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Subsequent Events

9 Months Ended

Sep. 30, 2014

In connection with the Company’s investment in Express Technologies, the Company entered into a letter agreement with Express Technologies (the “Letter Agreement”) pursuant to which the Company was granted an option until October 24, 2014 (the “Option”) to (i) purchase additional promissory notes in an amount up to $1,000,000 or (ii) to the extent a Financing occurs, purchase securities in such Financing in an amount up to $1,000,000. The Option is payable in U.S. dollars or bitcoins.

Additionally, pursuant to the Letter Agreement, Express Technologies has agreed to cause Charles Allen, the Company’s Chief Executive Officer, to be appointed as an advisor to Express Technologies in consideration for an option or warrant to purchase such number of shares of Express Technologies’ common stock as shall equal 0.25% of the Fully Diluted Capitalization at an exercise price equal to $9,000,000 divided by the Fully Diluted Capitalization. Such option or warrant shall vest over a two year period.

In the event the Company (i) exercises the Option and (ii) purchases an additional note or participates in a Financing in an amount of $1,000,000, Express Technologies shall cause Mr. Allen to be appointed to its Board of Directors in consideration for which, Mr. Allen shall receive an option or warrant to purchase such number of shares of Express Technologies’ common stock as shall equal 0.50% of the Fully Diluted Capitalization at an exercise price equal to $9,000,000 divided by the Fully Diluted Capitalization. Such option or warrant shall vest over a two year period

On October 2, 2014, the Company entered into a Subscription Agreement (the “Agreement”) with Coin Outlet Inc. (“Coin Outlet”) pursuant to which the Company purchased from Coin Outlet 8,334 Units, at $6.00 per Unit, for an aggregate purchase price of $50,004. Each Unit consists of (i) one share of Coin Outlet’s common stock, and (ii) a warrant to purchase two (2) shares of Coin Outlet’s common stock at an exercise price of $6.00 per share which expires on January 15, 2015 (the “Warrant”).

As further incentive for the Company to enter into the Agreement, the Company, Coin Outlet and its shareholders (the “Holders”) entered into an option agreement with the Company (the “Option”). Pursuant to the Option agreement the Company shall have the option in one or more transactions to exchange an aggregate of up to 75,448 shares in Coin Outlet (or approximately 7.4% of the total shares of Coin Outlet issued and outstanding immediately prior to this transaction) (the “CO Shares”) for up to an aggregate of 3,500,000 newly issued shares of common stock of the Company (the “BTCS Shares”). Both the CO Shares and BTCS Shares shall be adjusted to account for certain reclassifications and adjustments as set forth in the Option agreement. Pursuant to the Option agreement the Option will automatically be exercised in full on August 15, 2015 unless Coin Outlet or the Company has had a material adverse effect as defined.

The Holders further agreed to enter into a lock-up agreement with the Company with respect to any BTCS Shares received (the “Lockup Agreement”). Pursuant to the Lockup Agreement the Holders are prohibited from the sale of any BTCS Shares until after February 5, 2017.Immediately prior to the transaction Coin Outlet’s share structure consisted of 1,000,000 shares of common stock, and no other equity or equity linked securities were issued or outstanding. After giving effect to the Unit purchase the Company will own 0.83% of Coin Outlet and if the Warrant and Option are exercised in full the Company would own 9.8% of Coin Outlet.

On October 10, 2014, the Company entered into lockup agreements (the “Lockup Agreements”) with certain of its officers, directors and large shareholders (collectively, the “Lockup Parties”) pursuant to which the Lockup Parties agreed to refrain from selling or transferring an aggregate of 71,254,575 shares of the Company’s common stock they own until February 5, 2017. The foregoing description of the Lockup Agreements does not purport to be complete and is qualified in its entirety by reference to the complete text as set forth in an 8k filed with the SEC on October 10, 2014.

On October 17, 2014, the Company formed a Strategic Advisory Board (the “SAB”) whose purpose is to assist and provide advice to the Company’s Board of Directors and management regarding the Company’s corporate strategic plan and matters of particular strategic importance to the Company. In connection with the formation of the SAB, on October 17, 2014, the Company entered into Strategic Advisory Board Agreements with the initial ten members of its SAB, which nine of such agreements call for compensation to be paid in shares of the Company’s restricted common stock, par value $0.001 per share (the “Common Stock”) and one agreement calls for compensation to be paid in cash (the “Equity SAB Agreement” and the “Cash SAB Agreement, respectively).

On October 21, 2014, the Company entered into a Share Redemption Agreement and Release (the “Redemption Agreement”) with each of Charles Allen, its Chief Executive Officer, Chief Financial Officer and Chairman, Charles Kiser, its Chief Marketing Officer and Michal Handerhan, its Chief Operating Officer and corporate secretary (collectively, the “Company Officers”) pursuant to which the Company Officers agreed to return an aggregate of 12,750,000 shares of the Company’s common stock, par value $0.001 per share, held by them to the Company for cancellation in consideration for an aggregate payment of $2,490.72.

On November 7, 2014, the Company entered into an Option Cancellation and Release Agreement (each, a “Cancellation Agreement”) with each of Charles Allen, its Chief Executive Officer, Chief Financial Officer and Chairman, Charles Kiser, its Chief Marketing Officer, Michal Handerhan, its Chief Operating Officer and corporate secretary and Timothy Sidie, its former Chief Technology Officer (collectively, the “Company Option Holders”) pursuant to which each of the Company Option Holders agreed to return to the Company for cancellation, options to purchase up to 1,550,368 shares (or 6,201,472 shares in the aggregate) of the Company’s common stock, par value $0.001 per share, with an exercise price of $0.50, held by them.

On November 7, 2014, the Board of Directors of the Company granted Charles Allen an eight year non-qualified stock option under the Company’s 2014 Equity Incentive Plan (the “Plan”) to purchase up to an aggregate of Nine Million Five Hundred Thousand (9,500,000) shares of the Company’s common stock with a per share exercise price of $0.10 (the “Allen Option”). The Allen Option vests as follows:

Three Million Five Hundred Thousand (3,500,000) shares of common stock shall vest if (i) EBITDA (as defined in the Allen Option), as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending 2015, is at least Five Hundred Thousand Dollars ($500,000) and (ii) 2015 EBITDA Per Share (as defined in the Allen Option) is at least $0.003;

Five Million (5,000,000) shares of common stock shall vest if (i) EBITDA, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending 2016, is at least Three Million Dollars ($3,000,000) and (ii) 2016 EBITDA Per Share (as defined in the Allen Option) is at least $0.014 per share; and

One Million (1,000,000) shares of common stock shall vest upon the listing of the Company’s common stock on a national securities exchange on or prior to December 31, 2016.

On November 7, 2014, the Board of Directors of the Company granted Michal Handerhan an eight year non-qualified stock option under the Plan to purchase up to an aggregate of Two Million Nine Hundred and Fifty Thousand (2,950,000) shares of the Company’s common stock with a per share exercise price of $0.10 (the “Handerhan Option”). The Handerhan Option shall vest as follows:

Two Hundred and Fifty Thousand (250,000) shares of common stock shall vest if (i) EBITDA (as defined in the Handerhan Option), as reported in the Company’s Annual Report on Form 10-Kfor the fiscal year ending 2015, is at least Five Hundred Thousand Dollars ($500,000) and (ii) 2015 EBITDA Per Share (as defined in the Handerhan Option) is at least $0.003;

Three Hundred and Fifty Thousand (350,000) shares of common stock shall vest if (i) EBITDA, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending 2016, is at least Three Million Dollars ($3,000,000) and (ii) 2016 EBITDA Per Share (as defined in the Handerhan Option) is at least $0.014 per share;

One Million Five Hundred Thousand (1,500,000) shares of common stock shall vest if the revenue of the Company’s wholly owned subsidiary Bitcoinshop.us LLC for fiscal year ending 2016 as reported in the Company’s Annual Report on Form 10-K for the fiscal year ending, 2016 is at least One Million Dollars ($1,000,000); and

Eight Hundred and Fifty Thousand (850,000) shares of common stock shall vest upon the successful completion of various milestones on or prior to December 31, 2015, as described in the Handerhan Option.