Marathon Digital (MARA) 10-Q 10 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 10, 2019
Document And Entity Information
Entity Registrant Name	Marathon Patent Group, Inc.
Entity Central Index Key	0001507605
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		6,385,405
Trading Symbol	MARA
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 1,964,484	$ 2,551,171
Digital currencies	5,637
Prepaid expenses and other current assets	309,501	464,006
Total current assets	2,279,622	3,015,177
Other assets:
Property and equipment, net of accumulated depreciation and impairment charges of $4,476,292 and $4,338,931 for March 31, 2019 and December 31, 2018, respectively	897,214	1,034,575
Right-of-use assets	358,332
Intangible assets, net of accumulated amortization of $83,039 and $65,245 for March 31, 2019 and December 31, 2018, respectively	1,126,961	1,144,755
Total other assets	2,382,507	2,179,330
TOTAL ASSETS	4,662,129	5,194,507
Current liabilities:
Accounts payable and accrued expenses	1,168,469	1,235,444
Current portion of lease liability	80,971
Warrant liability	76,817	39,083
Convertible notes payable	999,106	999,106
Total current liabilities	2,325,363	2,273,633
Long-term liabilities
Lease liability	178,574
Total long-term liabilities	178,574
Total liabilities	2,503,937	2,273,633
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
Common stock, $0.0001 par value; 200,000,000 shares authorized; 6,385,405 and 6,379,992 issued and outstanding at March 31, 2019 and December 31, 2018, respectively	639	638
Additional paid-in capital	105,743,575	105,461,396
Accumulated other comprehensive loss	(450,719)	(450,719)
Accumulated deficit	(103,135,303)	(102,090,441)
Total stockholders' equity	2,158,192	2,920,874
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 4,662,129	$ 5,194,507

Consolidated Condensed Balanc_2

Consolidated Condensed Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Accumulated depreciation of property and equipment	$ 4,476,292	$ 4,338,931
Accumulated amortization of intangible assets	$ 83,039	$ 65,245
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	6,385,405	6,379,992
Common stock, shares outstanding	6,385,405	6,379,992

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations and Comprehensive Income (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues
Total revenues	$ 230,694	$ 239,967
Operating costs and expenses
Cost of revenue	508,640	267,709
Compensation and related taxes	486,687	413,118
Consulting fees	20,000	38,203
Professional fees	85,033	804,286
General and administrative	115,243	563,716
Total operating expenses	1,215,603	2,087,032
Operating loss	(984,909)	(1,847,065)
Other income (expenses)
Other income (expenses)	(9,437)	2,454
Foreign exchange loss	(11,873)	(15,332)
Realized loss on sale of digital currencies	(608)	(11,067)
Change in fair value of warrant liability	(37,734)	1,453,257
Amortization of debt discount		(1,944,772)
Interest income	12,016
Interest expense	(12,317)	(40,295)
Total other expenses	(59,953)	(555,755)
Net loss	$ (1,044,862)	$ (2,402,820)
Net loss per share, basic and diluted:	$ (0.16)	$ (0.63)
Weighted average shares outstanding, basic and diluted:	6,338,418	3,805,684
Net loss	$ (1,044,862)	$ (2,402,820)
Other comprehensive income:
Unrealized gain on foreign currency translation		15
Comprehensive loss attributable to Marathon Patent Group, Inc.	(1,044,862)	(2,402,805)
Cryptocurrency Mining Revenue [Member]
Revenues
Total revenues	230,694	199,582
Other Revenue [Member]
Revenues
Total revenues		$ 40,385

Consolidated Condensed Statem_2

Consolidated Condensed Statements of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning balance at Dec. 31, 2017	$ 1	$ 312	$ 97,114,659	$ (89,276,117)	$ (450,734)	$ 7,388,121
Beginning balance, shares at Dec. 31, 2017	1,378	3,119,445
Stock-based compensation		$ 10	329,515			329,525
Stock-based compensation, shares		98,350
Conversion of Series E preferred stock	$ (1)	$ 89	(88)
Conversion of Series E preferred stock, shares	(892)	892,386
Common stock issued for acquisition of patents		$ 6	959,994			960,000
Common stock issued for acquisition of patents, shares		62,500
Issue common stock for conversion of Warrants		$ 1	55,790			55,791
Issue common stock for conversion of Warrants, shares		4,433
Common stock issuance related to note conversion		$ 65	2,095,523			2,095,588
Common stock issuance related to note conversion, shares		654,871
Currency translation gain					15	15
Net Loss				(2,402,820)		(2,402,820)
Ending balance at Mar. 31, 2018		$ 483	100,555,393	(91,678,937)	(450,719)	8,426,220
Ending balance, shares at Mar. 31, 2018	486	4,831,985
Beginning balance at Dec. 31, 2018		$ 638	105,461,396	(102,090,441)	(450,719)	2,920,874
Beginning balance, shares at Dec. 31, 2018		6,379,992
Stock-based compensation			282,180			282,180
Stock-based compensation, shares
Par value adjustment and additional shares issued due to reverse split		$ 1	(1)
Par value adjustment and additional shares issued due to reverse split, shares		5,413
Net Loss				(1,044,862)		(1,044,862)
Ending balance at Mar. 31, 2019		$ 639	$ 105,743,575	$ (103,135,303)	$ (450,719)	$ 2,158,192
Ending balance, shares at Mar. 31, 2019		6,385,405

Consolidated Condensed Statem_3

Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,044,862)	$ (2,402,820)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation	137,361	232,006
Amortization of patents and website	17,794	12,120
Realized loss on sale of digital currencies	608	11,067
Change in fair value of warrant liability	37,734	(1,453,257)
Stock based compensation	282,180	329,525
Amortization of debt discount		1,944,772
Amortization of right-of-use assets	21,795
Bad debt allowance		6,826
Changes in operating assets and liabilities:
Digital currencies	(230,694)	(199,582)
Lease liability	(21,441)
Litigation liability		(2,150,000)
Prepaid expenses and other assets	55,364	(91,183)
Accounts payable and accrued expenses	(66,975)	110,104
Net cash used in operating activities	(811,136)	(3,650,422)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of digital currencies	224,449	120,470
Acquisition of patents		(250,000)
Purchase of property and equipment		(5,800,629)
Net cash provided by (used in) investing activities	224,449	(5,930,159)
Effect of foreign exchange rate changes		15
Net decrease in cash and cash equivalents	(586,687)	(9,580,566)
Cash and cash equivalents - beginning of period	2,551,171	14,948,529
Cash and cash equivalents - end of period	1,964,484	5,367,963
Supplemental schedule of non-cash investing and financing activities:
Par value adjustment due to reverse split	1
Conversion of Series E Preferred Stock to common stock		357
Par value adjustment due to reverse split		960,000
Common stock issued for note conversion		2,095,588
Restricted stock issuance		39
Warrants exercised into common shares		$ 55,791

Organization and Description of

Organization and Description of Business	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Marathon Patent Group, Inc. (the “Company”) was incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. On December 7, 2011, the Company changed its name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium minerals business. In June 2012, the Company discontinued the minerals business and began to invest in real estate properties in Southern California. In October 2012, the Company discontinued its real estate business when the former CEO joined the firm and the Company commenced IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. On November 1, 2017, the Company entered into a merger agreement with Global Bit Ventures, Inc. (“GBV”), which is focused on mining digital assets. The Company purchased cryptocurrency mining machines and established a data center in Canada to mine digital assets. The Company expanded its activities in the mining of new digital assets, while at the same time harvesting the value of its remaining IP assets. All share and per share values for all periods presented in the accompanying consolidated condensed financial statements have been retroactively adjusted to reflect the 1:4 Reverse Split which occurred on April 8, 2019. Going Concern The Company’s consolidated condensed financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated condensed financial statements, the Company had an accumulated deficit of approximately $103.1 million at March 31, 2019, a net loss of approximately $1.0 million and approximately $0.8 million net cash used in operating activities for the three months ended March 31, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Based on the Company’s current revenue and profit projections, management is uncertain that the Company’s existing cash will be sufficient to fund its operations through at least the next twelve months from the issuance date of the financial statements, raising substantial doubt regarding the Company’s ability to continue operating as a going concern. If we do not meet our revenue and profit projections or the business climate turns negative, then we will need to: ● raise additional funds to support the Company’s operations; provided, however, there is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all. If the Company raises additional funds by issuing securities, existing stockholders may be diluted; and ● review strategic alternatives. If adequate funds are not available, we may be required to curtail our operations or other business activities or obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to certain technologies or potential markets.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated condensed financial statements, include the accounts of the Company’s subsidiaries, Marathon Crypto Mining, Inc., Crypto Currency Patent Holding Company and Soems acquisition Corp., have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These consolidated condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ended December 31, 2019. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the useful lives of patent assets, the assumptions used to calculate fair value of warrants and options granted, goodwill impairment, realization of long-lived assets, deferred income taxes, unrealized tax positions and business combination accounting. Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies to those previously disclosed in the 2018 annual report. Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred. In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company continues to account for leases in the prior period financial statements under ASC Topic 840. Other than above, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K, which was filed with the SEC on March 25, 2019. Digital Currencies The following table presents the activities of the digital currencies for the three months ended March 31, 2019: Digital currencies at December 31, 2018 $ - Additions of digital currencies 230,694 Realized loss on sale of digital currencies (608 ) Sale of digital currencies (224,449 ) Digital Currencies at March 31, 2019 $ 5,637 Fair Value of Financial Instruments The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable, and accrued expenses, approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying value of notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2019 and December 31, 2018, respectively: Fair value measured at March 31, 2019 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs March 31, 2019 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 76,817 $ - $ - $ 76,817 Fair value measured at December 31, 2018 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs December 31, 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083 There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2019. At March 31, 2019, the Company had an outstanding warrant liability in the amount of $76,817 associated with warrants that were issued in January 2017 and warrants issued related to the Convertible Notes issued in August and September of 2017. The following table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs for the three months ended March 31, 2019. FV of warrant liabilities Fair value Outstanding as of December 31, 2018 $ 39,083 Change in fair value of warrants 37,734 Outstanding as of March 31, 2019 $ 76,817 Basic and Diluted Net Loss per Share Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2019 and 2018 are as follows: As of March 31, 2019 2018 Warrants to purchase common stock 182,191 182,191 Options to purchase common stock 1,466,520 112,193 Preferred stock to exchange common stock - 485,540 Convertible notes to exchange common stock 312,221 612,221 Total 1,960,932 1,392,145 The following table sets forth the computation of basic and diluted loss per share: For the three months ended March 31, 2019 2018 Net loss attributable to common shareholders $ (1,044,862 ) $ (2,402,820 ) Denominator: Weighted average common shares - basic and diluted 6,338,418 3,805,684 Loss per common share - basic and diluted $ (0.16 ) $ (0.63 ) Sequencing In connection with August 14, 2017 Convertible Note financing, the Company adopted a sequencing policy whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815) In February 2016, the FASB issued ASU 2016-02, Leases Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

Digital Asset Mining

Digital Asset Mining	3 Months Ended
	Mar. 31, 2019
Digital Asset Mining
Digital Asset Mining	NOTE 3 – DIGITIAL ASSET MINING The components of property, equipment and intangible assets as of March 31, 2019 and December 31, 2018 are: Useful life (Years) March 31, 2019 December 31, 2018 Website 7 $ 121,787 $ 121,787 Mining equipment 2 3,029,031 3,029,031 Mining patent 17 1,210,000 1,210,000 Gross property, equipment and intangible assets 4,360,818 4,360,818 Less: Accumulated depreciation and amortization (2,336,643 ) (2,181,488 ) Property, equipment and intangible assets, net $ 2,024,175 $ 2,179,330 The Company’s depreciation expense for the three months ended March 31, 2019 and 2018 were $137,361 and $232,006, and amortization expense were $17,794 and $12,120 for the three months ended March 31, 2019 and 2018, respectively.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2019
Equity [Abstract]
Stockholders' Equity	NOTE 4 - STOCKHOLDERS’ EQUITY Series B Convertible Preferred Stock As of March 31, 2019, there was no share of Series B Convertible Preferred Stock outstanding. Series E Preferred Stock There was no Series E Convertible Preferred Stock outstanding as of March 31, 2019. Common Stock Warrants As of March 31, 2019, the Company had warrants outstanding to purchase 182,191 shares of Common Stock with a weighted average remaining life of 3.1 years and a weighted average exercise price of $25.04. There was no activity of the Company’s warrants during the period ended March 31, 2019. Common Stock Options As of March 31, 2019, the Company had 1,466,520 options outstanding and 784,055 options vested and exercisable to purchase its common stock with a weighted average remaining life of 9.0 years and a weighted average exercise price of $10.37. There was no activity of the Company’s options during the period ended March 31, 2019.

Debt, Commitments and Contingen

Debt, Commitments and Contingencies	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Debt, Commitments and Contingencies	NOTE 5 - DEBT, COMMITMENTS AND CONTINGENCIES Debt consists of the following: Maturity Interest March 31, December 31, Date Rate 2019 2018 Convertible Note 12/31/2019 5 % $ 999,106 $ 999,106 Less: debt discount and 12/31/2019 - - Total Convertible notes, net of discount $ 999,106 $ 999,106 Total $ 999,106 $ 999,106 Less: current portion (999,106 ) (999,106 ) Total, net of current portion $ - $ - On August 14, 2017, the Company entered into a unit purchase agreement (the “Unit Purchase Agreement”) with certain accredited investors providing for the sale of up to $5,500,000 of 5% secured convertible promissory notes (the “Convertible Notes”), which are convertible into shares of the Corporation’s common stock, and the issuance of warrants to purchase 1,718,750 shares of the Company’s Common Stock (the “Warrants”). The Convertible Notes are convertible into shares of the Company’s Common Stock at the lesser of (i) $3.20 per share or (ii) the closing bid price of the Company’s common stock on the day prior to conversion of the Convertible Note; provided that such conversion price may not be less than $1.60 per share. The Warrants have an exercise price of $4.80 per share. In two closings of the Unit Purchase Agreement, the Company issued $5,500,000 in Convertible Notes to the investors. The remaining balance of the Convertible Notes were due to mature on May 31, 2018. The investor agreed to extend the maturity date to December 31, 2019. The note bears interest at the rate of 5% per annum and accrues but is not paid in cash. As of March 31, 2019, the Company had an outstanding obligation pursuant to the Convertible Notes in the amount of $999,106. Accrued interest as of March 31, 2019 was $157,298. During the three months ended March 31, 2019 and 2018, the interest expense were $12,317 and $40,295, respectively. During the three months ended March 31, 2019 and 2018, the amortization of debt discount were $0 and $1.9 million, respectively. Leases Effective June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month to month basis. The monthly rent is $1,907. A security deposit of $3,815 has been paid. The Company also assumed a lease in connection with the mining operations in Quebec, Canada. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and noncurrent operating lease liabilities on the balance sheets. Operation lease costs are recorded on a straight-line basis within operating expenses. The Company’s total lease expense is comprised of the following: For the Three Months Ended Operating leases Operating lease cost $ 26,246 Operating lease expense 26,246 Short-term lease rent expense 4,107 Total rent expense $ 30,353 Additional information regarding the Company’s leasing activities as a lessee is as follow: For the Three Months Ended Operating cash flows from operating leases $ 25,892 Weighted-average remaining lease term – operating leases 2.0 Weighted-average discount rate – operating leases 6.5 % As of March 31, 2019, contractual minimal lease payments are as follows: 2019 $ 69,372 2020 95,386 2021 95,386 2022 26,014 Total 286,158 Less present value discount (107,584 ) Operating lease liabilities $ 178,574 Legal Proceedings Feinberg Litigation On March 27, 2018, Jeffrey Feinberg, purportedly joined by the Jeffrey L. Feinberg Personal Trust and the Jeffrey L. Feinberg Family Trust, filed a complaint against the Company and certain of its former officers and directors. The complaint was filed in the Supreme Court of the State of New York, County of New York. The plaintiffs purported to state claims under Sections 11, 12(a)(2) and 15 of the federal Securities Act of 1933 and common law claims for “actual fraud and fraudulent concealment,” constructive fraud, and negligent misrepresentation, seeking unspecified money damages (including punitive damages), as well as costs and attorneys’ fees, and equitable or injunctive relief. On June 15, 2018, the defendants filed a motion to dismiss all claims asserted in the complaint and, on July 27, 2018, the plaintiffs filed an opposition to that motion. The court heard argument on the motion and, on January 15, 2019, the court granted the motion to dismiss, allowing 30 days for the filing of an amended complaint. On February 15, 2019, Jeffrey Feinberg, individually and as trustee of the Jeffrey L. Feinberg Personal Trust, and Terrence K. Ankner, as trustee of the Jeffrey L. Feinberg Family Trust, filed an amended complaint that purports to state the same claims and seeks the same relief sought in the original complaint. On March 7 and 22, 2019, defendants filed motions to dismiss the amended complaint and on April 5, 2019, plaintiffs filed an opposition to those motions. The court has tentatively scheduled oral argument on the motions to dismiss on July 1, 2019. Ramirez Litigation On July 20, 2018, Tony Ramirez filed a complaint against the Company and certain of its former directors. The complaint was filed in the United States District Court for the Central District of California. Mr. Ramirez alleged that he was a shareholder of the Company and purported to assert a single claim under Section 14(a) of the Securities and Exchange Act of 1934 and SEC Rule 14a-9 promulgated thereunder. The parties entered into a “Settlement Agreement and Mutual Release” and the case was voluntarily dismissed with prejudice on December 17, 2018.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2019
Subsequent Events [Abstract]
Subsequent Events	NOTE 6 – Subsequent Events The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued and has concluded that no such events or transactions took place that would require disclosure herein. The Company’s Board of Directors adopted the reverse stock split. Upon the effectiveness of the reverse stock split, every four shares of issued and outstanding common stock before the open of business on April 8, 2019 will be combined into one issued and outstanding share of common stock, with no change in par value per share.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The accompanying consolidated condensed financial statements, include the accounts of the Company’s subsidiaries, Marathon Crypto Mining, Inc., Crypto Currency Patent Holding Company and Soems acquisition Corp., have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These consolidated condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ended December 31, 2019.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the useful lives of patent assets, the assumptions used to calculate fair value of warrants and options granted, goodwill impairment, realization of long-lived assets, deferred income taxes, unrealized tax positions and business combination accounting.
Significant Accounting Policies	Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies to those previously disclosed in the 2018 annual report.
Leases	Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred. In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company continues to account for leases in the prior period financial statements under ASC Topic 840. Other than above, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K, which was filed with the SEC on March 25, 2019.
Digital Currencies	Digital Currencies The following table presents the activities of the digital currencies for the three months ended March 31, 2019: Digital currencies at December 31, 2018 $ - Additions of digital currencies 230,694 Realized loss on sale of digital currencies (608 ) Sale of digital currencies (224,449 ) Digital Currencies at March 31, 2019 $ 5,637
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable, and accrued expenses, approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying value of notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2019 and December 31, 2018, respectively: Fair value measured at March 31, 2019 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs March 31, 2019 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 76,817 $ - $ - $ 76,817 Fair value measured at December 31, 2018 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs December 31, 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083 There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2019. At March 31, 2019, the Company had an outstanding warrant liability in the amount of $76,817 associated with warrants that were issued in January 2017 and warrants issued related to the Convertible Notes issued in August and September of 2017. The following table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs for the three months ended March 31, 2019. FV of warrant liabilities Fair value Outstanding as of December 31, 2018 $ 39,083 Change in fair value of warrants 37,734 Outstanding as of March 31, 2019 $ 76,817
Basic and Diluted Net Loss Per Share	Basic and Diluted Net Loss per Share Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2019 and 2018 are as follows: As of March 31, 2019 2018 Warrants to purchase common stock 182,191 182,191 Options to purchase common stock 1,466,520 112,193 Preferred stock to exchange common stock - 485,540 Convertible notes to exchange common stock 312,221 612,221 Total 1,960,932 1,392,145 The following table sets forth the computation of basic and diluted loss per share: For the three months ended March 31, 2019 2018 Net loss attributable to common shareholders $ (1,044,862 ) $ (2,402,820 ) Denominator: Weighted average common shares - basic and diluted 6,338,418 3,805,684 Loss per common share - basic and diluted $ (0.16 ) $ (0.63 )
Sequencing	Sequencing In connection with August 14, 2017 Convertible Note financing, the Company adopted a sequencing policy whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815) In February 2016, the FASB issued ASU 2016-02, Leases Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Schedule of Change in Fair Value of Assets Measured Level 1	The following table presents the activities of the digital currencies for the three months ended March 31, 2019: Digital currencies at December 31, 2018 $ - Additions of digital currencies 230,694 Realized loss on sale of digital currencies (608 ) Sale of digital currencies (224,449 ) Digital Currencies at March 31, 2019 $ 5,637
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis	The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2019 and December 31, 2018, respectively: Fair value measured at March 31, 2019 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs March 31, 2019 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 76,817 $ - $ - $ 76,817 Fair value measured at December 31, 2018 Total carrying value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs December 31, 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083
Schedule of Fair Value of Warrant Liabilities	FV of warrant liabilities Fair value Outstanding as of December 31, 2018 $ 39,083 Change in fair value of warrants 37,734 Outstanding as of March 31, 2019 $ 76,817
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at March 31, 2019 and 2018 are as follows: As of March 31, 2019 2018 Warrants to purchase common stock 182,191 182,191 Options to purchase common stock 1,466,520 112,193 Preferred stock to exchange common stock - 485,540 Convertible notes to exchange common stock 312,221 612,221 Total 1,960,932 1,392,145
Schedule of Computation of Basic and Diluted Loss Per Share	The following table sets forth the computation of basic and diluted loss per share: For the three months ended March 31, 2019 2018 Net loss attributable to common shareholders $ (1,044,862 ) $ (2,402,820 ) Denominator: Weighted average common shares - basic and diluted 6,338,418 3,805,684 Loss per common share - basic and diluted $ (0.16 ) $ (0.63 )

Digital Asset Mining (Tables)

Digital Asset Mining (Tables)	3 Months Ended
	Mar. 31, 2019
Digital Asset Mining
Components of Property, Equipment and Intangible Assets	The components of property, equipment and intangible assets as of March 31, 2019 and December 31, 2018 are: Useful life (Years) March 31, 2019 December 31, 2018 Website 7 $ 121,787 $ 121,787 Mining equipment 2 3,029,031 3,029,031 Mining patent 17 1,210,000 1,210,000 Gross property, equipment and intangible assets 4,360,818 4,360,818 Less: Accumulated depreciation and amortization (2,336,643 ) (2,181,488 ) Property, equipment and intangible assets, net $ 2,024,175 $ 2,179,330

Debt, Commitments and Conting_2

Debt, Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Schedule of Debt	Debt consists of the following: Maturity Interest March 31, December 31, Date Rate 2019 2018 Convertible Note 12/31/2019 5 % $ 999,106 $ 999,106 Less: debt discount and 12/31/2019 - - Total Convertible notes, net of discount $ 999,106 $ 999,106 Total $ 999,106 $ 999,106 Less: current portion (999,106 ) (999,106 ) Total, net of current portion $ - $ -
Schedule of Components of Lease Cost	The Company’s total lease expense is comprised of the following: For the Three Months Ended Operating leases Operating lease cost $ 26,246 Operating lease expense 26,246 Short-term lease rent expense 4,107 Total rent expense $ 30,353
Schedule of Weighted Average Lease	Additional information regarding the Company’s leasing activities as a lessee is as follow: For the Three Months Ended Operating cash flows from operating leases $ 25,892 Weighted-average remaining lease term – operating leases 2.0 Weighted-average discount rate – operating leases 6.5 %
Schedule of Future Minimum Lease Payments	As of March 31, 2019, contractual minimal lease payments are as follows: 2019 $ 69,372 2020 95,386 2021 95,386 2022 26,014 Total 286,158 Less present value discount (107,584 ) Operating lease liabilities $ 178,574

Organization and Description _2

Organization and Description of Business (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Organization And Description Of Business [Line Items]
Accumulated deficit	$ (103,135,303)		$ (102,090,441)
Net loss	(1,044,862)	$ (2,402,820)
Net cash used in operating activities	$ (811,136)	$ (3,650,422)
April 8, 2019 [Member]
Organization And Description Of Business [Line Items]
Reverse stock split	1:4 reverse stock split

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Outstanding warrant liability	$ 76,817	$ 39,083

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Schedule of Change in Fair Value of Assets Measured Level 1 (Details)	3 Months Ended
	Mar. 31, 2019USD ($)
Accounting Policies [Abstract]
Digital currencies, Beginning balance
Additions of digital currencies	230,694
Realized loss on sale of digital currencies	(608)
Sale of digital currencies	(224,449)
Digital currencies, Ending balance	$ 5,637

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Warrant liability	$ 76,817	$ 39,083
Level 1 [Member]
Warrant liability
Level 2 [Member]
Warrant liability
Level 3 [Member]
Warrant liability	$ 76,817	$ 39,083

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Schedule of Fair Value of Warrant Liabilities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Fair value of warrant outstanding beginning balance	$ 39,083
Change in fair value of warrants	37,734	$ (1,453,257)
Fair value of warrant, Outstanding ending balance	$ 76,817

Summary of Significant Accoun_8

Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	1,960,932	1,392,145
Warrants to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	182,191	182,191
Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	1,466,520	112,193
Preferred Stock to Exchange Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total		485,540
Convertible Notes to Exchange Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	312,221	612,221

Summary of Significant Accoun_9

Summary of Significant Accounting Policies - Schedule of Computation of Basic and Diluted Loss Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Net loss attributable to common shareholders	$ (1,044,862)	$ (2,402,820)
Weighted average common shares - basic and Diluted	6,338,418	3,805,684
Loss per common share - basic and diluted	$ (0.16)	$ (0.63)

Digital Asset Mining (Details N

Digital Asset Mining (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Depreciation	$ 137,361	$ 232,006
Lease Agreement [Member]
Depreciation	137,361	232,006
Amortization expense	$ 17,794	$ 12,120

Digital Asset Mining - Componen

Digital Asset Mining - Components of Property, Equipment and Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Gross property, equipment and intangible assets	$ 4,360,818	$ 4,360,818
Less: Accumulated depreciation and amortization	(2,336,643)	(2,181,488)
Property, equipment and intangible assets, net	$ 2,024,175	2,179,330
Website [Member]
Useful life (Years)	7 years
Gross property, equipment and intangible assets	$ 121,787	121,787
Mining Equipment [Member]
Useful life (Years)	2 years
Gross property, equipment and intangible assets	$ 3,029,031	3,029,031
Mining Patent [Member]
Useful life (Years)	17 years
Gross property, equipment and intangible assets	$ 1,210,000	$ 1,210,000

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - $ / shares	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Preferred stock, shares outstanding	0	0
Series B Convertible Preferred Stock [Member]
Preferred stock, shares outstanding
Series E Convertible Preferred Stock [Member]
Preferred stock, shares outstanding
Warrant [Member]
Number of warrant to purchase shares of common stock	182,191
Warrants weighted average remaining life	3 years 1 month 6 days
Weighted average exercise price	$ 25.04
Options [Member]
Warrants weighted average remaining life	9 years
Weighted average exercise price	$ 10.37
Stock options shares outstanding	1,466,520
Stock options vested	784,055

Debt, Commitments and Conting_3

Debt, Commitments and Contingencies (Details Narrative) - USD ($)	Jun. 01, 2018	Aug. 14, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Debt interest rate			5.00%		5.00%
Debt maturity date			Dec. 31, 2019		Dec. 31, 2019
Interest expense			$ 12,317	$ 40,295
Amortization of debt discount				$ 1,944,772
Monthly rental payment	$ 1,907
Security deposit	$ 3,815
Unit Purchase Agreement [Member]
Secured convertible promissory note		$ 5,500,000
Debt interest rate		5.00%
Number of warrant to purchase shares of common stock		1,718,750
Debt conversion, description		The Convertible Notes are convertible into shares of the Company's Common Stock at the lesser of (i) $3.20 per share or (ii) the closing bid price of the Company's common stock on the day prior to conversion of the Convertible Note; provided that such conversion price may not be less than $1.60 per share.
Debt conversion price per share		$ 3.20
Warrant exercise price per share		$ 4.80
Convertible notes payable			999,106
Accrued interest			$ 157,298
Unit Purchase Agreement [Member] | Investor [Member]
Secured convertible promissory note		$ 5,500,000
Debt interest rate		5.00%
Debt maturity date		May 31, 2018
Debt instrument maturity description		The investor agreed to extend the maturity date to December 31, 2019.

Debt, Commitments and Conting_4

Debt, Commitments and Contingencies - Schedule of Debt (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Maturity date	Dec. 31, 2019	Dec. 31, 2019
Maturity date. range end	Dec. 31, 2019	Dec. 31, 2019
Interest rate	5.00%	5.00%
Convertible Note	$ 999,106	$ 999,106
Less: debt discount
Total Convertible notes, net of discount	999,106	999,106
Total	999,106	999,106
Less: current portion	(999,106)	(999,106)
Total, net of current portion

Debt, Commitments and Conting_5

Debt, Commitments and Contingencies - Schedule of Components of Lease Cost (Details)	3 Months Ended
	Mar. 31, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 26,246
Operating lease expense	26,246
Short-term lease rent expense	4,107
Total rent expense	$ 30,353

Debt, Commitments and Conting_6

Debt, Commitments and Contingencies - Schedule of Weighted Average Lease (Details)	3 Months Ended
	Mar. 31, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating cash flows from operating leases	$ 26,246
Weighted-average remaining lease term - operating leases	2 years
Weighted-average discount rate - operating leases	6.50%

Debt, Commitments and Conting_7

Debt, Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details)	Mar. 31, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 69,372
2020	95,386
2021	95,386
2022	26,104
Total	286,158
Less present value discount	(107,584)
Operating lease liabilities	$ 178,574