilities.
There have been no material changes with respect to the Cashcloud Group's capitalization or indebtedness since February 28, 2015. Cashcloud AG - 78 -
14. Taxation
14.1. Introduction
The following information on taxation in Switzerland, Germany and Luxembourg is based on the laws applicable in these countries as of the date of this Listing Prospectus and may thus be subject to legislative changes. The following summary does not purport to be an exhaustive description of all tax considerations that might be of relevance for the acquisition, holding or disposal of securities. Any prospective shareholders of Cashcloud AG or any beneficial owners of the shares are therefore urged to consult a tax advisor with regard to the tax consequences of the acquisition, holding and transfer of securities. Only tax advisors are in a position to adequately take into account the special tax situation of the individual shareholder. Therefore, Cashcloud AG recommends that more extensive information regarding the current legal and tax treatment be obtained from a member of the tax advisory professions.
14.2. Taxation in Switzerland
In Switzerland, a withholding tax (tax at source) of 35% is generally withheld from dividends and remitted to the Swiss Federal Tax Administration (Eidgenössische Steuerverwaltung) in Bern. The responsibility for this is assumed by the Issuer. The full amount of the dividend income received by shareholders resident in Germany will be subject to German income and corporate income tax. Refunds or tax credits of the withholding tax deducted will be determined on the basis of the bilateral agreements entered into between Germany and Switzerland.
14.3. Taxation in Germany
Taxation of dividends
For shareholders (natural persons and corporate bodies) subject to unlimited tax liability in Germany (i.e., persons who have their permanent residence, habitual abode, registered office or place of effective management and control in Germany) and for shareholders subject to taxation outside of Germany who hold their shares as part of the assets of a permanent establishment in Germany or as business assets for which a permanent representative in Germany has been appointed, the capital yields tax (Kapitalertragsteuer) (including the solidarity surcharge) that has been withheld and remitted to the tax authorities will be imputed to the relevant shareholder's personal or corporate income tax liability or refunded in the amount of the excess tax paid.
Notwithstanding the above-described general principles of dividend taxation at the level of the shareholders, it must be pointed out that distributed dividends can also be received free of tax if a distribution is made from the Issuer's contribution account for tax purposes (steuerliches Einlagenkonto).
The information provided below neglects to deal with the specific scenario that arises when dividend distributions are made from the contribution account for tax purposes.
Shareholders resident in Germany
Dividends paid to natural persons subject to unlimited tax liability in Germany who hold their shares as private (non-business) assets are subject to a special tax rate of 25% plus a solidarity surcharge of 5.5% (thus 26.375% in total) and, where applicable, church tax. This taxation is based on the so-called definitive withholding tax (Abgeltungsteuer). Income-related expenses, such as custody charges, financing interest, etc. are no longer deductible.
The Company assumes no responsibility for the withholding of tax at source.
Insofar as the shares involves shares which are capable of being held in a central securities depositary pursuant to Section 5 of the German Securities Deposit Act (Depotgesetz, "DepotG") and have in fact been entrusted to such a depositary for collective custody in Germany, or that are kept in segregated custody pursuant to Section 2 (1) DepotG or for which any earnings will be paid out or written off against surrender of the dividend coupons, the Company, as of January 1, 2012, is in principle no longer Cashcloud AG - 79 - responsible for deducting the capital yields tax plus solidarity surcharge and remitting such to the tax authorities, but this responsibility is now borne by the domestic credit or financial services institution, the domestic securities trading company or the domestic securities trading bank that manages or holds the shares in safe custody and pays out or credits the investment income against surrender of the dividend coupons or pays the investment income to a foreign institution, or the central securities depositary to whom the shares were entrusted for collective custody, if it pays out the investment income to a foreign institution, or the obligor of the investment income if the central securities depository to whom the shares were entrusted for collective custody fails to make any dividend settlement (the central securities depositary is required to inform the obligor of the investment income of the amount of the shareholdings excluding any dividend settlement). The tax base for the capital yields tax is the dividend resolved by the Annual General Meeting.
The definitive withholding tax rate of 25% is intended to tax the income generated with final discharging effect, thus regardless of the taxpayer's personal income tax rate. However, in certain cases (e.g., where the saver's allowance (Sparerfreibetrag) has not been fully utilized or in case of loss carryforwards from investment income), taxpayers may be able to obtain a tax assessment in deviation from the above principles. Taxpayers may apply for their investment income tax to be assessed not at the flat definitive withholding tax rate but at their personal income tax rate if this is lower than 25% (so-called most favorable tax treatment (Günstigerprüfung)). In the case of the latter application process, it will not be possible to claim for any income-related expenses.
Natural persons who hold their shares as part of their private assets are entitled to a flat-rate saver's allowance totaling EUR 801.00 (or EUR 1,602.00 for jointly assessed married couples) per calendar year for their investment income.
Where shareholders hold their shares as business assets, taxation will depend on whether the shareholder is a corporate body, a sole proprietor or a partnership (co-entrepreneurship). Irrespective of the shareholder's legal form, however, dividends are generally subject to capital yields tax at the rate of 25% plus a solidarity surcharge of 5.5% levied thereon (26.375% in total). Where the shares involve shares that are held in domestic collective custody in Germany pursuant to Section 5 DepotG or in segregated custody pursuant to Section 2 (1) DepotG, the depositary institution will as a rule, beginning January 1, 2012, have the responsibility to deduct the capital yields tax plus solidarity surcharge and remit such tax to the tax authorities. The Company assumes no responsibility for withholding the tax at source. The capital yields tax will be imputed to the shareholder's corporate income tax or personal income tax. If the capital yields tax withheld exceeds the shareholder's tax liability, any excess amounts will be refunded, if necessary.
Subject to certain exceptions that apply to companies in the financial and insurance sectors, the dividend income of corporate bodies is generally exempt from corporate income tax. However, a lump-sum amount of 5% of the dividends is deemed to be a non-deductible business expense and is therefore subject to corporate income tax (plus solidarity surcharge thereon). Otherwise, any business expenses incurred directly in connection with the dividends are fully tax-deductible. After deduction of any business expenses that are, from an economic point of view, related to the dividends, said dividends are subject to trade tax in the full amount, unless the relevant corporate body held at least 15% of the Company's share capital at the beginning of the relevant taxation period. In the latter case, only 5% of the dividends are subject to trade tax.
However, as of December 1, 2013, so-called free float dividends (i.e., dividends from equity investments of less than 10%) are taxed in the full amount at the level of the corporate body receiving the dividends. The above-described 95% tax exemption therefore only applies to equity investments of not less than 10% (Section 8b (4) of the German Corporate Income Tax Act, (Körperschaftsteuergesetz, "KStG"), new version).
The background to the new rule is a judgment of the European Court of Justice of October 20, 2011 (case no C-284/09). In this judgment, the European Court of Justice held that dividend payments to corporate bodies who are resident in an EU/EEA Member State and are subject to a limited tax liability should not be taxed at a higher tax rate than the dividends distributed to companies resident in Germany. Instead of also applying the tax exemption to foreign cases, the German legislator has now decided that dividends will be subject to full taxation in purely domestic cases as well. The new ruling shall apply for the first time to dividends that are received after February 28, 2013. Cashcloud AG - 80 -
With regard to shares held as business assets of a sole proprietor (Einzelunternehmer) being a natural person, only 60% of the dividends received will be included in the taxable income for income tax purposes. By the same token, only 60% of the business expenses that are, from an economic point of view, related to the dividends are tax-deductible. If the shares are attributable to the assets of a permanent establishment maintained in Germany, the dividends are also subject to trade tax in the full amount, unless the shareholder held at least 15% of the Company's share capital at the beginning of the relevant taxation period.
As a rule, the trade tax may be imputed to the shareholder's personal income tax by way of a flat-rate imputation procedure.
If the shareholder is a partnership (Personengesellschaft), the personal income tax or corporate income tax is levied only at the level of the respective partners. Where the partner is a corporate body and thus liable for corporate income tax, the dividends are in principle not subject to tax at the level of the partner, although 5% of the dividends is deemed to be a non-deductible business expense and is therefore taxable. However, this does not apply to so-called free float dividends (Streubesitzdividenden) that have been subject to corporate income tax in the full amount since December 1, 2013 (see under "corporate bodies" above). Where the partner is a natural person and thus subject to personal income tax, only 60% of the dividends received are subject to income tax, and (subject to further restrictions regarding deductibility) only 60% of the business expenses that are connected with the dividends are tax-deductible (see under "sole proprietor" above). Dividend payments are generally subject to trade tax in the full amount at the level of a partnership subject to trade tax, irrespective of whether the partnership interests are held by natural persons or corporations. However, to the extent that natural persons hold interests in the partnership, the trade tax levied at the level of the partnership is generally imputed to their personal income tax by way of a flat-rate imputation procedure. To the extent that corporations hold an interest in the partnership, only 5% of the dividends are subject to trade tax at the level of the partnership if the partnership held at least 15% of the Company's share capital at the beginning of the relevant taxation period. In the case where natural persons hold an interest in the partnership, the dividend payments are not subject to trade tax.
Shareholders resident outside Germany
If shareholders (natural persons or corporate bodies) resident outside Germany hold the shares as part of the assets of a permanent establishment in Germany or as business assets for which a permanent representative in Germany has been appointed, the rules of taxation shall be the same as those applied to shareholders resident in Germany.
In the case of shareholders (natural persons or corporate bodies) resident outside Germany who do not hold the shares as part of the assets of a permanent establishment in Germany or as business assets for which a permanent representative in Germany has been appointed, any tax liability is deemed to have been discharged by way of withholding capital yields tax.
Taxation of capital gains
Shareholders resident in Germany
Profits from the disposal of shares held as private assets of natural persons resident in Germany are likewise subject to the flat definite withholding tax (Abgeltungsteuer) at a rate of 25% plus solidarity surcharge if the shares were acquired after December 31, 2008. Since January 1, 2009, therefore, the legal situation in this regard and with regard to the taxation of dividend income is identical. In the event of the subsequent disposal of equity interests acquired prior to January 1, 2009, these will not be taken into account when determining income from capital investments. Following the expiry of the one-year period for private disposal transactions, they may be disposed tax-free.
If the relevant equity interest in the entity is greater than 1%, the definitive withholding tax will not apply. Instead the partial income method (Teileinkünfteverfahren) will apply, meaning that 60% of the income from disposal is subject to taxation and 60% of the business expenses is likewise deductible. The half-income method (Halbeinkünfteverfahren) and the individual personal income tax rate will continue to apply to taxable capital gains derived from equity interests in corporations that were acquired prior to January 1, 2009. Cashcloud AG - 81 -
Where the shares are held as business assets, taxation will depend on whether the shareholder is a corporate body, a sole proprietor or a partnership (co-entrepreneurship).
Subject to certain exceptions that apply to companies in the financial and insurance sectors, the gains on the disposal of shares generated by corporate bodies domiciled in Germany are generally exempt from corporate income tax, the solidarity surcharge and trade tax, irrespective of the size of the shareholding and the holding period. However, 5% of the capital gain is deemed to be a non-deductible business expense and is therefore subject to corporate income tax, the solidarity surcharge and trade tax. Losses generated as a result of the disposal of shares are not deductible for corporate income tax, solidarity surcharge and trade tax purposes.
Where the shares are held as part of the business assets of a sole proprietor who is resident in Germany, 60% of the capital gains generated will be taxable. Accordingly, only 60% of the business expenses related to such capital gains and only 60% of the losses incurred on disposal of the shares will be tax-deductible. Moreover, one half of the capital gains will be subject to trade tax if the shares are held as assets of a permanent establishment of a commercial operation in Germany. As a rule, the trade tax may be imputed to the shareholder's personal income tax by way of a flat-rate imputation procedure.
If the shareholder is a partnership, the personal income tax or corporate income tax is levied only at the level of the respective partner. The taxation will depend on whether the partner is a corporate body or a natural person. Where the partner is a corporate body and thus liable for corporate income tax, capital gains are in principle not subject to tax at the level of the partner, although 5% of the income from the disposal of shares is deemed to be a non-deductible business expense and is therefore taxable (see above under "corporate bodies").
Where the partner is a natural person and thus subject to personal income tax, only 60% of the capital gains will be treated as taxable income and (subject to further restrictions on deductibility) only 60% of the business expenses connected with the capital gains and 60% of the losses from the disposal of the shares are tax-deductible (see above under "sole proprietor"). In addition, 5% of the capital gains attributable to the partners liable to corporate income tax and 60% attributable to the partners not liable to corporate income tax are subject to trade tax if the shares are held as part of the assets of a permanent establishment of a commercial operation in Germany. However, to the extent that natural persons hold interests in the partnership, the trade tax levied at the level of the partnership is generally imputed to their personal income tax by way of a flat-rate imputation procedure.
Special rules apply to companies in the financial and insurance sectors.
Shareholders resident outside Germany
Where the disposal involves the shares of a natural person resident outside of Germany who (i) holds the shares as part of the business assets of a permanent establishment in Germany or of business assets for which a permanent representative in Germany has been appointed or (ii) who, in the case of gratuitous transfer, itself has or its legal predecessors have, either directly or indirectly, held at least 1% of the Company's share capital at any time during the five years preceding the disposal, 60% of the capital gains generated in Germany are subject to personal income tax plus 5.5% solidarity surcharge thereon and – if the shares are attributable to the permanent establishment of a commercial operation in Germany – also to trade tax. However, most double taxation treaties provide for full exemption from German taxation except in the situation outlined under (i) above.
Subject to certain exceptions that apply to companies in the financial and insurance sectors, the gains on the disposal of shares generated by corporate bodies domiciled abroad and subject to limited tax liability in Germany are generally exempt from corporate income tax and the solidarity surcharge. However, 5% of the capital gains is deemed to be a non-deductible business expense and is therefore subject to corporate income tax (plus solidarity surcharge) and, if applicable, trade tax. As a rule, capital losses and other reductions in profit in connection with the disposal of shares are not tax-deductible as business expenses.
14.4. Taxation in Luxembourg
No withholding tax is levied in Luxembourg on dividends received from Cashcloud AG (Switzerland). The offered shares cannot and will not be held in safe custody in Luxembourg. The Company also does Cashcloud AG - 82 - not have any paying agent in Luxembourg. Cashcloud AG pays the dividends directly from Switzerland only. This means that no withholding tax is levied at source in Luxembourg. After deduction of the withholding tax in Switzerland, investors receive the dividends as "net proceeds", which are taxable under the Luxembourg tax laws. Cashcloud AG - 83 -
15. Financial Section
Contents
1. Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2013 (audited)
Independent Auditor's Report 84
Consolidated Balance Sheets as of December 31 86
Consolidated Statements of Comprehensive Income for the years ended December 31 87
Consolidated Statements of Changes in Equity for the years ended December 31 88
Consolidated Statements of Cash Flows for the years ended December 31 89
Notes to the consolidated financial statements for the year ended 31 December 2013 90
2. Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2014 (audited)
Independent Auditor's Report 122
Consolidated Balance Sheets as of December 31 124
Consolidated Statements of Comprehensive Income for the years ended December 31 125
Consolidated Statements of Changes in Equity for the years ended December 31 126
Consolidated Statements of Cash Flows for the years ended December 31 128
Notes to the consolidated financial statements for the year ended 31 December 2014 129
3. Separate financial statements of Cashcloud AG (Swiss Audit Standard) for the fiscal year ended December 31, 2014 (audited)
Independent Auditor's Report 159
Balance Sheet as of 31 December 2014 161
Income Statement 2014 162
Notes to the Annual Accounts 2014 163
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15.1 Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2013 (audited)
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15.2 Consolidated financial statements of Cashcloud AG (IFRS) for the fiscal year ended December 31, 2014 (audited)
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16. Trend information
16.1. Significant recent trends
In fiscal year 2015 thus far, both the number of registered users of the "cashcloud eWallet" app and the number of transactions processed using it have increased.
There have been no further significant trends in fiscal year 2015 to date.
16.2. Recognized trends in the current fiscal year
With respect to the Cashcloud Group's own business development, the coming months will see the expansion of its range of solutions throughout additional eurozone countries, the introduction of improved functionality within the "cashcloud eWallet" app and the launch of marketing and advertising campaigns.
With respect to the industry, the Cashcloud Group believes that the market for smartphone use for mobile payments will generally continue to expand in the months to come and is likely to gain momentum particularly as a result of the increased involvement of major providers such as Apple, Samsung and Google. For example, US company "Apple" is expected to launch "Apple Pay", its payment system for mobile devices, in Europe over the coming months. "Apple Pay" was launched in the US for the iPhone 6 in October 2014. The Company also understands that Korean smartphone provider Samsung intends to compete with Apple in the mobile payment services sector with US company “LoopPay”, which it acquired in February 2015. In the future, the “Loop Pay” system will enable Samsung smartphone users to pay in stores with their mobile device instead of with cash or a credit card. Google has also joined with payment provider Softcard to boost its mobile payment service, "Google Wallet". Google has also entered into partnerships with mobile network operators AT&T Mobility, T-Mobile USA and Verizon Wireless for this purpose.
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17. Glossary
AktG German Stock Corporation Act (Aktiengesetz)
BaFin German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht)
Company Cashcloud AG, Basel, Switzerland
CW calendar week
e-money business The e-money business is the issuance and management of electronic money (e.g., money cards, credit cards)
e-money institution An e-money institution is any company that engages in e-money business
EStG German Income Tax Act (Einkommensteuergesetz)
Feature phone These are cell phones which offer fewer features than smartphones but which enable users to do more than just make phone calls. A typical feature phone offers mobile calling as well as, e.g., a camera or an Internet browser.
GewStG German Trade Tax Act (Gewerbesteuergesetz)
ISIN International Security Identification Number. The ISIN is a unique international identification for securities. It consists of a two-character country code (e.g., CH for Switzerland), followed by a ten-character numerical identifier.
Issuer Cashcloud AG, Basel, Switzerland
KStG German Corporation Tax Act (Körperschaftsteuergesetz)
NFC Near Field Communication (NFC) is an international communication protocol used in the contactless exchange of data via radio technology over short distances of a few centimeters and a maximum data transmission rate of 424 kbit/s. To date, this technology has been used primarily in micropayment solutions – cashless payments of small amounts.
NFC/HCE NFC/HCE are contactless payment technologies. Host Card Emulation (HCE) makes secure, NFC-based transactions for payments and services possible in mobile apps – regardless of the availability of a physical secure element (SE) on the cell phone. All data generated in the course of the transactions are thus no longer stored on a hardware component but rather are stored in a centralized, secure server environment. For a definition of "NFC", see "NFC".
OR Swiss Code of Obligations (Schweizerisches Obligationenrecht)
Private placement A private placement is the non-public sale (placement) of assets (in this instance, shares).
Securities Act United States Securities Act of 1933 Cashcloud AG - G-2 -
Swiss Audit Standards (Schweizer Prüfungsstandard (Fachempfehlungen zur Rechnungslegung)); Swiss GAAP AAR
WKN German Securities Identification Number (Wertpapier-Kennnummer)
WpPG German Securities Prospectus Act (Wertpapierprospektgesetz)
WpÜG German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz)
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Signature Page
Basel, dated [handwritten: 13.05.2015]
Cashcloud AG
[illegible signature] Sven Donhuysen - Director -
Munich, dated [handwritten: 13.05.2015]
VEM Aktienbank AG
[illegible signature] [handwritten: ppa] [illegible signature] Andreas Grosjean Annett Hüttinger - Member of Executive Board - - Commercial attorney-in-fact (Prokurist) -