Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | BTCS Inc. | |
Entity Central Index Key | 1,436,229 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 245,714,073 | |
Trading Symbol | BTCS | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 5,943 | $ 95,068 |
Digital currencies | 2 | 199 |
Prepaid expense | 20,378 | |
Total current assets | 26,323 | 95,267 |
Other assets: | ||
Property and equipment, net | 1,359 | |
Websites | 919 | |
Deposits | 1,885 | 1,885 |
Total other assets | 3,244 | 2,804 |
Total Assets | 29,567 | 98,071 |
Liabilities and Stockholders' Deficit: | ||
Accounts payable and accrued expenses | 491,960 | 770,497 |
Short term loan | 45,000 | |
Convertible notes | 3,283,034 | |
Derivative liabilities | 4,341,334 | 23,231,938 |
Derivative liabilities for shortfall of shares | 14,915,419 | |
Liquidated Damages Liabilities | 3,102,750 | |
Total current liabilities | 4,833,294 | 45,348,638 |
Stockholders' deficit: | ||
Common stock, 975,000,000 shares authorized at 0.001 par value, 187,025,438 and 16,095,929 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 187,026 | 16,097 |
Treasury stock, at cost, 616,667 and 216,667 shares at September 30, 2017 and December 31, 2016, respectively | (617) | (217) |
Additional paid in capital | 109,624,828 | 23,785,756 |
Accumulated deficit | (114,615,820) | (69,052,203) |
Total stockholders' deficit | (4,803,727) | (45,250,567) |
Total Liabilities and stockholders' deficit | 29,567 | 98,071 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock; 20,000,000 shares authorized at 0.001 par value: | 777 | |
Series C Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred stock; 20,000,000 shares authorized at 0.001 par value: | $ 79 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 975,000,000 | 975,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued | 187,025,438 | 16,095,929 |
Common stock, shares outstanding | 187,025,438 | 16,095,929 |
Treasury stock, shares | 616,667 | 216,667 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares issued | 778,317 | 0 |
Preferred stock, shares outstanding | 778,317 | 0 |
Liquidation preference | $ 0.001 | $ 0.001 |
Series C Preferred Stock [Member] | ||
Preferred stock, shares issued | 79,368 | 0 |
Preferred stock, shares outstanding | 79,368 | 0 |
Liquidation preference | $ 0.001 | $ 0.001 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
E-commerce | $ 941 | $ 96 | $ 4,480 | $ 2,338 |
Transaction verification services | 15,553 | 326,176 | ||
Hosting | 27,945 | |||
Total revenues | 941 | 15,649 | 4,480 | 356,459 |
Power and mining expenses | (35,050) | (263,869) | ||
Gross profit | 941 | (19,401) | 4,480 | 92,590 |
Operating expenses (income): | ||||
Marketing | 3,617 | 1,045 | 3,757 | 10,492 |
General and administrative | 211,464 | 192,900 | 605,872 | 969,101 |
Impairment loss on fixed assets | 240,853 | |||
Fair value adjustments for digital currencies | (2,671) | 488 | (2,671) | (8,665) |
Total operating expenses | 212,410 | 194,433 | 606,958 | 1,211,781 |
Net loss from operations | (211,469) | (213,834) | (602,478) | (1,119,191) |
Other (expenses) income: | ||||
Impairment loss related to investment | (2,250,000) | |||
Fair value adjustments for warrant liabilities | (8,651,295) | 1,038,588 | (40,338,368) | (8,183,196) |
Fair value adjustments for convertible notes | (2,909,236) | (16,849,071) | (3,245,896) | |
Fair value adjustments for derivative liability shortfall of shares | 7,078,042 | (7,401,321) | ||
Interest expenses | (604) | (6,784) | ||
Loss on issuance of convertible preferred C stock | (2,809,497) | |||
Loss on issuance of Units | (250,000) | |||
Gain (loss) on extinguishment of debt | (346,865) | 15,866,197 | (2,859,338) | |
Loss on settlement of derivative liability | (2,136,971) | |||
Loss from lease termination | (177,389) | |||
Liquidated damages | (1,433,250) | (693,000) | (1,621,750) | |
Other income (expenses) | 39,989 | 24,100 | 39,989 | (8,500) |
Total other (expenses) income | (10,748,277) | 3,450,775 | (44,961,139) | (25,826,785) |
Net (loss) income | $ (10,959,746) | $ 3,236,941 | $ (45,563,617) | $ (26,945,976) |
Net loss (income) per share, basic and diluted | ||||
Basic | $ (0.09) | $ 0.23 | $ (0.64) | $ (4.01) |
Diluted | $ (0.09) | $ 0.01 | $ (0.64) | $ (4.01) |
Weighted average number of shares outstanding, basic and diluted | ||||
Basic | 126,622,659 | 14,287,998 | 71,233,096 | 6,721,632 |
Diluted | 126,622,659 | 275,282,579 | 71,233,096 | 6,721,632 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Net Cash flows used from operating activities: | ||
Net loss | $ (45,563,617) | $ (26,945,976) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expenses | 1,044 | 181,134 |
Issuance of common stock for services | 10,000 | |
Change in fair value of digital currencies | (2,671) | (8,665) |
Fair value adjustments for warrant liabilities | 40,338,368 | 8,183,196 |
Fair value adjustments for convertible notes | 16,849,071 | 3,245,896 |
Fair value adjustments for derivative liability shortfall of shares | 7,401,321 | |
Gain on extinguishment of debt | (15,866,197) | |
Loss from lease termination | 177,389 | |
Impairment loss related to investment | 2,250,000 | |
Impairment loss on fixed assets | 240,853 | |
Loss on sale of fixed assets | 11,002 | |
Loss on extinguishment of debt | 2,859,338 | |
Loss on issuance of Preferred C | 2,809,497 | |
Liquidated damages | 693,000 | 1,621,750 |
Changes in operating assets and liabilities: | ||
Digital currencies | 2,868 | 25,501 |
Prepaid expenses and other current assets | (20,378) | (394) |
Accounts payable and accrued expenses | (387,129) | 260,499 |
Net cash used in operating activities | (958,755) | (674,545) |
Net cash used in investing activities: | ||
Purchase of property and equipment | (1,484) | (19,238) |
Sale of property and equipment, net | 57,335 | |
Refund of lease deposit | 310,889 | |
Net cash (used in) provided by investing activities | (1,484) | 348,986 |
Net cash provided by financing activities: | ||
Net proceeds from exercise of warrant | 91,766 | |
Net proceeds from May fund raising | 925,114 | |
Proceeds from issuance of convertible notes, net | 100,000 | |
Payment to settle the investor loan | (54,000) | |
Change in overdraft | 9,258 | |
Net cash provided by financing activities | 871,114 | 201,024 |
Net decrease in cash | (89,125) | (124,535) |
Cash, beginning of period | 95,068 | 124,535 |
Cash, end of period | 5,943 | |
Supplemental disclosure of non-cash financing and investing activities: | ||
Cashless warrant exercise | 11,638,566 | 212,230 |
Fractional shares adjusted for reverse split | 4 | |
FN Anti-Dilution Issuance of common stock | 14,517 | |
Conversion of Series B Preferred Stock | 76,525 | |
Management Redemption | 400 | 5,409,571 |
Conversion of convertible notes to common stock | ||
Settlement of notes and warrants | 90,168,290 | |
Preferred converted to Common Stock | (383) | |
Preferred issued for conversion of notes | 1,160 | |
Debt settlement from sale of fixed assets | 22,200 | |
Reclassification between convertible notes and derivative liabilities | $ 92,601 |
Business Organization and Natur
Business Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization and Nature of Operations | Note 1 - Business Organization and Nature of Operations BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008. In February 2014, the Company entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using digital currencies, including bitcoin and is currently focused on blockchain and digital currency ecosystems. In January 2015, the Company began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect its broadened strategy. The Company released its new website which included broader information on its strategy. In late 2014 we shifted our focus towards our transaction verification service business, also known as bitcoin mining, though in mid-2016 we ceased our transaction verification services operation at our North Carolina facility due to capital constraints. The Company is an early entrant in the Digital Asset market and one of the first U.S. publicly traded companies to be involved with Digital Assets and blockchain technologies. Subject to additional financing, the Company plans to create a portfolio of digital assets including bitcoin and other “protocol tokens” to provide investors a diversified pure-play exposure to the bitcoin and blockchain industries. The Company intends to acquire digital assets through: open market purchases and participating in initial digital asset offerings (often referred to as initial coin offerings). Additionally, the Company may acquire digital assets by resuming its transaction verification services business through outsourced data centers and earning rewards in digital assets by securing their respective blockchains. Reverse Stock Split and Amendment to Certificate of Incorporation On February 13, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to implement a reverse stock split at a ratio of one-for-60. The reverse stock split became effective immediately. The Reverse Stock Split reduced the number of outstanding shares of Common Stock from 952,756,004 shares to 15,879,267 shares as of December 31, 2016. All per share amounts and outstanding shares of Common Stock including stock options, restricted stock and warrants, have been retroactively adjusted in these consolidated financial statements for all periods presented to reflect the 1-for-60 Reverse Stock Split. Further, exercise prices of stock options and warrants have been retroactively adjusted in these consolidated financial statements for all periods presented to reflect the 1-for-60 Reverse Stock Split. Numbers of shares of the Company’s preferred stock and convertible securities were not affected by the Reverse Stock Split; however, the conversion ratios have been adjusted to reflect the Reverse Stock Split. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
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 in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2016. |
Liquidity, Financial Condition
Liquidity, Financial Condition and Management's Plans | 9 Months Ended |
Sep. 30, 2017 | |
Liquidity Financial Condition And Managements Plans | |
Liquidity, Financial Condition and Management's Plans | Note 3 - Liquidity, Financial Condition and Management’s Plans The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions. On May 25, 2017, the Company raised $1 million in cash from four institutional investors in exchange for the issuance of 79,368 of a new class of Series C Convertible Preferred Stock (“Series C”) and three types of warrants as described below. The 79,368 Series C shares are initially convertible into 15,873,600 shares of common stock. The Series C is convertible at $0.07 per share or approximately $0.063 per share after giving effect to the additional $1,111,111. The Company is subject to a number of customary covenants and a restriction on the incurrence of indebtedness for one year. Within 120 days, the Company agreed to file a registration statement, now pending, which covers the common stock issuable upon exercise of the registrable securities described below. The registration statement covers 47,302,176 shares of common underlying the Series A Warrants, Additional Warrants, and Bonus Warrants. 15,873,600 Series A Warrants exercisable at $0.085 per share over a five-year period; 15,714,288 Additional Warrants exercisable at $0.085 per share over a period which is the earlier of (i) one-year after the effective date of a registration statement covering the warrant shares, or (ii) three years from the date of issuance. The Additional Warrants are callable by the Company for nominal consideration if the common stock trades above $0.17 per share and the daily volume is more than $50,000 for at least 20 trading days; 15,714,288 Bonus Warrants exercisable at $0.17 per share, over a three-year period. The Bonus Warrants are also callable for nominal consideration but the threshold price is more than $0.30 per share. The total gross proceeds raised were $1 million, with net proceeds of $925,114, after deducting the offering expenses. All of these securities, excluding the Bonus Warrants, are subject to price protection. Notwithstanding, the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical of an early stage enterprise. Significant uncertainties include, among others, whether the Company will be able to raise the capital it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations as a profitable enterprise. The Company used approximately $1.0 million of cash in its operating activities for the nine months ended September 30, 2017. The Company incurred $45.6 million net loss for the nine months ended September 30, 2017. The Company had cash of approximately $6,000 and a working capital deficiency of approximately $4.8 million at September 30, 2017, which includes $4.3 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 Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. See Note 9 – Subsequent Events. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings by controlling costs, ● seeking additional financing through sales of additional securities |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 - Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2016 Annual Report. Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. As of September 30, 2017, and December 31, 2016, the Company had approximately $6,000 and $95,000 in cash and cash equivalents. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Derivative Instruments The Company accounts for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, or ASC 815, as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. We determine the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The Company used a Monte Carlo model to separately value the Warrants issued in connection with the convertible notes and preferred shares in order to take into account the possibility of an adjustment to the exercise price associated with new rounds of financing in the future. Use of Estimates The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and the exercise of stock options and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2017 and 2016 because their effect was anti-dilutive: As of September 30, 2017 2016 Warrants to purchase common stock 52,669,694 268,788,732 Convertible notes - 45,817,156 Favored Nations - 108,747,774 Series B preferred stock 155,663,400 - Series C preferred stock 15,873,600 - Total 224,206,694 423,353,662 Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 5 - Fair Value Measurements The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy. The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2017 and December 31, 2016: Fair value measured at September 30, 2017 Total carrying value at September 30, 2017 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Digital Currencies $ 2 $ 2 - - Liabilities Derivative liabilities $ 4,341,334 - - $ 4,341,334 Fair value measured at December 31, 2016 Total carrying value at December 31, 2016 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Digital Currencies $ 199 $ 199 - - Liabilities Derivative liabilities $ 23,231,938 - - $ 23,231,938 Derivative liabilities for shortfall of shares 14,915,419 - - 14,915,419 Convertible notes inclusive of derivative liabilities 3,283,034 - - 3,283,034 There were no transfers between Level 1, 2 or 3 during the three months ended September 30, 2017. 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 nine months ended September 30, 2017: Derivative liabilities balance - January 1, 2017 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 40,338,368 Cashless warrant exercise (11,638,566 ) Loss on issuance of Preferred C 2,809,497 Net proceeds from May fund raising 925,114 Derivative liabilities balance - September 30, 2017 $ 4,341,334 Derivative liabilities for shortfall of shares balance - January 1, 2017 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - September 30, 2017 $ - Convertible notes at fair value - January 1, 2017 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - September 30, 2017 $ - The Company’s derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 September 30, 2017 Strike Price 0.025 - 18.000 0.085 0.025 - 18.000 Volatility 186.7% - 208.3% 210.10% - 254.70% 207.65% - 295.61% Risk-free interest rate 1.25% - 1.83% 1.24% - 1.79% 1.34% - 1.87% Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 1.17 to 4.65 Dividend yield (per share) 0 0 0 Convertible Notes at Fair Value Date of valuation March 2, 2017 Strike Price 0.32 Volatility 267.8% Risk-free interest rate 0.68% 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 Company’s Management. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6 - Related Party Transactions On January 30, 2017, the Company received 24,000,000 pre-split shares (400,000 shares post-split) of Common Stock for cancelation for no consideration (the “Escrow Shares”). The Escrow Shares were placed in escrow by Charles Allen our Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, our Chief Operating Officer and corporate secretary (collectively, the “Principal Stockholders”) pursuant to a securities escrow agreement dated February 19, 2016 (the “Securities Escrow Agreement”). The Company recorded an adjustment to additional paid-in capital for $400 related to this transaction. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 7 - Notes Payable On March 9, 2017, the Company completed a securities exchange offer (the “Note Offer”) with its three convertible note holders (the “Note Holders”). Pursuant to the Note Offer the Note Holders agreed to exchange i) $868,897 of 5% Original Issue Discount 10% Senior Convertible Note Due September 16, 2016, originally issued in December 2015 and all accrued interest and liquidated damages owed (collectively the “Senior Notes”), ii) $175,000 of 20% Original Issue Discount Junior Convertible Notes Due December 5, 2016, originally issued in June 2016 and all accrued interest and liquidated damages owed (collectively the “Junior Notes”), iii) $220,002 of 8% Convertible Notes Due June 6, 2017, originally issued in December 2016 and all accrued interest owed (collectively the “Convertible Notes”), and iv) 97,423,579 warrants (the “Senior Warrants”) for 845,631 shares of Series B Convertible Preferred Stock (the “Preferred”). After giving effect to the Note Offer the Company no longer had any Senior Notes, Junior Notes or Convertible Notes outstanding. A gain of $15.9 million was booked for the extinguishment of $90.2 million liabilities associated with convertible notes, warrant liabilities, shortfall shares liabilities and liquidated damages. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 - Stockholders’ Equity Reverse Stock Split and Amendment to Certificate of Incorporation On February 13, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to implement a reverse stock split at a ratio of one-for-60. The reverse stock split became effective immediately. See note 1 – Business Organization and Nature of Operations. 2017 Activities On February 28, 2017, the Company issued 4,370 shares of Common Stock in connection with the one-for-60 reverse stock split resulting from the rounding up of fractional shares of Common Stock to the whole shares of Common Stock. On March 9, 2017, as a result of the Note Offer (described in Note 7) becoming effective, a securities exchange offer made to the Company’s January 19, 2015 investors (the “January Offer”) was accepted by certain of those investors (the “January Investors”). Pursuant to the January Offer the January Investors agreed to exchange i) 12,052,344 shares of common stock owed pursuant to the favored nations provision of the January 19, 2015 subscription agreement (the “January Agreement”), and ii) 30,130,861 warrants owed pursuant to the favored nations provision of the January Agreement for 210,919 shares of Preferred. On March 9, 2017, as a result of the Note Offer (described in Note 7) becoming effective, a securities exchange offer made to the Company’s April 19, 2015 investors (the “April Offer”) was accepted by certain of those investors (the “April Investors”). Pursuant to the April Offer, the April Investors agreed to exchange i) 20,110,699 shares of Common Stock owed pursuant to the favored nations provision of the April 19, 2015 subscription agreement (the “April Agreement”), and ii) 28,154,980 warrants owed pursuant to the favored nations provision of the April Agreement for 104,391 shares of Preferred. On March 15, 2017, the Company issued investors who participated in its: i) January 19, 2015 financing and rejected the January Offer, and ii) April 19, 2015 financing and rejected the April Offer an aggregate of 14,517,352 share of Common Stock and 112,782,487 warrants. The Common Stock and warrant issuances were made pursuant to the favored nations provision of the January Agreement and April Agreement. On March 15, 2017, the Company filed a Certificate of Designation for the Preferred with the Secretary of State of the State of Nevada. The Preferred Certificate of Designation provides authorization for the issuance of 1,160,941 shares of Preferred, par value $0.001. On March 22, 2017, the Company entered into a Settlement Agreement and Note (the “CSC Agreement”) with CSC Leasing Company (“CSC”) with respect to the equipment lease schedule entered into between CSC and the Company (the “CSC Lease”). Pursuant to the CSC Agreement the Company has agreed to: i) issue CSC 833,333 shares valued at $61,667 of the Company’s common stock (the “Shares”), and ii) pay CSC $200,000 (the “Cash Payment”). On April 4, 2017, the Company entered into a Settlement Agreement with RK Equity Advisors, LLC and Pickwick Capital Partners, LLC with respect to the tail provision of the Engagement Letter dated August 19, 2015. Pursuant to the Settlement Agreement the Company has agreed to: i) terminate the Engagement Letter including all provisions thereof and including any obligations to future fees, and ii) convert the Estimated Liability into 125,000 shares of common stock of the Company, par value $0.001 per share at a price of $0.10 per share. The total value of this transaction is $10,000. On May 25, 2017, the Company raised $1 million in cash from four institutional investors in exchange for the issuance of $1,111,111 of Series C. See Note 3- Liquidity, Financial Condition and Management’s Plans. Between March 15, 2017 and September 30, 2017, the Company issued 78,924,600 shares of Common Stock for the cashless exercise of 107,697,258 warrants. Between March 28, 2017 and September 30, 2017, the Company issued 76,524,800 shares of Common Stock upon the conversion of 382,624 shares of Series B Convertible Preferred stock. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 - Subsequent Events Between October 1, 2017 and November 2, 2017, the Company issued 2,331,302 shares of Common Stock for the cashless exercise of 2,844,446 warrants. Between October 1, 2017 and November 6, 2017, the Company issued 56,974,000 shares of Common Stock upon the conversion of 284,870 shares of Series B Convertible Preferred stock. On October 4, 2017, the Company filed the Certificate of Designation with the Nevada Secretary of State. The Certificate of Designation authorized the Company to issue the shares of Series C-1. On October 10, 2017, the Company entered into a Securities Purchase Agreement with four investors who committed $750,000 in cash and $250,000 in bitcoin in exchange for a new class of Series C-1 Convertible Preferred Stock (the “Series C-1”) and Series B Warrants exercisable at $0.135 per share (the “October Financing”). The Series C-1 is initially convertible into shares of the Company’s common stock at an effective price $0.085 per share. Both the Series C-1 and Series B Warrants are subject to adjustment in the event of future sales of the Company’s equity securities or common stock equivalents at a lower price, subject to elimination of the price protection on the Exchange Date (which is defined and described below). The investors are three institutional investors who were also investors in the Company’s May 2017 Series C financing (the “May Financing”) and the Australian entity which the Company previously announced that it had entered into a non-binding letter of intent to merge with (the “Proposed Merger”); this investor made its $250,000 investment in bitcoin (59.381 BTC). The Proposed Merger is still pending and subject to the same contingencies previously announced. Further, the Company can provide no assurances or guarantees it will be able to consummate the Proposed Merger. The terms of the Series C-1 and the Series B Warrants are essentially identical to the May Financing, except that the May Financing had three types of warrants rather than one. The offering is continuing up to a maximum of $1,500,000 in cash, bitcoin and/or ethereum. At the closing of the October Financing, the institutional investors agreed to release $100,000 from escrow in order to permit the Company to pay its auditors and other expenses (the “First Closing”). Charles Allen, our Chairman, Chief Executive Officer and Chief Financial Officer and Michal Handerhan our Chief Operating Officer (collectively the “Officers”) did not receive any proceeds from the First Closing towards owed out of pocket expenses of approximately $13,000 and accrued and unpaid salaries of approximately $110,000 associated with the Company’s failure to make payroll since July 1, 2017. If the Company did not file its quarterly report for the period ending June 30, 2017 (the “10-Q”) by October 24 th Common Stock Underlying: First Closing of $100,000 Second Closing of $900,000 Additional investment of up to $500,000 Series C-1 1,176,600 10,588,800 5,882,400 Series B Warrants 1,176,600 10,588,800 5,882,400 Total 2,353,200 21,177,600 11,764,800 The Company and the investors also entered into a letter agreement (the “Side Letter”) which provided for various waivers of certain investor protection provisions within the May Financing and the October Financing in order to permit the Proposed Merger to occur. The following are the key elements of the Side Letter: ● The investors agreed to eliminate various investor protective provisions from the May Financing. However, the representations and warranties and indemnification provisions in the May Financing Securities Purchase Agreement (the “May SPA”), limitations on the issuance of preferred stock (except in connection with the Proposed Merger) and variable rate financings remain, and the investors’ right of first refusal will expire nine months following the closing of the Proposed Merger. ● 91 Days following the closing of the Proposed Merger (the “Exchange Date”), the Series C and Series C-1 shall each be exchanged for Series B Convertible Preferred Stock (the “Newly Issued Series B”) identical to that issued in March 2017. The Series B is similar to the outstanding common stock, except for its containing a standard 4.99% beneficial ownership blocker. ● On the Exchange Date, the provision of the May SPA blocking the issuance of preferred stock and precluding the Company from engaging in variable rate transactions expires. ● All of the provisions of the October Financing Securities Purchase Agreement expire except for the representations and warranties and indemnification provisions. ● On the Exchange Date, all anti-dilution and price protections for the investors in the May and October Financings expire. ● Until the Exchange Date, the Company must maintain a 300% share reserve for the common stock issuable under all outstanding Newly Issued Series B, Series C and Series C-1 Preferred Stock or if it fails to do so it must on the Exchange Date issue the affected investors a one-time grant of 20% of the Newly Issued Series B. ● Beginning on the Exchange Date, for a nine-month period, if the Company fails to meet any of 11 targets, it must issue any affected investors a one-time grant of 20% of the newly issued Series B. These targets include the failure to timely file a Form 10-Q within 15 days after its due date, failure to post XBRL on its website, suspension of trading, delays in delivering common stock upon conversion of Series B or exercise of warrants and any delay in removing restrictive legends. The issuance of the Series C-1 shares and the Series B Warrants is exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof. The institutional investors previously invested in securities of the Company, the Australian investor has entered into a non-binding term sheet with respect to the Proposed Merger, the Company did not engage in general solicitation or advertising with regard to the issuance and sale of the securities and has not offered securities to the public in connection with such issuance and sale. Each investor represented that it is an accredited investor and purchased the securities for investment and not with a view to distribution. In connection with the October Financing, the Officers have both notified the Company that in the event the Company is unable to consummate the Proposed Merger, they intend to terminate their employment and resign as officers and directors of the Company. On October 24, 2017, upon filing its Form 10-Q for the six months ended June 30, 2017, the $650,000 in cash held in escrow was released to the Company and the Escrow Agent delivered the balance of the Series C-1 shares and Series B Warrants to the four investors who initially invested in the October Financing. In connection with the escrow release, the Company’s obligation to return $250,000 in bitcoin was extinguished. The Company received an additional investment of $100,000 in the October Financing from a new investor who acquired shares of Series C-1 and Series B Warrants, such that a total of $750,000 in cash held in escrow was released to the Company. Pursuant to a letter agreement entered into by Company and the investors (the “Side Letter”), which provided for various waivers of certain investor protection provisions within the May Financing and the October Financing in order to permit the Proposed Merger to occur, the Series C and Series C-1 shall each be exchanged for Series B Convertible Preferred Stock 91 Days following the closing of the Proposed Merger (the “Exchange Date”). The Series B is similar to the outstanding common stock, except for its containing a standard 4.99% beneficial ownership blocker. All of the provisions of the October Financing Securities Purchase Agreement expire except for the representations and warranties and indemnification provisions. The following table details the total number of shares of the Company’s common stock potentially issuable as a result of the October Financing. Common Stock Underlying: First Closing of $100,000 Second Closing of $1,000,000 Additional investment of up to $400,000 Series C-1 1,176,600 11,765,280 4,705,920 Series B Warrants 1,176,600 11,765,820 4,705,920 Total 2,353,200 23,530,560 9,411,840 |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Concentration of Cash | Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. As of September 30, 2017, and December 31, 2016, the Company had approximately $6,000 and $95,000 in cash and cash equivalents. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. |
Derivative Instruments | Derivative Instruments The Company accounts for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, or ASC 815, as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. We determine the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The Company used a Monte Carlo model to separately value the Warrants issued in connection with the convertible notes and preferred shares in order to take into account the possibility of an adjustment to the exercise price associated with new rounds of financing in the future. |
Use of Estimates | Use of Estimates The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of long-lived assets, stock-based compensation, the valuation of derivative liabilities, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions. |
Convertible Preferred Stock | Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and the conversion of the Company’s convertible preferred stock and warrants (using the if-converted method). Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and the exercise of stock options and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2017 and 2016 because their effect was anti-dilutive: As of September 30, 2017 2016 Warrants to purchase common stock 52,669,694 268,788,732 Convertible notes - 45,817,156 Favored Nations - 108,747,774 Series B preferred stock 155,663,400 - Series C preferred stock 15,873,600 - Total 224,206,694 423,353,662 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share Anti-Diluted | The following financial instruments were not included in the diluted loss per share calculation as of September 30, 2017 and 2016 because their effect was anti-dilutive: As of September 30, 2017 2016 Warrants to purchase common stock 52,669,694 268,788,732 Convertible notes - 45,817,156 Favored Nations - 108,747,774 Series B preferred stock 155,663,400 - Series C preferred stock 15,873,600 - Total 224,206,694 423,353,662 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Liabilities Measured at Fair Value On Recurring Basis | The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2017 and December 31, 2016: Fair value measured at September 30, 2017 Total carrying value at September 30, 2017 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Digital Currencies $ 2 $ 2 - - Liabilities Derivative liabilities $ 4,341,334 - - $ 4,341,334 Fair value measured at December 31, 2016 Total carrying value at December 31, 2016 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Digital Currencies $ 199 $ 199 - - Liabilities Derivative liabilities $ 23,231,938 - - $ 23,231,938 Derivative liabilities for shortfall of shares 14,915,419 - - 14,915,419 Convertible notes inclusive of derivative liabilities 3,283,034 - - 3,283,034 |
Schedule of Changes in Level 3 Liabilities Measured at Fair Value | Changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2017: Derivative liabilities balance - January 1, 2017 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 40,338,368 Cashless warrant exercise (11,638,566 ) Loss on issuance of Preferred C 2,809,497 Net proceeds from May fund raising 925,114 Derivative liabilities balance - September 30, 2017 $ 4,341,334 |
Schedule of Derivative Liabilities for Shortfall of Shares | Derivative liabilities for shortfall of shares balance - January 1, 2017 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - September 30, 2017 $ - |
Schedule of Changes in Fair Value of Convertible Notes | Convertible notes at fair value - January 1, 2017 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - September 30, 2017 $ - |
Summary of Quantitative Information to Valuation Methodology | A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 September 30, 2017 Strike Price 0.025 - 18.000 0.085 0.025 - 18.000 Volatility 186.7% - 208.3% 210.10% - 254.70% 207.65% - 295.61% Risk-free interest rate 1.25% - 1.83% 1.24% - 1.79% 1.34% - 1.87% Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 1.17 to 4.65 Dividend yield (per share) 0 0 0 Convertible Notes at Fair Value Date of valuation March 2, 2017 Strike Price 0.32 Volatility 267.8% Risk-free interest rate 0.68% Dividend yield (per share) 0 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Schedule of Potentially Issuable Common Stock | Common Stock Underlying: First Closing of $100,000 Second Closing of $900,000 Additional investment of up to $500,000 Series C-1 1,176,600 10,588,800 5,882,400 Series B Warrants 1,176,600 10,588,800 5,882,400 Total 2,353,200 21,177,600 11,764,800 The following table details the total number of shares of the Company’s common stock potentially issuable as a result of the October Financing. Common Stock Underlying: First Closing of $100,000 Second Closing of $1,000,000 Additional investment of up to $400,000 Series C-1 1,176,600 11,765,280 4,705,920 Series B Warrants 1,176,600 11,765,820 4,705,920 Total 2,353,200 23,530,560 9,411,840 |
Business Organization and Nat19
Business Organization and Nature of Operations (Details Narrative) - shares | Feb. 13, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Number of outstanding shares of common stock | 187,025,438 | 16,095,929 | |
Reverse stock split | one-for-60 | 1-for-60 | |
Maximum [Member] | |||
Number of outstanding shares of common stock | 952,756,004 | ||
Minimum [Member] | |||
Number of outstanding shares of common stock | 15,879,267 |
Liquidity, Financial Conditio20
Liquidity, Financial Condition and Management's Plans (Details Narrative) - USD ($) | May 25, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 15, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Preferred stock, shares issued | 1,160,941 | |||||||
Gross proceeds from may fund raising | $ 1,000,000 | |||||||
Net proceeds from may fund raising | 925,114 | |||||||
Net cash used in operating activities | 958,755 | 674,545 | ||||||
Net loss | $ 10,959,746 | $ (3,236,941) | 45,563,617 | 26,945,976 | ||||
Cash | 5,943 | 5,943 | $ 95,068 | $ 124,535 | ||||
Working capital deficiency | 4,800,000 | 4,800,000 | ||||||
Fair value of derivative liabilities | $ 4,341,334 | $ 4,341,334 | $ 23,231,938 | |||||
Warrants [Member] | ||||||||
Number of common stock issued to cover warrants | 47,302,176 | |||||||
Series A Warrants [Member] | ||||||||
Number of common stock issued to cover warrants | 15,873,600 | |||||||
Warrant exercise price per share | $ 0.085 | |||||||
Warrant term | 5 years | |||||||
Additional Warrants [Member] | ||||||||
Number of common stock issued to cover warrants | 15,714,288 | |||||||
Warrant exercise price per share | $ 0.085 | |||||||
Share issued price per share | $ 0.17 | |||||||
Additional Warrants [Member] | Minimum [Member] | ||||||||
Common stock trading volume | $ 50,000 | |||||||
Bonus Warrants [Member] | ||||||||
Number of common stock issued to cover warrants | 15,714,288 | |||||||
Warrant exercise price per share | $ 0.17 | |||||||
Warrant term | 3 years | |||||||
Bonus Warrants [Member] | Minimum [Member] | ||||||||
Threshold price per share | $ 0.30 | |||||||
Four Institutional Investors [Member] | Common Stock [Member] | ||||||||
Number of preferred stock shares convertible into common stock | 15,873,600 | |||||||
Four Institutional Investors [Member] | Common Stock Equivalents [Member] | ||||||||
Preferred stock conversion price per share | $ 0.063 | |||||||
Four Institutional Investors [Member] | Series C Convertible Preferred Stock [Member] | ||||||||
Proceeds from issuance of preferred stock | $ 1,000,000 | |||||||
Preferred stock, shares issued | 79,368 | |||||||
Preferred stock conversion price per share | $ 0.07 | |||||||
Preferred stock convertible, value | $ 1,111,111 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 5,943 | $ 95,068 | $ 124,535 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-Diluted (Details) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Excluded potentially dilutive securities | 224,206,694 | 423,353,662 |
Warrants to Purchase Common Stock [Member] | ||
Excluded potentially dilutive securities | 52,669,694 | 268,788,732 |
Convertible Notes [Member] | ||
Excluded potentially dilutive securities | 45,817,156 | |
Favored Nations [Member] | ||
Excluded potentially dilutive securities | 108,747,774 | |
Series B Preferred Stock [Member] | ||
Excluded potentially dilutive securities | 155,663,400 | |
Series C Preferred Stock [Member] | ||
Excluded potentially dilutive securities | 15,873,600 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value Liabilities Measured at Fair Value On Recurring Basis (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Digital currencies | $ 2 | $ 199 |
Derivative Liabilities | 4,341,334 | 23,231,938 |
Derivative liabilities for shortfall of shares | 14,915,419 | |
Convertible notes at inclusive of derivative liabilities | 3,283,034 | |
Quoted Prices in Active Markets (Level 1)[Member] | ||
Digital currencies | 2 | 199 |
Derivative Liabilities | ||
Derivative liabilities for shortfall of shares | ||
Convertible notes at inclusive of derivative liabilities | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Digital currencies | ||
Derivative Liabilities | ||
Derivative liabilities for shortfall of shares | ||
Convertible notes at inclusive of derivative liabilities | ||
Significant Unobservable Inputs (Level 3) [Member] | ||
Digital currencies | ||
Derivative Liabilities | 4,341,334 | 23,231,938 |
Derivative liabilities for shortfall of shares | 14,915,419 | |
Convertible notes at inclusive of derivative liabilities | $ 3,283,034 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Changes in Level 3 Liabilities Measured at Fair Value (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | ||||
Beginning balance | $ 23,231,938 | |||
Conversion of warrant liabilities | (51,325,017) | |||
Fair value adjustments for warrant liabilities | $ 8,651,295 | $ (1,038,588) | 40,338,368 | $ 8,183,196 |
Cashless warrant exercise | (11,638,566) | |||
Loss on issuance of Preferred C | 2,809,497 | |||
Net proceeds from May fund raising | 925,114 | |||
Ending balance | $ 4,341,334 | $ 4,341,334 |
Fair Value Measurements - Sch25
Fair Value Measurements - Schedule of Derivative Liabilities for Shortfall of Shares (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Derivative liabilities for shortfall of shares balance - January 1, 2017 | $ 14,915,419 |
Conversion of shortfall shares liabilities | (14,915,419) |
Derivative liabilities for shortfall of shares balance - September 30, 2017 |
Fair Value Measurements - Sch26
Fair Value Measurements - Schedule of Changes in Fair Value of Convertible Notes (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value Disclosures [Abstract] | |
Convertible notes at fair value, beginning balance | $ 3,283,034 |
Conversion of convertible notes | (20,132,105) |
Change in fair value of convertible notes (including OID discount) | 16,849,071 |
Convertible notes at fair value, ending balance |
Fair Value Measurements - Sum27
Fair Value Measurements - Summary of Quantitative Information to Valuation Methodology (Details) - $ / shares | May 24, 2017 | Mar. 02, 2017 | Sep. 30, 2017 |
Convertible Notes at Fair Value [Member] | |||
Strike Price | $ 0.32 | ||
Volatility | 267.80% | ||
Risk-free interest rate | 0.68% | ||
Dividend yield (per share) | $ 0 | ||
Warrant Liabilities [Member] | |||
Strike Price | $ 0.085 | ||
Dividend yield (per share) | $ 0 | 0 | $ 0 |
Warrant Liabilities [Member] | Minimum [Member] | |||
Strike Price | $ 0.025 | $ 0.025 | |
Volatility | 210.10% | 186.70% | 207.65% |
Risk-free interest rate | 1.24% | 1.25% | 1.34% |
Contractual life (in years) | 1 year 6 months 7 days | 1 year 9 months 14 days | 1 year 2 months 1 day |
Warrant Liabilities [Member] | Maximum [Member] | |||
Strike Price | $ 18 | $ 18 | |
Volatility | 254.70% | 208.30% | 295.61% |
Risk-free interest rate | 1.79% | 1.83% | 1.87% |
Contractual life (in years) | 5 years | 3 years 9 months 14 days | 4 years 7 months 24 days |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Charles Allen [Member] | Jan. 30, 2017USD ($)shares |
Number of escrowed shares cancelation | 24,000,000 |
Post-split shares of commons stock | 400,000 |
Adjustment to additional paid in capital | $ | $ 400 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Mar. 09, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Gain on extinguishment of debt | $ (346,865) | $ 15,866,197 | $ (2,859,338) | |||
Derivative liabilities | 4,341,334 | 4,341,334 | $ 23,231,938 | |||
Convertible Notes, Warrant Liabilities, Shortfall Shares Liabilities and Liquidated Damages [Member] | ||||||
Derivative liabilities | $ 90,200,000 | $ 90,200,000 | ||||
Series B Convertible Preferred Stock [Member] | ||||||
Number of common stock shares issued for conversion of debt | 845,631 | |||||
Senior Convertible Note [Member] | ||||||
Debt instrument principal amount | $ 868,897 | |||||
Original issue discount percentage | 5.00% | |||||
Notes interest rate percentage | 10.00% | |||||
Debt maturity date | Sep. 16, 2016 | |||||
Junior Convertible Notes [Member] | ||||||
Debt instrument principal amount | $ 175,000 | |||||
Original issue discount percentage | 20.00% | |||||
Debt maturity date | Dec. 5, 2016 | |||||
Convertible Notes [Member] | ||||||
Debt instrument principal amount | $ 220,002 | |||||
Original issue discount percentage | 8.00% | |||||
Debt maturity date | Jun. 6, 2017 | |||||
Senior Warrants [Member] | ||||||
Debt convertible into warrant shares | 97,423,579 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | May 25, 2017 | Apr. 04, 2017 | Mar. 22, 2017 | Mar. 09, 2017 | Feb. 28, 2017 | Feb. 13, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Mar. 15, 2017 | Dec. 31, 2016 | Apr. 19, 2015 |
Reverse stock split | one-for-60 | 1-for-60 | ||||||||||
Common stock, shares authorized | 975,000,000 | 975,000,000 | 975,000,000 | 975,000,000 | ||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Number of common stock issued to convert estimated liability, value | $ 20,132,105 | |||||||||||
Common Stock [Member] | ||||||||||||
Number of common stock shares issued for cashless exercise of warrants | 78,924,600 | |||||||||||
Cashless exercise of warrant | 107,697,258 | |||||||||||
Conversion of stock, shares issued | 76,524,800 | |||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||
Number of common stock issued to convert estimated liability | 845,631 | |||||||||||
Conversion of stock, shares converted | 382,624 | |||||||||||
Four Institutional Investors [Member] | Series C Convertible Preferred Stock [Member] | ||||||||||||
Preferred stock, shares issued | 79,368 | |||||||||||
Proceeds from issuance of preferred stock | $ 1,000,000 | |||||||||||
Preferred stock convertible, value | $ 1,111,111 | |||||||||||
January Agreement [Member] | ||||||||||||
Common stock, shares authorized | 12,052,344 | |||||||||||
Number of warrant shares issued | 30,130,861 | |||||||||||
Preferred stock, shares issued | 210,919 | |||||||||||
April Agreement [Member] | ||||||||||||
Common stock, shares authorized | 20,110,699 | |||||||||||
Number of warrant shares issued | 28,154,980 | |||||||||||
Preferred stock, shares issued | 104,391 | |||||||||||
January Agreement and April Agreement [Member] | ||||||||||||
Common stock, shares authorized | 14,517,352 | |||||||||||
Number of warrant shares issued | 112,782,487 | |||||||||||
CSC Agreement [Member] | ||||||||||||
Number of common stock shares issued | 833,333 | |||||||||||
Number of common stock shares issued value | $ 61,667 | |||||||||||
Payment to acquire cash payment | $ 200,000 | |||||||||||
Settlement Agreement [Member] | RK Equity Advisors, LLC and Pickwick Capital Partners, LLC [Member] | ||||||||||||
Number of common stock issued to convert estimated liability | 125,000 | |||||||||||
Common stock, par value | $ 0.001 | |||||||||||
Debt conversion price per share | $ 0.10 | |||||||||||
Number of common stock issued to convert estimated liability, value | $ 10,000 | |||||||||||
2017 Activities [Member] | ||||||||||||
Reverse stock split | one-for-60 reverse stock split | |||||||||||
Number of common stock shares issued | 4,370 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 10, 2017 | Nov. 06, 2017 | Nov. 02, 2017 | May 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Oct. 24, 2017 |
Pocket expenses | $ (39,989) | $ (24,100) | $ (39,989) | $ 8,500 | |||||||
Series B Convertible Preferred Stock [Member] | |||||||||||
Number of shares converted | 382,624 | ||||||||||
Common Stock [Member] | |||||||||||
Number of common stock shares issued for cashless exercise of warrants | 78,924,600 | ||||||||||
Cashless exercise of warrant | 107,697,258 | ||||||||||
Conversion of stock, shares issued | 76,524,800 | ||||||||||
Subsequent Event [Member] | |||||||||||
Number of common stock shares issued for cashless exercise of warrants | 2,331,302 | ||||||||||
Cashless exercise of warrant | 2,844,446 | ||||||||||
Payment to acquire investment | $ 250,000 | ||||||||||
Escrow, amount | $ 650,000 | ||||||||||
Pocket expenses | 13,000 | ||||||||||
Accrued and unpaid salaries | 110,000 | ||||||||||
Ownership interest | 4.99% | ||||||||||
Subsequent Event [Member] | Exchange Date [Member] | |||||||||||
Beneficial ownership interest rate | 4.99% | ||||||||||
Share reserve for common stock issuable, percent | 300.00% | ||||||||||
One time grant of newly issued shares, percentage | 20.00% | ||||||||||
Subsequent Event [Member] | Institutional Investor [Member] | |||||||||||
Due from related parties | 100,000 | $ 100,000 | $ 100,000 | $ 100,000 | |||||||
Subsequent Event [Member] | First Closing [Member] | |||||||||||
Escrow, amount | 650,000 | 650,000 | 650,000 | 650,000 | |||||||
Subsequent Event [Member] | May Financing [Member] | |||||||||||
Proceeds from financing activities | 1,500,000 | ||||||||||
Subsequent Event [Member] | May Financing [Member] | First Closing [Member] | |||||||||||
Escrow, amount | $ 100,000 | ||||||||||
Subsequent Event [Member] | Bitcoin [Member] | |||||||||||
Remaining funds | $ 250,000 | ||||||||||
Subsequent Event [Member] | Bitcoin [Member] | First Closing [Member] | |||||||||||
Remaining funds | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | |||||||
Subsequent Event [Member] | New Investor [Member] | Bitcoin [Member] | |||||||||||
Investment | 100,000 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Four Investors [Member] | |||||||||||
Proceeds from issuance of convertible preferred stock | $ 750,000 | ||||||||||
Warrant exercise price per share | $ 0.135 | ||||||||||
Common stock price per share | $ 0.085 | ||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Four Investors [Member] | Bitcoin [Member] | |||||||||||
Proceeds from issuance of convertible preferred stock | $ 250,000 | ||||||||||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | |||||||||||
Number of shares converted | 284,870 | ||||||||||
Subsequent Event [Member] | Series C-1 And Series B Warrants [Member] | |||||||||||
Escrow, amount | $ 750,000 | ||||||||||
Subsequent Event [Member] | Common Stock [Member] | |||||||||||
Conversion of stock, shares issued | 56,974,000 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Potentially Issuable Common Stock (Details) - Subsequent Event [Member] | Sep. 30, 2017shares |
First Closing of 100,000 [Member] | |
Number of shares of common stock potentially issuable | 2,353,200 |
First Closing of 100,000 [Member] | Series C-1 [Member] | |
Number of shares of common stock potentially issuable | 1,176,600 |
First Closing of 100,000 [Member] | Series B Warrants [Member] | |
Number of shares of common stock potentially issuable | 1,176,600 |
Second Closing of 900,000 [Member] | |
Number of shares of common stock potentially issuable | 21,177,600 |
Second Closing of 900,000 [Member] | Series C-1 [Member] | |
Number of shares of common stock potentially issuable | 10,588,800 |
Second Closing of 900,000 [Member] | Series B Warrants [Member] | |
Number of shares of common stock potentially issuable | 10,588,800 |
Additional Investment of Upto 500,000 [Member] | |
Number of shares of common stock potentially issuable | 11,764,800 |
Additional Investment of Upto 500,000 [Member] | Series C-1 [Member] | |
Number of shares of common stock potentially issuable | 5,882,400 |
Additional Investment of Upto 500,000 [Member] | Series B Warrants [Member] | |
Number of shares of common stock potentially issuable | 5,882,400 |
Second Closing of 1,000,000 [Member] | |
Number of shares of common stock potentially issuable | 23,530,560 |
Second Closing of 1,000,000 [Member] | Series C-1 [Member] | |
Number of shares of common stock potentially issuable | 11,765,280 |
Second Closing of 1,000,000 [Member] | Series B Warrants [Member] | |
Number of shares of common stock potentially issuable | 11,765,820 |
Additional Investment of Upto 400,000 [Member] | |
Number of shares of common stock potentially issuable | 9,411,840 |
Additional Investment of Upto 400,000 [Member] | Series C-1 [Member] | |
Number of shares of common stock potentially issuable | 4,705,920 |
Additional Investment of Upto 400,000 [Member] | Series B Warrants [Member] | |
Number of shares of common stock potentially issuable | 4,705,920 |
Subsequent Events - Schedule 33
Subsequent Events - Schedule of Potentially Issuable Common Stock (Details) (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Common stock, closing value | $ 187,026 | $ 16,097 |
Subsequent Event [Member] | First Closing of 100,000 [Member] | ||
Common stock, closing value | 100,000 | |
Subsequent Event [Member] | Second Closing of 900,000 [Member] | ||
Common stock, closing value | 900,000 | |
Subsequent Event [Member] | Additional Investment of Upto 500,000 [Member] | ||
Common stock, closing value | 500,000 | |
Subsequent Event [Member] | Second Closing of 1,000,000 [Member] | ||
Common stock, closing value | 1,000,000 | |
Subsequent Event [Member] | Additional Investment of Upto 400,000 [Member] | ||
Common stock, closing value | $ 400,000 |