Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jul. 19, 2019 | Jun. 29, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Crypto Co | ||
Entity Central Index Key | 0001688126 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 21,212,860 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,448 | $ 8,950,244 |
Accounts receivable, net | 500 | |
Prepaid expenses and other current assets | 79,283 | 33,294 |
Assets held for sale | 5,190,063 | |
Total current assets | 5,271,794 | 8,984,038 |
Equipment, net of accumulated depreciation | 89,332 | 68,320 |
Other assets | 20,968 | 1,500 |
Noncurrent assets held for sale | 1,131,885 | |
TOTAL ASSETS | 5,382,094 | 10,185,743 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 1,035,434 | 697,609 |
Income taxes payable | 1,600 | 800 |
Liabilities held for sale | 3,127,921 | |
Total current liabilities | 4,164,955 | 698,409 |
TOTAL LIABILITIES | 4,164,955 | 698,409 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.001 par value; 50,000,000 shares authorized, 21,212,860 and 20,458,945 shares issued and outstanding, respectively | 21,213 | 20,459 |
Additional paid-in-capital | 28,219,355 | 19,020,176 |
Accumulated deficit | (28,456,550) | (9,553,301) |
Accumulated other comprehensive income | (743,987) | |
TOTAL CRYPTO COMPANY EQUITY | (959,969) | 9,487,334 |
Noncontrolling interests | 2,177,108 | |
TOTAL STOCKHOLDERS' EQUITY | 1,217,740 | 9,487,334 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 5,382,094 | $ 10,185,743 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 21,212,860 | 20,458,945 |
Common stock, shares outstanding | 21,212,860 | 20,458,945 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Revenue: | ||
Total Revenue, net | $ 6,000 | $ 5,000 |
Operating expenses: | ||
General and administrative expenses | 3,471,010 | 5,730,063 |
Share-based compensation | 6,493,514 | 3,302,471 |
Total Operating Expenses | 9,964,524 | 9,032,534 |
Operating loss | (9,958,524) | (9,027,534) |
Impairment other assets | (134,100) | |
Other income(expense) | (1,130) | (14,844) |
Loss before provision for income taxes | (10,093,754) | (9,042,378) |
Provision for income taxes | 800 | 1,600 |
Loss from continuing operations | (10,094,554) | (9,043,978) |
Income/(loss) from discontinued operations attributable to the Crypto Company | 541,253 | (9,859,271) |
Net loss attributable to the Crypto Company | (9,553,301) | (18,903,249) |
Loss from discontinued operations attributable to noncontrolling interest | (6,516,860) | |
Net loss | (9,553,301) | (25,420,109) |
Other comprehensive loss | ||
Foreign currency translation adjustment | (743,987) | |
Foreign currency translation adjustment attributable to noncontrolling interest | (741,017) | |
Comprehensive loss | $ (9,553,301) | $ (26,905,113) |
Continuing operations: | ||
Net loss attributable to the Crypto Company per common share - basic and diluted | $ (0.60) | $ (0.43) |
Discontinued operations: | ||
Income/(loss) attributable to the Crypto Company per common share - basic and diluted | 0.03 | (0.47) |
Net loss attributable to the Crypto Company per common share - basic and diluted | $ (0.57) | $ (0.90) |
Weighted average common shares outstanding - basic and diluted | 16,746,792 | 21,096,881 |
Other [Member] | ||
Revenue: | ||
Total Revenue, net | $ 6,000 | $ 5,000 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance at Mar. 08, 2017 | ||||||
Beginning balance, shares at Mar. 08, 2017 | ||||||
Stock issued for cash to: Founders at prices ranging from $0.67 to $0.80 per share | $ 425 | 399,575 | 400,000 | |||
Stock issued for cash to: Founders at prices ranging from $0.67 to $0.80 per share, shares | 425,000 | |||||
Stock issued for cash to: Private placement investors at $42.86 per share | $ 53 | 2,265,833 | 2,265,886 | |||
Stock issued for cash to: Private placement investors at $42.86 per share, shares | 52,867 | |||||
Stock issued in exchange for services rendered at $1.60 per share | $ 125 | 199,875 | 200,000 | |||
Stock issued in exchange for services rendered at $1.60 per share, shares | 125,000 | |||||
Stock issued in exchange for investment in cryptocurrency at $0.80 per share | $ 125 | 99,875 | 100,000 | |||
Stock issued in exchange for investment in cryptocurrency at $0.80 per share, shares | 125,000 | |||||
Stock based compensation for founders issued stock at beneficial prices at or near inception | 380,000 | 380,000 | ||||
Stock based compensation for founders issued stock at beneficial prices at or near inception, shares | ||||||
Stock dividend issued to Crypto shareholders Founders | $ 10,125 | (10,125) | ||||
Stock dividend issued to Crypto shareholders Founders, shares | 10,125,000 | |||||
Stock dividend issued to Crypto shareholders Private placement investors | $ 793 | (793) | ||||
Stock dividend issued to Crypto shareholders Private placement investors, shares | 793,007 | |||||
Crypto's common stock exchanged for Croe's common stock | $ 6,299 | (6,299) | ||||
Crypto's common stock exchanged for Croe's common stock, shares | 6,298,747 | |||||
Shares previously outstanding for Croe not included in the stock exchange | $ 100 | (100) | ||||
Shares previously outstanding for Croe not included in the stock exchange, shares | 100,000 | |||||
Stock issued in exchange for services rendered at $1.29 per share | $ 129 | 166,588 | 166,717 | |||
Stock issued in exchange for services rendered at $1.29 per share, shares | 129,238 | |||||
Stock issued for cash | $ 47 | 94,953 | 95,000 | |||
Stock issued for cash, shares | 47,500 | |||||
Stock issued for cash at $2.00 per share | $ 437 | 874,538 | 874,975 | |||
Stock issued for cash at $2.00 per share, shares | 437,488 | |||||
Stock issued in exchange for investment in cryptocurrency at $2.00 per share | $ 63 | 124,949 | 125,012 | |||
Stock issued in exchange for investment in cryptocurrency at $2.00 per share, shares | 62,500 | |||||
Stock issued for cash at $2.00 per share, with warrants | $ 673 | 1,344,327 | 1,345,000 | |||
Stock issued for cash at $2.00 per share, with warrants , shares | 672,500 | |||||
Stock issued for cash at $7.00 per share, net of financing costs of $76,073 | $ 1,054 | 7,300,012 | 7,301,066 | |||
Stock issued for cash at $7.00 per share, net of financing costs of $76,073, shares | 1,053,848 | |||||
Stock issued in connection with cashless exercise of stock options | $ 11 | (11) | ||||
Stock issued in connection with cashless exercise of stock options, shares | 11,250 | |||||
Stock compensation expense in connection with issuance of options | 5,786,979 | 5,786,979 | ||||
Stock compensation expense in connection with issuance of options, shares | ||||||
Net loss | (9,553,301) | (9,553,301) | ||||
Ending balance at Dec. 31, 2017 | $ 20,459 | 19,020,176 | (9,553,301) | 9,487,334 | ||
Ending balance, shares at Dec. 31, 2017 | 20,458,945 | |||||
Stock issued for cash | $ 40 | 199,960 | 200,000 | |||
Stock issued for cash, shares | 40,000 | |||||
Stock issued in connection with cashless exercise of stock options | $ 15 | (15) | ||||
Stock issued in connection with cashless exercise of stock options, shares | 14,667 | |||||
Stock compensation expense in connection with issuance of options | 2,795,891 | 2,795,891 | ||||
Stock compensation expense in connection with issuance of options, shares | ||||||
Stock issued for acquisition of CoinTracking GmbH | $ 473 | 4,735,927 | 4,736,400 | |||
Stock issued for acquisition of CoinTracking GmbH, shares | 473,640 | |||||
Fair value of noncontrolling interest acquired in connection with acquisition of CoinTracking GmbH | 9,434,985 | 9,434,985 | ||||
Stock issued for services at $2.00 per share | $ 203 | 1,417,381 | 1,417,584 | |||
Stock issued for services at $2.00 per share, shares | 202,512 | |||||
Exercise of stock options | $ 23 | 50,035 | $ 50,058 | |||
Exercise of stock options, shares | 23,096 | 41,429 | ||||
Other comprehensive loss | (743,987) | (741,017) | $ (1,485,004) | |||
Net loss | (18,903,249) | (6,516,860) | (25,420,109) | |||
Ending balance at Dec. 31, 2018 | $ 21,213 | $ 28,219,355 | $ (28,456,550) | $ (743,987) | $ 2,177,108 | $ 1,217,740 |
Ending balance, shares at Dec. 31, 2018 | 21,212,860 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Equity (Parenthetical) - USD ($) | 10 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Financing costs, net | $ 76,073 | |
Common Stock One [Member] | ||
Share issued price per share | $ 2 | |
Common Stock One [Member] | Minimum [Member] | ||
Share issued price per share | $ 0.67 | |
Common Stock One [Member] | Maximum [Member] | ||
Share issued price per share | 0.80 | |
Common Stock Two [Member] | ||
Share issued price per share | 42.86 | $ 5 |
Common Stock Three [Member] | ||
Share issued price per share | 1.60 | |
Common Stock Four [Member] | ||
Share issued price per share | 0.80 | |
Common Stock Five [Member] | ||
Share issued price per share | 1.29 | |
Common Stock Six [Member] | ||
Share issued price per share | 2 | |
Common Stock Seven [Member] | ||
Share issued price per share | 2 | |
Common Stock Eight [Member] | ||
Share issued price per share | 2 | |
Common Stock Nine [Member] | ||
Share issued price per share | 2 | |
Common Stock Ten [Member] | ||
Share issued price per share | $ 7 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (9,553,301) | $ (18,903,249) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Net realized gain on investment in cryptocurrency | (781,373) | (1,303,130) |
Impairment of investments in cryptocurrency | ||
Impairment of intangible assets | 3,743,479 | |
Impairment of goodwill | 9,356,105 | |
Impairment of investments, non-cryptocurrency | ||
Impairment of assets held for sale | ||
Expenses paid in cryptocurrency | 105,684 | |
Depreciation and amortization | 4,675 | 1,214,827 |
Share-based compensation | 6,493,514 | 3,302,471 |
Change in operating assets and liabilities: | ||
Accounts receivable | (500) | 500 |
Loan receivable, related party | 23,696 | |
Prepaid expenses | (33,294) | 77,078 |
Accounts payable and accrued expenses | 698,409 | 493,138 |
Contract liabilities | (1,977,768) | |
Other assets | (1,500) | (21,919) |
Net cash used in operating activities | (3,133,188) | (6,274,104) |
Cash flows from investing activities: | ||
Payments for purchase of equipment | (72,995) | (42,675) |
Cash paid for acquisition, net of cash acquired | (3,189,303) | |
Proceeds from sales of cryptocurrency | 7,498,837 | |
Purchase of investments, non-cryptocurrency | (500,000) | |
Purchase of investments in cryptocurrency | (125,500) | (5,269,888) |
Capitalized software development | (127,937) | |
Net cash used in investing activities | (198,495) | (1,630,966) |
Cash flows from financing activities: | ||
Proceeds from common stock issuance | 12,358,000 | 200,000 |
Financing costs relating to common stock issuance | (76,073) | 50,057 |
Net cash provided by financing activities | 12,281,927 | 250,057 |
Effect of exchange rate changes on cash | (188,581) | |
Net (decrease) increase in cash and cash equivalents | 8,950,244 | (7,843,594) |
Cash and cash equivalents at the beginning of the period | 8,950,244 | |
Cash and cash equivalents at the end of the period | 8,950,244 | 1,106,650 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 1,130 | |
Cash paid for income taxes | 800 | |
Noncash investing activities: | ||
Shares of common stock issued in exchange of investment in cryptocurrency | 225,012 | |
Transfer of non-cryptocurrency to investments in cryptocurrency | 255,763 | |
Customer payments received in cryptocurrency | 1,211,250 | |
Cryptocurrency acquired in trade of cryptocurrency investments | 2,748,715 | 5,065,384 |
Issue of common stock for acquisition of CoinTracking GmbH | 4,736,400 | |
Purchase of contract asset for commissions and incentives with investments in cryptocurrency | $ 186,377 |
The Company
The Company | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | NOTE 1 – THE COMPANY The Crypto Company was incorporated in the State of Nevada on March 9, 2017 (“Inception”). The Company is engaged in the business of providing consulting services and education for distributed ledger technologies (“blockchain”), for the building of technological infrastructure and enterprise blockchain technology solutions. The Company currently generates revenues and incurs expenses solely through these consulting operations. Unless expressly indicated or the context requires otherwise, the terms “Crypto,” the “Company,” “we,” “us,” and “our” in this Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (this “Annual Report”) refer to The Crypto Company and, where appropriate, its wholly owned subsidiaries, Crypto Sub, Inc., a Nevada corporation (“Crypto Sub”); CoinTracking, LLC, a Nevada limited liability company (“CoinTracking”); Malibu Blockchain, LLC, a Nevada limited liability company (“Malibu Blockchain”); and, where applicable, CoinTracking’s majority-owned subsidiary, CoinTracking GmbH, which was sold subsequent to December 31, 2018. See “Note 17 - Subsequent Events” for additional details. During the year ended December 31, 2018, the Company had two principal business segments that generated revenues and incurred expenses, both of which have ceased operations as of the date of this Annual Report: The cryptocurrency investment segment generated revenues that primarily consisted of amounts earned through trading activities of cryptocurrencies. The Company recorded its investments in cryptocurrency as indefinite lived intangible assets, at cost less impairment, and are reported as long-term assets in the consolidated balance sheets. Realized gains and losses on sales of investments in cryptocurrency, and impairment losses, are included in other income/(expense) in the consolidated statement of operations and comprehensive income. The Company also generated software subscription revenues through CoinTracking GmbH and generates minimal amounts of consulting revenue. The software subscription segment consisted primarily of amounts earned through subscriptions to the CoinTracking GmbH website. Operating expenses related to this segment consisted primarily of technology infrastructure and general administrative costs primarily incurred in Germany. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation Consolidation Recent Developments – As a result of the pending sale as of December 31, 2018, of CoinTracking’s entire equity ownership stake in CoinTracking GmbH, and a strategic shift in the Company’s business in the fourth quarter of 2018 away from cryptocurrency investing to blockchain consulting and education, the assets and liabilities to be sold or disposed of other than by sale are reported in assets and liabilities held for sale in the Consolidated Balance Sheets as of December 31, 2018. Additionally, the current operating results associated with these assets and liabilities have been reclassified to give effect to these changes and are reported as discontinued operations in the Consolidated Statements of Operations for all periods presented. See “Note 15 - Discontinued Operations” and “Note 17 - Subsequent Events” for additional details. Liquidity and Going Concern The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain financing to fund the Company’s expenses and achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, private placements of capital stock, debt borrowings, partnerships and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful or that the Company will be able to replace the revenues lost as a result of the sale of CoinTracking GmbH, in 2019 and beyond. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Use of estimates Cash and cash equivalents Investments in cryptocurrency Realized gains and losses on sales of investments in cryptocurrency, and impairment losses, are included in other income/(expense) in the Consolidated Statements of Operations. The following table presents additional information about investments in cryptocurrency, as of December 31, 2018: December 31, 2018 Balance at January 1, 2018 $ 964,067 Acquisition of CoinTracking GmbH 1,115,345 Purchases of cryptocurrency 5,269,888 Net realized gains on investments in cryptocurrency 1,303,130 Transfer from investments, non-cryptocurrency 255,763 Customer payments in cryptocurrency 1,211,250 Expenditures of cryptocurrency (292,060 ) Sales of cryptocurrency (7,498,837 ) Impairment of cryptocurrency (2,066,803 ) Foreign currency impact (32,463 ) Balance at December 31, 2018 $ 229,280 The following table summarizes the historical cost of cryptocurrencies, held as of December 31, 2018: Bitcoin $ 200,849 Ethereum 19,383 Litecoin 5,153 Bitcoin Cash 2,018 Ripple 1,290 Other Cryptocurrencies 587 Balance at December 31, 2018 $ 229,280 The investments in cryptocurrency are included in assets held for sale at December 31, 2018. Investments – non-cryptocurrency The Company received tokens for $255,763 of its investments, at cost, during 2018 which have been transferred to an active exchange and included in Investments in Cryptocurrency in the consolidated balance sheets. The Company has evaluated the guidance in Accounting Standards Codification (“ASC”) No. 325-20 Investments – Other, in determining to account for its investments, non-cryptocurrency using the cost method since the investments are not marketable and do not give the Company significant influence. The Company has determined that $160,050 of its remaining token pre-sale or SAFT investments as of December 31, 2018 were impaired as the Company determined that a token generation event and trading on an active change were remote. During the year ended December 31, 2018, the Company determined that its SAFE investment is impaired as the enterprise changed its primary business model and requires additional financing to bring its products to market. Therefore, the Company has recorded an impairment loss of $250,000, representing the full value of its investment. Equipment Impairment of long-lived assets – Business combination – Goodwill and indefinite lived intangible assets The Company assesses whether goodwill impairment and indefinite lived intangible assets exists using both qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether a goodwill impairment exists at the reporting unit. The Company performed the annual impairment test for goodwill and intangible assets with indefinite lives as of December 31, 2018 using a quantitative assessment, and recorded an intangible asset impairment of $993,833, and $9,356,105 for goodwill, related to the intangible assets and goodwill acquired in connection with the purchase of CoinTracking GmbH (See Note 9 – Goodwill and Intangible Assets for further information). There was no impairment for the period from inception through December 31, 2017. In addition, we capitalized certain costs incurred with developing our CoinTracking SaaS platform in accordance with ASC 985-20, Software — Costs of Software to be Sold, Leased, or Marketed once technological feasibility has been established. Capitalized software costs primarily include i) external direct costs of services utilized in software development and ii) compensation and related benefits for employees who are directly associated with software development. We amortized our capitalized software costs over a five-year period, reflecting the estimated useful lives of the assets. Foreign Currency Translation Income taxes – When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of December 31, 2018, we are subject to taxation in the U.S., as well as state and German taxes. The Company has not been audited by the U.S. Internal Revenue Service, nor has the Company been audited by any states or in Germany. Subsequent to September 30, 2018, we sold our entire equity ownership stake in CoinTracking GmbH. See “Note 17 - Subsequent Events” for additional details. Fair value measurements Level 1 Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurable date. Level 2 Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date. Level 3 Unobservable inputs that reflect management’s best estimate of what participants would use in pricing the asset or liability at the measurement date. The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. Revenue recognition ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method for contracts as of the date of initial application. There is no cumulative impact to the Company’s retained earnings at January 1, 2018. See “Note 6 – Subscription Revenue Recognition” for additional information on the impact to the Company. Share-based compensation Equity instruments (“instruments”) issued to non-employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the instruments are vested. The compensation cost is remeasured at fair value at each reporting period when the award vests. As a result, stock option-based payments to non-employees can result in significant volatility in compensation expense. The Company accounts for its share-based compensation using the Black-Scholes model to estimate the fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to the (i) expected volatility of the Company’s common stock price, (ii) expected life of the award, which for options is the period of time over which employees and non-employees are expected to hold their options prior to exercise, and (iii) risk-free interest rate. Net loss per common share Marketing expense – Reclassifications – |
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 restatement is to correct errors in the Company’s previously issued financial statements, as disclosed in the Company’s Current Report on Form 8-K filed subsequent to December 31, 2018, on January 3, 2019. The restatement is in connection with the accounting for investments in cryptocurrency at fair value as opposed to intangible assets with indefinite lives and record such investments in cryptocurrency at historical cost less impairment, if any. Management previously reported its investments in cryptocurrency at fair value, with changes in fair value reported as unrealized gains and losses in its consolidated statements of operations. The Company has corrected the error in this Annual Report for the period from January 1, 2018 to June 30, 2018, and for the period from inception to December 31, 2017. The Company’s investment in cryptocurrency at December 31, 2017 were accounted for in error and were overstated from their historical cost by $1,785,742. In addition, the Company corrected the classification of its net realized gain/loss on investments in cryptocurrency by reclassifying them from revenue to other income(expense). The Company has also determined that its classification and disclosures of $367,639 in investments, as of June 30, 2018, were incorrectly described as investments in Initial Coin Offerings and included as investments in cryptocurrency in its consolidated balance sheets. The investments were made in accordance with token pre-sale and simple agreement for tokens agreements (“SAFT”), and should be included as investments, non-cryptocurrency in the Company’s consolidated balance sheets. The Company reclassified the balance and changed the related disclosures in this current filing. Management believes the reclassification is material to the Company’s condensed consolidated financial statements in the period from January 1, 2018 to June 30, 2018, and for the period from inception to December 31, 2017. Finally, in connection with the acquisition of CoinTracking GmbH, the Company completed its preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed based on the information available and preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The result is the recording of intangible assets of $7,726,356, noncontrolling interest of $9,434,984, and a reduction of $43,348 to net assets acquired, resulting in an adjustment to increase goodwill of $1,665,279. The Company recorded amortization expense of $993,023 relating to certain intangible assets acquired for the year ended December 31, 2018, of which $211,153 and $486,176 have been restated for the three and six months ended March 31 and June 30, 2018, respectively. As a result of these changes, the Company restated its consolidated balance sheet and consolidated statements of operations and comprehensive loss for the three months ended March 31, 2018 and June 30, 2018, as noted below. Subsequent to December 31, 2018, the Company sold its entire equity ownership stake in CoinTracking GmbH. See “Note 17 - Subsequent Events” for additional details. The Company’s originally disclosed accounting policy, from the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2018 regarding investments in cryptocurrency stated that: “ Investments in cryptocurrency Management In addition, the Company’s cryptocurrency investments include Initial Coin Offerings (“ICOs”), which primarily consist of tokens that are not currently traded on an exchange. The Company records these investments at cost, as there is no active market. As of June 30, 2018, ICOs represent $367,639 of the Company’s investments in cryptocurrencies. For the six-month period ended June 30, 2018, the Company recognized no impairment losses on investments in ICOs. Investments – non-cryptocurrency The Company’s updated accounting policy regarding investments in cryptocurrency transactions and remeasurement states that: “ Investments in cryptocurrency Realized gains and losses on sales of investments in cryptocurrency, and impairment losses, are included in other income/(expense) in the consolidated statement of operations and comprehensive income. Investments – non-cryptocurrency The Company received tokens for $255,763 of its investments, at cost, during 2018 which have been transferred to an active exchange and included in Investments in Cryptocurrency in the consolidated balance sheets. The Company has evaluated the guidance in Accounting Standards Codification (“ASC”) No. 325-20 Investments – Other, in determining to account for its investments, non-cryptocurrency using the cost method since the investments are not marketable and do not give the Company significant influence. The Company has determined that there is no impairment of its remaining token pre-sale or SAFT investments as of December 31, 2018 as they were entered into in the last twelve months and progress has been demonstrated toward tokenization. During the year ended December 31, 2018, the Company determined that its SAFE investment is impaired as the enterprise changed its primary business model and requires additional financing to bring its products to market. Therefore, the Company has recorded an impairment loss of $250,000, representing the full value of its investment.” The Company has determined that its previously issued financial statements should be restated on a prospective basis. Accordingly the Company is not amending and re-filing the financial statements included in its prior quarterly reports on Form 10-Q for each of the quarterly periods from Inception through June 30, 2018, nor in its Annual Report for the period from Inception through December 31, 2017. Management believes the errors are material when considering quantitative materiality. Management does not believe it is probable that the judgment of a reasonable person relying upon its prior filings would have been changed or influenced by the inclusion or correction of the item, nor is there a substantial likelihood that a reasonable person would consider it important.” The effect of the restatement on the Company’s net loss, net loss attributable to The Crypto Company, comprehensive income and per-share amounts for the prior interim periods of 2018 ended June 30, 2018 are as follows: For the three months ended March 31, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (3,521,747 ) $ 1,587,709 $ (211,153 ) $ (2,145,191 ) Net loss attributable to The Crypto Company (3,158,118 ) 1,587,709 (105,788 ) (1,676,197 ) Net loss per common share – basic and diluted (0.15 ) (0.08 ) Weighted average common shares outstanding – basic and diluted 20,864,198 - 20,864,198 For the three months ended June 30, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (7,145,543 ) $ 182,168 $ (275,024 ) $ (7,238,399 ) Net loss attributable to The Crypto Company (7,272,309 ) 182,925 (137,237 ) (7,226,621 ) Net loss per common share – basic and diluted (0.34 ) (0.34 ) Weighted average common shares outstanding – basic and diluted 21,131,457 - 21,131,457 For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (10,667,291 ) $ 1,769,877 $ (486,176 ) $ (9,383,590 ) Net loss attributable to The Crypto Company (10,431,256 ) 1,770,634 (243,359 ) (8,903,981 ) Net loss per common share – basic and diluted (0.50 ) (0.42 ) Weighted average common shares outstanding – basic and diluted 21,003,328 - 21,003,328 (1) Reflects the restatement in connection with the accounting for investments in cryptocurrency as intangible assets with indefinite lives and record such investments in cryptocurrency at cost less impairment. (2) Reflects the restatement of the intangible asset amortization due to the completion of the preliminary valuation of the fair value of tangible and intangible assets acquired and related liabilities in connection with the acquisition of CoinTracking GmbH on January 26, 2018. The effect of the restatement on the Company’s condensed consolidated balance sheet as of December 31, 2017 is as follows: December 31, 2017 As Previously Reported Restatement Adjustment Audited and Restated Investment in cryptocurrency, net $ 2,917,627 $ (2,917,627 ) $ - Total current assets 11,901,665 (2,917,627 ) (1) 8,984,038 Investment in cryptocurrency, net 2,917,627 (1,785,742 ) (1) 1,131,885 Total assets 11,971,485 (1,785,742 ) 10,185,743 Accumulated deficit (7,767,559 ) (1,785,742 ) (9,553,301 ) Total stockholders’ equity 11,273,076 (1,785,742 ) 9,487,334 Total liabilities and stockholders’ equity 11,971,485 (1,785,742 ) 10,185,743 (1) Includes reclassification of investments in cryptocurrency from current assets to long-term assets. The effect of the restatement on the Company’s condensed consolidated statement of operations for the period from Inception through December 31, 2017, are as follows: Inception through December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net realized gain on investment in cryptocurrency $ 781,373 $ (781,373 ) $ - Operating loss (9,551,371 ) (781,373 ) (10,332,744 ) Net change in unrealized appreciation (depreciation) on investment in cryptocurrency 1,785,742 (1,785,742 ) - Other income(expense): Net realized gain on investment in cryptocurrency - 781,373 781,373 Loss before provision for income taxes (7,766,759 ) (1,785,742 ) (9,552,231 ) Net loss (7,767,559 ) (1,785,742 ) (9,553,301 ) Net loss per common share - basic and diluted (0.46 ) (0.57 ) Weighted average common shares outstanding - basic and diluted 16,746,792 16,746,792 (1) Restatement adjustment includes reclassification of net realized gain/(loss) on investment in cryptocurrency from revenue to other income(expense). The effect of the restatement on the Company’s consolidated statement of cash flows for the period from Inception through December 31, 2017, are as follows: Inception through December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (7,767,559 ) $ (1,785,742 ) $ (9,553,301 ) Net change in unrealized appreciation (depreciation) on investment in cryptocurrency (1,785,742 ) 1,785,742 - Noncash investing activities: Cryptocurrency acquired in trade of cryptocurrency investments $ - $ 2,748,715 $ 2,748,715 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. The amendments in this ASU clarify certain aspects of the guidance related to: reporting comprehensive income, debt modification and extinguishment, income taxes related to stock compensation, income taxes related to business combinations, derivatives and hedging, fair value measurements, brokers and dealers liabilities, and plan accounting. This new standard is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2018. The adoption of ASU No. 2018-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, add, and modify certain disclosures. The ASU removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation process for Level 3 fair value measurements; and (4) certain other requirements for nonpublic entities. The ASU adds the following disclosure requirements: (1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, disclosure of other quantitative information may be more appropriate if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The ASU modifies disclosure requirements in Topic 820 relating to timing of liquidation of an investee’s assets, the disclosure of the date when restrictions from redemption might lapse, the intention of the measurement uncertainty disclosure, and certain other requirements for nonpublic entities. This new standard is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2019. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software). The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service to (1) determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense; (2) expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (3) apply the existing impairment guidance to the capitalized implementation costs as if the costs were long-lived assets; (4) present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting arrangements; and (5) present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. This new standard is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2019. The adoption of ASU No. 2018-15 is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In June 2018, FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting , The ASU expands the scope of Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. Management currently does not plan to early adopt this guidance. The new standard is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-07 will have on its consolidated financial statements and related disclosures. In July 2017, the FASB issued No. ASU 2017-11 , In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Essentially, an entity will not have to account for the effects of a modification if: (1) The fair value of the modified award is the same immediately before and after the modification; (2) the vesting conditions of the modified award are the same immediately before and after the modification; and (3) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The new standard became effective for us on January 1, 2018. Adoption of the ASU No. 2017-11 did not have a significant impact on our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business (Topic 805). The new guidance that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606, Revenue from Contracts with Customers. The ASU is effective for annual reporting periods beginning after December 15, 2017, and for interim periods within those years. Adoption of ASU No. 2017-01 did not have a significant impact on our consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350) which removes “Step Two” of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The ASU is effective for annual reporting periods beginning after December 15, 2019, and for interim periods within those years, with early adoption permitted. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which, among other things, requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard becomes effective for us on January 1, 2019. Early adoption is permitted. The amendments in this update should be applied under a modified retrospective approach. Adoption of ASU No. 2016-02 is not expected to have a significant impact on our consolidated financial statements and related disclosures. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 5 – ACQUISITION On January 26, 2018, the Company, through its wholly owned subsidiary, CoinTracking, acquired 50.1% of the equity interest in CoinTracking GmbH, for (i) $4,736,400 in cash and (ii) 473,640 shares of common stock of the Company at $10 per share for a total purchase price valued at $9,472,800. On the acquisition date, the fair market value of $10 per share for the Company’s common stock was determined using a trading range from November 2017, discounted further due to lack of marketability. The Company used this approach due to the lack of trading volume since (i) the stock trading was suspended by the SEC in December 2017 and was moved to OTC Grey market by the OTC Markets Group, Inc. on January 3, 2018, (ii) stock sales to accredited investors on December 12, 2017, at $7 per share, and (iii) a valuation performed as of March 31, 2018. The equity purchase agreement between the Company and CoinTracking GmbH included a purchase price adjustment pursuant to which the consideration would increase if the share price of the Company’s common stock closed below $10 per share on July 2, 2018. No adjustment was required. CoinTracking GmbH provides its customers with the ability to view and monitor their own cryptocurrency portfolios as well as tax calculation and reporting services. Customers may not make trades through the CoinTracking GmbH platform. The purpose of the acquisition was to increase the Company’s presence in the digital asset industry and build strategic alliances. The consolidated financial statements were prepared using the acquisition method of accounting in accordance with ASC 805, Business Combinations, and have been included in the Company’s consolidated results as of the acquisition date with the Company considered as the accounting acquirer and CoinTracking GmbH as the accounting acquiree. Accordingly, consideration paid by the Company to complete the acquisition was allocated to the identifiable assets and liabilities of CoinTracking GmbH based on estimated fair values as of the closing date. The Company made a preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed based on the information available and preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. Acquisition-related costs were expensed as incurred and were not considered to be significant. In the fourth quarter of the year ended December 31, 2018, the Company completed its allocation of the consideration transferred to the assets acquired and liabilities assumed based on the fair value of tangible and intangible assets acquired and liabilities assumed. The result was the recording of intangible assets of $7,726,356, noncontrolling interest of $9,434,984, and an additional adjustment of $267,401 to net assets acquired, resulting in an adjustment to increase goodwill of $1,976,029, from $10,014,881 to $11,990,910.Subsequent to December 31, 2018 and the 2018 fiscal year end, we sold our entire equity ownership stake in CoinTracking GmbH. See “Note 17 Subsequent Events” for additional details. The table below summarizes the fair values of the assets acquired and liabilities assumed, translated from euros to USD, at the date of acquisition: CoinTracking GmbH Cash and cash equivalents $ 1,547,097 Investment in cryptocurrency 1,115,345 Loan receivable – related party 194,380 Other current assets 296,273 Goodwill 11,990,910 Intangible assets 7,726,356 Other assets 14,633 Total assets $ 22,884,994 Current liabilities $ 360,486 Contract liabilities, short term 2,686,858 Contract liabilities, long term 929,866 Noncontrolling interest 9,434,984 Total liabilities 13,412,194 Net assets acquired $ 9,472,800 The purchase price was based on the expected financial performance of CoinTracking GmbH and not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill. As a result, the Company recognized $11,990,910 of goodwill on the date of acquisition. Unaudited pro forma financial information The unaudited pro forma financial information in the table below presents the combined results of the Company and CoinTracking GmbH as if the acquisition had occurred on January 1, 2018. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the acquisition actually occurred on January 1, 2018. For the year ended December 31, 2018: 2018 Revenue $ 3,553,979 Net loss (18,579,800 ) Basic and diluted loss per share: Basic and diluted $ (0.88 ) Subsequent to December 31, 2018, we sold our entire equity ownership stake in CoinTracking GmbH. See “Note 17 - Subsequent Events” for additional details. |
Subscription Revenue Recognitio
Subscription Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Subscription Revenue Recognition | |
Subscription Revenue Recognition | NOTE 6 – SUBSCRIPTION REVENUE RECOGNITION CoinTracking GmbH accounts for a contract when it has approval and commitment from all parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue was recognized when control of the promised services was transferred to the Company’s customers over time, and in an amount that reflects the consideration the Company was contractually due in exchange for those services. Most of the Company’s contracts with customers were single, or had few distinct performance obligations, and the transaction price was allocated to each performance obligation using the stand-alone selling price. CoinTracking GmbH’s revenue is primarily derived directly from users in the form of subscriptions. Subscription revenue is presented net of credits and credit card chargebacks. Subscribers pay in advance, primarily by PayPal or cryptocurrencies, subject to certain conditions identified in our terms and conditions. Revenue is initially deferred and recognized using the straight-line method over the term of the applicable subscription period, which primarily range from annual to perpetual. Transaction Price The objective of determining the transaction price was to estimate the amount of consideration the Company was due in exchange for services, including amounts that are variable. CoinTracking GmbH has a standalone sales price for its subscription service, which varies based on length of subscription. Further, the Company excluded from the measurement of transaction price all taxes assessed by governmental authorities that were both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers. Accordingly, such tax amounts were not included as a component of revenue or cost of revenue. Estimates of certain revenue Revenue collected in advance for subscriptions ranging from annual to perpetual packages were deferred and recognized as revenue on a straight-line basis over the terms of the applicable subscription period or performance obligation period. For “lifetime” revenue packages, where the customer had access to the website for an unlimited length of time, the Company elected to recognize revenue on a straight-line basis over three years. We believe that based on the short history of customer data, customer relationship period, and number of available alternative providers, and anticipation of future changes to the blockchain industry, a measure of three years of performance obligation to customers was appropriate. Net Revenue and Charge-back Reserves CoinTracking GmbH does not maintain an allowance for doubtful accounts because the customer prepays for subscription in advance before access is provided to CoinTracking GmbH’s website. The Company maintained a reserve for potential credits issued to consumers or other revenue adjustments when necessary. In addition, as of December 31, 2018, PayPal withheld $47,872 for potential credits issued to customers, which is included in assets held for sale on the Company’s consolidated balance sheets. As of December 31, 2017, the Company did not have consolidated contract liabilities. Contract Liabilities Contract liabilities were recorded when payments were received or due in advance of performing CoinTracking GmbH’s service obligations and was recognized over the service period, which primarily related to prepayments of subscription revenue. At the acquisition date of January 26, 2018, CoinTracking GmbH’s total contract liabilities were $3,616,724, and we recognized revenue of $3,553,979 for the year ended December 31, 2018. As of December 31, 2018, $1,750,465 of current contract liabilities and $847,461 of long-term contract liabilities are included in liabilities held for sale. As of December 31, 2017, we did not have consolidated contract liabilities. Assets Recognized from the Costs to Obtain a Contract with a Customer CoinTracking GmbH has determined that certain costs associated with affiliate payments paid to customers pursuant to certain sales incentive programs, meet the requirements to be capitalized as a cost of obtaining a contract. Affiliates are paid in Bitcoins and expense is amortized over the applicable subscription period. During the year ended December 31, 2018, the Company recognized expense of $208,104 related to the amortization of affiliate payments. The aggregate contract asset balance at December 31, 2018 was $106,026, included in assets held for sale. Subsequent to December 31, 2018, we sold our entire equity ownership stake in CoinTracking GmbH. See “Note 17 - Subsequent Events” for additional details. |
Investments, Non-cryptocurrency
Investments, Non-cryptocurrency | 12 Months Ended |
Dec. 31, 2018 | |
Investments [Abstract] | |
Investments, Non-cryptocurrency | NOTE 7 – INVESTMENTS, NON-CRYPTOCURRENCY The Company has invested $417,818 in non-tradeable token pre-sale and SAFT agreements, including $250,000 during the year ended December 31, 2018. In addition, the Company invested $250,000 during the year ended December 31, 2018 as part of a financing in accordance with a SAFE investment in a private enterprise. These investments are included as Level 3 investments as there was no active market as of December 31, 2018. The Company establishes processes and procedures to ensure that the valuation methodologies that are categorized within Level 3 are fair, consistent and verifiable. Non-cryptocurrency investments are carried at cost which approximates fair value at December 31, 2018. The Company considers the length of its investments, of which a majority were made during the current year, as well as its comprehensive investment process which includes reviews of white papers, preparation of either short or long forms analysis that is reviewed by the Company’s internal investment committee, among other factors in determining fair value. At the time that the investments are tokenized and available on active market exchanges, the investments will be reclassified to investments in cryptocurrency The following table sets forth a summary of changes in the fair value of the Company’s Level 3 investments for the year ended December 31, 2018: Level 3 Non-Cryptocurrency Balance at December 31, 2017 $ 167,818 Transfers to investments in cryptocurrency (255,763 ) Purchases, sales, issuances, and settlement, net 500,000 Impairment (410,050 ) Balance at December 31, 2018 $ 2,005 These investments are included in assets held for sale at December 31, 2018. |
Equipment
Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Equipment | NOTE 8 – EQUIPMENT Equipment consists of the following at December 31: 2018 2017 Computer equipment $ 114,244 $ 69,241 Furniture equipment 20,980 3,754 135,224 72,995 Less accumulated depreciation (35,522 ) (4,675 ) $ 99,701 $ 68,320 Depreciation expense for equipment was $30,847 and $4,675 for the year ended December 31, 2018 and the period from Inception through December 31, 2017, respectively. Depreciation expense is included in selling, general and administrative expenses. Equipment of $10,369 are included in assets held for sale at December 31, 2018. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 9 – GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company’s goodwill balance is the result of the acquisition of CoinTracking GmbH in the current year (see Note 5 - Acquisition). Intangible assets include software development costs, related to the CoinTracking GMBH SaaS platform, customer base and trade name. The carrying amount of goodwill for the year ended December 31, 2018 was as follows: December 31, 2018 Balance at December 31, 2017 $ - Acquisitions 11,990,910 Impairment (9,356,105 ) Foreign translation impact (940,100 ) $ 1,694,705 The carrying amounts of intangible assets for the year ended December 31, 2018 was as follows: Estimated Useful Life Gross Carry Amount Accumulated Amortization Impairment Balance as of Trade name - $ 1,797,768 - $ (993,833 ) $ 803,935 Software 5 Years 4,264,412 (795,888 ) (2,366,546 ) 1,101,978 Customer base 5 Years 1,058,422 (197,458 ) (270,267 ) 590,697 Capitalized software 5 Years 127,937 (15,104 ) (112,833 ) - $ 7,248,539 $ (1,008,450 ) $ (3,743,479 ) $ 2,496,610 Intangible assets with finite useful lives are amortized over their respective estimated useful lives. Amortization expense related to intangible assets was $1,008,450 year ended December 31, 2018. There was no amortization expense related to intangible assets in the prior year from Inception through December 31, 2017. Amortization expense for intangible assets is included in general and administrative expenses. The Company’s goodwill and intangible assets relate to CoinTracking GmbH and are therefore included as held for sale on the consolidated balance sheets, and amortization expense and impairment losses are included in loss from discontinued operations in the consolidated statements of operations for the year ended December 31, 2018. Impairment of goodwill and indefinite lived intangible assets The Company performed its annual impairment test at December 31, 2018. Based on the guidance in ASC 350 – Intangibles – Goodwill and Other, management of the Company elected to bypass the qualitative assessment of goodwill and proceeded directly to performing the first step of the goodwill impairment test. The first step of the goodwill impairment test indicated that the fair value of goodwill was below its carrying value, indicating impairment. The Company then performed the second step of the goodwill impairment test, comparing the implied fair value of goodwill to its carrying value, resulting in an impairment charge of $9,356,105. In addition, the Company recognized an impairment charge of $998,833 related to the Trade Name indefinite lived intangible asset. CoinTracking GmbH was acquired in the first quarter of 2018, shortly after bitcoin and other cryptocurrencies reached their highest market values, resulting in significant customer signups for CoinTracking GmbH’s software subscription service. Beginning in early 2018, the market value of cryptocurrencies declined sharply, resulting in a steady decline in new customer signups. While software subscription revenues for 2018 were in line with the Company’s projections, the Company reduced its projected revenue expectations for future years in line with the decline in new customer signups. Subsequent to December 31, 2018, the Company agreed to sell the software subscription business back to the noncontrolling shareholder at sales price of $2,200,000, significantly below the $9,472,800 purchase price paid by the Company in January 2018. See “Note 17 - Subsequent Events” for additional details. The Company estimates the fair value of its reporting units using a weighting of fair values derived from both the income approach and the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability of these publicly traded companies to the reporting unit. The Company used a 50% weighting of these two approaches in determining the fair value of CoinTracking GmbH, which fair value approximated the Company’s sales price. |
Warrants for Common Stock
Warrants for Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants for Common Stock | NOTE 10 – WARRANTS FOR COMMON STOCK As of December 31, 2018, outstanding warrants to purchase shares of the Company’s common stock were as follows: Number of Shares Issuance Date Exercisable Expiration Exercise Outstanding September 2017 Common Shares September 25, 2020 $ 2.00 168,125 The warrants expire on the third anniversary of their issuance dates. The exercise price of the warrants is subject to adjustment from time to time, as provided therein, to prevent dilution of purchase rights granted thereunder. The warrants are considered indexed to the Companys own stock and therefore no subsequent remeasurement is required. |
Summary of Stock Options
Summary of Stock Options | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Options | NOTE 11 – SUMMARY OF STOCK OPTIONS On July 21, 2017, the Company’s board of directors adopted The Crypto Company 2017 Equity Incentive Plan (the “Plan”), which was approved by its stockholders on August 24, 2017. The Plan is administered by the board of directors (the “Administrator”). Under the Plan, the Company may grant equity awards to eligible participants which may take the form of stock options (both incentive stock options and non-qualified stock options) and restricted stock awards. Awards may be granted to officers, employees, non-employee directors (as defined in the Plan) and other key persons (including consultants and prospective employees). The term of any stock option award may not exceed 10 years and may be subject to vesting conditions, as determined by the Administrator. Options granted generally vest over eighteen to thirty-six months. Incentive stock options may be granted only to employees of the Company or any subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Internal Revenue Code. During the year ended December 31, 2018, the Company issued an additional 450,000 stock options to members of its board of directors, 1,957,062 stock options to employees, and 400,000 stock options to non-employees. 5,000,000 shares of the Company’s common stock are reserved for issuance under the Plan. As of December 31, 2018, there are outstanding stock option awards issued from the Plan covering a total of 1,401,612 shares of the Company’s common stock and there remain reserved for future awards 3,544,459 shares of the Company’s common stock. Weighted Average Weighted Remaining Average Contractual Aggregate Number Exercise Term Intrinsic of Shares Price (years) Value Options outstanding at December 31, 2016 - Options granted 657,031 $ 2.28 Options cancelled - - Options exercised (12,500 ) $ 1.00 Options outstanding, at December 31, 2017 644,531 $ 2.32 Options granted 2,807,062 $ 7.37 Options cancelled (2,008,552 ) $ 6.93 Options exercised (41,429 ) $ 2.09 Options outstanding, at December 31, 2018 1,401,612 $ 5.83 9.08 $ - Exercisable 1,013,635 $ 6.16 9.10 $ - Vested and exercisable and expected to vest, end of period 1,401,612 $ 5.83 9.08 $ - The Company recognized $2,795,891 and $5,786,979, of compensation expense related to stock options for the year ended December 31, 2018 and the period from Inception to December 31, 2017, respectively. The total intrinsic value for options exercised, determined using the market price of our common stock on the date of exercise, was $295,763 and $7,175,000 during the year ended December 31, 2018 and the period from Inception to December 31, 2017, respectively. During the year ended December 31, 2018 and the period from Inception through December 31, 2017 the Company did not grant any restricted stock awards. As of December 31, 2018, approximately $357,058 of total unrecognized compensation costs related to stock options issued to employees is expected to be recognized over a weighted average period of approximately 1.18 years. The determination of the fair value of share-based compensation awards utilizing the Black-Scholes model is affected by the Company’s stock price and a number of complex and subjective assumptions, including stock price, volatility, expected life of the equity award, forfeitures rates if any, risk-free interest rates and expected dividends. Volatility is based on the historical volatility of comparable companies measured over the most recent period, generally commensurate with the expected life of the Company’s stock options, adjusted for future expectations given the Company’s limited historical share price data. The risk-free rate is based on implied yields in effect at the time of the grant on U.S. Treasury zero-coupon bonds with remaining terms equal to the expected term of the stock options. The expected dividend is based on the Company’s history and expectation of dividend payouts. Forfeitures are recognized when they occur. The range of assumptions used for the year ended December 31, 2018 and the period from Inception through December 31, 2017 are as follows: Year ended December 31, 2018 Period from Inception through December 31, 2017 Ranges Ranges Volatility 48 – 55 % 36 – 48 % Expected dividends 0 % 0 % Expected term (in years) 5 – 10 years 5 – 10 years Risk-free rate 1.81 – 3.12 % 1.81 – 2.36 % Stock options issued to nonemployees are revalued at each vesting tranche and/or reporting date in accordance with ASC 505. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 – RELATED PARTY TRANSACTIONS The Company has a services agreement with Full Stack Finance for chief financial officer and accounting outsource services. Ivan Ivankovich, the Company’s CFO, is the Co-Managing Director of Full Stack Finance. The Company paid a total of $476,287 and $111,075 in fees to Full Stack Finance during the year ended December 31, 2018 and the period from Inception to December 31, 2017, respectively. There was a balance of $133,834 due to Full Stack Finance, at December 31, 2018. There was no balance due to Full Stack at December 31, 2017. The Company has a loan receivable from an officer of CoinTracking GmbH as of December 31, 2018 totaling $170,684. The loan is due upon demand and it bears interest at 2%. During the year ended December 31, 2018 and the period from Inception to December 31, 2017 interest income accrued for this loan was $3,300 and $0, respectively, which is included in other income/(expense) on the accompanying consolidated statements of operations. During the year ended December 31, 2018, the company sold $939,155 in cryptocurrency held by CoinTracking GmbH to an officer of CoinTracking GmbH, in accordance with a shareholder resolution entered into on September 21, 2018. On April 3, 2018, CoinTracking entered into a Loan Agreement (the “Loan Agreement”) with CoinTracking GmbH, pursuant to which CoinTracking GmbH may provide a loan (the “CoinTracking Loan”) of up to $3,000,000 to CoinTracking, to be advanced to CoinTracking in one or more tranches, at such times and in such amounts as may be requested by CoinTracking from time to time, on or before the tenth anniversary of the Loan Agreement. The Company is deemed obligor of CoinTracking’s obligations under the Loan Agreement for United States Federal income tax purposes. Interest on the CoinTracking Loan will accrue at a rate per annum of the greater of (i) three percent (3%), or (ii) the interest rates published monthly by the United States Internal Revenue Service and in effect under section 1274(d) of the Internal Revenue Code in effect as of the date of issuance of any promissory note under the CoinTracking Loan, and will be payable quarterly. During the year ended December 31, 2018, pursuant to the Loan Agreement, CoinTracking GmbH advanced $1,500,000 to CoinTracking in exchange for three promissory notes (the “CoinTracking Note”) in the amounts of $300,000, $700,000 and $500,000, respectively, which is still outstanding as of December 31, 2018. The CoinTracking Note will mature on the second anniversary thereof. CoinTracking and CoinTracking GmbH are consolidated entities, as such, the loan and advances are intercompany transactions and are eliminated in consolidation. Subsequent to December 31, 2018, the Company sold its equity ownership stake in CoinTracking GmbH, and $1,200,000 of the sale proceeds were applied toward repayment of the $1,500,000 outstanding loan amount under the CoinTracking Note. See “Note 17 - Subsequent Events” for additional details. Effective May 14, 2018, Michael Poutre, former Chief Executive Officer and director of the Company resigned from all of his then-current roles with the Company. Mr. Poutre remained a consultant until November 2018. In connection with Mr. Poutre’s resignation, the Company entered into a Separation and Consulting Agreement and General Mutual Release (the “Separation and Consulting Agreement”), which was executed on May 9, 2018 and approved by the Board of Directors on May 14, 2018. The Separation and Consulting Agreement was not effective until May 17, 2018, following the end of the revocation period. The Separation and Consulting Agreement provides that the Company pays Mr. Poutre a lump-sum cash payment of (i) his earned but unpaid base salary, (ii) his accrued but unpaid vacation time, and (iii) any outstanding requests for expense reimbursements that are approved pursuant to Company policy. Mr. Poutre served as a consultant of the Company for six months at a rate of $30,000 per month, payable in two separate tranches. The Separation and Consulting Agreement contains other standard provisions contained in agreements of this nature including non-disparagement and a general release of any and all claims. During 2018, the Company paid Mr. Poutre $90,000 of the $180,000 due in connection with his Separation and Consulting Agreement. Subsequent to December 31, 2018, the Company reached a settlement with Mr. Poutre, reducing the final amount due to $40,000 (see Note 17 – Subsequent Events). |
Basic and Diluted Loss Per Shar
Basic and Diluted Loss Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Loss Per Share | NOTE 13 – BASIC AND DILUTED LOSS PER SHARE The following is a reconciliation of the basic and diluted loss per share computations for the year ended December 31, 2018 and the period from Inception through December 31, 2017: Year ended December 31, 2018 Period from Inception through December 31, 2017 (Restated) Numerator for basic and diluted income per share: Net loss from continuing operations attributable to the Company $ (9,043,978 ) $ (10,094,554 ) Discontinued operations: Income/(loss) attributable to the Company (9,859,271 ) 541,253 Net loss per share attributable to the Company $ (18,903,249 ) $ (9,553,301 ) Denominator for basic and diluted income per share: Weighted average shares (basic) 21,096,881 16,746,792 Common stock equivalents - - Weighted average shares (diluted) 21,096,881 16,746,792 Basic and diluted income (loss) per share: Net loss from continuing operations attributable to the Company $ (0.43 ) $ (0.60 ) Net loss from discontinued operations attributable to the Company (0.47 ) 0.03 Net loss attributable to the Company $ (0.90 ) $ (0.57 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 14 - COMMITMENTS AND CONTINGENCIES On November 1, 2018, the Company relocated its corporate office and entered into a month-to-month office agreement with Regus Management Group, LLC for $344 per month. Facility rent expense was $107,053 and $45,000 for the year ended December 31, 2018 and for the period from inception through December 31, 2017, respectively. Legal Contingencies – As previously disclosed, we received a subpoena on May 15, 2018, from the SEC’s Division of Enforcement in connection with a formal investigation it is conducting involving us as well as other unrelated public issuers who are holders of or provide services related to digital assets. The subpoena requested that we produce certain documents to the SEC’s Division of Enforcement by May 30, 2018. We are unable to predict how long the SEC’s investigation will continue or whether, at the conclusion of its investigation, the SEC will seek to impose fines or file an enforcement action against us. Additionally, the Company may from time to time become subject to legal proceedings, claims, and litigation arising in the ordinary course of business. Indemnities and guarantees - During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include certain agreements with the Company’s officers and directors, under which the Company may be required to indemnify such persons for liabilities arising out of their respective relationships. In connection with its facility lease, the Company has indemnified the lessor for certain claims arising from the use of the facility. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheet. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 15 - Discontinued Operations On December 28, 2018, the Company entered into an agreement to sell its controlling interest in CoinTracking GmbH, which sale was completed subsequent to December 31, 2018. See “Note 17 - Subsequent Events” for additional details. CoinTracking GmbH was acquired by the Company on January 26, 2018. In addition, during the fourth quarter of 2018, there was a strategic shift in the Company’s business away from cryptocurrency investing to blockchain consulting and education. As a result of the sale of CoinTracking GmbH and the shift in the Company’s operations, the Company reclassified the assets and liabilities divested as held for sale as of December 31, 2018. The Company’s financial results for the prior period from Inception through December 31, 2017 does not included the results of CoinTracking GmbH, which was acquired in 2018. The Company retained no ownership in CoinTracking GmbH and has no continuing involvement with CoinTracking GmbH as of the date of the sale of the controlling interest. In addition, the Company discontinued its cryptocurrency investment segment. The statement of operations and balance sheet impact below for the period from Inception through December 31, 2017 and as of December 31, 2017 reflect the operations of the cryptocurrency investment segment. A reconciliation of the operations of the cryptocurrency investment segment and CoinTracking GmbH to the Consolidated Statement of Operations is shown below: Year Ended December 31, 2018 For the period from Inception March 9, 2017 through December 31, 2017 Revenue: Subscription revenue, net $ 3,553,979 $ - Operating expenses: Cost of subscription revenues 350,348 - General and administrative expenses 3,623,234 199,937 Share-based compensation 911,003 40,182 Total Operating Expenses 4,884,585 (240,119 ) Operating loss (1,330,606 ) (240,119 ) Net realized gains on investment in cryptocurrency 1,303,130 781,373 Impairment of investments, cryptocurrency (2,066,803 ) - Impairment of investments, non-cryptocurrency (410,050 ) - Impairment of assets held for sale (743,987 ) - Impairment of goodwill (9,356,105 ) - Impairment of intangibles (3,743,480 ) Other income(expense) 144,608 - Income/(loss) before provision for income taxes (16,203,293 ) 541,254 Provision for income taxes 172,838 - Net income/(loss) $ (16,376,131 ) $ 541,254 Loss attributable to noncontrolling interest (6,516,860 ) - Income/(loss) attributable to Crypto Company $ (9,859,271 ) $ 541,254 The loss attributable to the Crypto Company of $9,859,271 for the year ended December 31, 2018 is comprised of a loss of $1,844,896 from the cryptocurrency investment segment, $6,542,979 representing 50.1% of CoinTracking GmbH’s operations loss from their stand-alone financial statements, $743,987 impairment of assets held for sale and $727,409 of costs incurred by the Company in support of CoinTracking GmbH’s operations, which costs were not allocated to the noncontrolling interest. A reconciliation of the assets and liabilities held for sale of the cryptocurrency investment segment and CoinTracking GmbH to the consolidated balance sheets is shown below: December 31, 2018 December 31, 2017 Cash and cash equivalents $ 1,104,202 $ - Loan receivable, related party 170,684 - Prepaid expenses and other current assets 103,086 - Impairment in assets held for sale (743,987 ) Contract asset for commissions and incentives, current portion 73,733 - Total current assets held for sale 707,718 - Equipment, net of accumulated depreciation 10,369 - Contract asset for commissions and incentives, net of current portion 32,293 - Investment in cryptocurrency 229,280 964,067 Investments, non-cryptocurrency 2,005 167,818 Goodwill 1,694,705 - Intangible assets, net 2,496,610 - Other assets 17,083 - Total noncurrent assets held for sale 4,482,345 1,131,885 Total assets held for sale $ 5,190,063 $ 1,131,885 Accounts payable and accrued expenses 362,149 - Income taxes payable 167,846 - Contract liabilities, net of current portion 1,750,465 - Total current liabilities held for sale 2,280,460 Contract liabilities, net of current portion 847,461 - Total noncurrent liabilities held for sale 847,861 - Total liabilities held for sale $ 3,127,921 $ - Cash flows from discontinued operations: Depreciation and amortization $ 1,047,526 $ - Impairment of goodwill $ 9,356,105 $ - Impairment of intangible assets $ 3,743,479 $ - Capital expenditures $ 19,943 $ - The balance sheet at December 31, 2017 includes the cryptocurrency investment segment. CoinTracking GmbH was not acquired until 2018. |
Provision for Income Taxes
Provision for Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Note 16 – PROVISION FOR Income taxes Income Tax – The components of the provision for income taxes are as follows: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Current: Federal $ - $ - State 1,600 800 Total current $ 1,600 $ 800 Deferred: Federal $ - $ - State - - Total deferred $ - $ - Provision for income taxes Significant Components of the Company’s net deferred tax assets are as follows: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Federal and state carryforwards $ 2,760,996 $ 815,300 Stock base compensation 4,157,006 1,764,100 Reserves and accruals 82,576 Other (9,026 ) 6,991,552 2,579,400 Valuation allowance (6,991,552 ) (2,579,400 ) $ - $ - Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of our lack of U.S. earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $4,894,551 during the year ended December 31, 2018. Income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income rates of 21% to pre-tax loss as follows for the following periods: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Tax benefit at federal statutory rate $ (2,569,899 ) $ (2,006,852 ) State income tax, net of federal benefit (2,138,781 ) (571,548 ) Increase in valuation allowance 6,323,644 2,579,200 Previously unrecognized deferred tax assets (1,613,364 ) - Income tax expense $ 1,600 $ 800 As of December 31, 2018, we had a net operating loss carryforward for federal income tax purposes of approximately $9,276,216, portions of which will begin to expire in 2037. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before utilization. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 - SUBSEQUENT EVENTS On December 28, 2018, CoinTracking entered into an agreement on the purchase and assignment of shares, agreements on a purchase price of loan agreement and a compensation agreement, pursuant to the laws of the Republic of Germany, with Kachel Holding and CoinTracking GmbH pursuant to which, on January 2, 2019, CoinTracking sold 12,525 shares of equity interest in CoinTracking GmbH, representing 50.1% of the outstanding equity interests in CoinTracking GmbH and CoinTracking’s entire equity ownership stake in CoinTracking GmbH, to Kachel Holding in exchange for $2,200,000, of which (i) $1,000,000 was paid in cash to CoinTracking and (ii) $1,200,000 was applied toward the repayment of an outstanding loan in the amount of $1,500,000 from CoinTracking GmbH to CoinTracking under the CoinTracking Note. On January 15, 2019, the Company entered into a settlement agreement with Mr. Poutre, whereby the Company agreed to pay Mr. Poutre $40,000 as settlement of all amounts outstanding in connection with his Separation and Consulting Agreement. In connection with the settlement the Company reduced its accounts payable and accrued expenses to $40,000 as of December 31, 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation |
Consolidation | Consolidation |
Recent Developments | Recent Developments – As a result of the pending sale as of December 31, 2018, of CoinTracking’s entire equity ownership stake in CoinTracking GmbH, and a strategic shift in the Company’s business in the fourth quarter of 2018 away from cryptocurrency investing to blockchain consulting and education, the assets and liabilities to be sold or disposed of other than by sale are reported in assets and liabilities held for sale in the Consolidated Balance Sheets as of December 31, 2018. Additionally, the current operating results associated with these assets and liabilities have been reclassified to give effect to these changes and are reported as discontinued operations in the Consolidated Statements of Operations for all periods presented. See “Note 15 - Discontinued Operations” and “Note 17 - Subsequent Events” for additional details. |
Liquidity and Going Concern | Liquidity and Going Concern The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain financing to fund the Company’s expenses and achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, private placements of capital stock, debt borrowings, partnerships and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful or that the Company will be able to replace the revenues lost as a result of the sale of CoinTracking GmbH, in 2019 and beyond. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. |
Use of Estimates | Use of estimates |
Cash and Cash Equivalents | Cash and cash equivalents |
Investments in Cryptocurrency | Investments in cryptocurrency Realized gains and losses on sales of investments in cryptocurrency, and impairment losses, are included in other income/(expense) in the Consolidated Statements of Operations. The following table presents additional information about investments in cryptocurrency, as of December 31, 2018: December 31, 2018 Balance at January 1, 2018 $ 964,067 Acquisition of CoinTracking GmbH 1,115,345 Purchases of cryptocurrency 5,269,888 Net realized gains on investments in cryptocurrency 1,303,130 Transfer from investments, non-cryptocurrency 255,763 Customer payments in cryptocurrency 1,211,250 Expenditures of cryptocurrency (292,060 ) Sales of cryptocurrency (7,498,837 ) Impairment of cryptocurrency (2,066,803 ) Foreign currency impact (32,463 ) Balance at December 31, 2018 $ 229,280 The following table summarizes the historical cost of cryptocurrencies, held as of December 31, 2018: Bitcoin $ 200,849 Ethereum 19,383 Litecoin 5,153 Bitcoin Cash 2,018 Ripple 1,290 Other Cryptocurrencies 587 Balance at December 31, 2018 $ 229,280 The investments in cryptocurrency are included in assets held for sale at December 31, 2018. |
Investments - Non-cryptocurrency | Investments – non-cryptocurrency The Company received tokens for $255,763 of its investments, at cost, during 2018 which have been transferred to an active exchange and included in Investments in Cryptocurrency in the consolidated balance sheets. The Company has evaluated the guidance in Accounting Standards Codification (“ASC”) No. 325-20 Investments – Other, in determining to account for its investments, non-cryptocurrency using the cost method since the investments are not marketable and do not give the Company significant influence. The Company has determined that $160,050 of its remaining token pre-sale or SAFT investments as of December 31, 2018 were impaired as the Company determined that a token generation event and trading on an active change were remote. During the year ended December 31, 2018, the Company determined that its SAFE investment is impaired as the enterprise changed its primary business model and requires additional financing to bring its products to market. Therefore, the Company has recorded an impairment loss of $250,000, representing the full value of its investment. |
Equipment | Equipment |
Impairment of Long-lived Assets | Impairment of long-lived assets – |
Business Combination | Business combination – |
Goodwill and Indefinite Lived Intangible Assets | Goodwill and indefinite lived intangible assets The Company assesses whether goodwill impairment and indefinite lived intangible assets exists using both qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed to determine whether a goodwill impairment exists at the reporting unit. The Company performed the annual impairment test for goodwill and intangible assets with indefinite lives as of December 31, 2018 using a quantitative assessment, and recorded an intangible asset impairment of $993,833, and $9,356,105 for goodwill, related to the intangible assets and goodwill acquired in connection with the purchase of CoinTracking GmbH (See Note 9 – Goodwill and Intangible Assets for further information). There was no impairment for the period from inception through December 31, 2017. In addition, we capitalized certain costs incurred with developing our CoinTracking SaaS platform in accordance with ASC 985-20, Software — Costs of Software to be Sold, Leased, or Marketed once technological feasibility has been established. Capitalized software costs primarily include i) external direct costs of services utilized in software development and ii) compensation and related benefits for employees who are directly associated with software development. We amortized our capitalized software costs over a five-year period, reflecting the estimated useful lives of the assets. |
Foreign Currency Translation | Foreign Currency Translation |
Income Taxes | Income taxes – When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of December 31, 2018, we are subject to taxation in the U.S., as well as state and German taxes. The Company has not been audited by the U.S. Internal Revenue Service, nor has the Company been audited by any states or in Germany. Subsequent to September 30, 2018, we sold our entire equity ownership stake in CoinTracking GmbH. See “Note 17 - Subsequent Events” for additional details. |
Fair Value Measurements | Fair value measurements Level 1 Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurable date. Level 2 Inputs, other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data at the measurement date. Level 3 Unobservable inputs that reflect management’s best estimate of what participants would use in pricing the asset or liability at the measurement date. The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts payable and accrued expenses approximate fair value because of the short maturity of these instruments. |
Revenue Recognition | Revenue recognition ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method for contracts as of the date of initial application. There is no cumulative impact to the Company’s retained earnings at January 1, 2018. See “Note 6 – Subscription Revenue Recognition” for additional information on the impact to the Company. |
Share-based Compensation | Share-based compensation Equity instruments (“instruments”) issued to non-employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the instruments are vested. The compensation cost is remeasured at fair value at each reporting period when the award vests. As a result, stock option-based payments to non-employees can result in significant volatility in compensation expense. The Company accounts for its share-based compensation using the Black-Scholes model to estimate the fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to the (i) expected volatility of the Company’s common stock price, (ii) expected life of the award, which for options is the period of time over which employees and non-employees are expected to hold their options prior to exercise, and (iii) risk-free interest rate. |
Net Loss Per Common Share | Net loss per common share |
Marketing Expense | Marketing expense – |
Reclassifications | Reclassifications – |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Investments in Cryptocurrency | The following table presents additional information about investments in cryptocurrency, as of December 31, 2018: December 31, 2018 Balance at January 1, 2018 $ 964,067 Acquisition of CoinTracking GmbH 1,115,345 Purchases of cryptocurrency 5,269,888 Net realized gains on investments in cryptocurrency 1,303,130 Transfer from investments, non-cryptocurrency 255,763 Customer payments in cryptocurrency 1,211,250 Expenditures of cryptocurrency (292,060 ) Sales of cryptocurrency (7,498,837 ) Impairment of cryptocurrency (2,066,803 ) Foreign currency impact (32,463 ) Balance at December 31, 2018 $ 229,280 |
Summary of Cryptocurrencies Held | The following table summarizes the historical cost of cryptocurrencies, held as of December 31, 2018: Bitcoin $ 200,849 Ethereum 19,383 Litecoin 5,153 Bitcoin Cash 2,018 Ripple 1,290 Other Cryptocurrencies 587 Balance at December 31, 2018 $ 229,280 |
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 Restatement of Consolidated Financial Statements | The effect of the restatement on the Company’s net loss, net loss attributable to The Crypto Company, comprehensive income and per-share amounts for the prior interim periods of 2018 ended June 30, 2018 are as follows: For the three months ended March 31, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (3,521,747 ) $ 1,587,709 $ (211,153 ) $ (2,145,191 ) Net loss attributable to The Crypto Company (3,158,118 ) 1,587,709 (105,788 ) (1,676,197 ) Net loss per common share – basic and diluted (0.15 ) (0.08 ) Weighted average common shares outstanding – basic and diluted 20,864,198 - 20,864,198 For the three months ended June 30, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (7,145,543 ) $ 182,168 $ (275,024 ) $ (7,238,399 ) Net loss attributable to The Crypto Company (7,272,309 ) 182,925 (137,237 ) (7,226,621 ) Net loss per common share – basic and diluted (0.34 ) (0.34 ) Weighted average common shares outstanding – basic and diluted 21,131,457 - 21,131,457 For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment (1) Restatement Adjustment (2) As Restated Net loss $ (10,667,291 ) $ 1,769,877 $ (486,176 ) $ (9,383,590 ) Net loss attributable to The Crypto Company (10,431,256 ) 1,770,634 (243,359 ) (8,903,981 ) Net loss per common share – basic and diluted (0.50 ) (0.42 ) Weighted average common shares outstanding – basic and diluted 21,003,328 - 21,003,328 (1) Reflects the restatement in connection with the accounting for investments in cryptocurrency as intangible assets with indefinite lives and record such investments in cryptocurrency at cost less impairment. (2) Reflects the restatement of the intangible asset amortization due to the completion of the preliminary valuation of the fair value of tangible and intangible assets acquired and related liabilities in connection with the acquisition of CoinTracking GmbH on January 26, 2018. The effect of the restatement on the Company’s condensed consolidated balance sheet as of December 31, 2017 is as follows: December 31, 2017 As Previously Reported Restatement Adjustment Audited and Restated Investment in cryptocurrency, net $ 2,917,627 $ (2,917,627 ) $ - Total current assets 11,901,665 (2,917,627 ) (1) 8,984,038 Investment in cryptocurrency, net 2,917,627 (1,785,742 ) (1) 1,131,885 Total assets 11,971,485 (1,785,742 ) 10,185,743 Accumulated deficit (7,767,559 ) (1,785,742 ) (9,553,301 ) Total stockholders’ equity 11,273,076 (1,785,742 ) 9,487,334 Total liabilities and stockholders’ equity 11,971,485 (1,785,742 ) 10,185,743 (1) Includes reclassification of investments in cryptocurrency from current assets to long-term assets. The effect of the restatement on the Company’s condensed consolidated statement of operations for the period from Inception through December 31, 2017, are as follows: Inception through December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net realized gain on investment in cryptocurrency $ 781,373 $ (781,373 ) $ - Operating loss (9,551,371 ) (781,373 ) (10,332,744 ) Net change in unrealized appreciation (depreciation) on investment in cryptocurrency 1,785,742 (1,785,742 ) - Other income(expense): Net realized gain on investment in cryptocurrency - 781,373 781,373 Loss before provision for income taxes (7,766,759 ) (1,785,742 ) (9,552,231 ) Net loss (7,767,559 ) (1,785,742 ) (9,553,301 ) Net loss per common share - basic and diluted (0.46 ) (0.57 ) Weighted average common shares outstanding - basic and diluted 16,746,792 16,746,792 (1) Restatement adjustment includes reclassification of net realized gain/(loss) on investment in cryptocurrency from revenue to other income(expense). The effect of the restatement on the Company’s consolidated statement of cash flows for the period from Inception through December 31, 2017, are as follows: Inception through December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (7,767,559 ) $ (1,785,742 ) $ (9,553,301 ) Net change in unrealized appreciation (depreciation) on investment in cryptocurrency (1,785,742 ) 1,785,742 - Noncash investing activities: Cryptocurrency acquired in trade of cryptocurrency investments $ - $ 2,748,715 $ 2,748,715 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The table below summarizes the fair values of the assets acquired and liabilities assumed, translated from euros to USD, at the date of acquisition: CoinTracking GmbH Cash and cash equivalents $ 1,547,097 Investment in cryptocurrency 1,115,345 Loan receivable – related party 194,380 Other current assets 296,273 Goodwill 11,990,910 Intangible assets 7,726,356 Other assets 14,633 Total assets $ 22,884,994 Current liabilities $ 360,486 Contract liabilities, short term 2,686,858 Contract liabilities, long term 929,866 Noncontrolling interest 9,434,984 Total liabilities 13,412,194 Net assets acquired $ 9,472,800 |
Schedule of Unaudited Pro Forma Financial Information | For the year ended December 31, 2018: 2018 Revenue $ 3,553,979 Net loss (18,579,800 ) Basic and diluted loss per share: Basic and diluted $ (0.88 ) |
Investments, Non-cryptocurren_2
Investments, Non-cryptocurrency (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments [Abstract] | |
Summary of Changes in the Fair Value of Investments | The following table sets forth a summary of changes in the fair value of the Company’s Level 3 investments for the year ended December 31, 2018: Level 3 Non-Cryptocurrency Balance at December 31, 2017 $ 167,818 Transfers to investments in cryptocurrency (255,763 ) Purchases, sales, issuances, and settlement, net 500,000 Impairment (410,050 ) Balance at December 31, 2018 $ 2,005 |
Equipment (Tables)
Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Equipment | Equipment consists of the following at December 31: 2018 2017 Computer equipment $ 114,244 $ 69,241 Furniture equipment 20,980 3,754 135,224 72,995 Less accumulated depreciation (35,522 ) (4,675 ) $ 99,701 68,320 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The carrying amount of goodwill for the year ended December 31, 2018 was as follows: December 31, 2018 Balance at December 31, 2017 $ - Acquisitions 11,990,910 Impairment (9,356,105 ) Foreign translation impact (940,100 ) $ 1,694,705 |
Schedule of Intangible Assets | The carrying amounts of intangible assets for the year ended December 31, 2018 was as follows: Estimated Useful Life Gross Carry Amount Accumulated Amortization Impairment Balance as of Trade name - $ 1,797,768 - $ (993,833 ) $ 803,935 Software 5 Years 4,264,412 (795,888 ) (2,366,546 ) 1,101,978 Customer base 5 Years 1,058,422 (197,458 ) (270,267 ) 590,697 Capitalized software 5 Years 127,937 (15,104 ) (112,833 ) - $ 7,248,539 $ (1,008,450 ) $ (3,743,479 ) $ 2,496,610 |
Warrants for Common Stock (Tabl
Warrants for Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of Outstanding Warrants to Purchase Shares of Common Stock | As of December 31, 2018, outstanding warrants to purchase shares of the Company’s common stock were as follows: Number of Shares Issuance Date Exercisable Expiration Exercise Outstanding September 2017 Common Shares September 25, 2020 $ 2.00 168,125 |
Summary of Stock Options (Table
Summary of Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Options Activity | Weighted Average Weighted Remaining Average Contractual Aggregate Number Exercise Term Intrinsic of Shares Price (years) Value Options outstanding at December 31, 2016 - Options granted 657,031 $ 2.28 Options cancelled - - Options exercised (12,500 ) $ 1.00 Options outstanding, at December 31, 2017 644,531 $ 2.32 Options granted 2,807,062 $ 7.37 Options cancelled (2,008,552 ) $ 6.93 Options exercised (41,429 ) $ 2.09 Options outstanding, at December 31, 2018 1,401,612 $ 5.83 9.08 $ - Exercisable 1,013,635 $ 6.16 9.10 $ - Vested and exercisable and expected to vest, end of period 1,401,612 $ 5.83 9.08 - |
Schedule of Stock Option Assumptions Used | The range of assumptions used for the year ended December 31, 2018 and the period from Inception through December 31, 2017 are as follows: Year ended December 31, 2018 Period from Inception through December 31, 2017 Ranges Ranges Volatility 48 – 55 % 36 – 48 % Expected dividends 0 % 0 % Expected term (in years) 5 – 10 years 5 – 10 years Risk-free rate 1.81 – 3.12 % 1.81 – 2.36 % |
Basic and Diluted Loss Per Sh_2
Basic and Diluted Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Basic and Diluted | The following is a reconciliation of the basic and diluted loss per share computations for the year ended December 31, 2018 and the period from Inception through December 31, 2017: Year ended December 31, 2018 Period from Inception through December 31, 2017 (Restated) Numerator for basic and diluted income per share: Net loss from continuing operations attributable to the Company $ (9,043,978 ) $ (10,094,554 ) Discontinued operations: Income/(loss) attributable to the Company (9,859,271 ) 541,253 Net loss per share attributable to the Company $ (18,903,249 ) $ (9,553,301 ) Denominator for basic and diluted income per share: Weighted average shares (basic) 21,096,881 16,746,792 Common stock equivalents - - Weighted average shares (diluted) 21,096,881 16,746,792 Basic and diluted income (loss) per share: Net loss from continuing operations attributable to the Company $ (0.43 ) $ (0.60 ) Net loss from discontinued operations attributable to the Company (0.47 ) 0.03 Net loss attributable to the Company $ (0.90 ) $ (0.57 ) |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Reconciliation of Operations and Balance Sheet of Cryptocurrency Investment | A reconciliation of the operations of the cryptocurrency investment segment and CoinTracking GmbH to the Consolidated Statement of Operations is shown below: Year Ended December 31, 2018 For the period from Inception March 9, 2017 through December 31, 2017 Revenue: Subscription revenue, net $ 3,553,979 $ - Operating expenses: Cost of subscription revenues 350,348 - General and administrative expenses 3,623,234 199,937 Share-based compensation 911,003 40,182 Total Operating Expenses 4,884,585 (240,119 ) Operating loss (1,330,606 ) (240,119 ) Net realized gains on investment in cryptocurrency 1,303,130 781,373 Impairment of investments, cryptocurrency (2,066,803 ) - Impairment of investments, non-cryptocurrency (410,050 ) - Impairment of assets held for sale (743,987 ) - Impairment of goodwill (9,356,105 ) - Impairment of intangibles (3,743,480 ) Other income(expense) 144,608 - Income/(loss) before provision for income taxes (16,203,293 ) 541,254 Provision for income taxes 172,838 - Net income/(loss) $ (16,376,131 ) $ 541,254 Loss attributable to noncontrolling interest (6,516,860 ) - Income/(loss) attributable to Crypto Company $ (9,859,271 ) $ 541,254 A reconciliation of the assets and liabilities held for sale of the cryptocurrency investment segment and CoinTracking GmbH to the consolidated balance sheets is shown below: December 31, 2018 December 31, 2017 Cash and cash equivalents $ 1,104,202 $ - Loan receivable, related party 170,684 - Prepaid expenses and other current assets 103,086 - Impairment in assets held for sale (743,987 ) Contract asset for commissions and incentives, current portion 73,733 - Total current assets held for sale 707,718 - Equipment, net of accumulated depreciation 10,369 - Contract asset for commissions and incentives, net of current portion 32,293 - Investment in cryptocurrency 229,280 964,067 Investments, non-cryptocurrency 2,005 167,818 Goodwill 1,694,705 - Intangible assets, net 2,496,610 - Other assets 17,083 - Total noncurrent assets held for sale 4,482,345 1,131,885 Total assets held for sale $ 5,190,063 $ 1,131,885 Accounts payable and accrued expenses 362,149 - Income taxes payable 167,846 - Contract liabilities, net of current portion 1,750,465 - Total current liabilities held for sale 2,280,460 Contract liabilities, net of current portion 847,461 - Total noncurrent liabilities held for sale 847,861 - Total liabilities held for sale $ 3,127,921 $ - Cash flows from discontinued operations: Depreciation and amortization $ 1,047,526 $ - Impairment of goodwill $ 9,356,105 $ - Impairment of intangible assets $ 3,743,479 $ - Capital expenditures $ 19,943 $ - |
Provision for Income Taxes (Tab
Provision for Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | Income Tax – The components of the provision for income taxes are as follows: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Current: Federal $ - $ - State 1,600 800 Total current $ 1,600 $ 800 Deferred: Federal $ - $ - State - - Total deferred $ - $ - Provision for income taxes |
Schedule of Net Deferred Tax Assets | Significant Components of the Company’s net deferred tax assets are as follows: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Federal and state carryforwards $ 2,760,996 $ 815,300 Stock base compensation 4,157,006 1,764,100 Reserves and accruals 82,576 Other (9,026 ) 6,991,552 2,579,400 Valuation allowance (6,991,552 ) (2,579,400 ) $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation | Income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income rates of 21% to pre-tax loss as follows for the following periods: For the Year Ended December 31, 2018 For the Period from Inception through December 31, 2017 Tax benefit at federal statutory rate $ (2,569,899 ) $ (2,006,852 ) State income tax, net of federal benefit (2,138,781 ) (571,548 ) Increase in valuation allowance 6,323,644 2,579,200 Previously unrecognized deferred tax assets (1,613,364 ) - Income tax expense $ 1,600 800 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jan. 02, 2019 | Jan. 26, 2018 | Jan. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock ownership percentage | 4.00% | 4.00% | 4.00% | ||||||
Cash balance | $ 8,950,244 | $ 2,448 | $ 8,950,244 | ||||||
Cash declined | 8,947,796 | ||||||||
Cash paid for acquisition, net of cash acquired | 3,189,303 | ||||||||
Net loss | $ (7,238,399) | $ (2,145,191) | $ (9,383,590) | (9,553,301) | (18,903,249) | ||||
Working capital | (955,303) | ||||||||
Investment in cryptocurrency at fair value | 964,067 | 964,067 | |||||||
Accumulated deficit | 9,553,301 | 28,456,550 | 9,553,301 | ||||||
Investment in non-cryptocurrency | 667,818 | ||||||||
Purchase of investments, non-cryptocurrency | 500,000 | ||||||||
Transfer of non-cryptocurrency to investments in cryptocurrency | 255,763 | ||||||||
Impairment of investments, non-cryptocurrency | |||||||||
Impairment loss on definite lived intangible assets, classified as held for sale | |||||||||
Intangible assets, amortization period | 5 years | ||||||||
Intangible asset impairment | $ 993,833 | ||||||||
Impairment on goodwill | 9,356,105 | ||||||||
Income tax payable | 800 | 1,600 | 800 | ||||||
Marketing expenses | $ 20,054 | $ 342,645 | |||||||
Minimum [Member] | |||||||||
Estimated useful life of equipment | 3 years | ||||||||
Maximum [Member] | |||||||||
Estimated useful life of equipment | 5 years | ||||||||
SAFE [Member] | |||||||||
Common stock ownership percentage | 4.00% | 4.00% | 4.00% | ||||||
Investment in a private enterprise | $ 250,000 | $ 250,000 | $ 250,000 | ||||||
Impairment of investments, non-cryptocurrency | 250,000 | ||||||||
SAFT [Member] | |||||||||
Investment in non-cryptocurrency | 417,818 | ||||||||
Investment in a private enterprise | 250,000 | ||||||||
Impairment of remaining tokens received | $ 160,050 | ||||||||
Subsequent Event [Member] | CoinTracking [Member] | |||||||||
Common stock ownership percentage | 100.00% | ||||||||
Cash received on sale of transaction | $ 1,000,000 | ||||||||
Repayments of outstanding loan | $ 1,500,000 | ||||||||
CoinTracking GmbH [Member] | |||||||||
Common stock ownership percentage | 50.10% | 50.10% | |||||||
Repayments of outstanding loan | $ 1,200,000 | ||||||||
Cash paid for acquisition, net of cash acquired | $ 9,472,800 | $ 9,472,800 | |||||||
CoinTracking GmbH [Member] | Finite-Lived Intangible Assets [Member] | |||||||||
Impairment loss on definite lived intangible assets, classified as held for sale | $ 2,749,646 | ||||||||
CoinTracking GmbH [Member] | Subsequent Event [Member] | |||||||||
Common stock ownership percentage | 50.10% | ||||||||
Number of shares sold | 12,525 | ||||||||
Number of shares sold, value | $ 2,200,000 | ||||||||
CoinTracking GmbH [Member] | Subsequent Event [Member] | CoinTracking [Member] | |||||||||
Repayments of outstanding loan | $ 1,200,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Investments in Cryptocurrency (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance at January 1, 2018 | $ 964,067 | |
Acquisition of CoinTracking GmbH | 1,115,345 | |
Purchases of cryptocurrency | $ 125,500 | 5,269,888 |
Net realized gains on investments in cryptocurrency | 1,303,130 | |
Transfer from investments, non-cryptocurrency | 255,763 | |
Customer payments in cryptocurrency | 1,211,250 | |
Expenditures of cryptocurrency | (292,060) | |
Sales of cryptocurrency | (7,498,837) | |
Impairment of cryptocurrency | (2,066,803) | |
Foreign currency impact | (32,463) | |
Balance at December 31, 2018 | $ 964,067 | $ 229,280 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Cryptocurrencies Held (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Investments | $ 229,280 | $ 964,067 |
Bitcoin [Member] | ||
Investments | 200,849 | |
Ethereum [Member] | ||
Investments | 19,383 | |
Litecoin [Member] | ||
Investments | 5,153 | |
Bitcoin Cash [Member] | ||
Investments | 2,018 | |
Ripple [Member] | ||
Investments | 1,290 | |
Other Cryptocurrencies [Member] | ||
Investments | $ 587 |
Restatement of the Consolidat_3
Restatement of the Consolidated Financial Statements (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 10 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Jan. 26, 2018 | |
Investments in cryptocurrency | $ 964,067 | $ 229,280 | |||
Non-controlling interest | $ 2,177,108 | ||||
Unrealized investments in cryptocurrencies | $ 2,200,449 | ||||
Percentage of volume of trades on exchanges | 1.30% | ||||
Investment in trading exchange on Bitcoin/USD per day | $ 168,000,000 | ||||
Equity interests, percentage | 4.00% | 4.00% | |||
Investment in non-cryptocurrency | $ 667,818 | ||||
Purchase of investments, non-cryptocurrency | 500,000 | ||||
Received tokens for investment cost | 255,763 | ||||
Impairment loss on investment | 250,000 | ||||
SAFE [Member] | |||||
Investment in a private enterprise | $ 250,000 | $ 250,000 | |||
Equity interests, percentage | 4.00% | 4.00% | |||
SAFT [Member] | |||||
Investment in a private enterprise | $ 250,000 | ||||
Investment in non-cryptocurrency | 417,818 | ||||
ICOs [Member] | |||||
Investments in cryptocurrency | $ 367,639 | ||||
Impairment on investments | |||||
CoinTracking GmbH [Member] | |||||
Intangible assets | 7,726,356 | ||||
Non-controlling interest | 9,434,984 | ||||
Reduction in net of assets acquired | 43,348 | ||||
Increase in goodwill | 1,665,279 | ||||
Amortization expense | $ 211,153 | $ 486,176 | $ 993,023 | ||
Equity interests, percentage | 50.10% | 50.10% | |||
Restatement Adjustment [Member] | |||||
Investment in cryptocurrency, overstated amount | $ 1,785,742 |
Restatement of the Consolidat_4
Restatement of the Consolidated Financial Statements - Schedule of Restatement of Consolidated Financial Statements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 10 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | ||
Net loss | $ (7,238,399) | $ (2,145,191) | $ (9,383,590) | $ (9,553,301) | $ (18,903,249) | |
Net loss attributable to The Crypto Company | $ (7,226,621) | $ (1,676,197) | $ (8,903,981) | $ (9,553,301) | $ (25,420,109) | |
Net loss per common share - basic and diluted | $ (0.34) | $ (0.08) | $ (0.42) | $ (0.57) | $ (0.90) | |
Weighted average common shares outstanding - basic and diluted | 21,131,457 | 20,864,198 | 21,003,328 | 16,746,792 | 21,096,881 | |
Investment in cryptocurrency, net | ||||||
Total current assets | 8,984,038 | $ 5,271,794 | ||||
Investment in cryptocurrency, net | 1,131,885 | |||||
Total assets | 10,185,743 | 5,382,094 | ||||
Accumulated deficit | (9,553,301) | (28,456,550) | ||||
Total stockholders' equity | 9,487,334 | (959,969) | ||||
Total liabilities and stockholders' equity | 10,185,743 | 5,382,094 | ||||
Net realized gain on investment in cryptocurrency | ||||||
Operating loss | (9,958,524) | (9,027,534) | ||||
Net change in unrealized appreciation (depreciation) on investment in cryptocurrency | ||||||
Net realized gain on investment in cryptocurrency | 781,373 | |||||
Loss before provision for income taxes | (10,093,754) | (9,042,378) | ||||
Cryptocurrency acquired in trade of cryptocurrency investments | 2,748,715 | $ 5,065,384 | ||||
Previously Reported [Member] | ||||||
Net loss | $ (7,145,543) | $ (3,521,747) | $ (10,667,291) | |||
Net loss attributable to The Crypto Company | $ (7,272,309) | $ (3,158,118) | $ (10,431,256) | $ (7,767,559) | ||
Net loss per common share - basic and diluted | $ (0.34) | $ (0.15) | $ (0.50) | $ (0.46) | ||
Weighted average common shares outstanding - basic and diluted | 21,131,457 | 20,864,198 | 21,003,328 | 16,746,792 | ||
Investment in cryptocurrency, net | $ 2,917,627 | |||||
Total current assets | 11,901,665 | |||||
Investment in cryptocurrency, net | 2,917,627 | |||||
Total assets | 11,971,485 | |||||
Accumulated deficit | (7,767,559) | |||||
Total stockholders' equity | 11,273,076 | |||||
Total liabilities and stockholders' equity | 11,971,485 | |||||
Net realized gain on investment in cryptocurrency | 781,373 | |||||
Operating loss | (9,551,371) | |||||
Net change in unrealized appreciation (depreciation) on investment in cryptocurrency | 1,785,742 | |||||
Net realized gain on investment in cryptocurrency | ||||||
Loss before provision for income taxes | (7,766,759) | |||||
Cryptocurrency acquired in trade of cryptocurrency investments | ||||||
Restatement Adjustment (1) [Member] | ||||||
Net loss | [1] | $ 182,168 | $ 1,587,709 | $ 1,769,877 | ||
Net loss attributable to The Crypto Company | [1] | $ 182,925 | $ 1,587,709 | $ 1,770,634 | ||
Weighted average common shares outstanding - basic and diluted | [1] | |||||
Restatement Adjustment (2) [Member] | ||||||
Net loss | [2] | $ (275,024) | $ (211,153) | $ (486,176) | ||
Net loss attributable to The Crypto Company | [2] | $ (137,237) | $ (105,788) | $ (243,359) | ||
Restatement Adjustment [Member] | ||||||
Net loss attributable to The Crypto Company | (1,785,742) | |||||
Investment in cryptocurrency, net | (2,917,627) | |||||
Total current assets | [3] | (2,917,627) | ||||
Investment in cryptocurrency, net | [3] | (1,785,742) | ||||
Total assets | (1,785,742) | |||||
Accumulated deficit | (1,785,742) | |||||
Total stockholders' equity | (1,785,742) | |||||
Total liabilities and stockholders' equity | (1,785,742) | |||||
Net realized gain on investment in cryptocurrency | (781,373) | |||||
Operating loss | (781,373) | |||||
Net change in unrealized appreciation (depreciation) on investment in cryptocurrency | (1,785,742) | |||||
Net realized gain on investment in cryptocurrency | 781,373 | |||||
Loss before provision for income taxes | (1,785,742) | |||||
Cryptocurrency acquired in trade of cryptocurrency investments | $ 2,748,715 | |||||
[1] | Reflects the restatement in connection with the accounting for investments in cryptocurrency as intangible assets with indefinite lives and record such investments in cryptocurrency at cost less impairment. | |||||
[2] | Reflects the restatement of the intangible asset amortization due to the completion of the preliminary valuation of the fair value of tangible and intangible assets acquired and related liabilities in connection with the acquisition of CoinTracking GmbH on January 26, 2018. | |||||
[3] | Includes reclassification of investments in cryptocurrency from current assets to long-term assets. |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Jan. 26, 2018 | Jan. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 12, 2017 |
Equity interests, percentage | 4.00% | 4.00% | 4.00% | |||||
Purchase price | $ 3,189,303 | |||||||
Increase in goodwill adjustments | 11,990,910 | |||||||
Goodwill on acquisition | $ 1,694,705 | $ 1,694,705 | ||||||
CoinTracking GmbH [Member] | ||||||||
Equity interests, percentage | 50.10% | 50.10% | 50.10% | |||||
Payments to acquire businesses in cash | $ 4,736,400 | |||||||
Number of common stock shares purchased | 473,640 | |||||||
Business combination, purchase price per share | $ 10 | |||||||
Purchase price | $ 9,472,800 | $ 9,472,800 | ||||||
Intangible assets | 7,726,356 | $ 7,726,356 | $ 7,726,356 | |||||
Noncontrolling interest | 9,434,984 | 9,434,984 | ||||||
Additional adjustments on net assets acquired | 267,401 | 267,401 | ||||||
Increase in goodwill adjustments | 1,976,029 | |||||||
Goodwill on acquisition | $ 11,990,910 | $ 11,990,910 | $ 11,990,910 | $ 10,014,881 | ||||
CoinTracking GmbH [Member] | Accredited Investors [Member] | ||||||||
Business combination, purchase price per share | $ 7 |
Acquisition - Schedule of Fair
Acquisition - Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 | Jan. 26, 2018 | Dec. 31, 2017 |
Goodwill | $ 1,694,705 | |||
CoinTracking GmbH [Member] | ||||
Cash and cash equivalents | $ 1,547,097 | |||
Investment in cryptocurrency | 1,115,345 | |||
Loan receivable - related party | 194,380 | |||
Other current assets | 296,273 | |||
Goodwill | 11,990,910 | $ 10,014,881 | 11,990,910 | |
Intangible assets | $ 7,726,356 | 7,726,356 | ||
Other assets | 14,633 | |||
Total assets | 22,884,994 | |||
Current liabilities | 360,486 | |||
Contract liabilities, short term | 2,686,858 | |||
Contract liabilities, long term | 929,866 | |||
Noncontrolling interest | 9,434,984 | |||
Total liabilities | 13,412,194 | |||
Net assets acquired | $ 9,472,800 |
Acquisition - Schedule of Unaud
Acquisition - Schedule of Unaudited Pro Forma Financial Information (Details) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / shares | |
Business Combinations [Abstract] | |
Revenue | $ 3,553,979 |
Net loss | $ (18,579,800) |
Basic and diluted loss per share: Basic and diluted | $ / shares | $ (0.88) |
Subscription Revenue Recognit_2
Subscription Revenue Recognition (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 26, 2018 | Dec. 31, 2017 | |
Subscriptions of revenue, description | Revenue collected in advance for subscriptions ranging from annual to perpetual packages were deferred and recognized as revenue on a straight-line basis over the terms of the applicable subscription period or performance obligation period. For "lifetime" revenue packages, where the customer had access to the website for an unlimited length of time, the Company elected to recognize revenue on a straight-line basis over three years. | ||
Potential credit withheld by paypal | $ 47,872 | ||
Subscription revenue | 3,553,979 | ||
Contract liabilities, current | 1,750,465 | ||
Contract liabilities, noncurrent | 847,461 | ||
Amortization of sales incentive programs cost | 208,104 | ||
Aggregate contract asset | $ 106,026 | ||
CoinTracking LLC [Member] | |||
Contract liabilities | $ 3,616,724 |
Investments, Non-Cryptocurren_3
Investments, Non-Cryptocurrency (Details Narrative) | Dec. 31, 2018USD ($) |
Investment in non-cryptocurrency | $ 667,818 |
Received tokens for investment cost | 255,763 |
SAFT Agreements [Member] | |
Investment in non-cryptocurrency | 417,818 |
Received tokens for investment cost | 250,000 |
Investment in a private enterprise | $ 250,000 |
Investments, Non-Cryptocurren_4
Investments, Non-Cryptocurrency - Summary of Changes in the Fair Value of Investments (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Impairment | ||
Level 3 [Member] | ||
Investment in non-cryptocurrency, beginning balance | 167,818 | |
Transfers to investments in cryptocurrency | (255,763) | |
Purchases, sales, issuances, and settlement, net | 500,000 | |
Impairment | (410,050) | |
Investment in non-cryptocurrency, ending balance | $ 167,818 | $ 2,005 |
Equipment (Details Narrative)
Equipment (Details Narrative) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 4,675 | $ 30,847 |
Assets held for sale | $ 10,369 |
Equipment - Schedule of Equipme
Equipment - Schedule of Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Equipment, gross | $ 135,224 | $ 72,995 |
Less accumulated depreciation | (35,522) | (4,675) |
Equipment, net | 89,332 | 68,320 |
Computer Equipment [Member] | ||
Equipment, gross | 114,244 | 69,241 |
Furniture Equipment [Member] | ||
Equipment, gross | $ 20,980 | $ 3,754 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details Narrative) - USD ($) | Jan. 02, 2019 | Jan. 26, 2018 | Jan. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Amortization expense related to intangible assets | $ 1,008,450 | ||||
Impairment of goodwill | 9,356,105 | ||||
Impairment of indefinite lived intangible asset | (3,743,479) | ||||
Purchase price | $ 3,189,303 | ||||
Description of fair value derived from market approach | The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability of these publicly traded companies to the reporting unit. The Company used a 50% weighting of these two approaches in determining the fair value of CoinTracking GmbH, which fair value approximated the Company's sales price. | ||||
CoinTracking GmbH [Member] | |||||
Purchase price | $ 9,472,800 | $ 9,472,800 | |||
CoinTracking GmbH [Member] | Subsequent Event [Member] | |||||
Proceeds from sale of software upon subscription by non-controlling shareholders | $ 2,200,000 | ||||
Trade Name [Member] | |||||
Impairment of indefinite lived intangible asset | $ 993,833 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning balance | ||
Acquisitions | 11,990,910 | |
Impairment | (9,356,105) | |
Foreign translation impact | (940,100) | |
Goodwill, ending balance | $ 1,694,705 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Gross Carry Amount | $ 7,248,539 | |
Accumulated Amortization | (1,008,450) | |
Impairment | 3,743,479 | |
Intangible Assets, Net | $ 2,496,610 | |
Trade Name [Member] | ||
Estimated Useful Life | 0 years | |
Gross Carry Amount | $ 1,797,768 | |
Accumulated Amortization | ||
Impairment | (993,833) | |
Intangible Assets, Net | $ 803,935 | |
Software [Member] | ||
Estimated Useful Life | 5 years | |
Gross Carry Amount | $ 4,264,412 | |
Accumulated Amortization | (795,888) | |
Impairment | (2,366,546) | |
Intangible Assets, Net | $ 1,101,978 | |
Customer Base [Member] | ||
Estimated Useful Life | 5 years | |
Gross Carry Amount | $ 1,058,422 | |
Accumulated Amortization | (197,458) | |
Impairment | (270,267) | |
Intangible Assets, Net | $ 590,697 | |
Capitalized Software [Member] | ||
Estimated Useful Life | 5 years | |
Gross Carry Amount | $ 127,937 | |
Accumulated Amortization | (15,104) | |
Impairment | (112,833) | |
Intangible Assets, Net |
Warrants for Common Stock - Sch
Warrants for Common Stock - Schedule of Outstanding Warrants to Purchase Shares of Common Stock (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Issuance Date | September 2017 |
Exercisable for | Common Shares |
Expiration Date | Sep. 25, 2020 |
Exercise Price | $ / shares | $ 2 |
Number of Shares Outstanding Under Warrants | shares | 168,125 |
Summary of Stock Options (Detai
Summary of Stock Options (Details Narrative) - USD ($) | Jul. 21, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Stock options granted | 2,807,062 | 657,031 | |||
Number of outstanding stock option awards | 644,531 | 1,401,612 | 644,531 | ||
Share based compensation | $ 5,786,979 | $ 2,795,891 | |||
Total intrinsic value of options exercised | $ 7,175,000 | $ 295,763 | |||
Restricted stock awards granted | |||||
Stock Option [Member] | |||||
Unrecognized compensation costs | $ 357,058 | ||||
Unrecognized compensation weighted average period | 1 year 2 months 5 days | ||||
Board of Directors [Member] | |||||
Stock options granted | 450,000 | ||||
Employees [Member] | |||||
Stock options granted | 1,957,062 | ||||
Non Employees [Member] | |||||
Stock options granted | 400,000 | ||||
2017 Equity Incentive Plan [Member] | |||||
Number of stock option remain reserved for future issuance | 3,544,459 | ||||
Number of outstanding stock option awards | 1,401,612 | ||||
2017 Equity Incentive Plan [Member] | |||||
Number of stock option remain reserved for future issuance | 5,000,000 | ||||
2017 Equity Incentive Plan [Member] | Maximum [Member] | |||||
Stock option award vesting period | 10 years |
Summary of Stock Options - Sche
Summary of Stock Options - Schedule of Stock Options Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options Outstanding, Beginning Balance | 644,531 | |
Number of Options Granted | 2,807,062 | 657,031 |
Number of Options Cancelled | (2,008,552) | |
Number of Options Exercised | (41,429) | (12,500) |
Number of Options Outstanding, Ending Balance | 1,401,612 | 644,531 |
Number of Options Outstanding, Exercisable | 1,013,635 | |
Number of Options Vested and Exercisable and Expected to Vest | 1,401,612 | |
Weighted Average Exercise Price, Options Outstanding, Beginning Balance | $ 2.32 | |
Weighted Average Exercise Price, Options Granted | 7.37 | 2.28 |
Weighted Average Exercise Price, Options Cancelled | 6.93 | |
Weighted Average Exercise Price, Options Exercised | 2.09 | 1 |
Weighted Average Exercise Price, Options Outstanding, Ending Balance | 5.83 | $ 2.32 |
Weighted Average Exercise Price, Options Exercisable | 6.16 | |
Weighted Average Exercise Price, Vested and Exercisable and Expected to Vest | $ 5.83 | |
Weighted Average Remaining Contractual Term, Options Outstanding | 9 years 29 days | |
Weighted Average Remaining Contractual Term, Options Exercisable | 9 years 1 month 6 days | |
Weighted Average Remaining Contractual Term, Vested and Exercisable and Expected to Vest | 9 years 29 days | |
Aggregate Intrinsic Value, Options Outstanding | ||
Aggregate Intrinsic Value, Options Exercisable | ||
Aggregate Intrinsic Value, Vested and Exercisable and Expected to Vest |
Summary of Stock Options - Sc_2
Summary of Stock Options - Schedule of Stock Option Assumptions Used (Details) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Expected dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Volatility | 36.00% | 48.00% |
Expected term (in years) | 5 years | 5 years |
Risk-free rate | 1.81% | 1.81% |
Maximum [Member] | ||
Volatility | 48.00% | 55.00% |
Expected term (in years) | 10 years | 10 years |
Risk-free rate | 2.36% | 3.12% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | May 17, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Jan. 15, 2019 | Apr. 03, 2018 |
Michael Poutre [Member] | Separation and Consulting Agreement [Member] | |||||
Related Party Transaction [Line Items] | |||||
Payments to related party | $ 90,000 | ||||
Due to related parties | 180,000 | ||||
Michael Poutre [Member] | Separation and Consulting Agreement [Member] | Subsequent Event [Member] | |||||
Related Party Transaction [Line Items] | |||||
Settlement of final amount to related party | $ 40,000 | ||||
Michael Poutre [Member] | Separation and Consulting Agreement [Member] | Tranches One [Member] | |||||
Related Party Transaction [Line Items] | |||||
Consultant fee payable to CFO, per month | $ 30,000 | ||||
Michael Poutre [Member] | Separation and Consulting Agreement [Member] | Tranches Two [Member] | |||||
Related Party Transaction [Line Items] | |||||
Consultant fee payable to CFO, per month | $ 30,000 | ||||
Full Stack Finance [Member] | |||||
Related Party Transaction [Line Items] | |||||
Legal fees | $ 111,075 | 476,287 | |||
Legal fees payable | 133,834 | ||||
CoinTracking GmbH [Member] | |||||
Related Party Transaction [Line Items] | |||||
Loans receivable | $ 170,684 | ||||
Loan interest rate | 2.00% | ||||
Accrued interest income | $ 0 | $ 3,300 | |||
Repayment of outstanding loan | 1,200,000 | ||||
CoinTracking GmbH [Member] | Loan Agreement [Member] | |||||
Related Party Transaction [Line Items] | |||||
Loan interest rate | 3.00% | ||||
Loan amount to be advanced | $ 3,000,000 | ||||
Long term loans payable | 1,500,000 | ||||
CoinTracking GmbH [Member] | Loan Agreement [Member] | Promissory Note One [Member] | |||||
Related Party Transaction [Line Items] | |||||
Long term notes payable | 300,000 | ||||
CoinTracking GmbH [Member] | Loan Agreement [Member] | Promissory Note Two [Member] | |||||
Related Party Transaction [Line Items] | |||||
Long term notes payable | 700,000 | ||||
CoinTracking GmbH [Member] | Loan Agreement [Member] | Promissory Note Three [Member] | |||||
Related Party Transaction [Line Items] | |||||
Long term notes payable | 500,000 | ||||
CoinTracking GmbH [Member] | Officer [Member] | |||||
Related Party Transaction [Line Items] | |||||
Shareholder receivable | $ 939,155 |
Basic and Diluted Loss Per Sh_3
Basic and Diluted Loss Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 10 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |||||
Numerator for basic and diluted income per share: Net loss from continuing operations attributable to the Company | $ (10,094,554) | $ (9,043,978) | |||
Discontinued operations: Income/(loss) attributable to the Company | 541,253 | (9,859,271) | |||
Net loss per share attributable to the Company | $ (7,238,399) | $ (2,145,191) | $ (9,383,590) | $ (9,553,301) | $ (18,903,249) |
Denominator for basic and diluted income per share: Weighted average shares (basic) | 16,746,792 | 21,096,881 | |||
Denominator for basic and diluted income per share: Common stock equivalents | |||||
Denominator for basic and diluted income per share: Weighted average shares (diluted) | 16,746,792 | 21,096,881 | |||
Basic and diluted income (loss) per share: Net loss from continuing operations attributable to the Company | $ (0.60) | $ (0.43) | |||
Basic and diluted income (loss) per share: Net loss from discontinued operations attributable to the Company | 0.03 | (0.47) | |||
Basic and diluted income (loss) per share: Net loss attributable to the Company | $ (0.34) | $ (0.08) | $ (0.42) | $ (0.57) | $ (0.90) |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Nov. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Facility rent expense | $ 45,000 | $ 107,053 | |
Regus Management Group, LLC [Member] | |||
Monthly rent | $ 344 |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - USD ($) | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Jun. 30, 2018 | Jan. 26, 2018 | |
Loss attributable to the Crypto Company | $ 541,253 | $ (9,859,271) | ||
Gain loss on investment segment in cryptocurrency | $ 1,844,896 | |||
Common stock ownership percentage | 4.00% | 4.00% | ||
Impairment of assets held for sale | ||||
CoinTracking GmbH [Member] | ||||
Loss attributable to the Crypto Company | $ 541,254 | $ (16,376,131) | ||
Income loss on discontinued operations | $ 6,542,979 | |||
Common stock ownership percentage | 50.10% | 50.10% | ||
Cost incurred relating to operations | $ 727,409 | |||
CoinTracking GmbH [Member] | Assets Held for Sale [Member] | ||||
Impairment of assets held for sale | $ 743,987 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Reconciliation of Operations and Balance Sheet of Cryptocurrency Investment (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Net income/(loss) | $ 541,253 | $ (9,859,271) |
Loss attributable to noncontrolling interest | (6,516,860) | |
Total current assets held for sale | 5,190,063 | |
Total noncurrent assets held for sale | 1,131,885 | |
Total current liabilities held for sale | 3,127,921 | |
CoinTracking GmbH [Member] | ||
Subscription revenue, net | 3,553,979 | |
Cost of subscription revenues | 350,348 | |
General and administrative expenses | 199,937 | 3,623,234 |
Share-based compensation | 40,182 | 911,003 |
Total Operating Expenses | (240,119) | 4,884,585 |
Operating loss | (240,119) | (1,330,606) |
Net realized gains on investment in cryptocurrency | 781,373 | 1,303,130 |
Impairment of investments, cryptocurrency | (2,066,803) | |
Impairment of investments, non-cryptocurrency | (410,050) | |
Impairment of assets held for sale | (743,987) | |
Impairment of goodwill | (9,356,105) | |
Impairment of intangibles | (3,743,480) | |
Other income (expense) | 144,608 | |
Income/(loss) before provision for income taxes | 541,254 | (16,203,293) |
Provision for income taxes | 172,838 | |
Net income/(loss) | 541,254 | (16,376,131) |
Loss attributable to noncontrolling interest | (6,516,860) | |
Income/(loss) attributable to Crypto Company | 541,254 | (9,859,271) |
Cash and cash equivalents | 1,104,202 | |
Loan receivable, related party | 170,684 | |
Prepaid expenses and other current assets | 103,086 | |
Impairment in assets held for sale | (743,987) | |
Contract asset for commissions and incentives, current portion | 73,733 | |
Total current assets held for sale | 707,718 | |
Equipment, net of accumulated depreciation | 10,369 | |
Contract asset for commissions and incentives, net of current portion | 32,293 | |
Investment in cryptocurrency | 964,067 | 229,280 |
Investments, non-cryptocurrency | 167,818 | 2,005 |
Goodwill | 1,694,705 | |
Intangible assets, net | 2,496,610 | |
Other assets | 17,083 | |
Total noncurrent assets held for sale | 1,131,885 | 4,482,345 |
Total assets held for sale | 1,131,885 | 5,190,063 |
Accounts payable and accrued expenses | 362,149 | |
Income taxes payable | 167,846 | |
Contract liabilities, net of current portion | 1,750,465 | |
Total current liabilities held for sale | 2,280,460 | |
Contract liabilities, net of current portion | 847,461 | |
Total noncurrent liabilities held for sale | 847,861 | |
Total liabilities held for sale | 3,127,921 | |
Depreciation and amortization | 1,047,526 | |
Impairment of goodwill | 9,356,105 | |
Impairment of intangible assets | 3,743,479 | |
Capital expenditures | $ 19,943 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Increase in valuation allowance | $ 4,894,551 |
Statutory income ta rate | 21.00% |
Net operating loss carryforward | $ 9,276,216 |
Operating loss carryforwards, expiration year | 2037 |
Provision for Income Taxes - Sc
Provision for Income Taxes - Schedule of Income Tax Provision (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Current: Federal | ||
Current: State | 800 | 1,600 |
Total current | 800 | 1,600 |
Deferred: Federal | ||
Deferred: State | ||
Total deferred | ||
Provision for income taxes | $ 800 | $ 1,600 |
Provision for Income Taxes - _2
Provision for Income Taxes - Schedule of Net Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Federal and state carryforwards | $ 2,760,996 | $ 815,300 |
Stock base compensation | 4,157,006 | 1,764,100 |
Reserves and accruals | 82,576 | |
Other | (9,026) | |
Gross deferred tax assets | 6,991,552 | 2,579,400 |
Valuation allowance | (6,991,552) | (2,579,400) |
Net deferred tax assets |
Provision for Income Taxes - _3
Provision for Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit at federal statutory rate | $ (2,006,852) | $ (2,569,899) |
State income tax, net of federal benefit | (571,548) | (2,138,781) |
Increase in valuation allowance | 2,579,200 | 6,323,644 |
Previously unrecognized deferred tax assets | (1,613,364) | |
Income tax expense | $ 800 | $ 1,600 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jan. 02, 2019 | Dec. 31, 2018 | Jan. 15, 2019 | Jun. 30, 2018 | Jan. 26, 2018 |
Common stock ownership percentage | 4.00% | 4.00% | |||
Michael Poutre [Member] | Separation and Consulting Agreement [Member] | |||||
Reduction in accounts payable and accrued expenses | $ 40,000 | ||||
Subsequent Event [Member] | Michael Poutre [Member] | Separation and Consulting Agreement [Member] | |||||
Settlement of final amount to related party | $ 40,000 | ||||
Subsequent Event [Member] | CoinTracking [Member] | |||||
Common stock ownership percentage | 100.00% | ||||
Cash received on sale of transaction | $ 1,000,000 | ||||
Repayments of outstanding loan | $ 1,500,000 | ||||
CoinTracking GmbH [Member] | |||||
Common stock ownership percentage | 50.10% | 50.10% | |||
Repayments of outstanding loan | $ 1,200,000 | ||||
CoinTracking GmbH [Member] | Subsequent Event [Member] | |||||
Number of shares sold | 12,525 | ||||
Common stock ownership percentage | 50.10% | ||||
Number of shares sold, value | $ 2,200,000 | ||||
CoinTracking GmbH [Member] | Subsequent Event [Member] | CoinTracking [Member] | |||||
Repayments of outstanding loan | $ 1,200,000 |