BTCS Inc. - Quarter Report: 2014 March (Form 10-Q)

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Nevada		26-2477977
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [   ]

Larger accelerated filer   [   ]	Accelerated filer        [   ]
Non-accelerated filer      [   ] (Do not check if a smaller reporting company)	Smaller reporting company     [X]

 

 

		Page
PART I - FINANCIAL INFORMATION		1
Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013		2
Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2014 (unaudited)		3
Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2014 (unaudited)		4
Condensed Consolidated Statement of Stockholders’ Equity		5
Notes to the Unaudited Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures about Market Risk		18
Item 4. Controls and Procedures		18
PART II - OTHER INFORMATION
Item 1.  Legal Proceedings		19
Item 1A.  Risk Factors		19
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.  Defaults upon Senior Securities		19
Item 4.  Mine Safety Disclosures		19
Item 5.  Other Information		19
Item 6.  Exhibits		19
SIGNATURES

 

 

 

 

 

 

 

 

 

 

 

The Company, through its ecommerce website, currently lists over 140,000 products available for sale; however, the Company does not take physical possession or title to any inventory. All orders are originated by the Company’s customers through its website and are fulfilled by third party vendors.  The Company charges its customers a processing fee and earns a profit margin on each transaction. Customers purchase merchandise on the Company’s website in amounts denominated in Virtual Currencies. The Company converts a portion of the Virtual Currencies received from its customers as payment, to an amount of USD that are needed to remit payments to third party vendors that ultimately fulfill the orders.  

 

Note 2 – Basis of Presentation

 

The accompanying 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 Company’s 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, 2013, included in a Form 8-K filed with the Securities and Exchange Comission on April 17, 2014.

 

 

 

 

 

 

 

Recent Accounting Pronouncements

 

The Company accounts for obligations under the Registration Rights Agreement in accordance with ASC 450 “Contingencies,” which requires us to record a liability if the contingent loss is probable and the amount can be estimated. At March 31, 2014, the Company has not recorded a liability pertaining to the Company’s obligations under the Registration Rights Agreement because the amount is not deemed probable.

A summary of quantitative information with respect to valuation methodology, estimated using a probability-weighted Black-Scholes option pricing model, which is comparable to a Binomial option pricing model, and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy for the three months ended March 31, 2014 is as follows:

 

 

The Company paid the entire rent through the Term and has recognized it as a prepaid rent.  Additionally, the Company paid a security deposit of one month’s rent of $4,815.

 

 

 

 

Revenues		$	11,374
Operating expenses:
Marketing			17,897
General and administrative			1,546,821
Change in fair value of virtual currencies			7,400
Total operating expenses			1,572,118
Loss from operations			(1,560,744	)
Other income
Fair value adjustments for warrant liabilities			109,000
Net loss		$	(1,451,744	)

 

 

 

 

 

 

 

 

ITEM 1

Legal Proceedings

ITEM 1A

Risk Factors

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 3

Defaults Upon Senior Securities

ITEM 4

Mine Safety Disclosures.

ITEM 5

Other Information

ITEM 6

Exhibits

31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.1		Principal Executive Officer and Principal Financial and Accounting Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

	Bitcoin Shop, Inc.
May 15, 2014
	By:	/s/Charles Allen
		Charles Allen
		Its: Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer and Principal Financial and Accounting Officer)