Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Sep. 19, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | BTCS Inc. | |
Entity Central Index Key | 1,436,229 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 965,756,004 | |
Trading Symbol | BTCS | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 66,599 | $ 124,535 |
Digital currencies | 17,872 | 17,036 |
Prepaid expense and other current assets | 2,078 | 8,902 |
Total current assets | 86,549 | 150,473 |
Other assets: | ||
Property and equipment, net | 489,420 | |
Investment | 2,250,000 | |
Websites | 3,497 | 6,075 |
Deposits | 35,996 | 336,885 |
Total other assets | 39,493 | 3,082,380 |
Total Assets | 126,042 | 3,232,853 |
Liabilities and Stockholders' Deficit: | ||
Accounts payable and accrued expense | 736,525 | 402,464 |
Short term loan | 45,000 | 45,000 |
Convertible notes at fair value | 3,840,110 | 1,781,156 |
Derivative liabilities | 13,015,937 | 3,794,153 |
Derivative liabilities for shortfall of shares | 14,479,363 | |
Total current liabilities | 32,116,935 | 6,022,773 |
Stockholders' deficit: | ||
Common stock, 975,000,000 shares authorized at $0.001 par value, 236,946,578 and 170,480,545 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 236,946 | 170,480 |
Treasury stock, at cost, 13,000,000 shares at June 30, 2016 and December 31, 2015 | (4,991) | (4,991) |
Additional paid in capital | 22,746,996 | 21,831,518 |
Accumulated deficit | (54,969,844) | (24,786,927) |
Total stockholders' deficit | (31,990,893) | (2,789,920) |
Total Liabilities and Stockholders' Deficit | $ 126,042 | $ 3,232,853 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 975,000,000 | 975,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued | 236,946,578 | 170,480,545 |
Common stock, shares outstanding | 236,946,578 | 170,480,545 |
Treasury stock, shares | 13,000,000 | 13,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | ||||
E-commerce | $ 2,242 | $ 5,252 | $ 2,242 | $ 6,290 |
Transaction verification services | 119,220 | 139,123 | 310,623 | 175,753 |
Hosting | 20,205 | 27,945 | ||
Total revenues | 141,667 | 144,375 | 340,810 | 182,043 |
Power and mining expenses | (114,837) | (60,342) | (228,819) | (77,285) |
Gross profit | 26,830 | 84,033 | 111,991 | 104,758 |
Operating expenses: | ||||
Marketing | 1,872 | 3,461 | 9,447 | 4,039 |
General and administrative | 376,399 | 2,047,140 | 776,201 | 3,654,087 |
Impairment loss on fixed assets | 240,853 | 240,853 | ||
Fair value adjustments for digital currencies | (4,868) | (9,153) | ||
Total operating expenses | 614,256 | 2,050,601 | 1,017,348 | 3,658,126 |
Net loss from operations | (587,426) | (1,966,568) | (905,357) | (3,553,368) |
Other (expenses) income: | ||||
Impairment loss related to investment | (2,250,000) | (254,433) | ||
Fair value adjustments for warrant liabilities | (9,719,017) | 1,250,572 | (9,221,784) | 323,952 |
Fair value adjustments for convertible notes | (371,670) | (336,660) | ||
Fair value adjustments for derivative liability shortfall of shares | (14,479,363) | (14,479,363) | ||
Inducement expense | (58,380) | |||
Interest expenses | (2,639) | (2,283) | (6,180) | (5,782) |
Loss on issuance of Units | (250,000) | (531,311) | (250,000) | (1,050,911) |
Loss on extinguishment of debt | (2,512,473) | (2,512,473) | ||
Liquidated Damages | (188,500) | (188,500) | ||
Other expenses | (32,488) | (256) | (32,600) | (470) |
Total other (expenses) income | (27,556,150) | 716,722 | (29,277,560) | (1,046,024) |
Net loss | $ (28,143,576) | $ (1,249,846) | $ (30,182,917) | $ (4,599,392) |
Net loss per share, basic and diluted | $ (0.16) | $ (0.01) | $ (0.17) | $ (0.03) |
Weighted average number of shares outstanding, basic and diluted | 177,144,561 | 167,874,601 | 173,812,553 | 162,971,575 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Net Cash from operating activities: | ||
Net loss | $ (30,182,917) | $ (4,599,392) |
Adjustments to reconcile net loss to net cash used in provided by operating activities: | ||
Depreciation and amortization expenses | 179,845 | 115,791 |
Stock based compensation | 2,753,968 | |
Change in fair value of digital currencies | (9,153) | (7,476) |
Issuance of common stock for services | 102,585 | |
Issuance of derivative liability warrants for services | 40,377 | |
Loss on issuance of Units | 250,000 | 1,050,911 |
Fair value adjustments for warrant liabilities | 9,221,784 | (323,952) |
Fair value adjustments for convertible notes | 336,660 | |
Fair value adjustments for derivative liability shortfall of shares | 14,479,363 | |
Inducement expenses | 58,380 | |
Impairment loss related to investment | 2,250,000 | 254,433 |
Impairment loss on fixed assets | 240,853 | |
Loss on sale of fixed assets | 35,102 | |
Loss on extinguishment of debt | 2,512,473 | |
Bad debt expense | 720 | |
Liquidated Damages | 188,500 | |
Changes in operating assets and liabilities: | ||
Digital currencies | 8,317 | (22,584) |
Accounts receivable | (720) | |
Prepaid expenses and other current assets | 6,824 | (7,923) |
Accounts payable | (104,439) | 131,895 |
Net cash used in operating activities | (586,788) | (452,987) |
Net cash from investing activities: | ||
Purchase of property and equipment | (19,238) | (375,603) |
Sale of property and equipment, net | 55,436 | 3,117 |
Refund of lease deposit | 300,889 | (56,700) |
Investments at cost | (1,600,000) | |
Net cash provided by (used in) investing activities | 337,087 | (2,029,186) |
Net cash from financing activities: | ||
Common stock repurchase | (2,500) | |
Net proceeds from exercise of warrant | 91,765 | |
Net proceeds from issuance of Private Placement Units | 2,695,500 | |
Net proceeds from issuance of Private Placement Units from related party | 50,000 | |
Proceeds from short term loan | 45,000 | |
Proceeds from issuance of convertible notes, net | 100,000 | |
Payment on short term loan to related party | (7,990) | |
Net cash provided by financing activities | 191,765 | 2,780,010 |
Net decrease in cash | (57,936) | 297,837 |
Cash, beginning of period | 124,535 | 5,403 |
Cash, end of period | 66,599 | 303,240 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Conversion of Series C Convertible Preferred to common stock | 2,200 | |
Issuance of common stock for fixed assets purchases | 48,626 | |
Conversion of accounts payable to common stock | 246,924 | |
Issuance of common stock for investment | 154,433 | |
Cashless warrant exercise | 12,500 | |
Conversion of convertible notes to common stock | $ 890,179 |
Business Organization and Natur
Business Organization and Nature of Operations | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization and Nature of Operations | Note 1 - Business Organization and Nature of Operations BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada Corporation (the Company) in February 2014 entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using digital currencies, including bitcoin and is building a diversified company with operations in the blockchain and digital currency ecosystems. In January 2015, the Company began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect its broadened strategy. The Company released its new website which included broader information on its strategy, and access to its ecommerce site. In late 2014 we shifted our focus towards our transaction verification service business, also known as bitcoin mining. Although we continue to support our ecommerce marketplace we are no longer developing or actively marketing it and our support of the ecommerce marketplace is limited. On July 20, 2016, BTCS Digital Manufacturing (DM), a wholly owned subsidiary the Company suspended its North Carolina transaction verification services facility operations. The recent reduction in the block reward from 25 bitcoins to 12.5 bitcoins, often referred to as the halving, coupled with the facilities cooling system failing, has resulted in DM being unable to meet certain of its financial commitments. The Company is pursuing the following options: i) seeking additional capital to potentially bring DM back online; ii) a possible sale of DM; iii) and permanently winding down DMs operations. If the Company ceases operations at DM, it may relocate its transaction verification services business to others data centers which may be more appropriate for the Companys current scale of operations. On August 8, 2016, DM discovered that its facility in North Carolina was broken into and certain of its equipment and approximately 165 Bitmain transaction verification servers leased from CSC Leasing Company were stolen. The value of the stolen equipment owned by the Company does not appear to be material. The Company has reported the theft to local authorities as well its insurance company regarding next steps. The Company was incorporated in the State of Nevada in 2008 under the name Hotel Management Systems, Inc.. On February 5, 2014, the Company entered into an Exchange Agreement with BitcoinShop.us, LLC, a Maryland limited liability company (BCSLLC), and the holders of the membership interests in BCSLLC. Upon closing of the Share Exchange, BCSLLC Members transferred all the outstanding membership interests of BCSLLC to the Company in exchange for an aggregate of 100,773,923 shares of the Companys common stock (the Reverse Merger). As a result, BCSLLC became a wholly-owned subsidiary of the Company. Immediately following the Share Exchange with BCSLLC, the Company discontinued its business as manufacturer of touch screen and touch board products, interactive whiteboard displays and large touch-screens. The Company is an early entrant in the digital currency market and one of the first U.S. publicly traded companies to be involved with digital currencies. The Company currently operates a beta ecommerce marketplace which already accepts a variety of digital currencies, and has been operating its transaction verification services business, which generate bitcoins (i.e. bitcoin mining). |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 2 - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Companys management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2015. |
Liquidity, Financial Condition
Liquidity, Financial Condition and Management's Plans | 6 Months Ended |
Jun. 30, 2016 | |
Liquidity Financial Condition And Managements Plans | |
Liquidity, Financial Condition and Management's Plans | Note 3 - Liquidity, Financial Condition and Managements Plans For the six months ended June 30, 2016 and 2015, the Company recognized a net loss of approximately $30.2 million and a net loss of approximately $4.6 million, respectively. The Company had cash and cash equivalents of approximately $67,000 and a working capital deficiency of approximately $32.0 million at June 30, 2016, which includes $27.5 million for the fair value of derivative liabilities. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer term business plan. The Companys existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Companys ability to continue as a going concern. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Companys past debt and equity offerings, by controlling costs, and ● seeking additional financing through sales of additional securities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 - Summary of Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of the accompanying condensed consolidated financial statements is as follows: Transaction Verification Services Revenue earned from bitcoin processing activities (Transaction Verification Services), commonly termed mining activities, is recognized at the fair value of the bitcoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for bitcoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or bitcoin mining. The Company receives consideration for performing such transaction verification activities in the form of bitcoins. Revenue is recorded upon the actual receipt of bitcoins. Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of bitcoins. The Company expenses these costs as they are incurred. Net Loss per Share Basic loss per share is computed by dividing net loss applicable to common stock by the weighted-average number of common shares outstanding during the period. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted loss per share reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. The following financial instruments were not included in the diluted loss per share calculation as of June 30, 2016 and 2015 because their effect was anti-dilutive: June 30, 2016 June 30, 2015 Stock options - 12,450,000 Warrants 1,184,186,577 22,991,679 Convertible notes 274,376,241 - Favored Nations 474,752,455 - Excluded potentially dilutive securities 1,933,315,273 35,441,679 Recent Accounting Pronouncements In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments Subsequent events Subsequent events have been evaluated through the date of this filing. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5 - Property and Equipment Property and equipment consist of the following at June 30, 2016 and December 31, 2015: June 30, 2016 December 31, 2015 Equipment $ - $ 109,493 Computer - 3,086 Leasehold improvement - 242,091 Transaction verification servers - 451,281 - 805,951 Accumulated depreciation - (316,531 ) Property and equipment, net $ - $ 489,420 Depreciation expense was approximately $84,000 and $68,000 for the three months ended June 30, 2016 and 2015, respectively, and $177,000 and $114,000 for the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2016, the Company purchased fixed assets of approximately $19,000, sold fixed assets amounting to approximately $55,000, resulting in loss on sale of fixed assets of $35,000. Due to the financial nature of the Company as of June 30, 2016, the Company impaired all fixed assets and recorded an approximately $241,000 impairment charge during the three months ended June 30, 2016. |
Investment at Cost
Investment at Cost | 6 Months Ended |
Jun. 30, 2016 | |
Schedule of Investments [Abstract] | |
Investment at Cost | Note 6 - Investment at Cost Spondoolies The Company had total investment of approximately $2.3 million to Spondoolies Tech Ltd. (Spondoolies) as of December 31, 2015. On May 5, 2016, the Company was informed that, on May 4, 2016, a hearing was held in the district court in Beersheva, Israel during which certain parties sought appointment of a temporary liquidator for Spondoolies. As a result of the liquidation the Company is no longer pursuing the acquisition of Spondoolies. The Company assessed impairment for the Spondoolies investment and determined that this investment is not recoverable and as such fully impaired. During the six months ended June 30, 2016, the Company recorded impairment loss of approximately $2.3 million. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7 - Fair Value Measurements The Companys assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy. The following table presents information about the Companys liabilities measured at fair value on a recurring basis and the Companys estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2016 and December 31, 2015: Fair value measured at June 30, 2016 Total carrying value at June 30, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,872 $ 17,872 $ - $ - Liabilities: Derivative Liabilities $ 13,015,937 $ - $ - $ 13,015,937 Derivative liabilities for shortfall of shares 14,479,363 - - 14,479,363 Convertible notes at fair value 3,840,110 - - 3,840,110 Fair value measured at December 31, 2015 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,036 $ 17,036 $ - $ - Liabilities: Derivative Liabilities $ 3,794,153 $ - $ - $ 3,794,153 Convertible notes at fair value 1,781,156 1,781,156 There were no transfers between Level 1, 2 or 3 during the six months ended June 30, 2016. The following table presents additional information about Level 3 assets and liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2016: Derivative liabilities Balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability 9,221,784 Derivative liabilities Balance - June 30, 2016 $ 13,015,937 Derivative liabilities for shortfall of shares Balance - January 1, 2016 $ - Change in fair value of derivative liability shortfall of shares 14,479,363 Derivative liabilities for shortfall of shares Balance - June 30, 2016 $ 14,479,363 Convertible notes at fair value Balance - January 1, 2016 $ 1,781,156 Addition of convertible notes 100,000 Conversion of notes into common stock (890,179 ) Loss on extinguishment of debt 2,512,473 Change in fair value of convertible notes (including OID discount) 336,660 Convertible notes at fair value Balance - June 30, 2016 $ 3,840,110 The Companys derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Companys derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the six months ended June 30, 2016 is as follows: Warrant Liabilities Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 146% to 155 % Risk-free rate 0.64% to 0.93 % Contractual term (years) 0.60 to 4.5 Dividend yield (per share) 0 % Derivative Liabilities for shortfall of shares Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 155.0 % Risk-free rate 0.9 % Contractual term (years) 4.0 Dividend yield (per share) 0 % Convertible Notes at Fair Value Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 90.6% to 193.2 % Risk-free rate 0.02% to 0.4 % Dividend yield (per share) 0 % The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Companys Management. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Note 8 - Stock Based Compensation Compensation expense for all stock-based awards is measured on the grant date based on the fair value of the award and is recognized as an expense, on a straight-line basis, over the employees requisite service period (generally the vesting period of the equity award). The fair value of each option award is estimated on the grant date using a Black-Scholes option valuation model. Stock-based compensation expense is recognized only for those awards that are expected to vest using an estimated forfeiture rate. The Company estimates pre-vesting option forfeitures at the time of grant and reflects the impact of estimated pre-vesting option forfeitures in compensation expense recognized. For options and warrants issued to non-employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Stock-based compensation expense was $0 and $1.4 million for the three months ended June 30, 2016 and 2015, respectively. Stock-based compensation expense was $0 and $2.8 million for the six months ended June 30, 2016 and 2015, respectively. Stock Options There are no stock options outstanding as of June 30, 2016 and December 31, 2015. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8 - Stock Based Compensation Compensation expense for all stock-based awards is measured on the grant date based on the fair value of the award and is recognized as an expense, on a straight-line basis, over the employees requisite service period (generally the vesting period of the equity award). The fair value of each option award is estimated on the grant date using a Black-Scholes option valuation model. Stock-based compensation expense is recognized only for those awards that are expected to vest using an estimated forfeiture rate. The Company estimates pre-vesting option forfeitures at the time of grant and reflects the impact of estimated pre-vesting option forfeitures in compensation expense recognized. For options and warrants issued to non-employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Stock-based compensation expense was $0 and $1.4 million for the three months ended June 30, 2016 and 2015, respectively. Stock-based compensation expense was $0 and $2.8 million for the six months ended June 30, 2016 and 2015, respectively. Stock Options There are no stock options outstanding as of June 30, 2016 and December 31, 2015. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 10 - Notes Payable On June 6, 2016, the Company, entered into a Securities Purchase Agreement (the Securities Purchase Agreement) with certain institutional investors (the Purchasers), pursuant to which the Purchaser subscribed for up to $375,000 of a 20% Original Issue Discount Junior Secured Convertible Notes (the Junior Notes). The aggregate principal amount of the Junior Notes issued at the initial close is $125,000 and the Company received $100,000 after giving effect to the 20% original issue discount. The lead investor was granted the option to require the Company to sell the Purchasers up to two additional Junior Notes in the principal amount of $125,000 during each of the periods that begin with the Initial Closing Date and end (i) on or before 45 days from the Initial Closing Date, and (ii) on or before 90 days from the Initial Closing Date. The Junior Notes bears no interest except in the event of default which interest rate is 24% per annum upon the occurrence of an Event of Default (as defined in the Junior Notes), have a maturity date of December 5, 2016 and are convertible (principal, and interest) at any time after the issuance date of the Junior Notes into shares of the Companys Common Stock at a conversion price equal to $0.30 per share. If an Event of Default has occurred, the Junior Note shall be convertible at 60% of the lowest closing price during the prior twenty (20) trading days of the Companys Common Stock. The Junior Notes contains certain covenants, such as restrictions on the incurrence of indebtedness, creation of liens, payment of restricted payments, redemptions, payment of cash dividends and the transfer of assets. The Junior Notes also contains certain adjustment provisions that apply in connection with any stock split, stock dividend, stock combination, recapitalization or similar transactions. In addition, subject to limited exceptions, the Purchaser will not have the right to convert any portion of the Junior Note if the Purchaser, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Companys Common Stock outstanding immediately after giving effect to its conversion. The Purchaser may not convert into or otherwise beneficially own in excess of 9.99% of the number of shares of the Companys Common Stock outstanding immediately after giving effect to its conversion. In connection with the Companys obligations under the Junior Notes, the Company and its subsidiaries (the Subsidiaries) entered into a Security Agreement, Pledge Agreement and Subsidiary Agreement with the lead investor, as agent, pursuant to which the Company and the Subsidiaries granted a lien on all assets of the Company (the Collateral) excluding permitted indebtedness, for the benefit of the Purchasers, to secure the Companys obligations under the Junior Notes. Upon an Event of Default (as defined in the Junior Notes), the Purchaser may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral. The use of proceeds from this financing are intended for general corporate purposes. The Company also reimbursed the Purchaser $5,000 for legal fees and expenses from the private placement. The issuance of the Common Stock is exempt from the registration requirements from the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof. The Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Common Stock and has not offered securities to the public in connection with such issuance and sale. Over the course of June 16, 2016 through June 30, 2016, the Company issued a total of 66,466,033 shares of the Companys Common Stock for: i) the conversion of $581,000 of principal and accrued interest on the Senior Secured Convertible Notes issued December 16, 2015 (the Senior Notes), and ii) the exercise of warrants. The issuances were exempt from registration pursuant to Rule 506 under Regulation D, the investors are sophisticated and familiar with our operations, and there was no solicitation in connection with the issuances. The dates of the issuances and the numbers of shares issued are as follows: Issued Date Note Conversions Warrant Exercises Total June 8, 2016 0 1,000,000 1,000,000 June 10, 2016 0 300,000 300,000 June 16, 2016 5,900,000 0 5,900,000 June 17, 2016 3,250,417 0 3,250,417 June 20, 2016 9,238,446 0 9,238,446 June 21, 2016 31,452,170 0 31,452,170 June 22, 2016 0 1,000,000 1,000,000 June 28, 2016 0 1,825,000 1,825,000 June 30, 2016 0 12,500,000 12,500,000 Total Issued Shares 49,841,033 16,625,000 66,466,033 None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers. Following these issuances, there were 236,946,578 shares of our Common Stock issued and outstanding as of June 30, 2016. On June 22, 2016 the Company entered into a Standstill and Leak-out Agreement with all of the Senior Note holders. The Senior Note holders have agreed not to convert any Senior Notes until July 1, 2016. Thereafter, and until September 19, 2016, each Senior Note holders daily conversions will be limited to the greater of: (1) $7,500, and (2) five percent of the aggregate dollar value of Common Stock traded during the trading day immediately prior to the conversion date. As of the June 30, 2016 the Company did not have sufficient shares of Common Stock to fulfill its obligations with respect to its Notes and warrants and has booked a derivative liability of $14,479,363 to account for the shortfall. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Note 11 - Stockholders Equity On June 3, 2016, the Company received the last signature from investors, which investors hold 75% of the units (Units) sold to subscribers (Subscribers) in the Company private placement offering (the Offering) pursuant to that certain subscription agreement by and between the Company and the Subscribers dated on or around April 20, 2015 (the Subscription Agreement), to an amendment agreement (the Amendment Agreement). Pursuant to the Amendment Agreement, the Company agreed to pay, on a pro-rata basis to all subscribers that purchased Units in the Offering, and in proportion to the respective Units purchased by each subscriber, pursuant to the Subscription Agreement, an aggregate $250,000 (Payment) upon the occurrence of the following events and in the amounts and on payment dates set forth in connection with such events: (i) in the event of a closing of any one or more equity or debt financing resulting in aggregate gross proceeds from the date of this Amendment of $350,000 or less, a payment towards the then-remaining Payment equal to ten-percent (10%) of such gross proceeds shall be made within three (3) business days of the closing of any such equity or debt financing; (ii) in the event of a closing of any one or more equity or debt financing resulting in aggregate gross proceeds from the date of this Amendment of $350,000 or more but less than $1,000,000, a payment towards the then-remaining Payment equal to twenty-percent (20%) of such gross proceeds shall be made within three (3) business days of the closing of any such equity or debt financing; (iii) at any of the Companys fiscal-year-ends payment will be made in the amount of available cash prior to any payments of bonuses payable to Mr. Allen, the Companys CEO, CFO and Chairman, and Mr. Handerhan, the Companys COO, Secretary and Director; and (iv) upon closing of any one or more equity or debt financing resulting in aggregate gross proceeds from the date of this Amendment of $1,000,000 or more, a payment of all then-remaining Payment within three (3) business days of the closing of any such equity or debt financing. In consideration for the Payment, the Subscribers agreed to limit any remedies currently due, if any, or to which they may be entitled in the future, under the Favored Nations Provision of the Subscription Agreement, to the additional issuance of Common Stock of the Company and warrants (Warrants) to purchase Common Stock up to the Common Stock and Warrants that would not result in each respective Subscriber beneficially owning over 4.99% of the Companys issued and outstanding Common Stock. On June 8, 2016, the Company and an investor (the Investor) holding a warrant dated January 19, 2015 (the Warrant) to purchase 2,325,000 shares (the Warrant Shares) of the Companys Common Stock entered into a warrant exercise agreement (the Exercise Agreement). Pursuant to the Exercise Agreement, the Company agreed to accept as full payment for 500,000 of the Warrant Shares, an aggregate exercise price equal to $27,500 (the Exercise Price) and the Investor irrevocably agreed to exercise the Warrant and deliver the Exercise Price within 2 days of the Exercise Agreement. Over the course of June 8, 2016 through June 28, 2016, the Company issued 4,125,000 shares of Common Stock for the cash exercise of warrants resulting in aggregate proceeds of $91,765 to the Company this includes the $27,500 received in connection with the Exercise Agreement mentioned above. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 - Subsequent Events Over the course of July 1, 2016 through August 1, 2016, the Company issued a total of 728,809,426 shares of the Companys Common Stock for: i) the conversion of $460,344 of principal and accrued interest on the Senior Notes, and ii) the exercise of warrants. The issuances were exempt from registration pursuant to Rule 506 under Regulation D, the investors are sophisticated and familiar with our operations, and there was no solicitation in connection with the issuances. The dates of the issuances and the numbers of shares issued are as follows: Issued Date Note Conversions Warrant Exercises Total July 1, 2016 1,409,427 4,000,000 5,409,427 July 5, 2016 7,137,095 12,000,000 19,137,095 July 6, 2016 13,107,365 7,500,000 20,607,365 July 7, 2016 32,997,387 40,935,845 73,933,232 July 8, 2016 28,313,307 35,380,676 63,693,983 July 11, 2016 43,015,180 36,502,280 79,517,460 July 12, 2016 8,214,526 16,000,000 24,214,526 July 13, 2016 41,857,162 11,153,844 53,011,006 July 14, 2016 73,745,678 36,257,966 110,003,644 July 15, 2016 51,569,878 0 51,569,878 July 18, 2016 53,571,427 0 53,571,427 July 19, 2016 44,240,476 0 44,240,476 July 20, 2016 23,591,267 0 23,591,267 July 25, 2016 7,500,000 0 7,500,000 July 27, 2016 60,590,572 0 60,590,572 July 29, 2016 11,448,412 0 11,448,412 August 1, 2016 26,769,656 0 26,769,656 Total Issued Shares 529,078,815 199,730,611 728,809,426 None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers. Following these issuances, there were 952,756,004 shares of our Common Stock issued and outstanding. As a result of the Senior Note conversions, the Company became obligated to issue, subject to certain limitations, the following additional securities: (i) 6,524,866,433 shares of Common Stock pursuant to favored nations provisions in certain common stockholder subscription agreements which includes those anti-dilution shares of Common Stock previously disclosed; and (ii) warrants to purchase 10,264,097,638 shares of Common Stock pursuant to favored nations provisions in certain common stockholder subscription agreements which includes those anti-dilution warrants previously disclosed. These figures do not reflect additional warrants to purchase Common Stock issuable to certain investors pursuant to the terms of the warrants issued on December 16, 2016 which includes those anti-dilution warrants previously disclosed. The Company also lowered the conversion price of the Companys outstanding Junior Notes and Senior Notes to $0.00042. The Company does not currently have sufficient authorized and unreserved shares to fulfill its obligations with respect to the issuance of new shares of Common Stock. While no assurances can be made, the Company intends to seek shareholder approval to adjust the Companys capitalization. On July 20, 2016, DM suspended its North Carolina transaction verification services facility operations. The recent reduction in the block reward from 25 bitcoins to 12.5 bitcoins, often referred to as the halving, coupled with the facilities cooling system failing, has resulted in DM being unable to meet certain of its financial commitments. The Company is pursuing the following options: i) seeking additional capital to potentially bring DM back online; ii) a possible sale of DM; iii) and permanently winding down DMs operations. If the Company ceases operations at DM, it may relocate its transaction verification services business to others data centers which may be more appropriate for the Companys current scale of operations. On August 8, 2016, DM, a wholly owned subsidiary of the Company discovered that its facility in North Carolina was broken into and certain of its equipment and approximately 165 Bitmain transaction verification servers leased from CSC Leasing Company were stolen. The value of the stolen equipment owned by the Company does not appear to be material. The Company has reported the theft to local authorities as well its insurance company regarding next steps. On September 1, 2016, DM gave cancelation notice to the landlord with respect to the lease of its North Carolina facility. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Transaction Verification Services | Transaction Verification Services Revenue earned from bitcoin processing activities (Transaction Verification Services), commonly termed mining activities, is recognized at the fair value of the bitcoins received as consideration on the date of actual receipt. The Company generates revenue by performing computer processing activities for bitcoin generation. In the digital-currency industry such activity is generally referred to as Transaction Verification Services or bitcoin mining. The Company receives consideration for performing such transaction verification activities in the form of bitcoins. Revenue is recorded upon the actual receipt of bitcoins. Expenses consist of utilities paid to cover our electric costs, rent for our facility and personnel to run our facility. The expenses related to our Transaction Verification Services activities are affected by the level of activities and not the ultimate generation of bitcoins. The Company expenses these costs as they are incurred. |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing net loss applicable to common stock by the weighted-average number of common shares outstanding during the period. For purposes of calculating basic and diluted earnings per share, vested restricted stock awards are considered outstanding. Under the treasury stock method, diluted loss per share reflects the potential dilution that could occur if securities or other instruments that are convertible into common stock were exercised or could result in the issuance of common stock. The following financial instruments were not included in the diluted loss per share calculation as of June 30, 2016 and 2015 because their effect was anti-dilutive: June 30, 2016 June 30, 2015 Stock options - 12,450,000 Warrants 1,184,186,577 22,991,679 Convertible notes 274,376,241 - Favored Nations 474,752,455 - Excluded potentially dilutive securities 1,933,315,273 35,441,679 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments |
Subsequent Events | Subsequent events Subsequent events have been evaluated through the date of this filing. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share Anti-Diluted | The following financial instruments were not included in the diluted loss per share calculation as of June 30, 2016 and 2015 because their effect was anti-dilutive: June 30, 2016 June 30, 2015 Stock options - 12,450,000 Warrants 1,184,186,577 22,991,679 Convertible notes 274,376,241 - Favored Nations 474,752,455 - Excluded potentially dilutive securities 1,933,315,273 35,441,679 |
Property And Equipment (Tables)
Property And Equipment (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property And Equipment, Net | Property and equipment consist of the following at June 30, 2016 and December 31, 2015: June 30, 2016 December 31, 2015 Equipment $ - $ 109,493 Computer - 3,086 Leasehold improvement - 242,091 Transaction verification servers - 451,281 - 805,951 Accumulated depreciation - (316,531 ) Property and equipment, net $ - $ 489,420 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Liabilities Measured at Fair Value On Recurring Basis | The following table presents information about the Companys liabilities measured at fair value on a recurring basis and the Companys estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2016 and December 31, 2015: Fair value measured at June 30, 2016 Total carrying value at June 30, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,872 $ 17,872 $ - $ - Liabilities: Derivative Liabilities $ 13,015,937 $ - $ - $ 13,015,937 Derivative liabilities for shortfall of shares 14,479,363 - - 14,479,363 Convertible notes at fair value 3,840,110 - - 3,840,110 Fair value measured at December 31, 2015 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Digital Currencies $ 17,036 $ 17,036 $ - $ - Liabilities: Derivative Liabilities $ 3,794,153 $ - $ - $ 3,794,153 Convertible notes at fair value 1,781,156 1,781,156 |
Schedule of Changes in Level 3 Liabilities Measured at Fair Value | Derivative liabilities Balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability 9,221,784 Derivative liabilities Balance - June 30, 2016 $ 13,015,937 |
Schedule of Derivative Liabilities for Shortfall of Shares | Derivative liabilities for shortfall of shares Balance - January 1, 2016 $ - Change in fair value of derivative liability shortfall of shares 14,479,363 Derivative liabilities for shortfall of shares Balance - June 30, 2016 $ 14,479,363 |
Schedule of Changes in Fair Value of Convertible Notes | Convertible notes at fair value Balance - January 1, 2016 $ 1,781,156 Addition of convertible notes 100,000 Conversion of notes into common stock (890,179 ) Loss on extinguishment of debt 2,512,473 Change in fair value of convertible notes (including OID discount) 336,660 Convertible notes at fair value Balance - June 30, 2016 $ 3,840,110 |
Summary of Quantitative Information to Valuation Methodology | Warrant Liabilities Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 146% to 155 % Risk-free rate 0.64% to 0.93 % Contractual term (years) 0.60 to 4.5 Dividend yield (per share) 0 % Derivative Liabilities for shortfall of shares Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 155.0 % Risk-free rate 0.9 % Contractual term (years) 4.0 Dividend yield (per share) 0 % Convertible Notes at Fair Value Date of valuation June 30, 2016 Strike price $ 0.01 Volatility (annual) 90.6% to 193.2 % Risk-free rate 0.02% to 0.4 % Dividend yield (per share) 0 % |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Conversion and Issuance of Shares | Issued Date Note Conversions Warrant Exercises Total June 8, 2016 0 1,000,000 1,000,000 June 10, 2016 0 300,000 300,000 June 16, 2016 5,900,000 0 5,900,000 June 17, 2016 3,250,417 0 3,250,417 June 20, 2016 9,238,446 0 9,238,446 June 21, 2016 31,452,170 0 31,452,170 June 22, 2016 0 1,000,000 1,000,000 June 28, 2016 0 1,825,000 1,825,000 June 30, 2016 0 12,500,000 12,500,000 Total Issued Shares 49,841,033 16,625,000 66,466,033 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Schedule of Debt Conversions and Issuance of Shares | The dates of the issuances and the numbers of shares issued are as follows: Issued Date Note Conversions Warrant Exercises Total July 1, 2016 1,409,427 4,000,000 5,409,427 July 5, 2016 7,137,095 12,000,000 19,137,095 July 6, 2016 13,107,365 7,500,000 20,607,365 July 7, 2016 32,997,387 40,935,845 73,933,232 July 8, 2016 28,313,307 35,380,676 63,693,983 July 11, 2016 43,015,180 36,502,280 79,517,460 July 12, 2016 8,214,526 16,000,000 24,214,526 July 13, 2016 41,857,162 11,153,844 53,011,006 July 14, 2016 73,745,678 36,257,966 110,003,644 July 15, 2016 51,569,878 0 51,569,878 July 18, 2016 53,571,427 0 53,571,427 July 19, 2016 44,240,476 0 44,240,476 July 20, 2016 23,591,267 0 23,591,267 July 25, 2016 7,500,000 0 7,500,000 July 27, 2016 60,590,572 0 60,590,572 July 29, 2016 11,448,412 0 11,448,412 August 1, 2016 26,769,656 0 26,769,656 Total Issued Shares 529,078,815 199,730,611 728,809,426 |
Business Organization and Nat24
Business Organization and Nature of Operations (Details Narrative) | Feb. 05, 2014shares |
Bitcoin Shop Us LLC [Member] | |
Shares issued for membership interests | 100,773,923 |
Liquidity, Financial Conditio25
Liquidity, Financial Condition and Management's Plans (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Liquidity Financial Condition And Managements Plans | ||||||
Net loss | $ 28,143,576 | $ 1,249,846 | $ 30,182,917 | $ 4,599,392 | ||
Cash | 66,599 | $ 303,240 | 66,599 | $ 303,240 | $ 124,535 | $ 5,403 |
Working capital deficiency | 32,000,000 | 32,000,000 | ||||
Fair value of derivative liabilities | $ 27,500,000 | $ 27,500,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-Diluted (Details) - shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Excluded potentially dilutive securities | 1,933,315,273 | 35,441,679 |
Warrants [Member] | ||
Excluded potentially dilutive securities | 1,184,186,577 | 22,991,679 |
Convertible Notes [Member] | ||
Excluded potentially dilutive securities | 274,376,241 | |
Favored Nations [Member] | ||
Excluded potentially dilutive securities | 474,752,455 | |
Stock Option [Member] | ||
Excluded potentially dilutive securities | 12,450,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 84,000 | $ 68,000 | $ 177,000 | $ 114,000 |
Fixed assets purchased | 19,238 | 375,603 | ||
Fixed assets sold | 55,436 | 3,117 | ||
Impairment charge | $ 240,853 | 240,853 | ||
Loss on sale of fixed assets | $ 35,000 |
Property And Equipment - Schedu
Property And Equipment - Schedule of Property And Equipment, Net (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 109,493 | |
Computer | 3,086 | |
Leasehold improvement | 242,091 | |
Transaction verification servers | 451,281 | |
Property and equipment | 805,951 | |
Accumulated depreciation | (316,531) | |
Property and equipment, net | $ 489,420 |
Investment at Cost (Details Nar
Investment at Cost (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Schedule of Investments [Abstract] | |||||
Investment | $ 2,250,000 | ||||
Impairment charge | $ 240,853 | $ 240,853 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Digital currencies | $ 17,872 | $ 17,036 |
Derivative Liabilities | 13,015,937 | 3,794,153 |
Derivative liabilities for shortfall of shares | 14,479,363 | |
Convertible notes at fair value | 3,840,110 | 1,781,156 |
Level 1 [Member] | ||
Digital currencies | 17,872 | 17,036 |
Derivative Liabilities | ||
Derivative liabilities for shortfall of shares | ||
Convertible notes at fair value | ||
Fair Value, Inputs, Level 2 [Member] | ||
Digital currencies | ||
Derivative Liabilities | ||
Derivative liabilities for shortfall of shares | ||
Convertible notes at fair value | ||
Fair Value, Inputs, Level 3 [Member] | ||
Digital currencies | ||
Derivative Liabilities | 13,015,937 | 3,794,153 |
Derivative liabilities for shortfall of shares | 14,479,363 | |
Convertible notes at fair value | $ 3,840,110 | $ 1,781,156 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Changes in Level 3 Liabilities Measured at Fair Value (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | ||||
Beginning balance | $ 3,794,153 | |||
Change in fair value of derivative liability | $ 9,719,017 | $ (1,250,572) | 9,221,784 | $ (323,952) |
Ending balance | $ 13,015,937 | $ 13,015,937 |
Fair Value Measurements - Sch32
Fair Value Measurements - Schedule of Derivative Liabilities for Shortfall of Shares (Details) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Fair Value Disclosures [Abstract] | |
Derivative liabilities for shortfall of shares Balance - January 1, 2016 | |
Change in fair value of derivative liability shortfall of shares | 14,479,363 |
Derivative liabilities for shortfall of shares Balance - June 30, 2016 | $ 14,479,363 |
Fair Value Measurements - Sch33
Fair Value Measurements - Schedule of Changes in Fair Value of Convertible Notes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | ||||
Convertible notes at fair value, beginning balance | $ 1,781,156 | |||
Addition of convertible notes | 100,000 | |||
Conversion of notes into common stock | (890,179) | |||
Loss on extinguishment of debt | $ 2,512,473 | 2,512,473 | ||
Change in fair value of convertible notes (including OID discount) | 336,660 | |||
Convertible notes at fair value, ending balance | $ 3,840,110 | $ 3,840,110 |
Fair Value Measurement - Summar
Fair Value Measurement - Summary of Quantitative Information to Valuation Methodology (Details) | 6 Months Ended |
Jun. 30, 2016$ / shares | |
Derivative Liabilities for shortfall of shares [Member] | |
Strike price | $ 0.01 |
Volatility (annual) | 155.00% |
Risk-free rate | 0.90% |
Contractual term (years) | 4 years |
Dividend yield (per share) | $ 0 |
Convertible Notes at Fair Value [Member] | |
Strike price | 0.01 |
Dividend yield (per share) | $ 0 |
Convertible Notes at Fair Value [Member] | Minimum [Member] | |
Volatility (annual) | 90.60% |
Risk-free rate | 0.02% |
Convertible Notes at Fair Value [Member] | Maximum [Member] | |
Volatility (annual) | 193.20% |
Risk-free rate | 0.40% |
Warrant Liabilities [Member] | |
Strike price | $ 0.01 |
Dividend yield (per share) | $ 0 |
Warrant Liabilities [Member] | Minimum [Member] | |
Volatility (annual) | 146.00% |
Risk-free rate | 0.64% |
Contractual term (years) | 7 months 6 days |
Warrant Liabilities [Member] | Maximum [Member] | |
Volatility (annual) | 155.00% |
Risk-free rate | 0.93% |
Contractual term (years) | 4 years 6 months |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||
Stock options outstanding | |||||
Stock-based compensation expense | $ 0 | $ 1,400,000 | $ 2,753,968 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Principal Stockholders [Member] - USD ($) | Jun. 03, 2016 | Feb. 19, 2016 | Apr. 30, 2015 | Jun. 30, 2016 |
Payments for Repurchase of Private Placement | $ 86 | $ 20,000 | ||
Subscription Agreement [Member] | ||||
Payments for Repurchase of Private Placement | $ 40,000 | |||
Securities Escrow Agreement [Member] | ||||
Number of common stock shares into escrow | 24,000,000 | |||
Listing Escrow Shares [Member] | ||||
Number of escrowed shares returned | 12,000,000 | |||
Merger Escrow Shares [Member] | Spondoolies-Tech Ltd [Member] | ||||
Number of escrowed shares returned | 12,000,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jun. 06, 2016 | Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Number of common stock shares issued for conversion of debt | 66,466,033 | ||||
Debt conversion into shares amount | $ 890,179 | ||||
Common stock, shares issued | 236,946,578 | 236,946,578 | 170,480,545 | ||
Common stock, shares outstanding | 236,946,578 | 236,946,578 | 170,480,545 | ||
Derivative liabilities for shortfall of shares | $ 14,479,363 | $ 14,479,363 | |||
Senior Secured Convertible Notes [Member] | |||||
Number of common stock shares issued for conversion of debt | 66,466,033 | ||||
Debt conversion into shares amount | $ 581,000 | ||||
Institutional Investors [Member] | |||||
Percentage of beneficially own in excess of number of common stock shares outstanding | 9.99% | ||||
Institutional Investors [Member] | Junior Secured Convertible Notes [Member] | |||||
Percentage of beneficially own in excess of number of common stock shares outstanding | 4.99% | ||||
Securities Purchase Agreement [Member] | Institutional Investors [Member] | Junior Secured Convertible Notes [Member] | |||||
Debt original amount | $ 375,000 | ||||
Percentage of original issuance of debt | 20.00% | ||||
Debt face amount | $ 125,000 | ||||
Proceeds from issuance of debt | $ 100,000 | ||||
Debt default interest rate | 24.00% | ||||
Debt maturity date | Dec. 5, 2016 | ||||
Debt conversion price per share | $ 0.30 | ||||
Debt convertible into common stock lowest closing price rate | 60.00% | ||||
Debt trading days | 20 days | ||||
Reimbursement amount | $ 5,000 | ||||
Securities Purchase Agreement [Member] | Institutional Investors [Member] | Junior Secured Convertible Notes [Member] | On or Before 45 Days From The Initial Closing Date [Member] | |||||
Debt periodic amount | 125,000 | ||||
Securities Purchase Agreement [Member] | Institutional Investors [Member] | Junior Secured Convertible Notes [Member] | On or Before 90 Days From The Initial Closing Date [Member] | |||||
Debt periodic amount | $ 125,000 | ||||
Standstill and Leak-out Agreement [Member] | Senior Noteholders [Member] | September 19, 2016 [Member] | |||||
Debt periodic amount | $ 7,500 | ||||
Debt convertible into common stock lowest closing price rate | 5.00% |
Notes Payable - Schedule of Deb
Notes Payable - Schedule of Debt Conversion and Issuance of Shares (Details) | 6 Months Ended |
Jun. 30, 2016shares | |
Note Conversions | 49,841,033 |
Warrant Exercises | 16,625,000 |
Total | 66,466,033 |
Notes Payable 1 [Member] | |
Date | Jun. 8, 2016 |
Note Conversions | 0 |
Warrant Exercises | 1,000,000 |
Total | 1,000,000 |
Notes Payable 2 [Member] | |
Date | Jun. 10, 2016 |
Note Conversions | 0 |
Warrant Exercises | 300,000 |
Total | 300,000 |
Notes Payable 3 [Member] | |
Date | Jun. 16, 2016 |
Note Conversions | 5,900,000 |
Warrant Exercises | 0 |
Total | 5,900,000 |
Notes Payable 4 [Member] | |
Date | Jun. 17, 2016 |
Note Conversions | 3,250,417 |
Warrant Exercises | 0 |
Total | 3,250,417 |
Notes Payable 5 [Member] | |
Date | Jun. 20, 2016 |
Note Conversions | 9,238,446 |
Warrant Exercises | 0 |
Total | 9,238,446 |
Notes Payable 6 [Member] | |
Date | Jun. 21, 2016 |
Note Conversions | 31,452,170 |
Warrant Exercises | 0 |
Total | 31,452,170 |
Notes Payable 7 [Member] | |
Date | Jun. 22, 2016 |
Note Conversions | 0 |
Warrant Exercises | 1,000,000 |
Total | 1,000,000 |
Notes Payable 8 [Member] | |
Date | Jun. 28, 2016 |
Note Conversions | 0 |
Warrant Exercises | 1,825,000 |
Total | 1,825,000 |
Notes Payable 9 [Member] | |
Date | Jun. 30, 2016 |
Note Conversions | 0 |
Warrant Exercises | 12,500,000 |
Total | 12,500,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Jun. 03, 2016 | Jan. 19, 2016 | Jun. 28, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jan. 19, 2015 |
Warrants exercise value | $ 91,765 | $ 91,765 | ||||
Number of common stock shares for cash exercise of warrants | 4,125,000 | |||||
Amendment Agreement [Member] | ||||||
Proceeds from equity or debt financing | $ 350,000 | |||||
Percentage of remaining payment of gross proceeds from equity or debt financing | 10.00% | |||||
Amendment Agreement [Member] | Charles Allen [Member] | ||||||
Proceeds from equity or debt financing | $ 1,000,000 | |||||
Percentage of remaining payment of gross proceeds from equity or debt financing | 10.00% | |||||
Amendment Agreement [Member] | Minimum [Member] | ||||||
Proceeds from equity or debt financing | $ 1,000,000 | |||||
Percentage of remaining payment of gross proceeds from equity or debt financing | 20.00% | |||||
Exercise Agreement [Member] | ||||||
Warrants issued to purchase of shares of common stock | 500,000 | |||||
Warrants exercise value | $ 27,500 | |||||
Subscribers [Member] | ||||||
Percentage of units for sold during the period | 75.00% | |||||
Subscribers [Member] | Subscription Agreement [Member] | ||||||
Payment of offering | $ 250,000 | |||||
Percentage of beneficially own in excess of number of common stock shares outstanding | 4.99% | |||||
Investors [Member] | Exercise Agreement [Member] | ||||||
Warrants issued to purchase of shares of common stock | 2,325,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |||
Aug. 01, 2016 | Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Number of common stock shares issued for conversion of debt | 66,466,033 | ||||
Debt conversion into shares amount | $ 890,179 | ||||
Common stock, shares issued | 236,946,578 | 236,946,578 | 170,480,545 | ||
Common stock, shares outstanding | 236,946,578 | 236,946,578 | 170,480,545 | ||
Senior Secured Convertible Notes [Member] | |||||
Number of common stock shares issued for conversion of debt | 66,466,033 | ||||
Debt conversion into shares amount | $ 581,000 | ||||
Subsequent Event [Member] | |||||
Number of common stock shares issued for conversion of debt | 728,809,426 | ||||
Debt conversion into shares amount | $ 460,344 | ||||
Common stock, shares issued | 952,756,004 | ||||
Common stock, shares outstanding | 952,756,004 | ||||
Subsequent Event [Member] | Senior Secured Convertible Notes [Member] | Common Stockholder Subscription Agreements [Member] | |||||
Number of common stock shares issued for conversion of debt | 6,524,866,433 | ||||
Warrants issued to purchase of shares of common stock | 10,264,097,638 | ||||
Debt conversion price per share | $ 0.00042 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Debt Conversion and Issuance of Shares (Details) - shares | 1 Months Ended | 6 Months Ended |
Aug. 01, 2016 | Jun. 30, 2016 | |
Note Conversions | 49,841,033 | |
Warrant Exercises | 16,625,000 | |
Total | 66,466,033 | |
Notes Payable 1 [Member] | ||
Date | Jun. 8, 2016 | |
Note Conversions | 0 | |
Warrant Exercises | 1,000,000 | |
Total | 1,000,000 | |
Notes Payable 2 [Member] | ||
Date | Jun. 10, 2016 | |
Note Conversions | 0 | |
Warrant Exercises | 300,000 | |
Total | 300,000 | |
Notes Payable 3 [Member] | ||
Date | Jun. 16, 2016 | |
Note Conversions | 5,900,000 | |
Warrant Exercises | 0 | |
Total | 5,900,000 | |
Notes Payable 4 [Member] | ||
Date | Jun. 17, 2016 | |
Note Conversions | 3,250,417 | |
Warrant Exercises | 0 | |
Total | 3,250,417 | |
Notes Payable 5 [Member] | ||
Date | Jun. 20, 2016 | |
Note Conversions | 9,238,446 | |
Warrant Exercises | 0 | |
Total | 9,238,446 | |
Notes Payable 6 [Member] | ||
Date | Jun. 21, 2016 | |
Note Conversions | 31,452,170 | |
Warrant Exercises | 0 | |
Total | 31,452,170 | |
Notes Payable 7 [Member] | ||
Date | Jun. 22, 2016 | |
Note Conversions | 0 | |
Warrant Exercises | 1,000,000 | |
Total | 1,000,000 | |
Notes Payable 8 [Member] | ||
Date | Jun. 28, 2016 | |
Note Conversions | 0 | |
Warrant Exercises | 1,825,000 | |
Total | 1,825,000 | |
Notes Payable 9 [Member] | ||
Date | Jun. 30, 2016 | |
Note Conversions | 0 | |
Warrant Exercises | 12,500,000 | |
Total | 12,500,000 | |
Subsequent Event [Member] | ||
Note Conversions | 529,078,815 | |
Warrant Exercises | 199,730,611 | |
Total | 728,809,426 | |
Subsequent Event [Member] | Notes Payable 1 [Member] | ||
Date | Jul. 1, 2016 | |
Note Conversions | 1,409,427 | |
Warrant Exercises | 4,000,000 | |
Total | 5,409,427 | |
Subsequent Event [Member] | Notes Payable 2 [Member] | ||
Date | Jul. 5, 2016 | |
Note Conversions | 7,137,095 | |
Warrant Exercises | 12,000,000 | |
Total | 19,137,095 | |
Subsequent Event [Member] | Notes Payable 3 [Member] | ||
Date | Jul. 6, 2016 | |
Note Conversions | 13,107,365 | |
Warrant Exercises | 7,500,000 | |
Total | 20,607,365 | |
Subsequent Event [Member] | Notes Payable 4 [Member] | ||
Date | Jul. 7, 2016 | |
Note Conversions | 32,997,387 | |
Warrant Exercises | 40,935,845 | |
Total | 73,933,232 | |
Subsequent Event [Member] | Notes Payable 5 [Member] | ||
Date | Jul. 8, 2016 | |
Note Conversions | 28,313,307 | |
Warrant Exercises | 35,380,676 | |
Total | 63,693,983 | |
Subsequent Event [Member] | Notes Payable 6 [Member] | ||
Date | Jul. 11, 2016 | |
Note Conversions | 43,015,180 | |
Warrant Exercises | 36,502,280 | |
Total | 79,517,460 | |
Subsequent Event [Member] | Notes Payable 7 [Member] | ||
Date | Jul. 12, 2016 | |
Note Conversions | 8,214,526 | |
Warrant Exercises | 16,000,000 | |
Total | 24,214,526 | |
Subsequent Event [Member] | Notes Payable 8 [Member] | ||
Date | Jul. 13, 2016 | |
Note Conversions | 41,857,162 | |
Warrant Exercises | 11,153,844 | |
Total | 53,011,006 | |
Subsequent Event [Member] | Notes Payable 9 [Member] | ||
Date | Jul. 14, 2016 | |
Note Conversions | 73,745,678 | |
Warrant Exercises | 36,257,966 | |
Total | 110,003,644 | |
Subsequent Event [Member] | Notes Payable 10 [Member] | ||
Date | Jul. 15, 2016 | |
Note Conversions | 51,569,878 | |
Warrant Exercises | 0 | |
Total | 51,569,878 | |
Subsequent Event [Member] | Notes Payable 11 [Member] | ||
Date | Jul. 18, 2016 | |
Note Conversions | 53,571,427 | |
Warrant Exercises | 0 | |
Total | 53,571,427 | |
Subsequent Event [Member] | Notes Payable 12 [Member] | ||
Date | Jul. 19, 2016 | |
Note Conversions | 44,240,476 | |
Warrant Exercises | 0 | |
Total | 44,240,476 | |
Subsequent Event [Member] | Notes Payable 13 [Member] | ||
Date | Jul. 20, 2016 | |
Note Conversions | 23,591,267 | |
Warrant Exercises | 0 | |
Total | 23,591,267 | |
Subsequent Event [Member] | Notes Payable 14 [Member] | ||
Date | Jul. 25, 2016 | |
Note Conversions | 7,500,000 | |
Warrant Exercises | 0 | |
Total | 7,500,000 | |
Subsequent Event [Member] | Notes Payable 15 [Member] | ||
Date | Jul. 27, 2016 | |
Note Conversions | 60,590,572 | |
Warrant Exercises | 0 | |
Total | 60,590,572 | |
Subsequent Event [Member] | Notes Payable 16 [Member] | ||
Date | Jul. 29, 2016 | |
Note Conversions | 11,448,412 | |
Warrant Exercises | 0 | |
Total | 11,448,412 | |
Subsequent Event [Member] | Notes Payable 17 [Member] | ||
Date | Aug. 1, 2016 | |
Note Conversions | 26,769,656 | |
Warrant Exercises | 0 | |
Total | 26,769,656 |