Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document And Entity Information | |
Entity Registrant Name | BTCS Inc. |
Entity Central Index Key | 0001436229 |
Document Type | S-1/A |
Document Period End Date | Sep. 30, 2019 |
Amendment Flag | true |
Amendment Description | Amendment No. 1 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business Flag | true |
Entity Emerging Growth Company | false |
Entity Ex Transition Period | false |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||
Cash | $ 296,553 | $ 52,117 | $ 303,334 |
Digital currencies | 208,702 | 217,119 | |
Prepaid expense | 36,224 | 8,333 | 67,736 |
Total current assets | 541,479 | 60,450 | 588,189 |
Other assets: | |||
Property and equipment, net | 1,686 | 2,703 | 1,235 |
Total other assets | 1,686 | 2,703 | 1,235 |
Total Assets | 543,165 | 63,153 | 589,424 |
Liabilities and Stockholders' Equity (Deficit): | |||
Accounts payable and accrued expense | 61,647 | 14,244 | 75,997 |
Accrued compensation | 16,816 | 104,902 | |
Convertible notes payable, net | 53,221 | ||
Short term loan | 200,000 | ||
Total current liabilities | 131,684 | 319,146 | 75,997 |
Stockholders' equity (deficit): | |||
Common stock, 975,000,000 shares authorized at $0.001 par value, 18,884,424, 375,455,986 and 363,043,769 shares issued and outstanding at September 30, December 31, 2018 and 2017 respectively | 18,885 | 375,456 | 363,044 |
Additional paid in capital | 116,647,537 | 114,711,714 | 114,667,080 |
Accumulated deficit | (116,254,970) | (115,343,192) | (114,516,772) |
Total stockholders' equity (deficit) | 411,481 | (255,993) | 513,427 |
Total Liabilities and stockholders' equity (deficit) | 543,165 | 63,153 | 589,424 |
Series B Convertible Preferred Stock [Member] | |||
Stockholders' equity (deficit): | |||
Preferred stock; 20,000,000 shares authorized at $0.001 par value: | 25 | ||
Series C-1 Convertible Preferred Stock [Member] | |||
Stockholders' equity (deficit): | |||
Preferred stock; 20,000,000 shares authorized at $0.001 par value: | $ 29 | $ 29 | $ 50 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 975,000,000 | 975,000,000 | 975,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares issued | 18,884,424 | 375,455,986 | 363,043,769 |
Common stock, shares outstanding | 18,884,424 | 375,455,986 | 363,043,769 |
Series B Convertible Preferred Stock [Member] | |||
Preferred stock, shares issued | 0 | 0 | 25,877 |
Preferred stock, shares outstanding | 0 | 0 | 25,877 |
Preferred stock, liquidation preference per share | $ 0.001 | $ 0.001 | $ 0.001 |
Series C-1 Convertible Preferred Stock [Member] | |||
Preferred stock, shares issued | 29,414 | 29,414 | 50,004 |
Preferred stock, shares outstanding | 29,414 | 29,414 | 50,004 |
Preferred stock, liquidation preference per share | $ 0.001 | $ 0.001 | $ 0.001 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | ||||||
E-commerce | $ 4,480 | |||||
Total revenues | 4,480 | |||||
Cost of revenues | ||||||
Power and mining expenses | (160) | |||||
Gross profit | 4,320 | |||||
Operating expenses (income): | ||||||
General and administrative | $ 251,439 | $ 271,844 | $ 803,075 | $ 761,636 | 986,525 | 1,564,851 |
Marketing | 9,334 | 60 | 9,929 | 3,030 | 3,644 | 9,242 |
Total operating expenses | 260,773 | 271,904 | 813,004 | 764,666 | 990,169 | 1,574,093 |
Net loss from operations | (990,169) | (1,569,773) | ||||
Other (expense) income: | ||||||
Fair value adjustments for warrant liabilities | (39,222,099) | |||||
Fair value adjustments for convertible notes | (16,849,071) | |||||
Gain on extinguishment of debt | 15,918,867 | |||||
Loss from lease termination | (100,696) | |||||
Liquidated damages | (693,000) | |||||
Interest expense | (45,553) | (57,553) | ||||
Impairment loss on digital currencies | (40,698) | (40,698) | ||||
Realized (loss) gain on digital currencies transactions | (523) | 47,055 | (523) | 158,194 | 163,749 | 299,092 |
Other income | 39,643 | |||||
Total other (expenses) income | (86,774) | 47,055 | (98,774) | 158,194 | 163,749 | (43,894,796) |
Net loss | (347,547) | (224,849) | (911,778) | (606,472) | (826,420) | (45,464,569) |
Deemed dividend related to reduction of warrant strike price | 95,708 | (5,600) | ||||
Net loss attributable to common stockholders | $ (347,547) | $ (224,849) | $ (1,007,486) | $ (606,472) | $ (832,020) | $ (45,464,569) |
Net loss per share attributable to common stockholders, basic and diluted | $ (0.02) | $ (0.02) | $ (0.07) | $ (0.05) | $ 0 | $ (0.37) |
Weighted average number of common shares outstanding, basic and diluted | 15,841,314 | 12,418,059 | 14,120,866 | 12,357,057 | 371,561,990 | 123,548,858 |
Series C Convertible Preferred Stock [Member] | ||||||
Other (expense) income: | ||||||
Loss on issuance of Convertible Preferred stock | ||||||
Series C-1 Convertible Preferred Stock [Member] | ||||||
Other (expense) income: | ||||||
Loss on issuance of Convertible Preferred stock | $ (478,035) | |||||
Series C Convertible Preferred Stock [Member] | ||||||
Other (expense) income: | ||||||
Loss on issuance of Convertible Preferred stock | $ (2,809,497) |
Statements of Changes in Stockh
Statements of Changes in Stockholders' (Deficit) Equity - USD ($) | Series B Convertible Preferred Stock [Member] | Series C Convertible Preferred Stock [Member] | Series C-1 Convertible Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 16,097 | $ (217) | $ 23,785,756 | $ (69,052,203) | $ (45,250,567) | |||
Balance, Shares at Dec. 31, 2016 | 16,095,929 | (216,667) | ||||||
Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering (net of $3.7 million warrant liability, offset by $2.8 million of loss on issuance of Series C Convertible Preferred Stock) | $ 79 | (79) | ||||||
Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering (net of $3.7 million warrant liability, offset by $2.8 million of loss on issuance of Series C Convertible Preferred Stock), shares | 79,368 | |||||||
Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering (net of $1.5 million warrant liability,offset by $478,000 of loss on issuance of Series C-1 Convertible Preferred Stock) | $ 65 | (65) | ||||||
Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering (net of $1.5 million warrant liability,offset by $478,000 of loss on issuance of Series C-1 Convertible Preferred Stock), shares | 64,710 | |||||||
Issuance of common stock for settlement of debt | $ 833 | 60,834 | 61,667 | |||||
Issuance of common stock for settlement of debt, shares | 833,333 | |||||||
Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable | $ 1,160 | 74,299,064 | (74,300,224) | |||||
Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable, shares | 1,160,941 | |||||||
Fractional shares adjusted for reverse split | $ 4 | (4) | ||||||
Fractional shares adjusted for reverse split, shares | 4,424 | |||||||
Conversion of Series B Convertible Preferred Stock to common stock | $ (1,135) | $ 227,013 | (225,878) | |||||
Conversion of Series B Convertible Preferred Stock to common stock, shares | (1,135,064) | 227,012,800 | ||||||
Conversion of Series C Convertible Preferred Stock to common stock | $ (79) | $ 15,874 | (15,795) | |||||
Conversion of Series C Convertible Preferred Stock to common stock, shares | (79,368) | 15,873,600 | ||||||
Conversion of Series C-1 Convertible Preferred stock to common stock | $ (15) | $ 2,941 | (2,926) | |||||
Conversion of Series C-1 Convertible Preferred stock to common stock, shares | (14,706) | 2,941,200 | ||||||
Issuance of common stock due to Anti-Dilution provision | $ 14,517 | (14,517) | ||||||
Issuance of common stock due to Anti-Dilution provision, shares | 14,517,352 | |||||||
Cashless warrant exercise | $ 81,857 | 12,196,111 | 12,277,968 | |||||
Cashless warrant exercise, shares | 81,856,798 | |||||||
Management redemption from escrow account | $ (400) | 400 | ||||||
Management redemption from escrow account, shares | (400,000) | |||||||
Issuance of common stock for services | $ 125 | 9,875 | 10,000 | |||||
Issuance of common stock for services, Shares | 125,000 | |||||||
Issuance of common stock as consideration for warrant Amendment | $ 4,400 | 435,600 | 440,000 | |||||
Issuance of common stock as consideration for warrant Amendment, shares | 4,400,000 | |||||||
Reclassification from derivative liability to stockholders' equity | 4,138,704 | 4,138,704 | ||||||
Cancellation of treasury stock | $ (617) | $ 617 | ||||||
Cancellation of treasury stock, shares | (616,667) | 616,667 | ||||||
Net loss | (45,464,569) | (45,464,569) | ||||||
Balance at Dec. 31, 2017 | $ 25 | $ 50 | $ 363,044 | 114,667,080 | (114,516,772) | 513,427 | ||
Balance, Shares at Dec. 31, 2017 | 25,877 | 50,004 | 363,043,769 | |||||
Conversion of Series B Convertible Preferred Stock to common stock | $ (25) | $ 173 | (148) | |||||
Conversion of Series B Convertible Preferred Stock to common stock, shares | (25,877) | 172,513 | ||||||
Conversion of Series C-1 Convertible Preferred stock to common stock | $ (21) | $ 137 | (116) | |||||
Conversion of Series C-1 Convertible Preferred stock to common stock, shares | (20,590) | 137,266 | ||||||
Cashless warrant exercise | $ 9 | (9) | ||||||
Cashless warrant exercise, shares | 8,961 | |||||||
Net loss | (606,472) | (606,472) | ||||||
Balance at Sep. 30, 2018 | $ 29 | $ 12,420 | 115,017,750 | (115,123,244) | (93,045) | |||
Balance, Shares at Sep. 30, 2018 | 29,414 | 12,420,202 | ||||||
Balance at Dec. 31, 2017 | $ 25 | $ 50 | $ 363,044 | 114,667,080 | (114,516,772) | 513,427 | ||
Balance, Shares at Dec. 31, 2017 | 25,877 | 50,004 | 363,043,769 | |||||
Issuance of common stock for settlement of debt | ||||||||
Conversion of Series B Convertible Preferred Stock to common stock | $ (25) | $ 5,175 | (5,150) | |||||
Conversion of Series B Convertible Preferred Stock to common stock, shares | (25,877) | 5,175,400 | ||||||
Conversion of Series C-1 Convertible Preferred stock to common stock | $ (21) | $ 4,118 | (4,097) | |||||
Conversion of Series C-1 Convertible Preferred stock to common stock, shares | (20,590) | 4,118,000 | ||||||
Cashless warrant exercise | $ 269 | (269) | ||||||
Cashless warrant exercise, shares | 268,817 | |||||||
Issuance of common stock as consideration for warrant Amendment | ||||||||
Warrant exercise | $ 2,850 | 54,150 | 57,000 | |||||
Warrant exercise, shares | 2,850,000 | |||||||
Net loss | (826,420) | (826,420) | ||||||
Balance at Dec. 31, 2018 | $ 29 | $ 375,456 | 114,711,714 | (115,343,192) | (255,993) | |||
Balance, Shares at Dec. 31, 2018 | 29,414 | 375,455,986 | ||||||
Balance at Jun. 30, 2018 | $ 29 | $ 12,411 | 115,017,759 | (114,898,395) | 131,804 | |||
Balance, Shares at Jun. 30, 2018 | 29,414 | 12,411,241 | ||||||
Cashless warrant exercise | $ 9 | (9) | ||||||
Cashless warrant exercise, shares | 8,961 | |||||||
Net loss | (224,849) | (224,849) | ||||||
Balance at Sep. 30, 2018 | $ 29 | $ 12,420 | 115,017,750 | (115,123,244) | (93,045) | |||
Balance, Shares at Sep. 30, 2018 | 29,414 | 12,420,202 | ||||||
Balance at Dec. 31, 2018 | $ 29 | $ 375,456 | 114,711,714 | (115,343,192) | (255,993) | |||
Balance, Shares at Dec. 31, 2018 | 29,414 | 375,455,986 | ||||||
Common stock issued including equity commitment fee, net | $ 4,375 | 1,142,014 | 1,146,389 | |||||
Common stock issued including equity commitment fee, net, shares | 4,374,741 | |||||||
Conversion of convertible notes | $ 1,252 | 148,748 | 150,000 | |||||
Conversion of convertible notes, Shares | 1,252,058 | |||||||
Beneficial conversion features associated with convertible notes payable | 54,493 | 54,493 | ||||||
Fractional shares adjusted for reverse split | $ 17 | (17) | ||||||
Fractional shares adjusted for reverse split, shares | 16,860 | |||||||
Warrant exercise | $ 726 | 227,644 | 228,370 | |||||
Warrant exercise, shares | 725,564 | |||||||
Net loss | (911,778) | (911,778) | ||||||
Balance at Sep. 30, 2019 | $ 29 | $ 18,885 | 116,647,537 | (116,254,970) | 411,481 | |||
Balance, Shares at Sep. 30, 2019 | 29,414 | 18,884,424 | ||||||
Balance at Jun. 30, 2019 | $ 29 | $ 15,722 | 115,984,824 | (115,907,423) | 93,152 | |||
Balance, Shares at Jun. 30, 2019 | 29,414 | 15,722,420 | ||||||
Common stock issued including equity commitment fee, net | $ 1,910 | 459,473 | 461,383 | |||||
Common stock issued including equity commitment fee, net, shares | 1,909,946 | |||||||
Conversion of convertible notes | $ 1,253 | 148,747 | 150,000 | |||||
Conversion of convertible notes, Shares | 1,252,058 | |||||||
Beneficial conversion features associated with convertible notes payable | 54,493 | 54,493 | ||||||
Net loss | (347,547) | (347,547) | ||||||
Balance at Sep. 30, 2019 | $ 29 | $ 18,885 | $ 116,647,537 | $ (116,254,970) | $ 411,481 | |||
Balance, Shares at Sep. 30, 2019 | 29,414 | 18,884,424 |
Statements of Changes in Stoc_2
Statements of Changes in Stockholders' (Deficit) Equity (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Series C Convertible Preferred Stock [Member] | |
Warrant liability | $ 3,700,000 |
Loss on issuance of Convertible Preferred stock | (2,809,497) |
Series C-1 Convertible Preferred Stock [Member] | |
Warrant liability | 1,500,000 |
Loss on issuance of Convertible Preferred stock | $ (478,035) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net Cash flows used from operating activities: | ||||
Net loss | $ (911,778) | $ (606,472) | $ (826,420) | $ (45,464,569) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization expenses | 1,017 | 788 | 1,130 | 1,169 |
Issuance of common stock for services | 10,000 | |||
Issuance of common stock as consideration for warrant Amendment | 440,000 | |||
Fair value adjustments for warrant liabilities | 39,222,099 | |||
Fair value adjustments for convertible notes | 16,849,071 | |||
Amortization on debt discount | 39,741 | |||
Realized (loss) gain on digital currencies transactions | 523 | (158,194) | (163,749) | (299,092) |
Proceeds from sale of digital currencies | 359,801 | 380,868 | 332,172 | |
Impairment loss on digital currencies | 40,698 | |||
Gain on extinguishment of debt | (15,918,867) | |||
Loss from lease termination | 100,696 | |||
Liquidated damages | 693,000 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (27,891) | 54,403 | 59,403 | (67,736) |
Accounts payable and accrued expenses | 65,376 | 51,012 | 43,149 | (673,729) |
Accrued compensation | (88,086) | |||
Net cash used in operating activities | (880,400) | (298,662) | (505,619) | (1,488,254) |
Net cash used in investing activities: | ||||
Purchase of digital currencies | (249,923) | |||
Purchase of property and equipment | (2,598) | (2,598) | (1,485) | |
Refund of lease deposit | 1,885 | |||
Net cash used in investing activities | (249,923) | (2,598) | (2,598) | 400 |
Net cash provided by financing activities: | ||||
Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering | 925,115 | |||
Net proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 825,005 | |||
Proceeds from exercise of warrants | 228,370 | 57,000 | ||
Net proceeds from issuance of common stock | 1,146,389 | |||
Payment to settle an investor loan | (54,000) | |||
Proceeds from short term loan | 200,000 | |||
Net cash provided by financing activities | 1,374,759 | 257,000 | 1,696,120 | |
Net increase (decrease) in cash | 244,436 | (301,260) | (251,217) | 208,266 |
Cash, beginning of period | 52,117 | 303,334 | 303,334 | 95,068 |
Cash, end of period | 296,553 | 2,074 | 52,117 | 303,334 |
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of convertible note to common stock | 150,000 | |||
Exchange of promissory note and accrued interest into convertible note | 217,973 | |||
Issuance of common stock due to Anti-Dilution provision | 14,517 | |||
Cashless warrant exercise | 269 | 269 | 12,277,968 | |
Management redemption from escrow account | 400 | |||
Preferred issued for conversion of notes | 1,160 | |||
Reclassification between convertible notes and derivative liabilities | 4,138,704 | |||
Fractional shares adjusted for reverse split | 17 | 4 | ||
Issuance of Series C-1 Convertible Preferred Stock and warrants in exchange of digital currencies | 250,000 | |||
Issuance of Series B Convertible Preferred Stock to settle convertible notes payable | 74,300,224 | |||
Issuance of common stock for settlement of debt | 61,667 | |||
Deemed dividend related to reduction of warrant strike price | (95,708) | 5,600 | ||
Deemed dividend | 95,708 | |||
Beneficial conversion features associated with convertible notes payable | 54,493 | |||
Series B Convertible Preferred Stock [Member] | ||||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of Convertible Preferred Stock to common stock | 5,175 | 5,175 | 227,013 | |
Series C-1 Convertible Preferred Stock [Member] | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Loss on issuance of Convertible Preferred stock | 478,035 | |||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of Convertible Preferred Stock to common stock | $ 4,118 | 4,118 | 2,941 | |
Series C Convertible Preferred Stock [Member] | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Loss on issuance of Convertible Preferred stock | 2,809,497 | |||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of Convertible Preferred Stock to common stock | $ 15,874 |
Business Organization and Natur
Business Organization and Nature of Operations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Business Organization and Nature of Operations | Note 1 - Business Organization and Nature of Operations BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008. In February 2014, the Company entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using Digital Assets, including bitcoin and is currently focused on blockchain and digital currency ecosystems. In January 2015, the Company began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect its broadened strategy. The Company released its new website which included broader information on its strategy. In late 2014 we shifted our focus towards our transaction verification service business, also known as bitcoin mining, though in mid-2016 we ceased our transaction verification services operation at our North Carolina facility due to capital constraints. Subject to additional financing, the Company plans to acquire additional Digital Assets to provide investors with indirect ownership of Digital Assets that are not securities, such as bitcoin and ether. The Company intends to acquire Digital Assets through open market purchases. Additionally, the Company may acquire Digital Assets by resuming its transaction verification services business through outsourced data centers and earning rewards in Digital Assets by securing their respective blockchains. We are not limiting our assets to a single type of Digital Asset and may purchase a variety of Digital Assets that appear to benefit our investors, subject to the certain limitations regarding Digital Securities. The Company is also seeking to acquire controlling interests in businesses in the blockchain industry. The Company has not participated in any initial coin offerings as it believes most of the offerings entail the offering of Digital Securities and require registration under the Securities Act and under state securities laws or can only be sold to accredited investors in the United States. Since about July 2017, initial coin offerings using Digital Securities have been (or should be) limited to accredited investors. Because we cannot qualify as an accredited investor, we do not intend to acquire coins in initial coin offerings or from purchasers in such offerings. Further, the Company does not intend to participate in registered or unregistered initial coin offerings. The Company will carefully review its purchases of Digital Securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities laws. Digital asset blockchains are typically maintained by a network of participants which run servers which secure their blockchain. The market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have greater resources than us. Amendment to Articles of Incorporation On April 5, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) with the Nevada Secretary of State to effect a one-for 30 reverse split of the Company’s class of common stock. The Amendment took effect on April 9, 2019. No fractional shares were or will be issued or distributed as a result of the Amendment. Fractional shares resulting from the reverse split were rounded up to the nearest whole share. Numbers of shares of the Company’s preferred stock were not affected by the Reverse Stock Split; however, the conversion ratios have been adjusted to reflect the Reverse Stock Split. The financial statements have been retroactively restated to reflect the reverse stock split. | Note 1 - Organization and Description of Business and Recent Developments BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008. In February 2014, the Company entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using Digital Assets, including bitcoin and is currently focused on blockchain and digital currency ecosystems. In January 2015, the Company began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect its broadened strategy. The Company released its new website which included broader information on its strategy. In late 2014 we shifted our focus towards our transaction verification service business, also known as bitcoin mining, though in mid-2016 we ceased our transaction verification services operation at our North Carolina facility due to capital constraints. Subject to additional financing, the Company plans to acquire additional Digital Assets to provide investors with indirect ownership of Digital Assets that are not securities, such as bitcoin and ether. The Company intends to acquire Digital Assets through open market purchases. Additionally, the Company may acquire Digital Assets by resuming its transaction verification services business through outsourced data centers and earning rewards in Digital Assets by securing their respective blockchains. We are not limiting our assets to a single type of Digital Asset and may purchase a variety of Digital Assets that appear to benefit our investors, subject to the certain limitations regarding Digital Securities. The Company is also seeking to acquire controlling interests in businesses in the blockchain industry. The Company has not participated in any initial coin offerings as it believes most of the offerings entail the offering of Digital Securities and require registration under the Securities Act and under state securities laws or can only be sold to accredited investors in the United States. Since about July 2017, initial coin offerings using Digital Securities have been (or should be) limited to accredited investors. Because we cannot qualify as an accredited investor, we do not intend to acquire coins in initial coin offerings or from purchasers in such offerings. Further, the Company does not intend to participate in registered or unregistered initial coin offerings. The Company will carefully review its purchases of Digital Securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities laws. Digital asset blockchains are typically maintained by a network of participants which run servers which secure their blockchain. The market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have greater resources than us. |
Basis of Presentation
Basis of Presentation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Basis of Presentation | Note 2 - Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2018. | Note 2 - Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, DM. DM was dissolved on May 2, 2018. The Company maintains its books of account and prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Company’s fiscal year ends on December 31. All significant intercompany balances and transactions have been eliminated in consolidation. |
Restatement of the Consolidated
Restatement of the Consolidated Financial Statements | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of the Consolidated Financial Statements | Note 3 - Restatement of the Consolidated Financial Statements The purpose of the restatement for the year ended December 31, 2017 was to correct errors in the Company’s previously issued financial statements for the period ended December 31, 2017 in connection with the accounting for digital currencies as intangible assets with indefinite lives and record such digital currencies at cost less impairment, if any. Management determined that the Company’s digital currencies as of December 31, 2017 were accounted for in error and were overstated by approximately $399,000. The originally filed accounting policy regarding digital currencies transactions and remeasurement stated that: “The Company accounts for digital currencies, which it considers to be an operating asset, at their initial cost and subsequently remeasures the carrying amounts of digital currencies it owns at each reporting date based on their current fair value. The changes in the fair value of digital currencies are included as a component of income or loss from operations. The Company currently classifies digital currencies as a current asset. Digital currencies are considered a crypto-currency and the Company receives deposits in various kinds of digital currencies including but not limited to bitcoins, litecoins and dogecoins from customer trade transactions. The Company obtains the equivalency rate of bitcoins to USD from various exchanges including, Bitstamp and Coinbase. The equivalency rate obtained from these sources represents a generally well recognized quoted price in an active market for bitcoins, which market and related database are accessible to the Company on an ongoing basis.” The updated accounting policy regarding digital currencies transactions and remeasurement state that: “Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations.” The effect of the restatement on the Company’s consolidated balance sheet as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 616,352 $ (399,233 ) $ 217,119 Total current assets 987,422 (399,233 ) 588,189 Total Assets 988,657 (399,233 ) 589,424 Accumulated deficit (114,117,539 ) (399,233 ) (114,516,772 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 Total Liabilities and stockholders’ equity 988,657 (399,233 ) 589,424 The effect of the restatement on the Company’s consolidated statement of operations for the year ended December 31, 2017 are as follows: For the year ended December 31, 2017 As Previously Restatement As Restated Gross profit $ 709,266 $ (704,946 ) $ 4,320 Revaluation of digital currencies 704,946 (704,946 ) - Net loss from operations (864,827 ) (704,946 ) (1,569,773 ) Realized gain on sale of digital currencies - 299,092 299,092 Other income 33,022 6,621 39,643 Total other expenses (44,200,509 ) 305,713 (43,894,796 ) Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Basic and Diluted Loss per Share (0.36 ) (0.01 ) (0.37 ) Basic and Diluted Shares 123,548,858 - 123,548,858 The effect of the restatement on the Company’s consolidated statement of stockholders’ equity (deficit) as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 The effect of the restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2017 are as follows: For the year ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (45,065,336 ) $ (399,233 ) $ (45,464,569 ) Change in fair value of digital currencies (704,946 ) 704,946 - Realized gain on sale of digital currencies - (299,092 ) (299,092 ) Proceeds from sale of digital currencies - 332,172 332,172 Decrease in Digital Currencies 338,793 (338,793 ) - Net cash used in operating activities (1,488,254 ) - (1,488,254 ) There was no impact to net cash used in investing activities or net cash used in financing activities within our consolidated statement of cash flows nor was there an impact on the net decrease in cash resulting from restatement. The impacts of the restatement for the year ended December 31, 2017 has been reflected throughout these financial statements, including the applicable footnotes, as appropriate. |
Liquidity, Financial Condition
Liquidity, Financial Condition and Management's Plans | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Liquidity Financial Condition And Managements Plans | ||
Liquidity, Financial Condition and Management's Plans | Note 3 - Liquidity, Financial Condition and Management’s Plans The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions. Notwithstanding, the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical of an early stage enterprise. Significant uncertainties include, among others, whether the Company will be able to raise the capital it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations as a profitable enterprise. Our working capital needs are influenced by our level of operations, and generally decrease with higher levels of revenue. The Company used approximately $0.9 million of cash in its operating activities for the nine months ended September 30, 2019. The Company incurred $0.9 million net loss for the nine months ended September 30, 2019. The Company had cash of approximately $0.3 million and a working capital of approximately $0.4 million at September 30, 2019. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer-term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional equity financing, primarily through the Purchase Agreement with Cavalry and seeking to obtain additional equity linked debt financing, however there are currently no other commitments of debt or equity in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings by controlling costs, ● seeking additional financing through sales of additional securities whether through Cavalry or other investors. | Note 4 - Liquidity, Financial Condition and Management’s Plans The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions. Notwithstanding, the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical of an early stage enterprise. Significant uncertainties include, among others, whether the Company will be able to raise the capital it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations as a profitable enterprise. Our working capital needs are influenced by our level of operations, and generally decrease with higher levels of revenue. The Company used approximately $0.5 million of cash in its operating activities for the year ended December 31, 2018. The Company incurred a $0.8 million net loss for the year ended December 31, 2018. The Company had cash of approximately $52,000 and a negative working capital of approximately $0.3 million at December 31, 2018. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer-term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings by controlling costs, ● seeking additional financing through sales of additional securities |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Note 4 - Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2018 Annual Report. Digital Assets Translations and Remeasurements Digital Assets are included in current assets in the consolidated balance sheets. Digital Assets are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of Digital Assets are included in other income (expense) in the consolidated statements of operations. The Company assesses impairment of Digital Assets quarterly if the fair value of a Digital Asset was less than its cost basis on a day during the quarter. The Company recognizes impairment losses on Digital Assets caused by decreases in fair value using the U.S. dollar spot price of the related Digital Asset as of each impairment date. Such impairment in the value of Digital Assets are recorded as a component of costs and expenses in our consolidated statements of operations. The Company recorded an impairment loss of approximately $41,000 related to Digital Assets during the years ended September 30, 2019. Use of Estimates The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, if any, 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. Convertible Instruments The Company has evaluated the Series A Convertible Preferred Stock (“Preferred Stock”) component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of the Preferred Stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that the Preferred Stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. Beneficial Conversion Feature of Convertible Notes Payable The Company accounts for convertible notes payable in accordance with the guidelines established by the FASB Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued. The discounted face value is then used to measure the effective conversion price of the note. The effective conversion price and the market price of the Company’s common stock are used to calculate the intrinsic value of the conversion feature. The intrinsic value is recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense. Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2019 and 2018 because their effect was anti-dilutive: As of September 30, 2019 2018 Warrants to purchase common stock 1,229,710 2,050,302 Series C-1 Convertible Preferred stock 196,093 196,093 Convertible notes 581,957 - Total 2,007,761 2,246,395 Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective November 5, 2018. The implementation of this rule did not have a material impact on the Company’s condensed financial position, results of operations, equity or cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | Note 5- Summary of Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements is as follows: Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents. As of December 31, 2018 and 2017, the Company had approximately $52,000 and $303,000 in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2018 and 2017, the Company had $0 and $53,000 in excess of the FDIC insured limit, respectively. Digital Assets Translations and Remeasurements Digital Assets are included in current assets in the consolidated balance sheets. Digital Assets are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of Digital Assets are included in other income (expense) in the consolidated statements of operations. The Company assesses impairment of Digital Assets quarterly if the fair value of digital assets is less than its cost basis. The Company recognizes impairment losses on Digital Assets caused by decreases in fair value using the average U.S. dollar spot price of the related Digital Asset as of each impairment date. Such impairment in the value of Digital Assets are recorded as a component of costs and expenses in our consolidated statements of operations. There were no impairment losses related to Digital Assets during the years ended December 31, 2018 and 2017. Property and Equipment Property and equipment consists of leasehold improvements, computer, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the indefinite life intangible assets, 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. Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred. Employee Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising expenses amounted to approximately $4,000 and $9,000 for the years ended December 31, 2018 and 2017, respectively. Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of December 31, 2018 and 2017 because their effect was anti-dilutive: As of December 31, 2018 2017 Warrants to purchase common stock 58,657,911 62,064,634 Series B Convertible Preferred stock - 5,175,400 Series C Convertible Preferred stock - 10,000,800 Series C-1 Convertible Preferred stock 5,882,800 - Total 64,540,711 77,240,834 Preferred Stock The Company applies the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares in stockholders’ equity. The Company’s preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within the Company’s control as of December 31, 2018 and 2017. Accordingly, all issuances of preferred stock are presented as a component of stockholders’ equity. Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company has evaluated its convertible preferred stock conversion component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of its convertible preferred stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that its convertible preferred stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company adopted ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Because the Company doesn’t have any customer contracts as of January 1, 2018, the adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. We are evaluating the impact of this guidance on our consolidated financial statements. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Note Payable | Note 5 - Note Payable On December 18, 2018, the Company issued a $200,000 promissory note to one institutional investor (the “Promissory Note”). The Promissory Note is due on September 18, 2019 and bears interest at a rate of 12%. In the event of default, the Promissory Note bears interest at a rate of 20%. By the maturity date of the Promissory Note, the Company made no payment in connection with this Promissory Note and accrued interest expense of $17,973. On September 18, 2019, the Company and holder of the Promissory Note agreed to exchange the Promissory Note, including $17,973 accrued and unpaid interest for a new $217,973 Convertible Note dated September 18, 2019 (the “Convertible Note”). The Convertible Note is due December 18, 2019 and is convertible at a 20% discount to the closing price of the Company’s common stock on the principal trading market on the date before exercise, provided however that the conversion price shall never be less than $0.10 per share. The Convertible Note shall bear interest at 12% per annum (payable at maturity) and may be prepaid by the Company. Through September 18, 2019 to September 30, 2019, the Company issued a total of 1,252,058 shares of the Company’s Common Stock for the conversion of $150,000 of principal on the Convertible Note and made no payment in connection with this Convertible Note and accrued interest expense. The exchange of the Promissory Note into the Convertible Note met the definition of an extinguishment. However, the carrying amount of the Promissory Note and the fair value of the Convertible Note were comparable. Therefore, no gain or loss was recorded on the extinguishment. In addition, the Convertible Note does not contain any embedded features that require bifurcation pursuant to ASC 815-15. At the issuance date, the Convertible Note was convertible into 1,746,579 shares of common stock at $0.12 per share, but the Company’s fair value of underlying common stock was $0.16 per share. As such, the Company recognized a beneficial conversion feature, resulting in a discount to the Notes of approximately $54,000 with a corresponding credit to additional paid-in capital. The resulting debt discount is presented net of the Convertible Note payable balance in the accompanying Condensed Balance Sheets and is amortized to interest expense over the Convertible Note term. During the three and nine months ended September 30, 2019, the Company recorded approximately $40,000 in interest expense related to amortization on debt discount. As of September 30, 2019, the Convertible Note had principal balance of approximately $53,000 accrued interest on the note payable of approximately $500 and approximately $15,000 remaining unamortized debt discount. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Stockholders' Equity | Note 6 - Stockholders’ Equity During the nine months ended September 30, 2019, the Company issued 725,564 shares of Common Stock for the cash exercise of Series A Warrants, Additional Warrants, and Bonus Warrants resulting in aggregate proceeds of $0.2 million to the Company. On April 18, 2019, the Company issued 16,860 shares of Common Stock in connection with the one-for 30 reverse split resulting from the rounding up of fractional shares of Common Stock to the whole shares of Common Stock. From September 18, 2019 and September 25, 2019, the Company issued a total of 1,252,058 shares of the Company’s Common Stock for the conversion of $150,000 of principal on the Convertible Note. Purchase Agreement On May 13, 2019, the Company entered into an equity line purchase agreement with Cavalry Fund I LP (“Cavalry”) (the “Purchase Agreement”) pursuant to which Cavalry agreed to purchase from the Company, at Company’s sole discretion, up to $10,000,000 of common stock (subject to certain limitations) from time to time over a 36-month period. In consideration for entering into the $10 million Purchase Agreement, the Company issued to Cavalry 333,334 shares of common stock as a commitment fee and will issue up to 583,334 shares of common stock pro rata as Cavalry purchases additional shares. Concurrently with the execution of the Purchase Agreement on May 13, 2019, the Company and Cavalry also entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed, among other things, to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”), no later than May 23, 2019 to register for resale by Cavalry under the Securities Act of 1933 (the “Act”), the shares of common stock that the Company may elect to issue and sell to Cavalry from time to time under the Purchase Agreement. The Registration Rights Agreement provides that in the event the Company is unable to register sufficient shares under the Registration Statement, the Company will be required to file additional registration statements such that sufficient registered shares are available for issuance and sale to Cavalry under the Purchase Agreement. The Company filed a Registration Statement on Form S-1 seeking to register 4,374,741 shares. The Registration Statement was declared effective by the SEC on May 28, 2019. Provided the Registration Statement remains current and effective and the conditions set forth in the Purchase Agreement are satisfied, the Company may, from time to time and at its sole discretion, direct Cavalry to purchase shares of the Company’s common stock during trading hours (“Intraday Puts”) and after trading hours until 7 p.m. New York time (“Aftermarket Puts”) (either an Intraday Put or an Aftermarket Put may be referred to as a “Put”). The Company may make multiple Puts each day subject to delivery of the shares associated with prior Puts. The number of shares that may be sold under an Intraday Put shall be equal to the total daily trading dollar volume (“Daily Trading Dollar Volume”) for the trading day prior to the applicable Put date, divided by the Intraday Purchase Price (such shares being the “Intraday Put Share Limit”). The “Intraday Purchase Price” means the lower of: (i) 94% of the lowest sale price on the trading day prior to the applicable Put date, and (ii) 94% of the arithmetic average of the three lowest closing prices for the Company’s common stock during the 12 consecutive trading days ending on the Trading Day immediately preceding such Put date. The number of shares that may be sold under an Aftermarket Put shall be equal to the Daily Trading Dollar Volume, divided by the Aftermarket Put Price (such shares being the “Aftermarket Put Share Limit”). The “Aftermarket Put Price” means: the lower of: (i) the lowest Sale Price on the applicable Put date, and (ii) the arithmetic average of the three lowest closing prices for the Company’s common stock during the 12 consecutive trading days ending on the trading day immediately preceding such Put date. Upon mutual agreement of Cavalry and the Company and subject to written confirmation by Cavalry that such agreement will not result in violation of the 4.99% beneficial ownership limitation, the Company may increase the Intraday Put Share Limit or the Aftermarket Put Share Limit, as applicable, for any Put to include an amount equal to $2,000,000 in Put shares at the applicable Purchase Price, in each case in addition to the applicable Intraday Put Share Limit or Aftermarket Put Share Limit. In all instances, the Company may not sell shares of its common stock to Cavalry under the Purchase Agreement if it would result in Cavalry beneficially owning more than 4.99% of the Company’s common stock or if the closing price the trading day immediately preceding the Put date is below $0.005. As of September 30, 2019, the Company sold all of the shares available for sale under the Registration Statement (4,374,741 shares) for total proceeds of $1,146,389, net of cost of $12,250. | Note 6 - Stockholders’ Equity Reverse Stock Split and Amendment to Certificate of Incorporation On February 13, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to implement a reverse stock split at a ratio of one-for-60. The reverse stock split became effective immediately. 2017 Activities On February 28, 2017, the Company issued 4,370 shares of Common Stock in connection with the one-for-60 reverse stock split resulting from the rounding up of fractional shares of Common Stock to the whole shares of Common Stock. On March 9, 2017, the Company completed a securities exchange offer (the “Note Offer”) with its three convertible note holders (the “Note Holders”). Pursuant to the Note Offer the Note Holders agreed to exchange i) $868,897 of 5% Original Issue Discount 10% Senior Convertible Note Due September 16, 2016, originally issued in December 2015 and all accrued interest and liquidated damages owed (collectively the “Senior Notes”), ii) $175,000 of 20% Original Issue Discount Junior Convertible Notes Due December 5, 2016, originally issued in June 2016 and all accrued interest and liquidated damages owed (collectively the “Junior Notes”), iii) $220,000 of 8% Convertible Notes Due June 6, 2017, originally issued in December 2016 and all accrued interest owed (collectively the “Convertible Notes”), and iv) 97,423,579 warrants (the “Senior Warrants”) for 845,631 shares of Series B Convertible Preferred Stock (the “Preferred”). After giving effect to the Note Offer the Company no longer has any Senior Notes, Junior Notes or Convertible Notes outstanding. The Note Offer also provided the Note Holders with a three month right of first refusal to participate in the Company’s next financing and a one-year participation right with respect to the Company next fully underwritten offering. On March 9, 2017, as a result of the Note Offer becoming effective, a securities exchange offer made to the Company’s January 19, 2015 investors (the “January Offer”) was accepted by certain of those investors (the “January Investors”). Pursuant to the January Offer the January Investors agreed to exchange i) 12,052,344 shares of common stock owed pursuant to the favored nations provision of the January 19, 2015 subscription agreement (the “January Agreement”), and ii) 30,130,861 warrants owed pursuant to the favored nations provision of the January Agreement for 210,919 shares of Preferred. On March 9, 2017, as a result of the Note Offer becoming effective, a securities exchange offer made to the Company’s April 19, 2015 investors (the “April Offer”) was accepted by certain of those investors (the “April Investors”). Pursuant to the April Offer, the April Investors agreed to exchange i) 20,110,699 shares of Common Stock owed pursuant to the favored nations provision of the April 19, 2015 subscription agreement (the “April Agreement”), and ii) 28,154,980 warrants owed pursuant to the favored nations provision of the April Agreement for 104,391 shares of Preferred. As a result of the Note Offer, the January Offer and April Offer the Company issues a total of 1,160,941 shares of Preferred. On March 15, 2017, the Company issued investors who participated in its: i) January 19, 2015 financing and rejected the January Offer, and ii) April 19, 2015 financing and rejected the April Offer an aggregate of 14,517,352 share of Common Stock and 112,782,487 warrants. The Common Stock and warrant issuances were made pursuant to the favored nations provision of the January Agreement and April Agreement. On March 15, 2017, the Company filed a Certificate of Designation for the Preferred with the Secretary of State of the State of Nevada. The Preferred Certificate of Designation provides authorization for the issuance of 1,160,941 shares of Preferred, par value $0.001. On March 22, 2017, the Company entered into a Settlement Agreement and Note (the “CSC Agreement”) with CSC Leasing Company (“CSC”) with respect to the equipment lease schedule entered into between CSC and the Company (the “CSC Lease”). Pursuant to the CSC Agreement the Company has agreed to: i) issue CSC 833,333 shares valued at $61,667 of the Company’s common stock (the “Shares”), and ii) pay CSC $200,000 (the “Cash Payment”). On April 4, 2017, the Company entered into a Settlement Agreement with RK Equity Advisors, LLC and Pickwick Capital Partners, LLC with respect to the tail provision of the Engagement Letter dated August 19, 2015. Pursuant to the Settlement Agreement the Company has agreed to: i) terminate the Engagement Letter including all provisions thereof and including any obligations to future fees, and ii) convert the Estimated Liability into 125,000 shares of common stock of the Company, par value $0.001 per share at a price of $0.10 per share. The total value of this transaction is $10,000. On May 25, 2017, the Company raised $1 million in cash from four institutional investors in exchange for the issuance of $1,111,111 of Series C. See Note 4 Liquidity, Financial Condition and Management’s Plans. On October 10, 2017, the Company entered into a Securities Purchase Agreement with four investors who committed $750,000 in cash and $250,000 in bitcoin in exchange for a new class of Series C-1 Convertible Preferred Stock (the “Series C-1”) and Series B Warrants exercisable at $0.135 per share (the “October Financing”). The Series C-1 is initially convertible into shares of the Company’s common stock at an effective price $0.085 per share. Both the Series C-1 and Series B Warrants are subject to adjustment in the event of future sales of the Company’s equity securities or common stock equivalents at a lower price, subject to elimination of the price protection on the Exchange Date. The Company subsequently received another $100,000 from an institutional investor which was held in escrow until the filing of the 10-Q. Between March 15, 2017 and December 19, 2017, the Company issued 81,856,798 shares of Common Stock for the cashless exercise of 111,244,318 warrants. Between March 28, 2017 and December 31, 2017, the Company issued 227,012,800 shares of Common Stock upon the conversion of 1,135,064 shares of Series B Convertible Preferred stock. Between November 27, 2017 and November 29, 2017, the Company issued 15,873,600 shares of Common Stock upon the conversion of 79,368 shares of Series C Convertible Preferred stock. On November 27, 2017, the Company issued 2,941,200 shares of Common Stock upon the conversion of 14,706 shares of Series C-1 Convertible Preferred stock. On December 7, 2017, the Company entered into an Amendment to Securities Agreement with the holders of a majority of the Company’s outstanding Convertible Preferred Stock Series C-1 amending the terms of the Company’s May 2017 Securities Purchase Agreement, the Company’s October 2017 Securities Purchase Agreement (the “October SPA”), the Certificate of Designations, Preferences, and Rights of the Series C-1 Convertible Preferred Stock, and the terms of the Series A Warrants, Additional Warrants, Bonus Warrants, and Series B Warrants. The Company issued, on a pro-rata basis to the subscribers of the October SPA a total of 4,400,000 shares of common stock of the Company. 2018 Activities On January 1, 2018, the Company issued 5,175,400 shares of Common Stock upon the conversion of 25,877 shares of Series B Convertible Preferred stock. On April 20, 2018, the Company issued 392,200 shares of Common Stock upon the conversion of 1,961 shares of Series C-1 Convertible Preferred stock. On April 23, 2018, the Company issued 1,176,600 shares of Common Stock upon the conversion of 5,883 shares of Series C-1 Convertible Preferred stock. On April 24, 2018, the Company issued 2,549,200 shares of Common Stock upon the conversion of 12,746 shares of Series C-1 Convertible Preferred stock. On July 23, 2018, the Company issued 268,817 shares of Common Stock for the cashless exercise of 555,556 warrants. On October 11, 2018 the Company issued four investors each 13,750,000 Series C Warrants or 55,000,000 warrants in aggregate. These Series C Warrants were not lawfully issued in accordance with the Nevada Revised Statutes (“NRS”). On October 25, 2018 the Company and each of the four investors who hold the Series C Warrants agreed to cancel the Series C Warrants for no consideration. Accordingly, the Series C Warrants are not outstanding. On November 13, 2018, pursuant to the Amendment to Securities Agreement dated December 7, 2017, the Company temporarily reduced the exercise price of 4,000,000 Series A Warrants from $0.085 to $0.02 (the “Offer”). The offer was made to all four investors who are record holders of the Series A Warrants on identical terms. Each investor had the option to exercise up to 1,000,000 Series A Warrants at the lower exercise price. Over the course of November 13 through November 16, 2018, the Company issued 2,850,000 shares of Common Stock for the cash exercise of Series A Warrants through the Offer resulting in aggregate proceeds of $57,000 to the Company. Stock Purchase Warrants The following is a summary of warrant activity for the year ended December 31, 2018 and 2017: Number of Warrants Outstanding as of January 1, 2017 268,788,733 Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 47,302,176 Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 12,942,000 Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants (163,178,007 ) Ratchet warrants issued due to price reset 7,454,050 Cashless warrant exercise (111,244,318 ) Outstanding as of December 31, 2017 62,064,634 Issuance of Series C Warrants 55,000,000 Cancellation of Series C Warrants for no consideration (55,000,000 ) Cashless warrant exercise (555,556 ) Warrants exercise for cash (2,850,000 ) Expiration of warrant (1,167 ) Outstanding as of December 31, 2018 58,657,911 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7 - Fair Value Measurements The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy. There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2018 and 2017. Level 3 Valuation Techniques The following table presents additional information about Level 3 assets and liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Changes in Level 3 liabilities measured at fair value for the years ended December 31, 2018 and 2017: Derivative liabilities balance - December 31, 2016 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 39,222,099 Cashless warrant exercise (12,277,968 ) Loss on issuance of Series C Convertible Preferred stock 2,809,497 Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 925,115 Loss on issuance of Series C-1 Convertible Preferred stock 478,035 Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 825,005 Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 250,000 Reclassification between convertible notes and derivative liabilities (4,138,704 ) Derivative liabilities balance - December 31, 2017 $ - Derivative liabilities for shortfall of shares balance - December 31, 2016 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - December 31, 2017 $ - Convertible notes at fair value - December 31, 2016 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - December 31, 2017 $ - The Company’s derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 December 7, 2017 December 31, 2016 Strike Price 0.025 - 18.000 0.085 0.025 - 0.085 0.03 - 60.0 Volatility 186.7% - 208.3 % 210.10% - 254.70 % 255.89% - 465.94 % 118% - 230 % Risk-free interest rate 1.25% - 1.83 % 1.24% - 1.79 % 1.67% - 2.14 % 0.35% - 2.23 % Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 0.98 to 4.88 0.10 to 3.96 Dividend yield (per share) 0 0 0 0 Senior Convertible Notes at Fair Value Date of valuation March 2, 2017 December 31, 2016 Strike Price 0.32 0.0252 Volatility 267.8 % 300.42% - 328.04 % Risk-free interest rate 0.68 % 0.51% - 0.63 % Dividend yield (per share) 0 0 % The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Management. |
Employment Agreements
Employment Agreements | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employment Agreements | Note 8 - Employment Agreements Charles W. Allen On June 22, 2017, we entered into an employment agreement with Charles Allen (the “Allen Employment Agreement”), whereby Mr. Allen agreed to serve as our Chief Executive Officer and Chief Financial Officer for a period of two (2) years, subject to renewal, in consideration for an annual salary of $245,000. Additionally, under the terms of the Allen Employment Agreement, Mr. Allen shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors. Mr. Allen shall be entitled to participate in all benefits plans we provide to our senior executive. The Company did not pay or accrue any amount for bonuses during the year ended December 31, 2018. We shall reimburse Mr. Allen for all reasonable expenses incurred in the course of his employment. The Company shall pay the Executive $500 per month to cover telephone and internet expenses. If the Company does not provide office space to the Executive the Company will pay the Executive an additional $500 per month to cover expenses in connection with their office space needs. Michal Handerhan On June 22, 2017, we entered into an employment agreement with Michal Handerhan (the “Handerhan Employment Agreement”), whereby Mr. Handerhan agreed to serve as our Chief Operating Officer and Secretary for a period of two (2) years, subject to renewal, in consideration for an annual salary of $190,000. Additionally, under the terms of the Handerhan Employment Agreement, Mr. Handerhan shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors. Mr. Handerhan shall be entitled to participate in all benefits plans we provide to our senior executive. The Company did not pay or accrue any amount for bonuses during the year ended December 31, 2018. We shall reimburse Mr. Handerhan for all reasonable expenses incurred in the course of his employment. The Company shall pay the Executive $500 per month to cover telephone and internet expenses. If the Company does not provide office space to the Executive the Company will pay the Executive an additional $500 per month to cover expenses in connection with their office space needs. The terms of the Allen Employment Agreement and Handerhan Employment Agreement (collectively the “Employment Agreements”) provide each of Messrs. Allen and Handerhan (the “Executives”) certain, severance and change of control benefits if the Executive resigns from the Company for good reason or the Company terminates him other than for cause. In such circumstances, the Executive would be entitled to a lump sum payment equal to (i) the Executive’s then-current base salary, and (ii) payment on a pro-rated basis of any bonus or other payments earned in connection with any bonus plan to which the Executive was a participant. In addition, the severance benefit for the Executives the employment agreements include the Company continuing to pay for medical and life insurance coverage for up to one year following termination. If, within eighteen months following a change of control (as defined below), the Executive’s employment is terminated by the Company without cause or he resigns from the Company for good reason, the Executive will receive certain severance compensation. In such circumstances, the cash benefit to the Executive will be a lump sum payment equal to two times (i) his then-current base salary and (ii) his prior year cash bonus and incentive compensation. Upon the occurrence of a change of control, irrespective of whether his employment with the Company terminates, each Executive’s stock options and equity-based awards will immediately vest. A “change of control” for purposes of the Employment Agreements means any of the following: (i) the sale or partial sale of the Corporation to an un-affiliated person or entity or group of un-affiliated persons or entities pursuant to which such party or parties acquire shares of capital stock of the Corporation representing at least twenty five (25%) of the fully diluted capital stock (including warrants, convertible notes, and preferred stock on an as converted basis) of the Corporation; (ii) the sale of the Corporation to an un-affiliated person or entity or group of such persons or entities pursuant to which such party or parties acquire all or substantially all of the Corporation’s assets determined on a consolidated basis, or (iii) Incumbent Directors (Mr. Allen and Mr. Handerhan) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the board of directors of the Company. Additionally, pursuant to the terms of the Employment Agreements, we have agreed to execute and deliver in favor of the Executives an indemnification agreement and to maintain directors’ and officers’ insurance with terms and in the amounts commensurate with our senior executive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9 - Related Party Transactions On February 19, 2016, the Company entered into a securities escrow agreement (the “Securities Escrow Agreement”) with Charles Allen its Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, its Chief Operating Officer and corporate secretary (collectively, the “Principal Stockholders”). Pursuant to the Securities Escrow Agreement and for the benefit of the Company’s public shareholders the Principal Stockholders voluntarily agreed to place stock certificates representing 400,000 shares of Common Stock (the “Escrow Shares”) into escrow. The return of 200,000 escrowed shares (the “Listing Escrow Shares”) to the Principal Stockholders shall be based upon the successful listing of the Company’s Common Stock on a National Stock Exchange on or before December 31, 2016 (the “Listing Condition”). The Listing Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Listing Condition. The return of 200,000 escrowed shares (the “Merger Escrow Shares”) to the Principal Stockholders shall be based upon the successful consummation of the merger with Spondoolies on or before December 31, 2016 (the “Merger Condition”). The Merger Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Merger Condition. Pursuant to the Securities Escrow Agreement and for the benefit of the Company’s public shareholders the Principal Stockholders voluntarily agreed to place stock certificates representing the Escrow Shares into escrow. The Company failed to list the Company’s Common Stock on a national securities exchange on or before December 31, 2016 and failed to consummate the merger with Spondoolies-Tech Ltd. on or before December 31, 2016. The escrow agent returned the shares to the Company for cancelation for no consideration. On January 30, 2017, the Company received 24,000,000 pre-split shares (400,000 shares post-split) of Common Stock for cancelation for no consideration (the “Escrow Shares”). The Escrow Shares were placed in escrow by Charles Allen our Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, our Chief Operating Officer and corporate secretary (collectively, the “Principal Stockholders”) pursuant to a securities escrow agreement dated February 19, 2016 (the “Securities Escrow Agreement”). The Company recorded an adjustment to additional paid-in capital for $400 related to this transaction. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10 - Income Taxes The Company had no income tax expense due to operating loss incurred for the years ended December 31, 2018 and 2017. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which makes broad and complex changes to the U.S. tax code. Certain of these changes may be applicable to the Company, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, creating a new limitation on deductible interest expense, eliminating the corporate alternative minimum tax (“AMT”), modifying the rules related to uses and limitations of net operating loss carryforwards generated in tax years ending after December 31, 2017, and changing the rules pertaining to the taxation of profits earned abroad. Changes in tax rates and tax laws are accounted for in the period of enactment. The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a decrease related to deferred tax assets of approximately $0.5 million dollars exclusive of the corresponding change in the valuation allowance, for the year ended December 31, 2018. Due to the full valuation allowance on the deferred tax assets, there is no net adjustment to deferred tax expense or benefit due to the reduction of the corporate tax rate. The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2018 and 2017 are comprised of the following: As of December 31, 2018 2017 Deferred tax assets: Net-operating loss carryforward $ 1,163,032 $ 1,689,152 Other - - Total Deferred Tax Assets 1,163,032 1,689,152 Valuation allowance (1,163,032 ) (1,689,152 ) Deferred Tax Asset, Net of Allowance $ - $ - At December 31, 2018, the Company had net operating loss carry forwards for federal and state tax purposes of approximately $5.54 million which begins to expire in 2034. For tax years beginning after December 31, 2017, NOLs generated can offset only 80% of taxable income in any given tax year. The 20-year carryforward period has been replaced with an indefinite carryforward period for these NOLs generated in 2018 and future years. Prior to the merger, the Company had generated net operating losses, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382. The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because of potential Change of Ownerships might be completely worthless. Therefore, Management of the Company has recorded a Full Valuation Reserve, since it is more likely than not that no benefit will be realized for the Deferred Tax Assets. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2018. The valuation allowance decreased by approximately $0.5 million as of December 31, 2018. The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: For the years ended December 31, 2018 2017 Statutory Federal Income Tax Rate (21.0 )% (34.0 )% State Taxes, Net of Federal Tax Benefit (6.3 )% (5.4 )% Federal tax rate change 0.0 % 11.9 Other 27.3 % 38.8 Change in Valuation Allowance (0.0 )% (11.3 )% Income Taxes Provision (Benefit) - % - % The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2018. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 7 - Subsequent Events On October 16, 2019, the Company issued a total of 679,730 shares of the Company’s Common Stock for the conversion of the remaining $67,973 of principal on the Convertible Note and subsequently paid all the accrued interest expense of $905 on the Convertible Note. On November 7, 2019, the Company issued a $200,000 promissory note (the “2019 Promissory Note”). The 2019 Promissory Note is due on August 7, 2020 and is: (i) convertible at a 20% discount to the closing price of the Company’s common stock on the date before exercise with a floor price of $0.02 per share, (ii) shall bear interest at 12% per annum (payable at maturity) and in the event of default bears interest at a rate of 20%, (iii) convertible at the Company’s option subject to certain limitations as set forth in the 2019 Promissory Note, and (iv) may be prepaid by the Company. | Note 11 - Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed. Over the course of January 9, 2019 through January 31, 2019, the Company issued 11,825,544 shares of Common Stock for the cash exercise of Series A Warrants, Additional Warrants, and Bonus Warrants resulting in aggregate proceeds of $148,843 to the Company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Concentration of Cash | Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents. As of December 31, 2018 and 2017, the Company had approximately $52,000 and $303,000 in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2018 and 2017, the Company had $0 and $53,000 in excess of the FDIC insured limit, respectively. | |
Digital Assets Translations and Remeasurements | Digital Assets Translations and Remeasurements Digital Assets are included in current assets in the consolidated balance sheets. Digital Assets are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of Digital Assets are included in other income (expense) in the consolidated statements of operations. The Company assesses impairment of Digital Assets quarterly if the fair value of a Digital Asset was less than its cost basis on a day during the quarter. The Company recognizes impairment losses on Digital Assets caused by decreases in fair value using the U.S. dollar spot price of the related Digital Asset as of each impairment date. Such impairment in the value of Digital Assets are recorded as a component of costs and expenses in our consolidated statements of operations. The Company recorded an impairment loss of approximately $41,000 related to Digital Assets during the years ended September 30, 2019. | Digital Assets Translations and Remeasurements Digital Assets are included in current assets in the consolidated balance sheets. Digital Assets are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of Digital Assets are included in other income (expense) in the consolidated statements of operations. The Company assesses impairment of Digital Assets quarterly if the fair value of digital assets is less than its cost basis. The Company recognizes impairment losses on Digital Assets caused by decreases in fair value using the average U.S. dollar spot price of the related Digital Asset as of each impairment date. Such impairment in the value of Digital Assets are recorded as a component of costs and expenses in our consolidated statements of operations. There were no impairment losses related to Digital Assets during the years ended December 31, 2018 and 2017. |
Property and Equipment | Property and Equipment Property and equipment consists of leasehold improvements, computer, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) | |
Use of Estimates | Use of Estimates The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, if any, 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. | Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the indefinite life intangible assets, 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. |
Convertible Instruments | Convertible Instruments The Company has evaluated the Series A Convertible Preferred Stock (“Preferred Stock”) component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of the Preferred Stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that the Preferred Stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. | |
Beneficial Conversion Feature of Convertible Notes Payable | Beneficial Conversion Feature of Convertible Notes Payable The Company accounts for convertible notes payable in accordance with the guidelines established by the FASB Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued. The discounted face value is then used to measure the effective conversion price of the note. The effective conversion price and the market price of the Company’s common stock are used to calculate the intrinsic value of the conversion feature. The intrinsic value is recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense. | |
Income Taxes | Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred. | |
Employee Stock-Based Compensation | Employee Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. | |
Advertising Expense | Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising expenses amounted to approximately $4,000 and $9,000 for the years ended December 31, 2018 and 2017, respectively. | |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2019 and 2018 because their effect was anti-dilutive: As of September 30, 2019 2018 Warrants to purchase common stock 1,229,710 2,050,302 Series C-1 Convertible Preferred stock 196,093 196,093 Convertible notes 581,957 - Total 2,007,761 2,246,395 | Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of December 31, 2018 and 2017 because their effect was anti-dilutive: As of December 31, 2018 2017 Warrants to purchase common stock 58,657,911 62,064,634 Series B Convertible Preferred stock - 5,175,400 Series C Convertible Preferred stock - 10,000,800 Series C-1 Convertible Preferred stock 5,882,800 - Total 64,540,711 77,240,834 |
Preferred Stock | Preferred Stock The Company applies the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares in stockholders’ equity. The Company’s preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within the Company’s control as of December 31, 2018 and 2017. Accordingly, all issuances of preferred stock are presented as a component of stockholders’ equity. | |
Convertible Preferred Stock | Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company has evaluated its convertible preferred stock conversion component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of its convertible preferred stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that its convertible preferred stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective November 5, 2018. The implementation of this rule did not have a material impact on the Company’s condensed financial position, results of operations, equity or cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company adopted ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Because the Company doesn’t have any customer contracts as of January 1, 2018, the adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. We are evaluating the impact of this guidance on our consolidated financial statements. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Restatement of the Consolidat_2
Restatement of the Consolidated Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The effect of the restatement on the Company’s consolidated balance sheet as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 616,352 $ (399,233 ) $ 217,119 Total current assets 987,422 (399,233 ) 588,189 Total Assets 988,657 (399,233 ) 589,424 Accumulated deficit (114,117,539 ) (399,233 ) (114,516,772 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 Total Liabilities and stockholders’ equity 988,657 (399,233 ) 589,424 The effect of the restatement on the Company’s consolidated statement of operations for the year ended December 31, 2017 are as follows: For the year ended December 31, 2017 As Previously Restatement As Restated Gross profit $ 709,266 $ (704,946 ) $ 4,320 Revaluation of digital currencies 704,946 (704,946 ) - Net loss from operations (864,827 ) (704,946 ) (1,569,773 ) Realized gain on sale of digital currencies - 299,092 299,092 Other income 33,022 6,621 39,643 Total other expenses (44,200,509 ) 305,713 (43,894,796 ) Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Basic and Diluted Loss per Share (0.36 ) (0.01 ) (0.37 ) Basic and Diluted Shares 123,548,858 - 123,548,858 The effect of the restatement on the Company’s consolidated statement of stockholders’ equity (deficit) as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 The effect of the restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2017 are as follows: For the year ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (45,065,336 ) $ (399,233 ) $ (45,464,569 ) Change in fair value of digital currencies (704,946 ) 704,946 - Realized gain on sale of digital currencies - (299,092 ) (299,092 ) Proceeds from sale of digital currencies - 332,172 332,172 Decrease in Digital Currencies 338,793 (338,793 ) - Net cash used in operating activities (1,488,254 ) - (1,488,254 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Schedule of Earnings Per Share Anti-diluted | The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2019 and 2018 because their effect was anti-dilutive: As of September 30, 2019 2018 Warrants to purchase common stock 1,229,710 2,050,302 Series C-1 Convertible Preferred stock 196,093 196,093 Convertible notes 581,957 - Total 2,007,761 2,246,395 | The following financial instruments were not included in the diluted loss per share calculation as of December 31, 2018 and 2017 because their effect was anti-dilutive: As of December 31, 2018 2017 Warrants to purchase common stock 58,657,911 62,064,634 Series B Convertible Preferred stock - 5,175,400 Series C Convertible Preferred stock - 10,000,800 Series C-1 Convertible Preferred stock 5,882,800 - Total 64,540,711 77,240,834 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Warrant Activity | The following is a summary of warrant activity for the year ended December 31, 2018 and 2017: Number of Warrants Outstanding as of January 1, 2017 268,788,733 Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 47,302,176 Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 12,942,000 Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants (163,178,007 ) Ratchet warrants issued due to price reset 7,454,050 Cashless warrant exercise (111,244,318 ) Outstanding as of December 31, 2017 62,064,634 Issuance of Series C Warrants 55,000,000 Cancellation of Series C Warrants for no consideration (55,000,000 ) Cashless warrant exercise (555,556 ) Warrants exercise for cash (2,850,000 ) Expiration of warrant (1,167 ) Outstanding as of December 31, 2018 58,657,911 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Derivative liabilities | Derivative liabilities balance - December 31, 2016 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 39,222,099 Cashless warrant exercise (12,277,968 ) Loss on issuance of Series C Convertible Preferred stock 2,809,497 Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 925,115 Loss on issuance of Series C-1 Convertible Preferred stock 478,035 Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 825,005 Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 250,000 Reclassification between convertible notes and derivative liabilities (4,138,704 ) Derivative liabilities balance - December 31, 2017 $ - |
Schedule of Derivative Liabilities for Shortfall of Shares | Derivative liabilities for shortfall of shares balance - December 31, 2016 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - December 31, 2017 $ - |
Schedule of Changes in Fair Value of Convertible Notes | Convertible notes at fair value - December 31, 2016 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - December 31, 2017 $ - |
Summary of Quantitative Information to Valuation Methodology | A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 December 7, 2017 December 31, 2016 Strike Price 0.025 - 18.000 0.085 0.025 - 0.085 0.03 - 60.0 Volatility 186.7% - 208.3 % 210.10% - 254.70 % 255.89% - 465.94 % 118% - 230 % Risk-free interest rate 1.25% - 1.83 % 1.24% - 1.79 % 1.67% - 2.14 % 0.35% - 2.23 % Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 0.98 to 4.88 0.10 to 3.96 Dividend yield (per share) 0 0 0 0 Senior Convertible Notes at Fair Value Date of valuation March 2, 2017 December 31, 2016 Strike Price 0.32 0.0252 Volatility 267.8 % 300.42% - 328.04 % Risk-free interest rate 0.68 % 0.51% - 0.63 % Dividend yield (per share) 0 0 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2018 and 2017 are comprised of the following: As of December 31, 2018 2017 Deferred tax assets: Net-operating loss carryforward $ 1,163,032 $ 1,689,152 Other - - Total Deferred Tax Assets 1,163,032 1,689,152 Valuation allowance (1,163,032 ) (1,689,152 ) Deferred Tax Asset, Net of Allowance $ - $ - |
Schedule of Income Tax Rate | The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: For the years ended December 31, 2018 2017 Statutory Federal Income Tax Rate (21.0 )% (34.0 )% State Taxes, Net of Federal Tax Benefit (6.3 )% (5.4 )% Federal tax rate change 0.0 % 11.9 Other 27.3 % 38.8 Change in Valuation Allowance (0.0 )% (11.3 )% Income Taxes Provision (Benefit) - % - % |
Business Organization and Nat_2
Business Organization and Nature of Operations (Details Narrative) | Apr. 18, 2019 | Apr. 05, 2019 | Feb. 13, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Reverse stock split | one-for 30 reverse split | one-for 30 reverse split | one-for-60 |
Restatement of the Consolidat_3
Restatement of the Consolidated Financial Statements (Details Narrative) (10-K) | Dec. 31, 2017USD ($) |
Restatement Adjustment [Member] | |
Digital currencies | $ 399,000 |
Restatement of the Consolidat_4
Restatement of the Consolidated Financial Statements - Schedule of Error Corrections and Prior Period Adjustments (Details) (10-K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2016 | |
Digital currencies | $ 217,119 | ||||||||
Total current assets | $ 541,479 | $ 541,479 | $ 60,450 | 588,189 | |||||
Total Assets | 543,165 | 543,165 | 63,153 | 589,424 | |||||
Accumulated deficit | (116,254,970) | (116,254,970) | (115,343,192) | (114,516,772) | |||||
Total stockholders' equity | 411,481 | $ (93,045) | 411,481 | $ (93,045) | (255,993) | 513,427 | $ 93,152 | $ 131,804 | $ (45,250,567) |
Total Liabilities and stockholders' equity | 543,165 | 543,165 | 63,153 | 589,424 | |||||
Gross profit | 4,320 | ||||||||
Revaluation of digital currencies | |||||||||
Net loss from operations | (990,169) | (1,569,773) | |||||||
Realized gain on sale of digital currencies | (523) | 47,055 | (523) | 158,194 | 163,749 | 299,092 | |||
Other income | 39,643 | ||||||||
Total other expenses | (86,774) | 47,055 | (98,774) | 158,194 | 163,749 | (43,894,796) | |||
Net loss | $ (347,547) | $ (224,849) | $ (911,778) | $ (606,472) | $ (826,420) | $ (45,464,569) | |||
Basic and Diluted Loss per Share | $ (0.02) | $ (0.02) | $ (0.07) | $ (0.05) | $ 0 | $ (0.37) | |||
Basic and Diluted Shares | 15,841,314 | 12,418,059 | 14,120,866 | 12,357,057 | 371,561,990 | 123,548,858 | |||
Change in fair value of digital currencies | |||||||||
Proceeds from sale of digital currencies | 332,172 | ||||||||
Decrease in Digital Currencies | |||||||||
Net cash used in operating activities | $ (880,400) | $ (298,662) | $ (505,619) | (1,488,254) | |||||
Previously Reported [Member] | |||||||||
Digital currencies | 616,352 | ||||||||
Total current assets | 987,422 | ||||||||
Total Assets | 988,657 | ||||||||
Accumulated deficit | (114,117,539) | ||||||||
Total stockholders' equity | 912,660 | ||||||||
Total Liabilities and stockholders' equity | 988,657 | ||||||||
Gross profit | 709,266 | ||||||||
Revaluation of digital currencies | 704,946 | ||||||||
Net loss from operations | (864,827) | ||||||||
Realized gain on sale of digital currencies | |||||||||
Other income | 33,022 | ||||||||
Total other expenses | (44,200,509) | ||||||||
Net loss | $ (45,065,336) | ||||||||
Basic and Diluted Loss per Share | $ (0.36) | ||||||||
Basic and Diluted Shares | 123,548,858 | ||||||||
Change in fair value of digital currencies | $ (704,946) | ||||||||
Proceeds from sale of digital currencies | |||||||||
Decrease in Digital Currencies | 338,793 | ||||||||
Net cash used in operating activities | (1,488,254) | ||||||||
Restatement Adjustment [Member] | |||||||||
Digital currencies | (399,233) | ||||||||
Total current assets | (399,233) | ||||||||
Total Assets | (399,233) | ||||||||
Accumulated deficit | (399,233) | ||||||||
Total stockholders' equity | (399,233) | ||||||||
Total Liabilities and stockholders' equity | (399,233) | ||||||||
Gross profit | (704,946) | ||||||||
Revaluation of digital currencies | (704,946) | ||||||||
Net loss from operations | (704,946) | ||||||||
Realized gain on sale of digital currencies | 299,092 | ||||||||
Other income | 6,621 | ||||||||
Total other expenses | 305,713 | ||||||||
Net loss | $ (399,233) | ||||||||
Basic and Diluted Loss per Share | $ (0.01) | ||||||||
Basic and Diluted Shares | |||||||||
Change in fair value of digital currencies | $ 704,946 | ||||||||
Proceeds from sale of digital currencies | 332,172 | ||||||||
Decrease in Digital Currencies | (338,793) | ||||||||
Net cash used in operating activities |
Liquidity, Financial Conditio_2
Liquidity, Financial Condition and Management's Plans (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Liquidity Financial Condition And Managements Plans | ||||||
Net cash used in operating activities | $ (880,400) | $ (298,662) | $ (505,619) | $ (1,488,254) | ||
Net loss | $ (347,547) | $ (224,849) | (911,778) | $ (606,472) | (826,420) | (45,464,569) |
Cash | 296,553 | 296,553 | $ 52,117 | $ 303,334 | ||
Working capital | $ 400,000 | $ 400,000 |
Liquidity, Financial Conditio_3
Liquidity, Financial Condition and Management's Plans (Details Narrative) (10-K) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Liquidity Financial Condition And Managements Plans | ||||||
Net cash used in operating activities | $ 880,400 | $ 298,662 | $ 505,619 | $ 1,488,254 | ||
Net loss | $ 347,547 | $ 224,849 | 911,778 | $ 606,472 | 826,420 | 45,464,569 |
Cash | $ 296,553 | $ 296,553 | 52,117 | $ 303,334 | ||
Working capital deficiency | $ 300,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Accounting Policies [Abstract] | |
Impairment loss of digital asset | $ 41,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) (10-K) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | |
Cash and cash equivalents | $ 52,117 | $ 303,334 | $ 296,553 |
Cash, FDIC Insured Amount | $ 0 | 53,000 | |
Income tax likehood percentage description | Likelihood of greater than 50% | ||
Advertising expenses | $ 4,000 | $ 9,000 | |
Maximum [Member] | |||
Cash, FDIC Insured Amount | $ 250,000 | ||
Property and equipment depreciated over period | 5 years | ||
Minimum [Member] | |||
Property and equipment depreciated over period | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-diluted (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Excluded potentially dilutive securities | 2,007,761 | 2,246,395 | 64,540,711 | 77,240,834 |
Warrants to Purchase Common Stock [Member] | ||||
Excluded potentially dilutive securities | 1,229,710 | 2,050,302 | 58,657,911 | 62,064,634 |
Series C-1 Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 196,093 | 196,093 | 5,882,800 | |
Convertible Notes [Member] | ||||
Excluded potentially dilutive securities | 581,957 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-diluted (Details) (10-K) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Excluded potentially dilutive securities | 2,007,761 | 2,246,395 | 64,540,711 | 77,240,834 |
Warrants to Purchase Common Stock [Member] | ||||
Excluded potentially dilutive securities | 1,229,710 | 2,050,302 | 58,657,911 | 62,064,634 |
Series B Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 5,175,400 | |||
Series C Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 10,000,800 | |||
Series C-1 Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 196,093 | 196,093 | 5,882,800 |
Note Payable (Details Narrative
Note Payable (Details Narrative) - USD ($) | Sep. 30, 2019 | Sep. 25, 2019 | Sep. 18, 2019 | Dec. 18, 2018 | Sep. 30, 2019 | Sep. 30, 2019 |
Debt accrued interest | $ 500 | $ 17,973 | $ 500 | $ 500 | ||
Beneficial conversion feature credit to additional paid in capital | 54,493 | 54,493 | ||||
Interest expense | 40,000 | 40,000 | ||||
Debt principal balance | 53,000 | 53,000 | 53,000 | |||
Unamortized debt discount | $ 15,000 | $ 15,000 | $ 15,000 | |||
Convertible Note [Member] | ||||||
Debt maturity date | Dec. 18, 2019 | |||||
Debt interest rate | 12.00% | |||||
Debt default interest rate | 20.00% | |||||
Unpaid interest | $ 217,973 | |||||
Debt conversion price | $ 0.10 | |||||
Common stock issued | 1,252,058 | 1,252,058 | ||||
Debt conversion principal amount | $ 150,000 | $ 150,000 | ||||
Convertible Note One [Member] | ||||||
Debt conversion price | $ 0.12 | $ 0.12 | $ 0.12 | |||
Common stock issued | 1,746,579 | |||||
Fair value of underlying common stock | $ 0.16 | $ 0.16 | $ 0.16 | |||
Beneficial conversion feature credit to additional paid in capital | $ 54,000 | |||||
One Institutional Investor [Member] | ||||||
Proceeds from issuance of promissory notes | $ 200,000 | |||||
Debt maturity date | Sep. 18, 2019 | |||||
Debt interest rate | 12.00% | |||||
Debt default interest rate | 20.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Sep. 30, 2019 | Sep. 25, 2019 | May 13, 2019 | Apr. 18, 2019 | Apr. 05, 2019 | Feb. 13, 2017 | Sep. 30, 2019 | Sep. 30, 2019 |
Number of stock issued for reverse stock split | 16,860 | |||||||
Reverse stock split | one-for 30 reverse split | one-for 30 reverse split | one-for-60 | |||||
Shares to be included in put option share limit, value | $ 461,383 | $ 1,146,389 | ||||||
Purchase Agreement [Member] | Cavalry Fund I LP [Member] | ||||||||
Purchase agreement terms, description | Cavalry agreed to purchase from the Company, at Company's sole discretion, up to $10,000,000 of common stock (subject to certain limitations) from time to time over a 36-month period. | |||||||
Shares issued for commitment fee | 333,334 | |||||||
Number of shares register | $ 4,374,741 | |||||||
Intraday purchase price, description | The "Intraday Purchase Price" means the lower of: (i) 94% of the lowest sale price on the trading day prior to the applicable Put date, and (ii) 94% of the arithmetic average of the three lowest closing prices for the Company's common stock during the 12 consecutive trading days ending on the Trading Day immediately preceding such Put date | |||||||
Aftermarket put price, description | The "Aftermarket Put Price" means: the lower of: (i) the lowest Sale Price on the applicable Put date, and (ii) the arithmetic average of the three lowest closing prices for the Company's common stock during the 12 consecutive trading days ending on the trading day immediately preceding such Put date | |||||||
Beneficial ownership limitation percentage | 4.99% | |||||||
Purchase Agreement [Member] | Cavalry Fund I LP [Member] | Put Option [Member] | ||||||||
Shares to be included in put option share limit, value | $ 2,000,000 | |||||||
Purchase Agreement [Member] | Cavalry Fund I LP [Member] | Maximum [Member] | ||||||||
Issuable shares of common stock pro rata | 583,334 | |||||||
Sale of stock under put option, closing price limitation | $ 0.005 | |||||||
Registration Statement [Member] | Cavalry Fund I LP [Member] | ||||||||
Number of shares sold | 4,374,471 | |||||||
Proceeds from sale of stock | $ 1,146,389 | |||||||
Issuance cost | $ 12,250 | |||||||
Convertible Note [Member] | ||||||||
Common stock issued | 1,252,058 | 1,252,058 | ||||||
Debt conversion principal amount | $ 150,000 | $ 150,000 | ||||||
Series A Warrants [Member] | ||||||||
Number of warrants issued | 725,564 | 725,564 | 725,564 | |||||
Additional warrants proceeds | $ 200,000 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details Narrative) (10-K) - USD ($) | Apr. 18, 2019 | Apr. 05, 2019 | Nov. 16, 2018 | Jul. 23, 2018 | Apr. 24, 2018 | Apr. 23, 2018 | Apr. 20, 2018 | Jan. 02, 2018 | Dec. 19, 2017 | Nov. 29, 2017 | Nov. 27, 2017 | Oct. 10, 2017 | May 25, 2017 | Apr. 04, 2017 | Mar. 28, 2017 | Mar. 22, 2017 | Mar. 15, 2017 | Mar. 09, 2017 | Feb. 28, 2017 | Feb. 13, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 13, 2018 | Oct. 11, 2018 | Dec. 07, 2017 | Apr. 19, 2015 |
Reverse stock split | one-for 30 reverse split | one-for 30 reverse split | one-for-60 | |||||||||||||||||||||||||||
Debt instrument principal amount | $ 53,000 | $ 53,000 | ||||||||||||||||||||||||||||
Common stock, shares authorized | 975,000,000 | 975,000,000 | 975,000,000 | 975,000,000 | ||||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||||||||
Number of common stock shares issued, value | $ 461,383 | $ 1,146,389 | ||||||||||||||||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||||||||||
Common stock, shares issued | 18,884,424 | 18,884,424 | 375,455,986 | 363,043,769 | ||||||||||||||||||||||||||
Proceeds from warrants exercise value | $ 228,370 | $ 57,000 | ||||||||||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock shares issued | 1,909,946 | 4,374,741 | ||||||||||||||||||||||||||||
Number of common stock shares issued, value | $ 1,910 | $ 4,375 | ||||||||||||||||||||||||||||
Cashless warrant exercise, shares | 268,817 | 8,961 | 8,961 | 268,817 | 81,856,798 | |||||||||||||||||||||||||
Warrants [Member] | ||||||||||||||||||||||||||||||
Cashless warrant exercise, shares | 555,556 | |||||||||||||||||||||||||||||
Series A Warrants [Member] | ||||||||||||||||||||||||||||||
Number of warrant shares issued | 4,000,000 | |||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 725,564 | 725,564 | ||||||||||||||||||||||||||||
Cash warrant exercise, shares | 2,850,000 | |||||||||||||||||||||||||||||
Proceeds from warrants exercise value | $ 57,000 | |||||||||||||||||||||||||||||
Series A Warrants [Member] | Maximum [Member] | ||||||||||||||||||||||||||||||
Number of warrant shares issued | 1,000,000 | |||||||||||||||||||||||||||||
Warrant price per share exceeds | $ 0.085 | |||||||||||||||||||||||||||||
Series A Warrants [Member] | Minimum [Member] | ||||||||||||||||||||||||||||||
Warrant price per share exceeds | $ 0.02 | |||||||||||||||||||||||||||||
Investor One [Member] | Series C Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 13,750,000 | |||||||||||||||||||||||||||||
Investor One [Member] | Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 55,000,000 | |||||||||||||||||||||||||||||
Investor Two [Member] | Series C Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 13,750,000 | |||||||||||||||||||||||||||||
Investor Two [Member] | Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 55,000,000 | |||||||||||||||||||||||||||||
Investor Three [Member] | Series C Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 13,750,000 | |||||||||||||||||||||||||||||
Investor Three [Member] | Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 55,000,000 | |||||||||||||||||||||||||||||
Investor Four [Member] | Series C Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 13,750,000 | |||||||||||||||||||||||||||||
Investor Four [Member] | Warrants [Member] | ||||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 55,000,000 | |||||||||||||||||||||||||||||
January Agreement [Member] | ||||||||||||||||||||||||||||||
Common stock, shares authorized | 12,052,344 | |||||||||||||||||||||||||||||
Number of warrant shares issued | 30,130,861 | |||||||||||||||||||||||||||||
Preferred stock, shares issued | 210,919 | |||||||||||||||||||||||||||||
April Agreement [Member] | ||||||||||||||||||||||||||||||
Common stock, shares authorized | 20,110,699 | |||||||||||||||||||||||||||||
Number of warrant shares issued | 28,154,980 | |||||||||||||||||||||||||||||
Preferred stock, shares issued | 104,391 | |||||||||||||||||||||||||||||
Note Offer [Member] | ||||||||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||||||||
January Offer [Member] | ||||||||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||||||||
April Offer [Member] | ||||||||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||||||||
January Agreement and April Agreement [Member] | ||||||||||||||||||||||||||||||
Common stock, shares authorized | 14,517,352 | |||||||||||||||||||||||||||||
Number of warrant shares issued | 112,782,487 | |||||||||||||||||||||||||||||
CSC Agreement [Member] | ||||||||||||||||||||||||||||||
Number of common stock shares issued | 833,333 | |||||||||||||||||||||||||||||
Number of common stock shares issued, value | $ 61,667 | |||||||||||||||||||||||||||||
Payment to acquire cash payment | $ 200,000 | |||||||||||||||||||||||||||||
Settlement Agreement [Member] | RK Equity Advisors, LLC and Pickwick Capital Partners, LLC [Member] | ||||||||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 125,000 | |||||||||||||||||||||||||||||
Debt conversion price per share | $ 0.10 | |||||||||||||||||||||||||||||
Common stock, par value | $ 0.001 | |||||||||||||||||||||||||||||
Value of common stock issued to convert estimated liability | $ 10,000 | |||||||||||||||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||||||||||||||
Proceeds from investments | $ 100,000 | |||||||||||||||||||||||||||||
October 2017 Securities Purchase Agreement [Member] | ||||||||||||||||||||||||||||||
Common stock, shares issued | 4,400,000 | |||||||||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Preferred stock, shares issued | 0 | 0 | 0 | 25,877 | ||||||||||||||||||||||||||
Conversion of common stock, shares issued | 5,175,400 | |||||||||||||||||||||||||||||
Conversion of common stock, shares converted | 25,877 | |||||||||||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | Four Institutional Investors [Member] | ||||||||||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 1,000,000 | |||||||||||||||||||||||||||||
Preferred stock convertible, value | $ 1,111,111 | |||||||||||||||||||||||||||||
Series C-1 Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock shares issued | ||||||||||||||||||||||||||||||
Number of common stock shares issued, value | ||||||||||||||||||||||||||||||
Conversion of common stock, shares issued | 2,549,200 | 1,176,600 | 392,200 | |||||||||||||||||||||||||||
Conversion of common stock, shares converted | 12,746 | 5,883 | 1,961 | |||||||||||||||||||||||||||
Cashless warrant exercise, shares | ||||||||||||||||||||||||||||||
Series C-1 Convertible Preferred Stock [Member] | Securities Purchase Agreement [Member] | Series B Warrants [Member] | ||||||||||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 750,000 | |||||||||||||||||||||||||||||
Warrant price per share exceeds | $ 0.135 | |||||||||||||||||||||||||||||
Equity price per share | $ 0.085 | |||||||||||||||||||||||||||||
Series C-1 Convertible Preferred Stock [Member] | Securities Purchase Agreement [Member] | Series B Warrants [Member] | Bitcoin [Member] | ||||||||||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 250,000 | |||||||||||||||||||||||||||||
Senior Convertible Notes [Member] | ||||||||||||||||||||||||||||||
Debt instrument principal amount | $ 868,897 | |||||||||||||||||||||||||||||
Original issue discount percentage | 5.00% | |||||||||||||||||||||||||||||
Notes interest rate percentage | 10.00% | |||||||||||||||||||||||||||||
Debt maturity date | Sep. 16, 2016 | |||||||||||||||||||||||||||||
Junior Convertible Notes [Member] | ||||||||||||||||||||||||||||||
Debt instrument principal amount | $ 175,000 | |||||||||||||||||||||||||||||
Original issue discount percentage | 20.00% | |||||||||||||||||||||||||||||
Debt maturity date | Dec. 5, 2016 | |||||||||||||||||||||||||||||
8% Convertible Notes [Member] | ||||||||||||||||||||||||||||||
Debt instrument principal amount | $ 220,000 | |||||||||||||||||||||||||||||
Debt maturity date | Jun. 6, 2017 | |||||||||||||||||||||||||||||
Senior Warrants [Member] | ||||||||||||||||||||||||||||||
Debt convertible into warrant, shares | 97,423,579 | |||||||||||||||||||||||||||||
Senior Warrants [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 845,631 | |||||||||||||||||||||||||||||
2017 Activities [Member] | ||||||||||||||||||||||||||||||
Reverse stock split | one-for-60 | |||||||||||||||||||||||||||||
Number of common stock shares issued | 4,370 | |||||||||||||||||||||||||||||
Number of common stock shares issued for cashless exercise of warrants | 81,856,798 | 81,856,798 | ||||||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 111,244,318 | 111,244,318 | ||||||||||||||||||||||||||||
2017 Activities [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 1,135,064 | 1,135,064 | ||||||||||||||||||||||||||||
Common stock, shares issued | 227,012,800 | 227,012,800 | ||||||||||||||||||||||||||||
2017 Activities [Member] | Series C Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 79,368 | 79,368 | ||||||||||||||||||||||||||||
Common stock, shares issued | 15,873,600 | 15,873,600 | ||||||||||||||||||||||||||||
2017 Activities [Member] | Series C-1 Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 14,706 | |||||||||||||||||||||||||||||
Common stock, shares issued | 2,941,200 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Warrant Activity (Details) (10-K) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Number of Warrants Outstanding, Beginning Balance | 62,064,634 | 268,788,733 |
Number of Warrants Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering | 47,302,176 | |
Number of Warrants Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 12,942,000 | |
Number of Warrants Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants | (163,178,007) | |
Number of Warrants Ratchet warrants issued due to price reset | 7,454,050 | |
Number of Warrants Cashless warrant exercise | (555,556) | (111,244,318) |
Number of Warrants Issuance of series C warrants | $ 55,000,000 | |
Number of Warrants Cancellation of Series C Warrants for no consideration | $ (55,000,000) | |
Number of Warrants exercise for cash | (2,850,000) | |
Number of Warrants Expiration of warrant | $ (1,167) | |
Number of Warrants Outstanding, Ending Balance | 58,657,911 | 62,064,634 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Derivative liabilities (Details) (10-K) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | ||
Derivative liabilities beginning balance | $ 23,231,938 | |
Conversion of warrant liabilities | (51,325,017) | |
Fair value adjustments for warrant liabilities | 39,222,099 | |
Cashless warrant exercise | (12,277,968) | |
Loss on issuance of Series C Convertible Preferred stock | 2,809,497 | |
Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering | 925,115 | |
Loss on issuance of Series C-1 Convertible Preferred stock | 478,035 | |
Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 825,005 | |
Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 250,000 | |
Reclassification between convertible notes and derivative liabilities | (4,138,704) | |
Derivative liabilities ending balance |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Derivative Liabilities for Shortfall of Shares (Details) (10-K) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Derivative liabilities for shortfall of shares beginning balance | $ 14,915,419 |
Conversion of shortfall shares liabilities | (14,915,419) |
Derivative liabilities for shortfall of shares ending balance |
Fair Value Measurements - Sch_3
Fair Value Measurements - Schedule of Changes in Fair Value of Convertible Notes (Details) (10-K) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Convertible note at fair value beginning balance | $ 3,283,034 |
Conversion of convertible notes | (20,132,105) |
Change in fair value of convertible notes (including OID discount) | 16,849,071 |
Convertible note at fair value ending balance |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Quantitative Information to Valuation Methodology (Details) (10-K) - $ / shares | Dec. 07, 2017 | May 24, 2017 | Mar. 02, 2017 | Dec. 31, 2016 |
Measurement Input, Exercise Price [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Strike Price | $ 0.32 | $ 0.0252 | ||
Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 267.80% | |||
Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.68% | |||
Measurement Input, Expected Dividend Payment [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Strike Price | $ 0 | $ 0 | ||
Minimum [Member] | Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 300.42% | |||
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.51% | |||
Maximum [Member] | Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 328.04% | |||
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.63% | |||
Warrant Liabilities [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.085 | |||
Warrant Liabilities [Member] | Measurement Input, Expected Dividend Payment [Member] | ||||
Strike Price | $ 0 | $ 0 | 0 | $ 0 |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.025 | $ 0.025 | $ 0.03 | |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Price Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 255.89% | 210.10% | 186.70% | 118.00% |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 1.67% | 1.24% | 1.25% | 0.35% |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Expected Term [Member] | ||||
Fair value assumptions, measurement input, term | 11 months 23 days | 1 year 6 months 7 days | 1 year 9 months 14 days | 1 month 6 days |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.085 | $ 18 | $ 60 | |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Price Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 465.94% | 254.70% | 208.30% | 230.00% |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 2.14% | 1.79% | 1.83% | 2.23% |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Expected Term [Member] | ||||
Fair value assumptions, measurement input, term | 4 years 10 months 17 days | 5 years | 3 years 9 months 14 days | 3 years 11 months 15 days |
Employment Agreements (Details
Employment Agreements (Details Narrative) (10-K) - USD ($) | Jun. 22, 2017 | Dec. 31, 2018 |
Charles W. Allen [Member] | ||
Employment agreement term | 2 years | |
Annual salary | $ 245,000 | |
Compensation | 500 | |
Charles W. Allen [Member] | Office Space [Member] | ||
Compensation | $ 500 | |
Michal Handerhan [Member] | ||
Employment agreement term | 2 years | |
Annual salary | $ 190,000 | |
Compensation | 500 | |
Diluted capital stock percentage | 25.00% | |
Michal Handerhan [Member] | Office Space [Member] | ||
Compensation | $ 500 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) (10-K) - USD ($) | Jan. 30, 2017 | Feb. 19, 2016 | Dec. 31, 2016 |
Chief Financial Officer [Member] | Charles Allen [Member] | |||
Number of escrowed shares cancelation | 24,000,000 | ||
Post-split shares of commons stock | 400,000 | ||
Adjustment to additional paid in capital | $ 400 | ||
Securities Escrow Agreement [Member] | Principal Stockholders [Member] | |||
Number of common stock shares into escrow | 400,000 | ||
Listing Escrow Shares [Member] | Principal Stockholders [Member] | |||
Number of escrowed shares returned | 200,000 | ||
Merger Escrow Shares [Member] | Principal Stockholders [Member] | Spondoolies-Tech Ltd [Member] | |||
Number of escrowed shares returned | 200,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) (10-K) - USD ($) | Dec. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Federal corporate tax rate | 35.00% | 21.00% | 34.00% |
Income tax reconciliation description | On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), which makes broad and complex changes to the U.S. tax code. Certain of these changes may be applicable to the Company, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, creating a new limitation on deductible interest expense, eliminating the corporate alternative minimum tax ("AMT"), modifying the rules related to uses and limitations of net operating loss carryforwards generated in tax years ending after December 31, 2017, and changing the rules pertaining to the taxation of profits earned abroad. Changes in tax rates and tax laws are accounted for in the period of enactment. The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. | ||
Deferred tax assets, valuation allowance decreased amount | $ 500,000 | ||
Net operating loss carry forwards for federal and state tax | $ 5,540,000 | ||
Operating loss carry forwards expiration years | 2034 | ||
Net operating loss carry forwards percentage | 80.00% | ||
Tax Cuts and Jobs Act [Member] | |||
Deferred tax assets, valuation allowance decreased amount | $ 500,000 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) (10-K) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net-operating loss carryforward | $ 1,163,032 | $ 1,689,152 |
Other | ||
Total Deferred Tax Assets | 1,163,032 | 1,689,152 |
Valuation allowance | (1,163,032) | (1,689,152) |
Deferred Tax Asset, Net of Allowance |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Rate (Details) (10-K) | Dec. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | |||
Statutory Federal Income Tax Rate | (35.00%) | (21.00%) | (34.00%) |
State Taxes, Net of Federal Tax Benefit | (6.30%) | (5.40%) | |
Federal tax rate change | 0.00% | 11.90% | |
Other | 27.30% | 38.80% | |
Change in Valuation Allowance | 0.00% | (11.30%) | |
Income Taxes Provision (Benefit) | 0.00% | 0.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 16, 2019 | Sep. 30, 2019 | Sep. 25, 2019 | Nov. 07, 2019 | Sep. 18, 2019 |
Debt accrued interest | $ 500 | $ 17,973 | |||
Debt issued, amount | $ 53,000 | ||||
Convertible Note [Member] | |||||
Debt conversion, shares issued | 1,252,058 | 1,252,058 | |||
Debt conversion, principal amount | $ 150,000 | $ 150,000 | |||
Debt discount interest rate | 20.00% | ||||
Debt conversion price | $ 0.10 | ||||
Debt interest rate | 12.00% | ||||
Subsequent Event [Member] | 2019 Promissory Note [Member] | |||||
Debt issued, amount | $ 200,000 | ||||
Debt discount interest rate | 20.00% | ||||
Debt conversion price | $ 0.02 | ||||
Debt interest rate | 12.00% | ||||
Debt instrument, default interest rate | 20.00% | ||||
Subsequent Event [Member] | Convertible Note [Member] | |||||
Debt conversion, shares issued | 679,730 | ||||
Debt conversion, principal amount | $ 67,973 | ||||
Debt accrued interest | $ 905 |
Subsequent Events (Details Na_2
Subsequent Events (Details Narrative) (10-K) - Series A Warrants [Member] - USD ($) | 1 Months Ended | 9 Months Ended |
Jan. 31, 2019 | Sep. 30, 2019 | |
Number of warrants issued | 725,564 | |
Additional warrants proceeds | $ 200,000 | |
Subsequent Event [Member] | ||
Number of warrants issued | 11,825,544 | |
Additional warrants proceeds | $ 148,843 |