Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 16, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | BTCS Inc. | |
Entity Central Index Key | 1,436,229 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 157,480,545 | |
Trading Symbol | BTCS | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 62,560 | $ 124,535 |
Digital currencies | 45,517 | $ 17,036 |
Accounts receivable | 3,780 | |
Prepaid expense and other current assets | 14,698 | $ 8,902 |
Total current assets | 126,555 | 150,473 |
Other assets: | ||
Property and equipment, net | $ 404,420 | 489,420 |
Investment | 2,250,000 | |
Websites | $ 4,786 | 6,075 |
Deposits | 35,996 | 336,885 |
Total other assets | 445,202 | 3,082,380 |
Total Assets | 571,757 | 3,232,853 |
Liabilities and Stockholders' Deficit: | ||
Accounts payable and accrued expense | 312,952 | 402,464 |
Short term loan | 45,000 | 45,000 |
Senior convertible notes at fair value | 1,746,146 | 1,781,156 |
Derivative liability | 3,296,920 | 3,794,153 |
Total current liabilities | $ 5,401,018 | $ 6,022,773 |
Stockholders' deficit: | ||
Preferred stock value | ||
Common stock, 975,000,000 shares authorized at $0.001 par value, 170,480,545 and 153,186,804 shares issued and outstanding, respectively | $ 170,480 | $ 170,480 |
Treasury stock, at cost, 13,000,000 shares at March 31, 2016 and December 31, 2015 | (4,991) | (4,991) |
Additional paid in capital | 21,831,518 | 21,831,518 |
Accumulated deficit | (26,826,268) | (24,786,927) |
Total stockholders' deficit | (4,829,261) | (2,789,920) |
Total Liabilities and stockholders' deficit | $ 571,757 | $ 3,232,853 |
Series C Convertible Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock value | ||
Total stockholders' deficit |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock; shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Common stock; shares authorized | 975,000,000 | 975,000,000 |
Common stock; par value | $ 0.001 | $ 0.001 |
Common stock; shares issued | 170,480,545 | 170,480,545 |
Common stock; shares outstanding | 170,480,545 | 170,480,545 |
Treasury stock, shares | 13,000,000 | 13,000,000 |
Series C Convertible Preferred Stock [Member] | ||
Preferred stock; shares issued | 0 | 2,200,000 |
Preferred stock; shares outstanding | 0 | 2,200,000 |
Preferred stock, liquidation preference | $ 0.001 | $ 0.001 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | ||
E-commerce | $ 1,038 | |
Transaction verification services | $ 191,403 | $ 38,038 |
Hosting | 7,740 | |
Total revenues | 199,143 | $ 39,076 |
Power and mining expenses | (113,982) | (16,943) |
Gross profit | 85,161 | 22,133 |
Operating expenses: | ||
Marketing | 7,575 | 578 |
General and administrative | 399,802 | 1,606,947 |
Fair value adjustments for digital currencies | (4,285) | 1,408 |
Total operating expenses | 403,092 | 1,608,933 |
Net loss from operations | (317,931) | (1,586,800) |
Other income (expenses): | ||
Impairment loss related to investment | (2,250,000) | (254,433) |
Fair value adjustments for warrant liabilities | 497,233 | $ (926,620) |
Fair value adjustments for convertible notes | $ 35,010 | |
Inducement expense | $ (58,380) | |
Interest (expenses) income | $ (3,541) | (3,499) |
Loss on issuance of Units | (519,600) | |
Other expenses | $ (112) | (214) |
Total other (expenses) income | (1,721,410) | (1,762,746) |
Net loss | $ (2,039,341) | $ (3,349,546) |
Net loss per share, basic and diluted | $ (.01) | $ (.02) |
Weighted average number of shares outstanding | ||
Basic and diluted | 170,480,545 | 158,014,070 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Cash flows used from operating activities: | ||
Net loss | $ (2,039,341) | $ (3,349,546) |
Adjustments to reconcile net loss to net cash used in provided by operating activities: | ||
Depreciation and amortization expenses | $ 94,845 | 47,359 |
Stock based compensation | 1,369,376 | |
Change in fair value of digital currencies | $ (4,285) | 1,408 |
Loss on issuance of Units | 519,600 | |
Fair value adjustments for warrant liabilities | $ (497,233) | $ 926,620 |
Fair value adjustments for convertible notes | $ (35,010) | |
Inducement expenses | $ 58,380 | |
Impairment loss | $ 2,250,000 | 254,433 |
Changes in operating assets and liabilities: | ||
Digital currencies | (24,196) | $ (5,312) |
Accounts receivable | (3,780) | |
Prepaid expenses and other current assets | (5,796) | $ 8,238 |
Accounts payable | (89,512) | 68,091 |
Net cash used in operating activities | (354,308) | (101,353) |
Net cash used in investing activities: | ||
Purchase of property and equipment | (11,208) | (234,565) |
Sale of property and equipment, net | 2,652 | 1,412 |
Refund of lease deposits | $ 300,889 | (56,700) |
Investments at cost | (100,000) | |
Net cash provided by (used in) investing activities | $ 292,333 | (389,853) |
Net cash provided by financing activities: | ||
Common stock repurchase | (2,500) | |
Net proceeds from issuance of Private Placement Units | 423,000 | |
Net proceeds from issuance of Private Placement Units from related party | 10,000 | |
Proceeds from short term loan | 45,000 | |
Proceeds from short term loan from related party | 20,000 | |
Payment on short term loan to related party | (6,000) | |
Net cash provided by financing activities | 489,500 | |
Net decrease in cash | $ (61,975) | (1,706) |
Cash, beginning of period | 124,535 | 5,403 |
Cash, end of period | $ 62,560 | 3,697 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Conversion of Serise C Convertible Preferred to common stock | 2,200 | |
Issuance of common stock for fixed assets purchases | 39,480 | |
Increase in accounts payable related to fixed assets | 8,984 | |
Conversion of accounts payable to common stock | 143,694 | |
Issuance of common stock for investment | $ 154,433 |
Business Organization and Natur
Business Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization and Nature of Operations | Note 1 - Business Organization and Nature of Operations BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada Corporation (the Company) in February 2014 entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using digital currencies, including bitcoin and is building a diversified company with operations in the blockchain and digital currency ecosystems. In January 2015, the Company began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect its broadened strategy. The Company released its new website which included broader information on its strategy, access to its ecommerce site, and launching an invite only beta version of its multi-sig secure storage solution (digital wallet). Although we continue to support our ecommerce marketplace, weve shifted our focus towards our transaction verification service business, also known as bitcoin mining. The Company has currently stopped the development of its digital wallet. The Company was incorporated in the State of Nevada in 2008 under the name Hotel Management Systems, Inc.. On February 5, 2014, the Company entered into an Exchange Agreement with BitcoinShop.us, LLC, a Maryland limited liability company (BCSLLC), and the holders of the membership interests in BCSLLC. Upon closing of the Share Exchange, Bitcoinshop Members transferred all the outstanding membership interests of Bitcoinshop to the Company in exchange for an aggregate of 100,773,923 shares of the Companys common stock (the Reverse Merger). As a result, Bitcoinshop became a wholly-owned subsidiary of the Company. Immediately following the Share Exchange with Bitcoinshop, the Company discontinued its business as manufacturer of touch screen and touch board products, interactive whiteboard displays and large touch-screens. The Company is an early entrant in the digital currency market and one of the first U.S. publicly traded companies to be involved with digital currencies. The Company currently operates a beta ecommerce marketplace which already accepts a variety of digital currencies, and has been expanding its transaction verification services business, recently adding servers capable of generating bitcoins (i.e. bitcoin mining). In the short term, the Company believes its transaction verification services business may be a growing source of revenue for it. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 2 - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Companys management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2015. |
Liquidity, Financial Condition
Liquidity, Financial Condition and Management's Plans | 3 Months Ended |
Mar. 31, 2016 | |
Liquidity Financial Condition And Managements Plans | |
Liquidity, Financial Condition and Management's Plans | Note 3 - Liquidity, Financial Condition and Managements Plans For the three months ended March 31, 2016 and 2015, the Company recognized a net loss of $2.0 million and a net loss of $3.3 million, respectively. The Company had cash and cash equivalents of approximately $63,000 and a working capital deficiency of approximately $5.3 million at March 31, 2016, which includes $3.3 million for the fair value of derivative liabilities. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. . The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer term business plan. The Companys existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Companys ability to continue as a going concern. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Companys past equity offerings by controlling costs, ● increasing revenue from its transaction verification services business, which enables the Company to generate digital currencies for cash, and ● seeking additional financing through sales of additional securities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 - Summary of Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of the accompanying condensed consolidated financial statements is as follows: Transaction Verification Services Revenue earned from bitcoin processing activities (Transaction Verification Services), commonly termed mining activities, is recognized at the fair value of the bitcoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for bitcoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or bitcoin mining. The Company receives consideration for performing such transaction verification activities in the form of bitcoins. Revenue is recorded upon the actual receipt of bitcoins. Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of bitcoins. The Company expenses these costs as they are incurred. Net Loss per Share Basic loss per share is computed by dividing net loss applicable to common stock by the weighted-average number of common shares outstanding during the period. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted loss per share reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. The following financial instruments were not included in the diluted loss per share calculation for the three months ended March 31, 2016 and 2015 because their effect was anti-dilutive: March 31, 2016 December 31, 2015 Warrants 29,203,352 29,203,352 Convertible notes 4,833,333 4,833,333 Excluded potentially dilutive securities 34,036,685 34,036,685 Recent Accounting Pronouncements In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. When adopted, the Company does not expect this guidance to have a material impact on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer Subsequent events Subsequent events have been evaluated through the date of this filing. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5 - Property and Equipment Property and equipment consist of the following at March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 Equipment $ 108,441 $ 109,493 Computer 4,232 3,086 Leasehold improvement 242,091 242,091 Transaction verification servers 458,243 451,281 813,007 805,951 Accumulated depreciation (408,587 ) (316,531 ) Property and equipment, net $ 404,420 $ 489,420 Depreciation expense was approximately $95,000 and $47,000 for the three months ended March 31, 2016 and 2015, respectively. |
Investment at Cost
Investment at Cost | 3 Months Ended |
Mar. 31, 2016 | |
Schedule of Investments [Abstract] | |
Investment at Cost | Note 6 Investment at Cost Spondoolies The Company had total investment of $2,250,000 to Spondoolies Tech Ltd. (Spondoolies) as of December 31, 2015. The Company assessed impairment for the Spondoolies investment and determined that this investment is not recoverable and as such fully impaired it due to the During the three months ended March 31, 2016, the Company recorded impairment loss of $2,250,000. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7 - Fair Value Measurements The Companys assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy. The following table presents information about the Companys liabilities measured at fair value on a recurring basis and the Companys estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2016 and December 31, 2015: Fair value measured at March 31, 2016 Total carrying value at March 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 45,517 $ 45,517 $ - $ - Liabilities: Derivative Liabilities $ 3,296,920 $ - $ - $ 3,296,920 Senior convertible notes at fair value 1,746,146 1,746,146 Fair value measured at December 31, 2015 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,036 $ 17,036 $ - $ - Liabilities: Derivative Liabilities $ 3,794,153 $ - $ - $ 3,794,153 Senior convertible notes at fair value 1,781,156 1,781,156 There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2016. The following table presents additional information about Level 3 assets and liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2016: Balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability (497,233 ) Balance - March 31, 2016 $ 3,296,920 The amount of total gains or losses for the period included in changes in fair values attributable to the change in unrealized gains or losses relating to liability still held as of March 31, 2016 were approximately $497,000 and $927,000 for the three months ended March 31, 2016 and 2015, respectively. Senior convertible notes at fair value Balance - January 1, 2016 $ 1,781,156 Change in fair value of senior convertible notes (35,010 ) Senior convertible notes at fair value Balance - March 31, 2016 $ 1,746,146 The Companys derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Companys derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the three months ended March 31, 2016 is as follows: Derivative Liabilities Date of valuation March 31, 2016 Strike price $ 0.27 Volatility (annual) 117.5 % Risk-free rate 1.1 % Contractual term (years) 4.1 Dividend yield (per share) 0 % Senior Convertible Notes at Fair Value Date of valuation March 31, 2016 Strike price $ 0.11 Volatility (annual) 94.4 % Risk-free rate 0.4 % Dividend yield (per share) 0 % The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Companys Management. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Note 8 - Stock Based Compensation Compensation expense for all stock-based awards is measured on the grant date based on the fair value of the award and is recognized as an expense, on a straight-line basis, over the employees requisite service period (generally the vesting period of the equity award). The fair value of each option award is estimated on the grant date using a Black-Scholes option valuation model. Stock-based compensation expense is recognized only for those awards that are expected to vest using an estimated forfeiture rate. The Company estimates pre-vesting option forfeitures at the time of grant and reflects the impact of estimated pre-vesting option forfeitures in compensation expense recognized. For options and warrants issued to non-employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Stock-based compensation expense was $0 and $1.4 million for the three months ended March 31, 2016 and 2015, respectively. Stock Options There are no stock options outstanding as of March 31, 2016 and December 31, 2015. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9 - Related Party Transactions On February 19, 2016, the Company entered into a securities escrow agreement (the Securities Escrow Agreement) with Charles Allen its Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, its Chief Operating Officer and corporate secretary (collectively, the Principal Stockholders). Pursuant to the Securities Escrow Agreement and for the benefit of the Companys public shareholders the Principal Stockholders voluntarily agreed to place stock certificates representing 24,000,000 shares of Common Stock (the Escrow Shares) into escrow. The return of 12,000,000 escrowed shares (the Listing Escrow Shares) to the Principal Stockholders shall be based upon the successful listing of the Companys Common Stock on a National Stock Exchange on or before December 31, 2016 (the Listing Condition). The Listing Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Listing Condition. The return of 12,000,000 escrowed shares (the Merger Escrow Shares) to the Principal Stockholders shall be based upon the successful consummation of the merger with Spondoolies-Tech Ltd. (Spondoolies) on or before December 31, 2016 (the Merger Condition). The Merger Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Merger Condition. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 - Subsequent Events On April 21, 2016, the Company dismissed its independent registered public accounting firm Marcum LLP (Marcum) effective immediately. The dismissal was approved by the Board of Directors (the Board) of the Company. On April 21, 2016, the Company engaged RBSM LLP (RBSM) as the Companys independent registered public accountant effective immediately. On May 5, 2016, the Company was informed that, on May 4, 2016, a hearing was held in the district court (the Court) in Beersheva, Israel during which certain parties sought appointment of a temporary liquidator for Spondoolies Tech Ltd. (Spondoolies). As a result of the hearing, the Court appointed a temporary liquidator and the judge presiding over the proceedings set a hearing for July 14, 2016, at least one week prior to which a certificate of information must be filed with the Court as required in the applicable regulations. The Company is seeking a conference with the temporary liquidator. At the present time, there can be no assurance that the Companys pending acquisition of Spondoolies can be effectuated and is examining what claims, if any, it may have in connection with such acquisition and the Companys prior investments in Spondoolies. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Transaction Verification Services | Transaction Verification Services Revenue earned from bitcoin processing activities (Transaction Verification Services), commonly termed mining activities, is recognized at the fair value of the bitcoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for bitcoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or bitcoin mining. The Company receives consideration for performing such transaction verification activities in the form of bitcoins. Revenue is recorded upon the actual receipt of bitcoins. Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of bitcoins. The Company expenses these costs as they are incurred. |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing net loss applicable to common stock by the weighted-average number of common shares outstanding during the period. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted loss per share reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. The following financial instruments were not included in the diluted loss per share calculation for the three months ended March 31, 2016 and 2015 because their effect was anti-dilutive: March 31, 2016 December 31, 2015 Warrants 29,203,352 29,203,352 Convertible notes 4,833,333 4,833,333 Excluded potentially dilutive securities 34,036,685 34,036,685 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. When adopted, the Company does not expect this guidance to have a material impact on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer |
Subsequent Events | Subsequent events Subsequent events have been evaluated through the date of this filing. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share Anti-Diluted | The following financial instruments were not included in the diluted loss per share calculation for the three months ended March 31, 2016 and 2015 because their effect was anti-dilutive: March 31, 2016 December 31, 2015 Warrants 29,203,352 29,203,352 Convertible notes 4,833,333 4,833,333 Excluded potentially dilutive securities 34,036,685 34,036,685 |
Property And Equipment (Tables)
Property And Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property And Equipment, Net | Property and equipment consist of the following at March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 Equipment $ 108,441 $ 109,493 Computer 4,232 3,086 Leasehold improvement 242,091 242,091 Transaction verification servers 458,243 451,281 813,007 805,951 Accumulated depreciation (408,587 ) (316,531 ) Property and equipment, net $ 404,420 $ 489,420 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value liabilities Measured at Fair Value on Recurring Basis | The following table presents information about the Companys liabilities measured at fair value on a recurring basis and the Companys estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2016 and December 31, 2015: Fair value measured at March 31, 2016 Total carrying value at March 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 45,517 $ 45,517 $ - $ - Liabilities: Derivative Liabilities $ 3,296,920 $ - $ - $ 3,296,920 Senior convertible notes at fair value 1,746,146 1,746,146 Fair value measured at December 31, 2015 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,036 $ 17,036 $ - $ - Liabilities: Derivative Liabilities $ 3,794,153 $ - $ - $ 3,794,153 Senior convertible notes at fair value 1,781,156 1,781,156 |
Schedule of Changes in Level 3 Liabilities Measured at Fair Value | Changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2016: Balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability (497,233 ) Balance - March 31, 2016 $ 3,296,920 |
Schedule of Changes in Fair Value of Convertible Notes | The amount of total gains or losses for the period included in changes in fair values attributable to the change in unrealized gains or losses relating to liability still held as of March 31, 2016 were approximately $497,000 and $927,000 for the three months ended March 31, 2016 and 2015, respectively. Senior convertible notes at fair value Balance - January 1, 2016 $ 1,781,156 Change in fair value of senior convertible notes (35,010 ) Senior convertible notes at fair value Balance - March 31, 2016 $ 1,746,146 |
Summary of Quantitative Information to Valuation Methodology | Derivative Liabilities Date of valuation March 31, 2016 Strike price $ 0.27 Volatility (annual) 117.5 % Risk-free rate 1.1 % Contractual term (years) 4.1 Dividend yield (per share) 0 % Senior Convertible Notes at Fair Value Date of valuation March 31, 2016 Strike price $ 0.11 Volatility (annual) 94.4 % Risk-free rate 0.4 % Dividend yield (per share) 0 % The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Companys Management. |
Organization and Description of
Organization and Description of Business and Recent Developments (Details Narrative) | Feb. 05, 2014shares |
Bitcoin Shop Us LLC [Member] | |
Shares issued for membership interests | 100,773,923 |
Liquidity, Financial Conditio21
Liquidity, Financial Condition and Management's Plans (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Liquidity Financial Condition And Managements Plans | ||||
Net loss | $ 2,039,341 | $ 3,349,546 | ||
Cash | 62,560 | $ 3,697 | $ 124,535 | $ 5,403 |
Working capital deficiency | 5,300,000 | |||
Fair value of derivative liabilities | $ 3,300,000 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-Diluted (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Excluded potentially dilutive securities | 34,036,685 | 34,036,685 |
Warrants [Member] | ||
Excluded potentially dilutive securities | 29,203,352 | 29,203,352 |
Convertible Notes [Member] | ||
Excluded potentially dilutive securities | 4,833,333 | 4,833,333 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 95,000 | $ 47,000 |
Property And Equipment - Schedu
Property And Equipment - Schedule of Property And Equipment, Net (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 108,441 | $ 109,493 |
Computer | 4,232 | 3,086 |
Leasehold improvement | 242,091 | 242,091 |
Transaction verification servers | 458,243 | 451,281 |
Property and equipment | 813,007 | 805,951 |
Accumulated depreciation | (408,587) | (316,531) |
Property and equipment, net | $ 404,420 | $ 489,420 |
Investment at Cost (Details Nar
Investment at Cost (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Schedule of Investments [Abstract] | |||
Investment | $ 2,250,000 | ||
Investment impairment loss | $ 2,250,000 | $ 254,433 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value Disclosures [Abstract] | ||
Change in unrealized gain losse relating to assets | $ 497,000 | $ 927,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Digital currencies | $ 45,517 | $ 17,036 |
Derivative Liabilities | 3,296,920 | 3,794,153 |
Senior convertible notes at fair value | 1,746,146 | 1,781,156 |
Level 1 [Member] | ||
Digital currencies | $ 45,517 | $ 17,036 |
Derivative Liabilities | ||
Senior convertible notes at fair value | ||
Fair Value, Inputs, Level 2 [Member] | ||
Digital currencies | ||
Derivative Liabilities | ||
Senior convertible notes at fair value | ||
Fair Value, Inputs, Level 3 [Member] | ||
Digital currencies | ||
Derivative Liabilities | $ 3,296,920 | $ 3,794,153 |
Senior convertible notes at fair value | $ 1,746,146 | $ 1,781,156 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Changes in Level 3 Liabilities Measured at Fair Value (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 3,794,153 | |
Change in fair value of derivative liability | (497,233) | $ 926,620 |
Ending balance | $ 3,296,920 |
Fair Value Measurements - Sch29
Fair Value Measurements - Schedule of Changes in Fair Value of Convertible Notes (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Fair Value Disclosures [Abstract] | |
Senior convertible notes at fair value, Beginning Balance | $ 1,781,156 |
Change in fair value of senior convertible notes | (35,010) |
Senior convertible notes at fair value, Ending Balance | $ 1,746,146 |
Fair Value Measurement - Summar
Fair Value Measurement - Summary of Quantitative Information to Valuation Methodology (Details) | 3 Months Ended |
Mar. 31, 2016$ / shares | |
Senior Convertible Notes [Member] | |
Strike price | $ 0.11 |
Volatility (annual) | 94.40% |
Risk-free rate | 0.40% |
Dividend yield (per share) | $ 0 |
Derivative Liabilites [Member] | |
Strike price | $ 0.27 |
Volatility (annual) | 117.50% |
Risk-free rate | 1.10% |
Contractual term (years) | 4 years 1 month 6 days |
Dividend yield (per share) | $ 0 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Stock options outstanding | |||
Stock-based compensation expense | $ 1,369,376 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Principal Stockholders [Member] - shares | Feb. 19, 2016 | Mar. 31, 2016 |
Securities Escrow Agreement [Member] | ||
Number of common stock shares into escrow | 24,000,000 | |
Listing Escrow Shares [Member] | ||
Number of escrowed shares returned | 12,000,000 | |
Merger Escrow Shares [Member] | Spondoolies-Tech Ltd [Member] | ||
Number of escrowed shares returned | 12,000,000 |