Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 16, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Riot Blockchain, Inc. | |
Entity Central Index Key | 1,167,419 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 13,475,132 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 5,257,534 | $ 41,651,965 |
Prepaid contracts | 3,584,699 | |
Prepaid expenses and other current assets | 511,374 | 538,812 |
Digital currencies | 4,258,669 | 200,164 |
Current assets of discontinued operations | 44 | |
Total current assets | 13,612,276 | 42,390,985 |
Property and equipment, net | 22,492,426 | 4,294,166 |
Intangible rights acquired | 1,487,052 | 754,244 |
Long-term investments | 9,412,726 | 3,000,000 |
Security deposits | 673,463 | |
Other long-term assets, net: | ||
Patents, net | 519,113 | 509,649 |
Goodwill | 1,186,496 | 1,186,496 |
Convertible note | 200,000 | 200,000 |
Total assets | 49,583,552 | 52,335,540 |
Current liabilities | ||
Accounts payable | 1,511,227 | 410,029 |
Accrued expenses | 743,472 | 216,883 |
Deferred purchase price - BMSS | 1,500,000 | |
Demand note | 775,074 | |
Notes and other obligations, current | 54,534 | 135,574 |
Deferred revenue, current portion | 96,698 | 96,698 |
Current liabilities of discontinued operations | 16,340 | 181,340 |
Total current liabilities | 4,697,345 | 1,040,524 |
Deferred revenue, less current portion | 944,443 | 968,617 |
Deferred income tax liability | 706,709 | 699,000 |
Total liabilities | 6,348,497 | 2,708,141 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, no par value | ||
Common stock, no par value; 170,000,000 shares authorized; 13,327,615 and 11,622,112 shares outstanding as of March 31, 2018 and December 31, 2017, respectively | 193,335,481 | 180,387,518 |
Accumulated deficit | (155,613,572) | (139,263,480) |
Total Riot Blockchain stockholders' equity | 42,651,677 | 48,869,304 |
Non-controlling interest | 583,378 | 758,095 |
Total stockholders' equity | 43,235,055 | 49,627,399 |
Total liabilities and stockholders' equity | 49,583,552 | 52,335,540 |
2% Convertible Preferred Stock Series A [Member] | ||
Stockholders' equity | ||
Preferred stock, no par value | ||
0% Convertible Preferred Stock Series B [Member] | ||
Stockholders' equity | ||
Preferred stock, no par value | $ 4,929,768 | $ 7,745,266 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value | ||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares authorized | 170,000,000 | 170,000,000 |
Common stock, shares issued | 13,327,615 | 11,622,112 |
Common stock, shares outstanding | 13,327,615 | 11,622,112 |
2% Convertible Preferred Stock Series A [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
0% Convertible Preferred Stock Series B [Member] | ||
Preferred stock, shares authorized | 1,750,001 | 1,750,001 |
Preferred stock, shares issued | 928,000 | 1,458,001 |
Preferred stock, shares outstanding | 928,000 | 1,458,001 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Total Revenue | $ 925,554 | $ 24,175 |
Costs and expenses: | ||
Cost of revenues (exclusive of depreciation and amortization shown below) | 349,011 | |
Selling, general and administrative | 3,906,197 | 1,034,653 |
Research and development | 4,532 | 17,692 |
Depreciation and amortization | 2,156,427 | |
Impairment expense | 11,480,491 | |
Change in fair value of digital currencies | 2,467,875 | |
Total costs and expenses | 20,364,533 | 1,052,345 |
Operating loss from continuing operations | (19,438,979) | (1,028,170) |
Other income (expense) | ||
Interest expense | (1,069) | (4,834) |
Other expenses | (337,020) | |
Investment income | 62,586 | 26,220 |
Total other income (expense) | (275,503) | 21,386 |
Loss from continuing operations before income taxes | (19,714,482) | (1,006,784) |
Deferred income tax benefit | 3,053,000 | |
Loss from continuing operations | (16,661,482) | (1,006,784) |
Discontinued operations | ||
Income (loss) from operations | 96,132 | (642,636) |
Impairment loss | (2,704,356) | |
Income (loss) from discontinued operations | 96,132 | (3,346,992) |
Net loss | (16,565,350) | (4,353,776) |
Net loss attributable to non-controlling interest | 215,258 | |
Net loss attributable to Riot Blockchain | $ (16,350,092) | $ (4,353,776) |
Basic and diluted net loss per share: | ||
Continuing operations attributable to Riot Blockchain | $ (1.36) | $ (0.22) |
Discontinued operations attributable to Riot Blockchain | 0.01 | (0.73) |
Net loss | $ (1.35) | $ (0.95) |
Basic and diluted weighted average number of shares outstanding | 12,289,785 | 4,599,184 |
Revenue - Crypto-currency mining [Member] | ||
Total Revenue | $ 901,380 | |
Other revenue - fee [Member] | ||
Total Revenue | $ 24,174 | $ 24,175 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Preferred Stock | Common Stock [Member] | Accumulated Deficit | Total riot blockchain stockholder's equity [Member] | Noncontrolling Interest [Member] | Total |
BALANCE at Dec. 31, 2017 | $ 7,745,266 | $ 180,387,518 | $ (139,263,480) | $ 48,869,304 | $ 758,095 | $ 49,627,399 |
BALANCE, shares at Dec. 31, 2017 | 1,458,001 | 11,622,112 | ||||
Common stock issued for asset purchase - Prive | $ 8,480,000 | 8,480,000 | 8,480,000 | |||
Common stock issued for asset purchase - Prive, shares | 800,000 | |||||
Common stock escrow shares issued for asset purchase - Prive | ||||||
Common stock escrow shares issued for asset purchase - Prive, shares | 200,000 | |||||
Preferred stock converted to Common stock | $ (2,815,498) | $ 2,815,498 | ||||
Preferred stock converted to Common stock, shares | (530,001) | 530,001 | ||||
Exercise of warrants | $ 350,000 | 350,000 | 350,000 | |||
Exercise of warrants, shares | 100,000 | |||||
Stock-based compensation | $ 883,943 | 883,943 | 883,943 | |||
Stock-based compensation, shares | ||||||
Exercise of stock options | $ 78,522 | 78,522 | 78,522 | |||
Exercise of stock options, shares | 19,533 | |||||
Common stock issued for services | $ 20,000 | 20,000 | 20,000 | |||
Common stock issued for services, shares | 2,754 | |||||
Sale of Riot shares held by Tess | $ 320,000 | 320,000 | 320,000 | |||
Sale of Riot shares held by Tess, shares | ||||||
Cashless exercise of stock purchase warrants | ||||||
Cashless exercise of stock purchase warrants, shares | 3,215 | |||||
Delivery of common stock underlying restricted stock units | ||||||
Delivery of common stock underlying restricted stock units, shares | 50,000 | |||||
Non-controlling interest - Logical Brokerage | 40,541 | 40,541 | ||||
Net loss attributable to non-controlling interest | (215,258) | (215,258) | ||||
Net loss | (16,350,092) | (16,350,092) | (16,350,092) | |||
BALANCE at Mar. 31, 2018 | $ 4,929,768 | $ 193,335,481 | $ (155,613,572) | $ 42,651,677 | $ 583,378 | $ 43,235,055 |
BALANCE, shares at Mar. 31, 2018 | 928,000 | 13,327,615 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Continuing operations: | ||
Net loss | $ (16,565,350) | $ (4,353,776) |
Income from discontinued operations | (96,132) | (3,346,992) |
Loss from continuing operations | (16,661,482) | (1,006,784) |
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities of continuing operations : | ||
Stock-based compensation | 883,943 | 133,043 |
Depreciation and amortization | 2,156,427 | 18,133 |
Deferred income tax benefit | (3,053,000) | |
Amortization of license fee revenue | (24,174) | (24,175) |
Common stock issued for services | 20,000 | |
Asset impairment charge | 11,480,491 | |
Revaluation of digital currencies | 2,467,875 | |
Other non-cash charges | 1,500 | |
Changes in assets and liabilities: | ||
Prepaid contracts | (3,584,699) | |
Prepaid expenses and other current assets | 27,438 | 62,733 |
Digital currencies | (901,380) | |
Accounts payable | 1,101,198 | 15,950 |
Accrued expenses | 526,590 | (202,227) |
Net cash used in operating activities of continuing operations | (5,560,773) | (1,001,827) |
Net cash used in operating activities of discontinued operations | (68,824) | (661,998) |
Net cash used in operating activities | (5,629,597) | (1,663,825) |
Continuing operations: | ||
Purchases of property and equipment | (18,922,569) | |
Purchase of digital currency | (5,625,000) | 7,506,761 |
Purchases of other investments | (6,412,726) | |
Security deposits | (673,463) | (11,911) |
Purchases of patent and trademark application costs | (24,074) | |
Investment in Logical Brokerage, net of cash acquired | (516,918) | |
Purchase of developed technology | (32,640) | |
Net cash (used in) provided by investing activities of continuing operations | (32,207,390) | 7,494,850 |
Net cash (used in) investing activities of discontinued operations | (1,776) | |
Net cash (used in) provided by investing activities | (32,207,390) | 7,493,074 |
Cash flows from financing activities - continuing operations: | ||
Proceeds from notes payable | 775,074 | 705,974 |
Repayment of notes payable and other obligations | (81,040) | |
Proceeds from exercise of warrants | 350,000 | (83,453) |
Proceeds from exercise of stock options | 78,522 | |
Proceeds from sale of Riot shares held by Tess | 320,000 | |
Net cash provided by financing activities of continuing operations | 1,442,556 | 622,521 |
Net increase (decrease) in cash and cash equivalents | (36,394,431) | 6,451,770 |
Cash and cash equivalents at beginning of period | 41,651,965 | 5,529,848 |
Cash and cash equivalents at end of period | 5,257,534 | 11,981,618 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1,219 | 1,256 |
Supplemental disclosure of noncash investing and financing activities: | ||
Value of shares issued for Prive asset acquisition | $ 8,480,000 | |
Conversion of Preferred stock to Common stock | 2,815,498 | |
Deferred purchase price for BMSS | $ 1,500,000 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1. Organization: Nature of operations: Riot Blockchain, Inc. (the "Company" or "Riot Blockchain") was organized on July 24, 2000, as a Colorado corporation. Effective October 19, 2017, the Company's name was changed to Riot Blockchain, Inc., from Bioptix, Inc., and as of November 30, 2016, the Company's name was changed to Bioptix, Inc., from Venaxis, Inc. Effective October 19, 2017, the Company was re-incorporated to Nevada from Colorado. On October 19, 2017, the Company's changed its name to Riot Blockchain, Inc. The Company is building a cryptocurrency mining operation, operating specialized computers (also known as "miners") that generate cryptocurrency (primarily bitcoin). As of March 31, 2018, the Company owned approximately 8,000 miners. The Company acquired 1,200 miners as a result of its acquisition of Kairos Global Technology, Inc., ("Kairos") in November 2017 and in February 2018, the Company acquired 3,800 miners from Prive Technologies, Inc. (“Prive”) and 3,000 miners from On January 2, 2018 the Company formed Digital Green Energy Corp. (Digital Green), a wholly owned subsidiary, which is seeking to identify environmentally friendly projects with large energy capacity and a cost-effective rate for energy for cryptocurrency mining operations and data center projects. On February 27, 2018, Kairos entered into a lease agreement for approximately a 107,000-square foot facility in Oklahoma City, Oklahoma, which included data center improvements. Upon the execution of the facility lease the Company began consolidating all of its miners at the data center facility. As of March 31, 2018, 3,500 of the miners were installed and operating. On March 26, 2018, the Company acquired 92.5% of Logical Brokerage Corp. (“Logical Brokerage”). Logical Brokerage is a futures introducing broker headquartered in Miami, Florida registered with the Commodity Futures Trading Commission (“CFTC”), and a member of the National Futures Association (“NFA”). The Company intends to investigate launching a digital currency exchange and a futures brokerage operation within the United States under the name RiotX. |
Basis of presentation, summary
Basis of presentation, summary of significant accounting policies and recent accounting pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation, summary of significant accounting policies and recent accounting pronouncements | Note 2: Basis of presentation, summary of significant accounting policies and recent accounting pronouncements The Company has experienced recurring losses and negative cash flows from operations. At March 31, 2018, the Company had approximate balances of cash and cash equivalents of $5,258,000, working capital of $8,915,000, total stockholders' equity of $43,235,000 and an accumulated deficit of $155,614,000. To date, the Company has in large part relied on equity financing to fund its operations. The primary focus of the Company is its cryptocurrency mining operations currently located in Oklahoma City, Oklahoma, and potentially establishment of other mining operations in other locations around the world, along with its investigation of the launch of a cryptocurrency exchange in the United States. That operational focus and the Company’s recently completed Kairos and Tess acquisitions and Coinsquare investment, as well as the Company’s new name, reflect a strategic decision by the Company to pursue blockchain and digital currency related operations. The Company's current strategy will continue to expose the Company to the numerous risks and volatility associated within this sector. Effective January 14, 2017, the Company adopted a plan to exit the business of BiOptix Diagnostics Inc. (“BDI”) and commenced a significant reduction in the workforce. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017, of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. Accordingly, the historical results of BDI have been classified as discontinued operations for all periods presented. The Company expects to continue to incur losses from operations for the near-term and these losses could be significant as the Company incurs costs and expenses associated with the recent and potential future acquisitions and investments, as well as public company and administrative related expenses are incurred and winding-down BDI's operations. The Company believes its upcoming near-term cash needs relative to the recent acquisitions will be covered by cash acquired in the acquisitions combined with the Company's available cash. The Company believes that its current working capital position will be sufficient to meet its estimated cash needs for at least a year and a day from this filing. The Company is closely monitoring its cash balances, cash needs and expense levels. Management's strategic plans include the following: • continuing expansion of cryptocurrency mining operations; • continuing to evaluate opportunities for investments in the blockchain and digital currency sector; • establishing a virtual currency exchange; • exploring other possible strategic options and financing opportunities available to the Company; • evaluating options to monetize, partner or license the Company's assets; and • continuing to implement cost control initiatives to conserve cash. Basis of presentation and principles of consolidation The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet at March 31, 2018, condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, condensed consolidated statements of cash flows for the three months ended March 31, 2018 and 2017, and condensed consolidated statement of changes in stockholders’ equity for the three months ended March 31, 2018 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, that the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018 or for any future interim period. The consolidated balance sheet at December 31, 2017 has been derived from audited financial statements; however, it does not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as amended, as filed with the SEC (the “2017 Annual Report”). The Company's consolidated subsidiaries and (percentage owned at March 31, 2018) consisted of; Kairos Global Technology, Inc. (100%), Digital Green Energy Corp., Inc. (100%), Logical Brokerage Corp. (92.5%), Tess, Inc. (52%) and BiOptix Diagnostics, Inc. (100%). Revenue Recognition (Cryptocurrency Mining): The Company recognizes revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of an arrangement and that the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable and collectability is probable. Our material revenue stream is related to the mining of digital currencies. The Company derives its revenue by providing transaction verification services within the digital currency networks of cryptocurrencies, such as bitcoin, bitcoin cash and litecoin, commonly termed "cryptocurrency mining." In consideration for these services, the Company receives digital currencies which are recorded as revenue, using the average U. S. dollar spot price of the related cryptocurrency on the date of receipt. The coins are recorded on the balance sheet at their fair value and re–measured at each reporting date. Revaluation gains or losses, as well as gains or losses on sale of digital currencies are recorded as a component of cost and expenses in the statement of operations. Expenses associated with running the cryptocurrency mining business, such as equipment depreciation, rent and electricity costs are also recorded as cost and expenses. There is currently no specific definitive guidance in GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations and the guidance in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers · Step 1: Identify the contract with the customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: • The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct). • The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: · Variable consideration · Constraining estimates of variable consideration · The existence of a significant financing component in the contract · Noncash consideration · Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. There is only one performance obligation in each digital currency transaction (transfer of a verified transaction to the blockchain). If the Company is successful in adding a block to the blockchain (by verifying an individual transaction), the Company is automatically awarded a fixed number of digital currency tokens for their effort. At the time the contract with the customer arises (upon being the first to solve the algorithm and transferring a verified transaction to the blockchain), the consideration receivable is fixed. As such, the Company concluded that there was no variable consideration. There is no significant financing component or consideration payable to the customer in these transactions. Digital currencies are non-cash consideration and thus must be included in the transaction price at fair value at the inception of the contract, which is when the algorithm is solved and a verified transaction is transferred to the blockchain. Fair value is determined using the average U.S. dollar spot rate of the related digital currency. The Company subsequently accounts for digital currencies received at fair value, with changes in fair value flowing through current income, as the Company has concluded that that the fair value measurement model, with both realized and unrealized changes reflected currently in the income statement, best represents the economics associated with holding digital currencies. These subsequent holding gains and losses are not reflected as revenue from contracts with customers, in accordance with the guidance above but are recorded as a component of costs and expenses. Expenses associated with running the digital currency mining business, such as rent and electricity cost are also recorded as cost of revenues. Depreciation on digital currency mining equipment is recorded as a component of costs and expenses. Use of estimates: The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the accompanying condensed consolidated financial statements include recoverability and useful lives (indefinite or finite) of intangible assets, assessment of impairment of goodwill, provisions for income taxes and the fair value of digital currencies, stock options and warrants granted to employees, consultants, directors, investors, licensors, placement agents and underwriters. The Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. Deferred tax liability: The Company recognized a $2.9 million and $0.2 million deferred tax liability related to the Prive and Logical Brokerage acquisitions during the three months ended March 31, 2018. Due to the acquisitions, a temporary difference between the book fair value and the tax basis of the indefinite life intangible assets and depreciable property and equipment acquired created an approximately $3.1 million deferred tax liability. In addition, due to the impairment and depreciation of the Kairos and Prive property and equipment, the Company recorded a $3.1 million income tax benefit from the reduction of its existing deferred tax liability related to these acquisitions. The following is a rollforward of the Company’s deferred tax liability from January 1, 2018 to March 31, 2018: March 31, 2018 Deferred tax liability as of January 1, 2018 $ 699,000 Deferred tax liability recorded on the Prive acquisition 2,918,000 Deferred tax liability recorded on the Logical Brokerage acquisition 142,709 Impairment and depreciation on Prive and Kairos acquisitions (3,053,000 ) Deferred tax liability as of March 31, 2018 $ 706,709 Loss per share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company excludes escrow shares because including them would result in anti-dilution. Since the Company has only incurred losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2018 and 2017 are as follows: March 31, 2018 2017 Warrants to purchase common stock 1,831,886 897,003 Options to purchase common stock 150,000 552,747 Restricted stock units 681,176 145,000 Escrow shares of common stock 200,000 - Convertible Series B preferred shares 928,000 - 3,791,062 1,594,750 For periods when shares of preferred stock are outstanding, the two-class method is used to calculate basic and diluted earnings (loss) per common share since such preferred stock is a participating security under ASC 260 Earnings per Share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic earnings (loss) per common share is computed by dividing net earnings (loss) attributable to common share after allocation of earnings to participating securities by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share, when applicable, is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company. Under the provisions of ASC 260, "Earnings Per Share," basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders is computed by deducting both the dividends declared in the period on preferred stock and the dividends accumulated for the period on cumulative preferred stock from income from continuing operations. There were no dividends declared during the three months ended March 31, 2018 and 2017. Adoption of Recent Accounting Pronouncements: The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's consolidated financial statements properly reflect the change. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Leases (Topic 840) Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3. Acquisitions: The acquisitions of Prive, BMSS, and Logical Brokerage were accounted for as an asset acquisition pursuant to ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, Asset Purchase Agreement with Prive Technologies LLC: On February 21, 2018, the Company and Kairos, completed an asset purchase under an agreement (the "Prive Purchase Agreement") with Prive on behalf of certain persons and entities who owned certain cryptocurrency mining machines and related equipment (the "Prive Equipment"). Pursuant to the Prive Purchase Agreement, the aggregate consideration for the Prive Equipment consisted of (i) Eleven Million Dollars ($11,000,000) and (ii) One Million (1,000,000) shares of the Company’s common stock (the “Prive Shares”). Upon closing of the transaction, and pursuant to the terms of the Prive Purchase Agreement, Kairos became the owner of the Prive Equipment and other assets used for the mining of cryptocurrency, including, but not limited to, 3,800 Bitmain AntMiner S9s. On February 21, 2018, the miners were recorded for a purchase price of $22,400,000, consisting of cash of $11,000,000 and 800,000 of the Company’s shares of common stock valued at $10.60 per share (excludes 200,000 shares of Common Stock held in escrow). The purchase price for the miners was recorded as follow: March 31, 2018 Cash consideration $ 11,000,000 Fair value of common stock 8,480,000 Deferred tax liability 2,918,000 Other expenses 2,000 $ 22,400,000 Two principal shareholders held 24.8% and 18.4%, respectively, of Prive, at the time of its acquisition by the Company. These holders held 10.7% and 5.7%, respectively of Kairos at the time of its acquisition by the Company. Two Hundred Thousand (200,000) of the Shares (the "Escrow Shares") were deposited into an escrow account with Corporate Stock Transfer, Inc., as escrow agent (the "Escrow Agent"), pursuant to an escrow agreement (the "Escrow Agreement"). Certificates representing the Escrow Shares were deposited and recorded with the Escrow Agent to be held in escrow and not be transferred, pledged or hypothecated except as provided in the Escrow Agreement. The Escrow Shares will be released to the Sellers upon the Company generating Net Cash Flow (as defined in the Prive Purchase Agreement) of at least Ten Million Dollars ($10,000,000) from the Equipment. If the Escrow Shares are not released to the Sellers on or before the two-year anniversary of the Prive Purchase Agreement, the Escrow Shares shall be returned to the Company for cancellation. Under the guidance of ASC 360, Impairment or Disposal of Long-lived Assets, a long-lived asset or asset group (including intangibles) will be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Asset Purchase Agreement with Blockchain Mining Supply & Services Ltd.: On February 21, 2018, the Company completed an asset purchase under an agreement (the “BMSS Purchase Agreement”) with “BMSS which owned 3,000 AntMiner S9 bitcoin mining machines (the “BMSS Equipment”). Pursuant to the BMSS Purchase Agreement, the Company purchased the BMSS Equipment for aggregate consideration of Eight Million Five Hundred Thousand Dollars ($8,500,000). On February 21, 2018, the miners were recorded for purchase price of $8,500,000 paid or payable in cash. Seven Million Dollars ($7,000,000) of the purchase price was paid at closing. The remaining One Million Five Hundred Thousand Dollars ($1,500,000) of the purchase price shall be payable on the earlier of August 20, 2018 and such time when the BMSS Equipment becomes operational. Under the guidance of ASC 360, Impairment or Disposal of Long-lived Assets, a long-lived asset or asset group (including intangibles) will be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Acquisition of Logical Brokerage Corp.: On March 26, 2018, the Company entered into and closed a stock purchase agreement (the “Logical Brokerage Purchase Agreement”) between the Company and Mark Bradley Fisher (the “Logical Brokerage Seller”). Pursuant to the Logical Brokerage Purchase Agreement, the Company purchased from the Logical Brokerage Seller 9.25 shares of Logical Brokerage, representing 92.5% of the outstanding capital stock of Logical Brokerage, for a cash purchase price of $600,000. Logical Brokerage, a futures introducing broker headquartered in Miami, Florida is registered with the CFTC and is a member of the NFA. The Company considered the provisions of FASB ASU 2017-01, Business Combinations (Topic 805), and has determined that the Logical Brokerage Purchase Agreement should be accounted for as an acquisition of assets based on the estimated fair value at the acquisition date. The CFTC license . As a result of an asset acquisition, temporary differences may arise due to differences between the tax bases of assets acquired and liabilities assumed (determined by tax law) and the values of those assets and liabilities recognized for financial statement purposes (determined based on the provisions of ASC 805). ASC 740 requires an entity to recognize deferred tax assets and liabilities for those temporary differences and acquired operating loss or other tax credit carryforwards that arise as a result of the purchase of an asset. However, deferred taxes are not recognized for differences related to nondeductible goodwill, leveraged leases, and certain other differences for which there are specific exceptions. The deferred tax liability represents the difference between the book basis and the tax basis of Riot Blockchain’s intangible assets, calculated using a 25.6% effective tax rate. On March 26, 2018, the CFTC license was recorded as follows (unaudited): March 31, 2018 Cash, net of cash acquired $ 500,000 Deferred tax liability 142,709 Non-controlling interest 40,541 Legal expense 16,918 $ 700,168 In connection with the closing of the Logical Brokerage Purchase Agreement, on March 26, 2018, the Company entered into a stockholders’ agreement (the “Stockholders Agreement”) with Logical Brokerage and Mark Bradley Fisher. The Stockholders Agreement provides, among other things, that, subject to certain exceptions, the Logical Brokerage Seller may not transfer any of his remaining shares of Logical Brokerage without the written consent of the Company. The Stockholders Agreement also provides that, subject to certain exceptions, in the event the Company proposes to transfer 35% or more of Logical Brokerage’s total issued and outstanding capital stock, the Logical Brokerage Seller will be entitled to certain “tag-along” rights. |
Property and equipment
Property and equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Note 4. Property and equipment: As of March 31, 2018, the Company’s property and equipment primarily consisted of its approximately 8,000 cryptocurrency machines. During the first quarter of 2018, the Company determined that certain events occurred that were indicators of potential impairments to the miners. st March 31, 2018 (unaudited) Prive miners $ 10,677,603 BMSS miners 406,652 Kairos miners 396,236 Total impairment charge $ 11,480,491 In the first quarter of 2018 the Company commenced the relocation of the servers acquired in the Kairos transaction to the newly leased facility in Oklahoma City Oklahoma. Kairos noted that due to storm water leakage into a previously utilized facility as of December 31, 2017, servers consisting of 90 AntMiner S9s and 29 AntMiner L3s had visible evidence of exposure to water. These servers were taken off line and Kairos investigated the extent of possible damage and functionality of the 119 servers. During the first quarter of 2018, the Company determined there was no damage to the 119 servers and they are being relocated to the Company’s facility in Oklahoma City, Oklahoma during the second quarter of 2018. Property and equipment consisted of the following: March 31, 2018 (unaudited) December 31, 2017 Cryptocurrency machines, net of impairment 23,468,237 $ 4,700,575 Leasehold improvements 852,512 - Office and computer equipment 70,718 61,670 Total cost of property and equipment 24,391,467 4,762,245 Less accumulated depreciation (1,899,041 ) (468,079 ) Property and equipment, net $ 22,492,426 $ 4,294,166 Depreciation expense for the three months ended March 31, 2018 and 2017, totaled approximately $2,142,000 and $500, respectively. |
Investment in Coinsquare
Investment in Coinsquare | 3 Months Ended |
Mar. 31, 2018 | |
Investments, All Other Investments [Abstract] | |
Investment in Coinsquare | Note 5. Investment in Coinsquare: In September 2017, the Company acquired a minority interest for $3,000,000, in goNumerical, Ltd., (d/b/a: Coinsquare), which operates a digital crypto-currency exchange platform operating in Canada. The Company acquired approximately 10.9% of the voting common stock of Coinsquare. In connection with the investment, the Company also received warrants, expiring May 30, 2018, to acquire shares of common stock of Coinsquare, which if exercised in full by the Company, would result in the Company owning an approximate total of 14.7% of Coinsquare, including the initial investment. The fair value of the warrants was determined to be de minimis. The Company has evaluated the guidance ASC 325-20 Investments – Other , in determining to account for the investment on the cost method since the equity securities are not marketable and do not give the Company significant influence over Coinsquare. As of December 31, 2017, the Company considers the cost of the investment to not exceed the fair value of the investment due to the subsequent funding activities of Coinsquare and the proximity of the time of the investment to year end During February 2018 the Company invested an additional $6.4 million in Coinsquare. The investment included an additional equity investment of $2.8 million that is part of an approximate $24 million financing by Coinsquare. Additionally, warrants acquired in the original investment were exercised in exchange of a cash payment of $3.6 million. These additional investments resulted in a current ownership in Coinsquare by the Company of approximately 12.9% based upon Coinsquare’s issued and outstanding shares. |
Other long-term assets
Other long-term assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other long-term assets | Note 6. Other long-term assets: Other long-term assets as of March 31, 2018 consisted of the following (unaudited): Cost: Beginning Balance December 31, 2017 Additions Ending Balance March 31, 2018 Patents $ 1,059,832 $ 24,074 $ 1,083,906 Goodwill 1,186,496 - 1,186,496 Convertible note investment 200,000 - 200,000 Total 2,446,328 24,074 2,470,402 Accumulated amortization: Patents (550,183 ) (14,610 ) (564,793 ) Total (550,183 ) (14,610 ) (564,793 ) Net other long-term assets $ 1,896,145 $ 9,464 $ 1,905,609 The Company’s intangible assets with finite lives consist of its patents. The patents were issued in relation to its animal health business which has been out-licensed. For all periods presented, all of the Company’s identifiable intangible assets were subject to amortization. The carrying amounts related to acquired intangible assets as of March 31, 2018 were as follows (unaudited): March 31, 2018 Patents at January 1, 2018, net $ 509,649 Additions 24,074 Less: amortization expense 14,610 Patents at March 31, 2018, net $ 519,113 For the year ended December 31, Estimated amortization expense 2018 $ 43,390 2019 $ 58,000 2020 $ 58,000 2021 $ 58,000 2022 $ 46,479 |
Notes and Other Obligations
Notes and Other Obligations | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes and Other Obligations | Note 7. Notes and other obligations: As of March 28, 2018, Tess, a subsidiary of the Company, entered into a note purchase agreement with a private investor under which a convertible promissory note issued by Tess in the principal amount CAD $2.2 million (the “Convertible Note”) and cash proceeds of CAD $2.2 million were placed into a third-party controlled escrow account. Upon the successful achievement of conditions defined under the escrow agreement relating to closing of a transaction between Tess and Cresval Capital Corp, (“Cresval”) whereby Tess and Cresval would merge as provided in the merger agreements and Tess would become publicly traded on the TSXV Venture Exchange, the then remaining cash and the Convertible Note would be issued to Tess and the investor, respectively. If those conditions are not successfully achieved or revised or waived by August 31, 2018, the then remaining cash and Convertible Note would be returned to the investor and Tess, respectively. Upon funding the escrow account and as provided thereunder, an interim release of consideration from the escrow account was made to the parties. The interim release consisted of CAD $1.0 million (USD $775,074) of cash released to Tess and an unsecured promissory note issued by Tess (“Promissory Note”) released to the investor. Upon the achievement of conditions discussed above required for the successful release of the escrowed Convertible Note and then remaining escrowed cash, the Promissory Note would thereupon be cancelled. The Promissory Note bears interest at 6%, is unsecured and due upon demand. Notes and other obligations also consisted of short-term installment obligations, arising from insurance premium financing programs bearing interest at approximately 4.5%, with outstanding balances of $54,534 and $135,574, as of March 31, 2018 and December 31, 2017, respectively. |
Stockholders' equity
Stockholders' equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholders' equity | Note 8. Stockholders’ equity: Series B – Preferred Stock During the first quarter of 2018, holders of 530,001 Series B Preferred Shares elected to convert those shares to 530,001 shares of the Company’s common stock under their original terms. As of March 31, 2018, 928,000 shares of Series B Preferred Stock were outstanding. Common Stock: On January 4, 2018, 19,533 shares of common stock were issued upon the exercise of an employee stock-option. On January 25, 2018, 2,754 shares of common stock were issued at fair value for consulting services. On February 14, 2018, 100,000 shares of common stock were issued in exchange for the exercise of 100,000 warrants issued in March 2017. The Company received $350,000 from the exercise of the warrants. During the three months ended March 31, 2018, 13,009 warrants were exercised in exchange for 3,215 shares of common stock. See Note 10. Common Stock issued in Asset Acquisition: On February 21, 2018, the Company issued 1,000,000 shares of common stock at fair value in connection with the Prive asset purchase agreement, with 200,000 of these shares deposited into an escrow account with Corporate Stock Transfer, Inc. See Note 3. Restricted Common Stock Units: On March 28, 2018 the Company issued 50,000 shares of common stock related to a fully vested restricted stock unit were delivered for services performed in 2017. See Note 10. |
Stock based compensation, optio
Stock based compensation, options and warrants | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock based compensation, options and warrants | Note 9. Stock based compensation, options and warrants: Stock based compensation: The Company recognized total expenses for stock-based compensation during the three months ended March 31, 2018 and 2017, which are included in the accompanying condensed consolidated statements of operations, as follows: Three Months Ended March 31, 2018 2017 Selling, general and administrative expenses $ 883,943 $ 133,043 Total stock-based compensation $ 883,943 $ 133,043 The Company recognized total stock-based compensation expense during the three months ended March 31, 2018 and 2017, from the following categories: Three Months Ended March 31, 2018 2017 Restricted stock awards under the Plan $ 766,949 $ 30,431 Stock option awards under the Plan 116,994 63,806 Non-qualified stock option awards - 38,806 Total stock-based compensation $ 883,943 $ 133,043 Restricted stock units: A summary of the Company’s restricted stock activity in the three months ended March 31, 2018 is presented here: Number of Shares Weighted Average Grant-Date Fair Value Unvested at January 1, 2018 496,152 $ 5.97 Granted 292,500 13.08 Vested (30,913 ) 12.35 Forfeited (26,563 ) 10.58 Delivered (50,000 ) 4.50 Unvested at March 31, 2018 681,176 $ 8.66 During the three months ended March 31, 2018, the Company granted 225,000 and 67,500 restricted stock units to employees and non-employee directors, respectively. The weighted-average fair value of restricted stock units granted during the three months ended March 31, 2018 was $13.08 per share based upon the share price as of the date of grant. The total fair value of restricted stock units granted during the three months ended March 31, 2018 was approximately $3,825,000. The value of restricted stock unit grants are measured based on their fair value on the date of grant and amortized over the vesting period of twenty-four months. As of March 31, 2018, there was approximately $5,603,000 of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of approximately one year. Stock incentive plan options: The Company currently provides stock-based compensation to employees, directors and consultants under the Plan. The Company granted 50,000 stock options to an employee of the Company for the three months ended March 31, 2018. There were no stock options granted to employees, directors or consultants for the three months ended March 31, 2017. A summary of activity under the Plan for the three months ended March 31, 2018 is presented below: Shares Underlying Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at January 1, 2018 119,533 $ 9.02 Granted 50,000 $ 18.50 Exercised (19,533 ) $ 4.02 Forfeited - $ - Outstanding at March 31, 2018 150,000 $ 12.83 9.7 $ - Exercisable at March 31, 2018 108,333 $ 10.65 9.6 $ - The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on March 31, 2018 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on March 31, 2018. In January 2018, 19,533 vested options granted under the Plan were exercised for cash proceeds of $78,522. During the three months ended March 31, 2018, there were no options forfeited that were granted under the Plan. The vested options were exercisable at an average of $10.65 per share, the unvested options were exercisable at an average of $18.50 per share. Other common stock purchase options and warrants: Following is a summary of outstanding options and warrants that were issued outside of the Plan for the three months ended March 31, 2018: Shares Underlying Options/Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 1,944,895 $ 35.06 2.7 $ 6,135,000 Granted - - Exercised (113,009 ) $ 3.50 Forfeited - - Outstanding at March 31, 2018 1,831,886 $ 36.96 2.5 $ 62,400 Exercisable at March 31, 2018 1,831,886 $ 36.96 2.5 $ 62,400 During the three months ended March 31, 2018, 13,009 of the warrants issued in the May 2013 private offering were surrendered for the issuance of 3,215 shares of common stock and 100,000 warrants issued in March 2017, were exercised for cash proceeds of $350,000. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on March 31, 2018 and the exercise price, multiplied by the number of in-the-money options and warrants) that would have been received by the option and warrant holders, had all option and warrant holders been able to, and in fact had, exercised their options and warrants on March 31, 2018. |
Digital Currencies
Digital Currencies | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Digital Currencies | Note 10. Digital Currencies The following table presents additional information about digital currencies: March 31, 2018 Digital currencies balance - January 1. 2018 $ 200,164 Additions of digital currencies 901,380 Purchase of digital currencies 5,625,000 Change in fair value of digital currencies (2,467,875 ) Digital currencies balance - March 31, 2018 $ 4,258,669 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 11. Discontinued Operations: During the quarter ended March 31, 2017, the Company made the decision to discontinue the operations of its wholly-owned subsidiary BDI. BDI had developed a proprietary Enhanced Surface Plasmon Resonance technology platform for the detection of molecular interactions. The decision to adopt this plan was made following an evaluation by the Company’s Board of Directors in January 2017 of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. The Company substantially disposed of the BDI assets and operations during 2017 by selling the assets and licensing the intellectual property rights. The Company has recognized the exit of BDI in accordance with ASC 205-20, Discontinued Operations The Company’s historical financial statements have been revised to present the operating results of the BDI business as a discontinued operation. Assets and liabilities related to the discontinued operations of BDI were approximately as follows as of March 31, 2018 (unaudited) and December 31, 2017: Current Liabilities March 31, 2018 December 31, 2017 Accounts payable $ 16,000 $ 16,000 Accrued expenses - 28,000 Deferred revenue - 137,000 Total current liabilities $ 16,000 $ 181,000 Summarized results of the discontinued operation are as follows for the three months ended March 31, 2018 and 2017 (unaudited): March 31, 2018 March 31, 2017 Revenue $ 137,000 $ 13,000 Cost of revenue 41,000 2,000 Gross margin 96,000 11,000 Operating expenses - 654,000 Operating income (loss) 96,000 (643,000 ) Impairment loss - (2,704,000 ) Income (loss) from discontinued operations $ 96,000 $ (3,347,000 ) |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 12. Commitments and contingencies: Commitments: Oklahoma Lease Agreement. On February 27, 2018, Kairos (“Tenant”) entered into a lease agreement (the “Lease”) with 7725 Reno #1, LLC (the “Landlord”), pursuant to which the Tenant leases an approximately 107,600 square foot warehouse located in Oklahoma City, Oklahoma, including improvements thereon. Pursuant to the terms of the Lease, the initial term of one year terminates on February 15, 2019, unless terminated earlier pursuant to the terms of the Lease, subject to the Tenant’s options to renew the Lease. Tenant has four one-year renewal options that may be exercised so long as Tenant is not in default, subject to increases in base rent. Tenant has the right to operate from the premises on a 24 hour/seven day a week basis. At least three months, but no more than six months, prior to the expiration of the initial Lease term or renewal term, as applicable, Tenant shall give Landlord written notice of its intent to exercise the applicable renewal option, which also includes incremental payment for additional electric capacity delivery. If Tenant does not elect to exercise a renewal option, all remaining renewal options, if any, shall terminate. Base rent for the premises during the first 12 months is equal to $55.95/kW per month for a total of 4 Megawatts (MW) of available electrical power, or $223,800 per month. Base rent is calculated based upon the monthly electrical power made available to Tenant within the premises, and not based on Tenant’s actual usage. In connection with the Lease, Parent has provided a limited guarantee of Tenant’s failure to make payment of base rent or additional rent pursuant to the Lease. As soon as practicable after the effective date of the Lease, Landlord, at Landlord’s expense, agreed to provide additional 12.5 kV transformer equipment to increase the electrical power available for Tenant’s use by an additional 2MW, which will result in additional rent of $55.12/kW for the additional 2MW of power when it is made available. Provided that Tenant is not in default under the Lease beyond any applicable notice and cure periods, Tenant may request Landlord to further increase the electrical power available, in increments from 6.01 MW up to 12.0 MW, by giving written notice to Landlord of the requested increase. Landlord, at Landlord’s expense, would then provide an additional 12.5kV of electrical transforming equipment to increase the electrical power available for Tenant’s use by the additional MW requested by Tenant. Effective as of the date the additional power is made available to Tenant, base rent will increase by an amount equivalent to the additional MW requested by Tenant multiplied by $55.12 per kW. If Tenant exercises all of its renewal options, then the base rent for the first 4MW of available power would increase to $57.63 per kW in year two, $59.36 per kW in year three, $61.14 per kW in year four and $62.97 per kW in year five. In each case, available power of greater than 4MW and up to 12MW would result in base rent of $55.12 per kW. On March 26, 2018, Kairos entered into a first amendment to the above lease, whereby 7725 Reno agreed to increase the electrical power available for Kairos’s use from 6MW to 12MW, and the base rent under the lease was increased to approximately $665,760 per month, effective as of the date when such additional power is available. Registration Rights Agreement On December 19, 2017, the Company accepted subscriptions for the sale of $37,000,000 of units of its securities, with each unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock, at a per unit price of $22.50. On December 21, 2017, the Company accepted subscriptions for an additional $37,528 of units. On December 21, 2017, the Company closed on the sale of $37,037,528 of units of its securities and issued 1,646,113 shares of Common Stock and warrants to purchase up to 1,646,113 shares of Common Stock. The registration rights agreement required that the securities would be registered by March 5, 2018, the effectiveness date, Corporate Lease Agreement See Note 14 for new corporate lease agreement commitment subsequent to March 31, 2018. Ingenium International LLC Consulting Agreement. On February 21, 2018, the Company entered into a Consulting Agreement with Ingenium International LLC (the “Consultant”) to provide consulting services related to the Company’s business for a 12-month period. Pursuant to the Consulting Agreement, Consultant’s services are defined as follows: complete the installation and deployment of 8,000+ ASIC cryptocurrency miners, which included the Prive Equipment and the BMSS Equipment; assist in managing and monitoring the operation of the 8,000+ cryptocurrency miners on an ongoing basis; promptly responding to and troubleshooting any issues as they arise in the management and monitoring of the operations; continuing the buildout of up to 40 Megawatts of energy capacity, with the ultimate goal to secure the power and build the location for up to 80 Megawatts of energy capacity; and to make strategic introductions to other cryptocurrency business opportunities and contacts in the sector. In connection with the Consulting Agreement the Company made a lump sum payment of $4,000,000 to the Consultant. The controlling principals of Ingenium International LLC., as disclosed in Note 3, are shareholders in the Company by virtue of the previous Kairos and Prive transactions. Contingencies: On February 17, 2018, Creighton Takata filed an action asserting putative class action claims on behalf of the Riot Blockchain, Inc.'s shareholders in the United District Court for the District of New Jersey, Takata v. Riot Blockchain Inc., et al., Case No. 3:18-cv-02293. The complaint asserts violations of federal securities laws under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of shareholders that purchased stock from November 13, 2017 through February 15, 2018. The complaint alleges that the Company and certain of its officers and directors made, caused to be made, or failed to correct false and/or misleading statements in press releases and public filings regarding its business plan in connection with its cryptocurrency business. The following complaints are generally based on the same conduct alleged in the Takatoa putative class action and request damages in unspecified amounts, costs and fees of bringing the action, and other unspecified relief, as well as in the derivative action, corporate governance changes. On February 22, 2018 Richard Roys filed a complaint in the United District States Court for the Southern District of Florida ( Roys v. Riot Blockchain Inc., et al On February 22, 2018 Bruce Greenawalt filed a complaint in the United States District Court for the District of Colorado ( Greenawalt v. Riot Blockchain Inc., et al ., Case No. 1:18-cv-00440). On April 2, 2018, Mr. Greenawalt filed a notice of voluntary dismissal of his action, which the court entered on the same On April 5, 2018, Michael Jackson filed a shareholder derivative complaint on behalf of the Company in the Supreme Court of the State of New York, County of Nassau, against certain of the Company's officers and directors, as well as against an investor ( Jackson v. Riot Blockchain, Inc., et al , Case No 604520/18). On April 18, 2018, Joseph J. Klapper, Jr., filed a complaint against Riot Blockchain, Inc., and certain of its officers and directors Klapper v. Riot Blockchain Inc., et al On April 9, 2018, the Company received a subpoena requesting documents from the U.S. Securities and Exchange Commission pursuant to a formal order of investigation. As part of its ongoing review of the Company’s SEC filings, the Company has received and responded to comments from the staff of the SEC regarding certain developments and the Company’s ongoing development of a blockchain/cryptocurrency business model. These inquires include the proper asset classification, applicability of the Investment Company Act or 1940, to the Company’s business and affairs and accounting treatment of its cryptocurrency. The resolution of these matters is ongoing and has been described in more detail under “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13. Related Party Transactions Per Schedules 13D filed with the Securities and Exchange Commission, each of Barry Honig (together with other group members) and Catherine Johanna DeFrancesco during a portion of 2017 beneficially owned greater than 10% of the dispositive and voting power of the Company’s common stock. Mr. Honig reported beneficial ownership of approximately 11.2% of the Company’s common stock as of January 5, 2017 and Ms. DeFrancesco reported beneficial ownership of approximately 11.45% of the Company’s common stock as of January 10, 2017. Mr. Honig invested $1,750,000 in the Company’s March 2017 Convertible Note Private Placement. GRQ Consultants, Inc., a related party of Mr. Honig, received a cash payment of $50,000 for diligence services in connection with the Company’s September 2017 investment in Coinsquare. Each of Mr. Honig and Ms. DeFrancesco was a shareholder of Kairos at the time of its acquisition by the Company, with Mr. Honig having owned approximately 8.6% of Kairos and Ms. DeFrancesco having owned approximately 6.3% of Kairos. Each of Mr. Honig and Ms. DeFrancesco invested in the December 2017 Common Share Private Placement, with Mr. Honig investing $500,000 and Ms. DeFrancesco investing $360,000. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14. Subsequent Events: During May 2018, the Company executed a trade for 100 bitcoins generating $957,300 in cash proceeds. Corporate Lease Agreement On April 9, 2018 the Company entered into a commercial lease covering 1,694 rentable square feet of office space in Fort Lauderdale, Florida, with a third-party. The lease is for an initial term of thirty-nine months, with one five-year option to renew. The lease requires initial monthly rent of approximately $7,000, including base rent and associated operating expenses. Stock Transactions In April 2018, holders of 89,517 Series B preferred shares elected to convert those shares to 89,517 shares of the Company’s common stock under its original terms. On April 20, 2018, 18,000 shares of the Company’s common stock were issued for consulting services. On April 25, 2018 the Company issued 40,000 shares of common stock related to a restricted stock unit issuance for services performed in 2017. |
Significant accounting policies
Significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet at March 31, 2018, condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, condensed consolidated statements of cash flows for the three months ended March 31, 2018 and 2017, and condensed consolidated statement of changes in stockholders’ equity for the three months ended March 31, 2018 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, that the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018 or for any future interim period. The consolidated balance sheet at December 31, 2017 has been derived from audited financial statements; however, it does not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as amended, as filed with the SEC (the “2017 Annual Report”). The Company's consolidated subsidiaries and (percentage owned at March 31, 2018) consisted of; Kairos Global Technology, Inc. (100%), Digital Green Energy Corp., Inc. (100%), Logical Brokerage Corp. (92.5%), Tess, Inc. (52%) and BiOptix Diagnostics, Inc. (100%). |
Revenue Recognition (Crypto-Currency Mining) | Revenue Recognition (Cryptocurrency Mining): The Company recognizes revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of an arrangement and that the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable and collectability is probable. Our material revenue stream is related to the mining of digital currencies. The Company derives its revenue by providing transaction verification services within the digital currency networks of cryptocurrencies, such as bitcoin, bitcoin cash and litecoin, commonly termed "cryptocurrency mining." In consideration for these services, the Company receives digital currencies which are recorded as revenue, using the average U. S. dollar spot price of the related cryptocurrency on the date of receipt. The coins are recorded on the balance sheet at their fair value and re–measured at each reporting date. Revaluation gains or losses, as well as gains or losses on sale of digital currencies are recorded as a component of cost and expenses in the statement of operations. Expenses associated with running the cryptocurrency mining business, such as equipment depreciation, rent and electricity costs are also recorded as cost and expenses. There is currently no specific definitive guidance in GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations and the guidance in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers · Step 1: Identify the contract with the customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: • The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct). • The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: · Variable consideration · Constraining estimates of variable consideration · The existence of a significant financing component in the contract · Noncash consideration · Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. There is only one performance obligation in each digital currency transaction (transfer of a verified transaction to the blockchain). If the Company is successful in adding a block to the blockchain (by verifying an individual transaction), the Company is automatically awarded a fixed number of digital currency tokens for their effort. At the time the contract with the customer arises (upon being the first to solve the algorithm and transferring a verified transaction to the blockchain), the consideration receivable is fixed. As such, the Company concluded that there was no variable consideration. There is no significant financing component or consideration payable to the customer in these transactions. Digital currencies are non-cash consideration and thus must be included in the transaction price at fair value at the inception of the contract, which is when the algorithm is solved and a verified transaction is transferred to the blockchain. Fair value is determined using the average U.S. dollar spot rate of the related digital currency. The Company subsequently accounts for digital currencies received at fair value, with changes in fair value flowing through current income, as the Company has concluded that that the fair value measurement model, with both realized and unrealized changes reflected currently in the income statement, best represents the economics associated with holding digital currencies. These subsequent holding gains and losses are not reflected as revenue from contracts with customers, in accordance with the guidance above but are recorded as a component of costs and expenses. Expenses associated with running the digital currency mining business, such as rent and electricity cost are also recorded as cost of revenues. Depreciation on digital currency mining equipment is recorded as a component of costs and expenses. |
Use of Estimates | Use of estimates: The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the accompanying condensed consolidated financial statements include recoverability and useful lives (indefinite or finite) of intangible assets, assessment of impairment of goodwill, provisions for income taxes and the fair value of digital currencies, stock options and warrants granted to employees, consultants, directors, investors, licensors, placement agents and underwriters. The Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. |
Deferred tax liability | Deferred tax liability: The Company recognized a $2.9 million and $0.2 million deferred tax liability related to the Prive and Logical Brokerage acquisitions during the three months ended March 31, 2018. Due to the acquisitions, a temporary difference between the book fair value and the tax basis of the indefinite life intangible assets and depreciable property and equipment acquired created an approximately $3.1 million deferred tax liability. In addition, due to the impairment and depreciation of the Kairos and Prive property and equipment, the Company recorded a $3.1 million income tax benefit from the reduction of its existing deferred tax liability related to these acquisitions. The following is a rollforward of the Company’s deferred tax liability from January 1, 2018 to March 31, 2018: March 31, 2018 Deferred tax liability as of January 1, 2018 $ 699,000 Deferred tax liability recorded on the Prive acquisition 2,918,000 Deferred tax liability recorded on the Logical Brokerage acquisition 142,709 Impairment and depreciation on Prive and Kairos acquisitions (3,053,000 ) Deferred tax liability as of March 31, 2018 $ 706,709 |
Loss per Share | Loss per share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company excludes escrow shares because including them would result in anti-dilution. Since the Company has only incurred losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2018 and 2017 are as follows: March 31, 2018 2017 Warrants to purchase common stock 1,831,886 897,003 Options to purchase common stock 150,000 552,747 Restricted stock units 681,176 145,000 Escrow shares of common stock 200,000 - Convertible Series B preferred shares 928,000 - 3,791,062 1,594,750 For periods when shares of preferred stock are outstanding, the two-class method is used to calculate basic and diluted earnings (loss) per common share since such preferred stock is a participating security under ASC 260 Earnings per Share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic earnings (loss) per common share is computed by dividing net earnings (loss) attributable to common share after allocation of earnings to participating securities by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share, when applicable, is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company. Under the provisions of ASC 260, "Earnings Per Share," basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders is computed by deducting both the dividends declared in the period on preferred stock and the dividends accumulated for the period on cumulative preferred stock from income from continuing operations. There were no dividends declared during the three months ended March 31, 2018 and 2017. |
Adoption of Recent Accounting Pronouncements | Adoption of Recent Accounting Pronouncements: The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's consolidated financial statements properly reflect the change. In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting |
Recent Accounting Pronouncements not Yet Adopted | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Leases (Topic 840) Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, |
Basis of presentation, summar22
Basis of presentation, summary of significant accounting policies and recent accounting pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Tax Liability | The following is a rollforward of the Company’s deferred tax liability from January 1, 2018 to March 31, 2018: March 31, 2018 Deferred tax liability as of January 1, 2018 $ 699,000 Deferred tax liability recorded on the Prive acquisition 2,918,000 Deferred tax liability recorded on the Logical Brokerage acquisition 142,709 Impairment and depreciation on Prive and Kairos acquisitions (3,053,000 ) Deferred tax liability as of March 31, 2018 $ 706,709 |
Schedule of Loss Per Share | Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2018 and 2017 are as follows: March 31, 2018 2017 Warrants to purchase common stock 1,831,886 897,003 Options to purchase common stock 150,000 552,747 Restricted stock units 681,176 145,000 Escrow shares of common stock 200,000 - Convertible Series B preferred shares 928,000 - 3,791,062 1,594,750 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Assets and Liabilities Acquired | The purchase price for the miners was recorded as follow: March 31, 2018 Cash consideration $ 11,000,000 Fair value of common stock 8,480,000 Deferred tax liability 2,918,000 Other expenses 2,000 $ 22,400,000 |
Schedule of Intangible rights acquired | On March 26, 2018, the CFTC license was recorded as follows (unaudited): March 31, 2018 Cash, net of cash acquired $ 500,000 Deferred tax liability 142,709 Non-controlling interest 40,541 Legal expense 16,918 $ 700,168 |
Property and equipment (Tables)
Property and equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Impairment Charge | The breakdown of the impairment charge is as follows: March 31, 2018 (unaudited) Prive miners $ 10,677,603 BMSS miners 406,652 Kairos miners 396,236 Total impairment charge $ 11,480,491 |
Schedule of Property and Equipment | Property and equipment consisted of the following: March 31, 2018 (unaudited) December 31, 2017 Cryptocurrency machines, net of impairment 23,468,237 $ 4,700,575 Leasehold improvements 852,512 - Office and computer equipment 70,718 61,670 Total cost of property and equipment 24,391,467 4,762,245 Less accumulated depreciation (1,899,041 ) (468,079 ) Property and equipment, net $ 22,492,426 $ 4,294,166 |
Other long-term assets (Tables)
Other long-term assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Other Long-Term Assets | Other long-term assets as of March 31, 2018 consisted of the following (unaudited): Cost: Beginning Balance December 31, 2017 Additions Ending Balance March 31, 2018 Patents $ 1,059,832 $ 24,074 $ 1,083,906 Goodwill 1,186,496 - 1,186,496 Convertible note investment 200,000 - 200,000 Total 2,446,328 24,074 2,470,402 Accumulated amortization: Patents (550,183 ) (14,610 ) (564,793 ) Total (550,183 ) (14,610 ) (564,793 ) Net other long-term assets $ 1,896,145 $ 9,464 $ 1,905,609 |
Schedule of Carrying Amounts Related to Acquired Intangible Assets | The carrying amounts related to acquired intangible assets as of March 31, 2018 were as follows (unaudited): March 31, 2018 Patents at January 1, 2018, net $ 509,649 Additions 24,074 Less: amortization expense 14,610 Patents at March 31, 2018, net $ 519,113 |
Schedule of Total Estimated Amortization of Intangible Assets | The following table represents the total estimated amortization of intangible assets for the five succeeding years: For the year ended December 31, Estimated amortization expense 2018 $ 43,390 2019 $ 58,000 2020 $ 58,000 2021 $ 58,000 2022 $ 46,479 |
Stock based compensation, opt26
Stock based compensation, options and warrants (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock-Based Compensation | The Company recognized total expenses for stock-based compensation during the three months ended March 31, 2018 and 2017, which are included in the accompanying condensed consolidated statements of operations, as follows: Three Months Ended March 31, 2018 2017 Selling, general and administrative expenses $ 883,943 $ 133,043 Total stock-based compensation $ 883,943 $ 133,043 |
Schedule of Recognized Stock-based Compensation | The Company recognized total stock-based compensation expense during the three months ended March 31, 2018 and 2017, from the following categories: Three Months Ended March 31, 2018 2017 Restricted stock awards under the Plan $ 766,949 $ 30,431 Stock option awards under the Plan 116,994 63,806 Non-qualified stock option awards - 38,806 Total stock-based compensation $ 883,943 $ 133,043 |
Summary of Stock Restricted Plan Activity | A summary of the Company’s restricted stock activity in the three months ended March 31, 2018 is presented here: Number of Shares Weighted Average Grant-Date Fair Value Unvested at January 1, 2018 496,152 $ 5.97 Granted 292,500 13.08 Vested (30,913 ) 12.35 Forfeited (26,563 ) 10.58 Delivered (50,000 ) 4.50 Unvested at March 31, 2018 681,176 $ 8.66 |
Summary of Stock Incentive Plan Activity | A summary of activity under the Plan for the three months ended March 31, 2018 is presented below: Shares Underlying Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at January 1, 2018 119,533 $ 9.02 Granted 50,000 $ 18.50 Exercised (19,533 ) $ 4.02 Forfeited - $ - Outstanding at March 31, 2018 150,000 $ 12.83 9.7 $ - Exercisable at March 31, 2018 108,333 $ 10.65 9.6 $ - |
Schedule of Nonqualified Award Activity | Following is a summary of outstanding options and warrants that were issued outside of the Plan for the three months ended March 31, 2018: Shares Underlying Options/Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 1,944,895 $ 35.06 2.7 $ 6,135,000 Granted - - Exercised (113,009 ) $ 3.50 Forfeited - - Outstanding at March 31, 2018 1,831,886 $ 36.96 2.5 $ 62,400 Exercisable at March 31, 2018 1,831,886 $ 36.96 2.5 $ 62,400 |
Digital Currencies (Tables)
Digital Currencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Digital Currencies | The following table presents additional information about digital currencies: March 31, 2018 Digital currencies balance - January 1. 2018 $ 200,164 Additions of digital currencies 901,380 Purchase of digital currencies 5,625,000 Change in fair value of digital currencies (2,467,875 ) Digital currencies balance - March 31, 2018 $ 4,258,669 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Operation and Assets and Liabilities Related to Discontinued Operations | Assets and liabilities related to the discontinued operations of BDI were approximately as follows as of March 31, 2018 (unaudited) and December 31, 2017: Current Liabilities March 31, 2018 December 31, 2017 Accounts payable $ 16,000 $ 16,000 Accrued expenses - 28,000 Deferred revenue - 137,000 Total current liabilities $ 16,000 $ 181,000 |
Schedule of Income Statements related to Discontinued Operation | Summarized results of the discontinued operation are as follows for the three months ended March 31, 2018 and 2017 (unaudited): March 31, 2018 March 31, 2017 Revenue $ 137,000 $ 13,000 Cost of revenue 41,000 2,000 Gross margin 96,000 11,000 Operating expenses - 654,000 Operating income (loss) 96,000 (643,000 ) Impairment loss - (2,704,000 ) Income (loss) from discontinued operations $ 96,000 $ (3,347,000 ) |
Organization (Details)
Organization (Details) | Mar. 31, 2018item | Feb. 28, 2018item | Feb. 27, 2018ft²item | Nov. 30, 2017item |
Miners [Member] | ||||
Number of computers acquired | 8,000 | 3,500 | ||
Kairos Global Technology, Inc [Member] | ||||
Area of lease | ft² | 107,600 | |||
Number of computers acquired | 1,200 | |||
Percentage of interest acquired | 100.00% | |||
Prive Technologies, Inc. [Member] | ||||
Number of computers acquired | 3,800 | |||
BMSS [Member] | ||||
Number of computers acquired | 3,000 | |||
Logical Brokerage Corp [Member] | ||||
Percentage of interest acquired | 92.50% |
Basis of presentation, summar30
Basis of presentation, summary of significant accounting policies (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Cash and cash equivalents | $ 5,258,000 | ||
Working capital | 8,915,000 | ||
Stockholders' equity | 42,651,677 | $ 48,869,304 | |
Accumulated deficit | (155,613,572) | (139,263,480) | |
Deferred tax liability | 706,709 | $ 699,000 | |
Income tax benefit | $ 3,053,000 | ||
BDI [Member] | |||
Percentage of consolidated subsidiaries | 100.00% | ||
Tess Inc [Member] | |||
Percentage of consolidated subsidiaries | 52.00% | ||
Kairos Global Technology, Inc [Member] | |||
Percentage of consolidated subsidiaries | 100.00% | ||
Digital Green Energy Corp., Inc. [Member] | |||
Percentage of consolidated subsidiaries | 100.00% | ||
Logical Brokerage Corp [Member] | |||
Percentage of consolidated subsidiaries | 92.50% | ||
Deferred tax liability | $ 200,000 | ||
Prive Technologies, Inc. [Member] | |||
Deferred tax liability | $ 2,900,000 |
Basis of presentation, summar31
Basis of presentation, summary of significant accounting policies (Schedule of Deferred Tax Liability) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Deferred tax liability as of January 1, 2018 | $ 699,000 | |
Deferred tax liability recorded on the Prive acquisition | 2,918,000 | |
Deferred tax liability recorded on the Logical Brokerage acquisition | 142,709 | |
Impairment and depreciation on Prive and Kairos acquisitions | (3,053,000) | |
Deferred tax liability as of March 31, 2018 | $ 706,709 |
Basis of presentation, summar32
Basis of presentation, summary of significant accounting policies (Loss Per Share) (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 3,974,741 | 1,594,750 |
Warrants to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 1,831,886 | 897,003 |
Option to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 150,000 | 552,747 |
Restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 864,855 | 145,000 |
Escrow shares of common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 200,000 | |
Convertible Series B preferred shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 982,000 |
Acquisition (Narrative) (Detail
Acquisition (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 26, 2018 | Feb. 21, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Business Acquisition [Line Items] | ||||
Aggregate cash consideration | $ 516,918 | |||
Impairment charge | 11,480,491 | |||
Value of equity consideration issued for acquisition | $ 8,480,000 | |||
Prive Technologies, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Equity consideration issued for acquisition, number of shares | 1,000,000 | |||
Aggregate cash consideration | $ 11,000,000 | |||
Common stock shares held in escrow | 200,000 | |||
Common stock escrow value | $ 10,000,000 | |||
Impairment charge | $ 10,678,000 | |||
Prive Technologies, Inc. [Member] | Michael Ho [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of acquired entity | 24.80% | |||
Prive Technologies, Inc. [Member] | Bryan Pascual [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of acquired entity | 18.40% | |||
Prive Technologies, Inc. [Member] | Series B Preferred Shareholders [Member] | Michael Ho [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of acquired entity | 10.70% | |||
Prive Technologies, Inc. [Member] | Series B Preferred Shareholders [Member] | Bryan Pascual [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of acquired entity | 5.70% | |||
Miners [Member] | ||||
Business Acquisition [Line Items] | ||||
Equity consideration issued for acquisition, number of shares | 800,000 | |||
Aggregate cash consideration | $ 11,000,000 | |||
Net purchase price | $ 22,400,000 | |||
Business acquisition share price | $ 10.60 | |||
Common stock shares held in escrow | 200,000 | |||
Blockchain Mining Supply & Services Ltd [Member] | ||||
Business Acquisition [Line Items] | ||||
Aggregate cash consideration | $ 8,500,000 | |||
Impairment charge | $ 407,000 | |||
Purchase price on closing | 7,000,000 | |||
Remainder of purchase price | $ 1,500,000 | |||
Logical Brokerage Corp [Member] | ||||
Business Acquisition [Line Items] | ||||
Aggregate cash consideration | $ 100,000 | |||
Net purchase price | $ 600,000 | |||
Percentage of acquired entity | 92.50% | |||
Effective tax rate | 25.60% |
Acquisitions (Schedule of Purch
Acquisitions (Schedule of Purchase Price for the Miners) (Details) - Prive Technologies, Inc. [Member] | Mar. 31, 2018USD ($) |
Cash consideration | $ 11,000,000 |
Fair value of common stock | 8,480,000 |
Deferred tax liability | 2,918,000 |
Other expenses | 2,000 |
Purchase price | $ 22,400,000 |
Acquisitions (Schedule of CFTC
Acquisitions (Schedule of CFTC License) (Details) - Logical Brokerage Corp [Member] | Mar. 31, 2018USD ($) |
Cash, net of cash acquired | $ 500,000 |
Deferred tax liability | 142,709 |
Non-controlling interest | 40,541 |
Legal expense | 16,918 |
Purchase price | $ 700,168 |
Property and equipment (Narrati
Property and equipment (Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 2,142,000 | $ 500 |
Impairment charge | $ 11,480,491 |
Property and equipment (Schedul
Property and equipment (Schedule of Impairement Charge) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Property, Plant and Equipment [Line Items] | |
Impairment charge | $ 11,480,491 |
Prive Miners [Member] | |
Property, Plant and Equipment [Line Items] | |
Impairment charge | 10,677,603 |
BMSS Miners [Member] | |
Property, Plant and Equipment [Line Items] | |
Impairment charge | 406,652 |
Kairos Miners [Member] | |
Property, Plant and Equipment [Line Items] | |
Impairment charge | $ 396,236 |
Property and equipment (Sched38
Property and equipment (Schedule of Property and Equipment) (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Total cost of property and equipment | $ 24,391,467 | $ 4,762,245 |
Less accumulated depreciation | (1,899,041) | (468,079) |
Property and equipment, net | 22,492,426 | 4,294,166 |
Cryptocurrency machine [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost of property and equipment | 23,468,237 | 4,700,575 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost of property and equipment | 852,512 | |
Office and computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost of property and equipment | $ 70,718 | $ 61,670 |
Investment in Coinsquare (Detai
Investment in Coinsquare (Details) - Coinsquare [Member] - USD ($) | 1 Months Ended | |
Sep. 30, 2017 | Feb. 28, 2018 | |
Minority interest | $ 3,000,000 | |
Percentage of minority interest | 10.90% | |
Maturity date | May 30, 2018 | |
Amount of Investment | $ 6,400,000 | |
Equity investment | 2,800,000 | |
Financing amount | 24,000,000 | |
Warrant acquired cash payment | $ 3,600,000 | |
Percentage of ownership | 12.90% | |
Warrant [Member] | ||
Percentage of minority interest | 14.70% |
Other long-term assets (Schedul
Other long-term assets (Schedule of Other Long-Term Assets) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Patents: | ||
Cost, beginning | $ 509,649 | |
Cost, ending | 519,113 | |
Additions | (14,610) | $ (18,000) |
Goodwill: | ||
Goodwill, beginning | 1,186,496 | |
Additions | ||
Goodwill, ending | 1,186,496 | |
Convertible Note Investment: | ||
Convertible Note Investment, beginning | 200,000 | |
Convertible Note Investment , ending | 200,000 | |
Total other long-term assets: | ||
Cost, beginning | 2,446,328 | |
Additions | 24,074 | |
Cost, ending | 2,470,402 | |
Additions | (52,974) | |
Other long-term assets, net, beginning | 1,896,145 | |
Additions | 9,464 | |
Other long-term assets, net, ending | 1,905,609 | |
Patents [Member] | ||
Patents: | ||
Cost, beginning | 1,059,832 | |
Additions | 24,074 | |
Cost, ending | 1,083,906 | |
Accumulated amortization, beginning | (550,183) | |
Additions | (14,610) | |
Accumulated amortization, ending | $ (564,793) |
Other long-term assets (Sched41
Other long-term assets (Schedule of Carrying Amounts Related to Acquired Intangible Assets) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Other Long-term Assets Schedule Of Carrying Amounts Related To Acquired Intangible Assets Details | ||
Patents at January 1, 2018, net | $ 509,649 | |
Additions | 24,074 | |
Less: amortization expense | 14,610 | $ 18,000 |
Patents at March 31, 2018, net | $ 519,113 |
Other long-term assets (Sched42
Other long-term assets (Schedule of Total Estimated Amortization of Intangible Assets) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Future amortization | ||
2,018 | $ 43,390 | |
2,019 | 58,000 | |
2,020 | 58,000 | |
2,021 | 58,000 | |
2,022 | 46,479 | |
Amortization expense of intangible assets | $ 14,610 | $ 18,000 |
Notes and Other Obligations (Na
Notes and Other Obligations (Narrative) (Details) | 3 Months Ended | |||
Mar. 31, 2018USD ($)shares | Mar. 31, 2018CAD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | ||||
Notes Payable | $ 54,534 | $ 135,574 | ||
Fixed interest rate | 4.50% | |||
Interest expense | $ 1,069 | $ 4,834 | ||
Warrants to purchase common stock | shares | 13,009 | |||
Convertible Note [Member] | Canada, Dollars [Member] | Private Placement [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from convertible debt held in escrow | $ 2,200,000 | |||
Promissory Note [Member] | Private Placement [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from convertible debt held in escrow | $ 775,074 | |||
Interest rate | 6.00% | 6.00% | ||
Promissory Note [Member] | Canada, Dollars [Member] | Private Placement [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from convertible debt held in escrow | $ 1,000,000 | |||
Third party [Member] | Convertible Note [Member] | Canada, Dollars [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from convertible debt held in escrow | $ 2,200,000 |
Stockholders' equity (Details)
Stockholders' equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Feb. 14, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Jan. 25, 2018 | Jan. 04, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | ||||||
Common stock, shares authorized | 170,000,000 | 170,000,000 | ||||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | ||||
Warrants to purchase common stock | 13,009 | |||||
Interest rate percentage | 4.50% | |||||
Interest expense | $ 1,069 | $ 4,834 | ||||
Prive Technologies, Inc. [Member] | ||||||
Class of Stock [Line Items] | ||||||
Shares issued | 1,000,000 | |||||
Common stock shares held in escrow | 200,000 | |||||
Series B Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock converted to Common stock | 530,001 | |||||
Preferred stock, shares outstanding | 928,000 | |||||
Warrant [Member] | ||||||
Class of Stock [Line Items] | ||||||
Proceeds from common stock and warrants released | $ 350,000 | |||||
Warrants to purchase common stock | 100,000 | |||||
Restricted Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Shares issued | 50,000 | |||||
Common shares vested | 30,913 | |||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Warrants to purchase common stock | 3,215 | |||||
Common Stock [Member] | Employee Stock Option [Member] | ||||||
Class of Stock [Line Items] | ||||||
Shares issued | 19,533 | |||||
Common Stock [Member] | Consulting Services [Member] | ||||||
Class of Stock [Line Items] | ||||||
Shares issued | 2,754 |
Stock based compensation, opt45
Stock based compensation, options and warrants (Stock Incentive Plan Options) (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Net proceeds from exercise of stock options | $ 78,522 | ||
Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vested options granted under the Plan | 19,533 | ||
Options granted | 50,000 | ||
Options granted, exercise price | $ 18.50 | ||
Options grant date fair value | $ 10.65 | ||
Options forfeited | |||
Options expired, exercise price | $ 18.50 | ||
Net proceeds from exercise of stock options | $ 78,522 | ||
Non Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 67,500 | ||
Options grant date fair value | $ 13.08 | ||
Fair value of options vested | $ 3,825,000 | ||
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 292,500 | ||
Options grant date fair value | $ 13.08 | ||
Vesting period | 1 year | ||
Fair value of options vested | $ 5,603,000 | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 225,000 |
Stock based compensation, opt46
Stock based compensation, options and warrants (Other Common Stock Purchase Options and Warrants) (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Feb. 14, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants to purchase common stock | 13,009 | ||
Warrant [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants to purchase common stock | 100,000 | ||
Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants to purchase common stock | 3,215 | ||
Other common stock purchase options and warrants [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards outstanding | 1,831,886 | 1,944,895 | |
Proceeds from issuance of common stock | $ 350,000 | ||
Other common stock purchase options and warrants [Member] | Warrant [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants to purchase common stock | 100,000 | ||
Other common stock purchase options and warrants [Member] | Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued | 3,215 |
Stock based compensation, opt47
Stock based compensation, options and warrants (Schedule of Stock-based Compensation) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 883,943 | $ 133,043 |
Selling, general and administrative expenses [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 883,943 | $ 133,043 |
Stock based compensation, opt48
Stock based compensation, options and warrants (Schedule of Stock-based Expense) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 883,943 | $ 133,043 |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | 766,949 | 30,431 |
Stock options awards under the Plan Member [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | 116,994 | 63,806 |
Non-qualified stock option awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock-based compensation | $ 38,806 |
Stock based compensation, opt49
Stock based compensation, options and warrants (Schedule of Restricted Stock Activity) (Details) - Restricted Stock [Member] | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of shares | |
Beginning balance | shares | 496,152 |
Granted | shares | 292,500 |
Vested | shares | (30,913) |
Forfeited | shares | (26,563) |
Delivered | shares | (50,000) |
Ending balance | shares | 681,176 |
Weighted Average Grant Date Fair value | |
Beginning balance | $ / shares | $ 5.97 |
Granted | $ / shares | 13.08 |
Vested | $ / shares | 12.35 |
Forfeited | $ / shares | 10.58 |
Delivered | $ / shares | 4.50 |
Ending balance | $ / shares | $ 8.66 |
Stock based compensation, opt50
Stock based compensation, options and warrants (Schedule of Award Activity) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Stock Incentive Plan [Member] | ||
Shares Underlying Options | ||
Outstanding, beginning | 119,533 | |
Granted | 50,000 | |
Exercised | (19,533) | |
Forfeited | ||
Outstanding, ending | 150,000 | 119,533 |
Exercisable | 108,333 | |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ 9.02 | |
Granted | 18.50 | |
Exercised | 4.02 | |
Forfeited | ||
Outstanding, ending | 12.83 | $ 9.02 |
Exercisable | $ 10.65 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 9 years 8 months 12 days | |
Exercisable | 9 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Outstanding | ||
Exercisable | ||
Other common stock purchase options and warrants [Member] | ||
Shares Underlying Options | ||
Outstanding, beginning | 1,944,895 | |
Granted | ||
Exercised | (113,009) | |
Forfeited | ||
Outstanding, ending | 1,831,886 | 1,944,895 |
Exercisable | 1,831,886 | |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ 35.06 | |
Granted | ||
Exercised | 3.50 | |
Forfeited | ||
Outstanding, ending | 36.96 | $ 35.06 |
Exercisable | $ 36.96 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 2 years 6 months | 2 years 8 months 12 days |
Exercisable | 2 years 6 months | |
Aggregate Intrinsic Value | ||
Outstanding | $ 62,400 | $ 6,135,000 |
Exercisable | $ 62,400 |
Digital Currencies (Schedule o
Digital Currencies (Schedule of Additional Information About Digital Currencies) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |
Digital currencies balance | $ 200,164 |
Additions of digital currencies | 901,380 |
Purchase of digital currencies | 5,625,000 |
Change in fair value of digital currencies | (2,467,875) |
Digital currencies ending balance | $ 4,258,669 |
Discontinued Operations (Schedu
Discontinued Operations (Schedule of Assets and Liabilities Acquired) (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current liabilities: | ||
Total current liabilities | $ 16,340 | $ 181,340 |
BDI [Member] | ||
Current liabilities: | ||
Accounts payable | 16,000 | 16,000 |
Accrued expenses | 28,000 | |
Deferred revenue | 137,000 | |
Total current liabilities | $ 16,000 | $ 181,000 |
Discontinued Operations (Sche53
Discontinued Operations (Schedule of Operation and Assets and Liabilities Related to Discontinued Operations) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Impairment loss | $ (2,704,356) | |
BDI [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenue | 137,000 | 13,000 |
Cost of revenue | 41,000 | 2,000 |
Gross margin | 96,000 | 11,000 |
Operating expenses | 654,000 | |
Operating income (loss) | 96,000 | (643,000) |
Impairment loss | (2,704,000) | |
Income (loss) from discontinued operations | $ 96,000 | $ (3,347,000) |
Commitments and contingencies (
Commitments and contingencies (Details) | Mar. 31, 2018USD ($)shares | Mar. 26, 2018USD ($) | Feb. 27, 2018USD ($)ft² | Dec. 21, 2017USD ($) | Dec. 19, 2017USD ($)$ / sharesshares |
Operating Leased Assets [Line Items] | |||||
Warrants to purchase common stock | shares | 13,009 | ||||
Accrued expenses | $ 333,000 | ||||
Amount paid to consultant | $ 4,000,000 | ||||
Kairos Global Technology, Inc [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Area of lease | ft² | 107,600 | ||||
Base rent per month | $ 665,760 | $ 223,800 | |||
Registration Rights Agreement [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Subscriptions amount | $ 37,037,528 | $ 37,000,000 | |||
Subscriptions amount additional unit | $ 37,528 | ||||
Per unit price | $ / shares | $ 22.50 | ||||
Warrants to purchase common stock | shares | 1,646,113 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2017 | |
Two shareholders [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership Percentage | 10.00% | |
Barry Honig [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership Percentage | 11.20% | |
Proceeds from Private Placement offering | $ 1,750,000 | $ 500,000 |
Ms. DeFrancesco [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership Percentage | 11.45% | |
Proceeds from Private Placement offering | $ 360,000 | |
GRQ Consultants, Inc [Member] | ||
Related Party Transaction [Line Items] | ||
Cash payment received by Mr. Honig | $ 50,000 | |
Percentage share of Kairos owned by Mr. Honig [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership Percentage | 8.60% | |
Percentage share of Kairos owned by Ms. DeFrancesco [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership Percentage | 6.30% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Apr. 09, 2018 | May 31, 2018 | Apr. 30, 2018 | Apr. 25, 2018 | Apr. 20, 2018 | Mar. 31, 2018 |
Subsequent Event [Line Items] | ||||||
Warrants to purchase common stock | 13,009 | |||||
Restricted Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Shares issued | 50,000 | |||||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Monthly base rent | $ 7,000 | |||||
Cash proceeds from currency trade | $ 957,300 | |||||
Subsequent Event [Member] | Series B Preferred Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Warrants to purchase common stock | 89,517 | |||||
Subsequent Event [Member] | Consulting Services [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Shares issued | 18,000 | |||||
Subsequent Event [Member] | Restricted Stock [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Shares issued | 40,000 |