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Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

Fair Value Measurements

The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy.

The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2014:

		Fair value measured at December 31, 2014
		Total carrying value at December 31, 2014				Quoted prices in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Digital Currencies		$	16,040			$	16,040			$	-			$	-

		Fair value measured at December 31, 2013
			Total carrying value at December 31, 2013			Quoted prices in active markets 5 (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs(Level 3)
Digital Currencies		$	22,959			$	22,959			$	-			$	-

There were no transfers between Level 1, 2 or 3 during the year ended December 31, 2014 and for the period ended July 28, 2013 (inception) through December 31, 2013, respectively.

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 twelve months ended December 31, 2014:

Balance - January 1, 2014		$	-
Fair value of warrant liability on date of issuance (February 6, 2014)			227,239
Change in fair value of warrant liability immediately before reclassification			(204,957	)
Reclassification of derivative liability warrant			(22,282	)
Balance - December 31, 2014		$	-

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 year ended December 31, 2014 is as follows:

Date of valuation		February 6, 2014				March 31, 2014				June 30, 2014
Fair value of common stock		$	0.44			$	0.32				0.17
Dividend yield (per share)			0.00	%			0.00	%			0.00	%
Strike price		$	1.00			$	1.00				1.00
Volatility (annual)			74	%			74	%			71	%
Risk-free rate			0.66	%			0.93	%			0.88	%
Expected life (years)			3.0				2.9				2.7

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Management.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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