Bitcoin Shop (BTCs) announced on April 28 that it signed a letter of intent (LOI) to a merge with Spondoolies Tech, an Israeli mining hardware manufacturer. This new development will entrench BTCs’ interest in transaction verification services and mining.
This is not the first deal the two companies have made. Bitcoin Shop has been a client of Spondoolies Tech for some time now. In fact, the publicly traded company is in the process of setting up an 83,000 square foot mining facility in North Carolina, with much of the equipment supplied by Spondoolies Tech, a shareholder in Bitcoin Shop.
Speaking to CoinTelegraph, Charles Allen, the CEO of BTCs, said the merger will be conditioned on satisfactory due diligence, definitive documentation and various approvals. He said:
“After spending over one year evaluating all areas of the digital currency and blockchain industries, it has become very clear that fully integrated mining is one of the only profitable businesses (at least in the short run prior to mass adoption). However, this must be done with a focus on cost; many mining companies failed because they weren't prepared for a Bitcoin price decline.”
He also said that if they are successfully able to consummate the merger, they will have approximately 75 days from the closing of the merger to file Spondoolies’ audited financial statements in an 8-K form to notify investors of the event. However, Spondoolies may elect to release some preliminary unaudited financials before then.
The merger initiative comes only two weeks after BTCs closed financing of US$2.3 million, where it sold 7,708,342 units of shares to two hedge fund managers who have chosen to remain anonymous, along with and 17 other investors. Allen said:
"The financing was priced at $0.30 per share. The round was led by two notable hedge fund managers who manage a $20 billion-plus fund and have asked to remain anonymous. Additionally, I participated in the round for $20K and Michal Handerhan, our COO, invested US$20K as well.”
Spondoolies Tech has been able to raise approximately US$10 million from leading venture firms in the last quarter of 2014 and the first quarter of 2015.
When asked what the effect of the two announcements has been on their stock price, Allen said:
“Our stock price is dependent on market forces, so we typically don’t comment on price or valuation. However, we believe a merger with Spondoolies is extremely positive news for our public shareholders and we were surprised when our stock declined approximately 20%.”
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This is not the first deal the two companies have made. Bitcoin Shop has been a client of Spondoolies Tech for some time now. In fact, the publicly traded company is in the process of setting […]