Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018 | |
Document And Entity Information | |
Entity Registrant Name | BTCS Inc. |
Entity Central Index Key | 1,436,229 |
Document Type | S-1/A |
Document Period End Date | Jun. 30, 2018 |
Amendment Flag | true |
Amendment Description | Amendment No. 8 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Ex Transition Period | false |
Trading Symbol | BTCS |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | |||
Cash | $ 32,440 | $ 303,334 | $ 95,068 |
Digital currencies | 96,710 | 217,119 | 199 |
Prepaid expense | 68,333 | 67,736 | |
Total current assets | 197,483 | 588,189 | 95,267 |
Other assets: | |||
Property and equipment, net | 3,388 | 1,235 | |
Websites | 919 | ||
Deposits | 1,885 | ||
Total other assets | 3,388 | 1,235 | 2,804 |
Total Assets | 200,871 | 589,424 | 98,071 |
Liabilities and Stockholders' Equity (Deficit): | |||
Accounts payable and accrued expense | 69,067 | 75,997 | 770,497 |
Short term loan | 45,000 | ||
Convertible notes | 3,283,034 | ||
Derivative liabilities | 23,231,938 | ||
Derivative liabilities for shortfall of shares | 14,915,419 | ||
Liquidated Damages Liabilities | 3,102,750 | ||
Total current liabilities | 69,067 | 75,997 | 45,348,638 |
Stockholders' equity (deficit): | |||
Common stock, 975,000,000 shares authorized at 0.001 par value, 372,337,169, 363,043,769 and 16,095,929 shares issued and outstanding at June 30, 2018, December 31, 2017 and 2016, respectively | 372,337 | 363,044 | 16,097 |
Treasury stock, at cost, 0 and 216,667 shares at December 31, 2017 and 2016, respectively | (217) | ||
Additional paid in capital | 114,657,833 | 114,667,080 | 23,785,756 |
Accumulated deficit | (114,898,395) | (114,516,772) | (69,052,203) |
Total stockholders' equity (deficit) | 131,804 | 513,427 | (45,250,567) |
Total Liabilities and stockholders' equity (deficit) | 200,871 | 589,424 | 98,071 |
Series B Convertible Preferred Stock [Member] | |||
Stockholders' equity (deficit): | |||
Preferred stock; 20,000,000 shares authorized at 0.001 par value: | 25 | ||
Series C-1 Convertible Preferred Stock [Member] | |||
Stockholders' equity (deficit): | |||
Preferred stock; 20,000,000 shares authorized at 0.001 par value: | $ 29 | $ 50 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 975,000,000 | 975,000,000 | 975,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares issued | 372,337,169 | 363,043,769 | 16,095,929 |
Common stock, shares outstanding | 372,337,169 | 363,043,769 | 16,095,929 |
Treasury stock, shares | 0 | 216,667 | |
Series B Convertible Preferred Stock [Member] | |||
Preferred stock, shares issued | 0 | 25,877 | 0 |
Preferred stock, shares outstanding | 0 | 25,877 | 0 |
Preferred stock, liquidation preference per share | $ 0.001 | $ 0.001 | $ 0.001 |
Series C-1 Convertible Preferred Stock [Member] | |||
Preferred stock, shares issued | 29,414 | 50,004 | 0 |
Preferred stock, shares outstanding | 29,414 | 50,004 | 0 |
Preferred stock, liquidation preference per share | $ 0.001 | $ 0.001 | $ 0.001 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | ||||||
Total revenues | $ 358 | $ 3,539 | $ 4,480 | $ 355,212 | ||
Cost of revenues | ||||||
Power and mining expenses | (160) | (263,869) | ||||
Gross profit | 4,320 | 91,343 | ||||
Operating expenses (income): | ||||||
General and administrative | 234,129 | 215,022 | 489,792 | 394,408 | 1,564,851 | 1,309,014 |
Marketing | 1,485 | 80 | 2,970 | 140 | 9,242 | 10,693 |
Revaluation of digital currencies | (8,665) | |||||
Impairment loss on fixed assets | 236,585 | |||||
Total operating expenses | 235,614 | 215,102 | 492,762 | 394,548 | 1,574,093 | 1,547,627 |
Net loss from operations | (235,614) | (214,744) | (492,762) | (391,009) | (1,569,773) | (1,456,284) |
Other (expenses) income: | ||||||
Impairment loss related to investment | (2,250,000) | |||||
Fair value adjustments for warrant liabilities | 1,485,813 | (31,687,073) | (39,222,099) | (25,266,593) | ||
Fair value adjustments for convertible notes | (16,849,071) | (16,849,071) | 2,096,700 | |||
Fair value adjustments for derivative liability shortfall of shares | (14,915,419) | |||||
Interest expenses | (7,420) | |||||
Realized gain on sale of digital currencies | 18,926 | 111,139 | 299,092 | |||
Loss on issuance of Units | (250,000) | |||||
Gain on extinguishment of debt | (6,870) | 15,866,197 | 15,918,867 | 837,369 | ||
Gain on settlement of derivative liability | 2,136,971 | 2,136,971 | ||||
Loss from lease termination | (177,389) | (100,696) | ||||
Liquidated damages | (693,000) | (693,000) | (3,102,750) | |||
Other income | 39,643 | 49,121 | ||||
Total other income (expense) | 18,926 | 806,417 | 111,139 | (34,212,862) | (43,894,796) | (42,808,992) |
Net (loss) income | $ (216,688) | $ 591,673 | $ (381,623) | $ (34,603,871) | $ (45,464,569) | $ (44,265,276) |
Net loss per share, basic and diluted | ||||||
Basic and Diluted | $ 0 | $ 0.01 | $ 0 | $ (0.80) | $ (0.37) | $ (4.89) |
Weighted average number of shares outstanding, basic and diluted | ||||||
Basic and Diluted | 371,326,525 | 66,171,066 | 369,781,431 | 43,079,285 | 123,548,858 | 9,058,785 |
Series C Convertible Preferred Stock [Member] | ||||||
Other (expenses) income: | ||||||
Loss on issuance of Convertible Preferred stock | $ (2,809,497) | $ (2,809,497) | $ (2,809,497) | |||
Series C-1 Convertible Preferred Stock [Member] | ||||||
Other (expenses) income: | ||||||
Loss on issuance of Convertible Preferred stock | (478,035) | |||||
E-commerce [Member] | ||||||
Revenues | ||||||
Total revenues | $ 358 | $ 3,539 | 4,480 | 1,640 | ||
Transaction Verification Services [Member] | ||||||
Revenues | ||||||
Total revenues | 325,627 | |||||
Hosting [Member] | ||||||
Revenues | ||||||
Total revenues | $ 27,945 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Deficit) - USD ($) | Series B Convertible Preferred Stock [Member] | Series C Convertible Preferred Stock [Member] | Series C-1 Convertible Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ 2,842 | $ (217) | $ 21,994,382 | $ (24,786,927) | $ (2,789,920) | |||
Balance, Shares at Dec. 31, 2015 | 2,841,342 | (216,667) | ||||||
Conversion of Senior convertible notes | $ 9,649 | 1,703,215 | 1,712,864 | |||||
Conversion of Senior convertible notes, shares | 9,648,662 | |||||||
Warrant exercise for cash | $ 69 | 91,696 | 91,765 | |||||
Warrant exercise for cash, shares | 68,750 | |||||||
Cashless warrant exercise | $ 3,537 | (3,537) | 3,537 | |||||
Cashless warrant exercise, shares | 3,537,175 | |||||||
Issuance of common stock for settlement of debt | ||||||||
Issuance of common stock due to Anti-Dilution provision | ||||||||
Management redemption from escrow account | ||||||||
Issuance of common stock for services | ||||||||
Issuance of common stock as consideration for warrant Amendment | ||||||||
Net loss | (44,265,276) | (44,265,276) | ||||||
Balance at Dec. 31, 2016 | $ 16,097 | $ (217) | 23,785,756 | (69,052,203) | (45,250,567) | |||
Balance, Shares at Dec. 31, 2016 | 16,095,929 | (216,667) | ||||||
Cashless warrant exercise | $ 81,857 | 12,196,111 | 12,277,968 | |||||
Cashless warrant exercise, shares | 81,856,798 | |||||||
Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering (net of 3.7 million warrant liability, offset by 2.8 million of loss on issuance of Series C Convertible Preferred Stock) | $ 79 | (79) | ||||||
Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering (net of 3.7 million warrant liability, offset by 2.8 million of loss on issuance of Series C Convertible Preferred Stock), shares | 79,368 | |||||||
Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering (net of 1.5 million warrant liability,offset by 478,000 of loss on issuance of Series C-1 Convertible Preferred Stock) | $ 65 | (65) | ||||||
Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering (net of 1.5 million warrant liability,offset by 478,000 of loss on issuance of Series C-1 Convertible Preferred Stock), shares | 64,710 | |||||||
Issuance of common stock for settlement of debt | $ 833 | 60,834 | 61,667 | |||||
Issuance of common stock for settlement of debt, shares | 833,333 | |||||||
Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable | $ 1,160 | 74,299,064 | 74,300,224 | |||||
Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable, shares | 1,160,941 | |||||||
Conversion of Series B Convertible Preferred stock to common stock | $ (1,135) | $ 227,013 | (225,878) | |||||
Conversion of Series B Convertible Preferred stock to common stock, shares | (1,135,064) | 227,012,800 | ||||||
Conversion of Series C Convertible Preferred to common stock | $ (79) | $ 15,874 | (15,795) | |||||
Conversion of Series C Convertible Preferred to common stock, Shares | (79,368) | 15,873,600 | ||||||
Conversion of Series C-1 Convertible Preferred Stock to common stock | $ (15) | $ 2,941 | (2,926) | |||||
Conversion of Series C-1 Convertible Preferred Stock to common stock, shares | (14,706) | 2,941,200 | ||||||
Issuance of common stock due to Anti-Dilution provision | $ 14,517 | (14,517) | ||||||
Issuance of common stock due to Anti-Dilution provision, shares | 14,517,352 | |||||||
Management redemption from escrow account | $ (400) | 400 | ||||||
Management redemption from escrow account, shares | (400,000) | |||||||
Issuance of common stock for services | $ 125 | 9,875 | 10,000 | |||||
Issuance of common stock for services, Shares | 125,000 | |||||||
Issuance of common stock as consideration for warrant Amendment | $ 4,400 | 435,600 | (440,000) | |||||
Issuance of common stock as consideration for warrant Amendment, shares | 4,400,000 | |||||||
Reclassification from derivative liability to stockholders' equity | 4,138,704 | 4,138,704 | ||||||
Reclassification from derivative liability to stockholders' equity, shares | ||||||||
Fractional shares adjusted for reverse split | $ 4 | (4) | ||||||
Fractional shares adjusted for reverse split, shares | 4,424 | |||||||
Cancellation of treasury stock | $ (617) | $ 617 | ||||||
Cancellation of treasury stock, shares | (616,667) | 616,667 | ||||||
Net loss | (45,464,569) | (45,464,569) | ||||||
Balance at Dec. 31, 2017 | $ 25 | $ 50 | $ 363,044 | $ 114,667,080 | $ (114,516,772) | 513,427 | ||
Balance, Shares at Dec. 31, 2017 | 25,877 | 50,004 | 363,043,769 | |||||
Cashless warrant exercise | ||||||||
Issuance of common stock for settlement of debt | ||||||||
Issuance of common stock for services | ||||||||
Net loss | (381,623) | |||||||
Balance at Jun. 30, 2018 | $ 131,804 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Equity (Deficit) (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Series C Convertible Preferred Stock [Member] | |
Warrant liability | $ 3,700,000 |
Loss on issuance convertible preferred stock | 1,500,000 |
Series C-1 Convertible Preferred Stock [Member] | |
Warrant liability | 2,800,000 |
Loss on issuance convertible preferred stock | $ 478,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Cash flows used from operating activities: | ||||
Net loss | $ (381,623) | $ (34,603,871) | $ (45,464,569) | $ (44,265,276) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization expenses | 445 | 920 | 1,169 | 182,037 |
Issuance of common stock for services | 10,000 | 10,000 | ||
Issuance of common stock as consideration for warrant Amendment | 440,000 | |||
Change in fair value of digital currencies | (8,665) | |||
Loss on issuance of Units | 250,000 | |||
Fair value adjustments for warrant liabilities | 31,687,073 | 39,222,099 | 25,266,593 | |
Fair value adjustments for convertible notes | 16,849,071 | 16,849,071 | (2,096,700) | |
Fair value adjustments for derivative liability shortfall of shares | 14,915,419 | |||
Realized gain on sale of digital currencies | 111,139 | 299,092 | ||
Proceeds from sale of digital currencies | 231,548 | 332,172 | ||
Gain on extinguishment of debt | (15,866,197) | (15,918,867) | (837,369) | |
Loss from lease termination | 177,389 | 100,696 | ||
Impairment loss related to investment | 2,250,000 | |||
Impairment loss on fixed assets | 236,585 | |||
Loss on sale of fixed assets | 1,530 | |||
Gain on settlement of derivative liability | (2,136,971) | |||
Liquidated damages | 693,000 | 693,000 | 3,102,750 | |
Changes in operating assets and liabilities: | ||||
Digital currencies | 25,502 | |||
Prepaid expenses and other current assets | (597) | (28,019) | (67,736) | 8,902 |
Accounts payable | (6,930) | (539,313) | (673,729) | 140,233 |
Net cash used in operating activities | (268,296) | (947,421) | (1,488,254) | (828,459) |
Net cash used in investing activities: | ||||
Purchase of property and equipment | (2,598) | (1,484) | (1,485) | (14,582) |
Sale of property and equipment, net | 66,807 | |||
Refund of lease deposit | 1,885 | 335,000 | ||
Net cash used in investing activities | (2,598) | (1,484) | 400 | 387,225 |
Net cash provided by financing activities: | ||||
Net proceeds from exercise of warrant | 91,765 | |||
Net proceeds from issuance of convertible notes | 320,002 | |||
Payment to settle an investor loan | (54,000) | (54,000) | ||
Net cash provided by financing activities | 871,114 | 1,696,120 | 411,767 | |
Net decrease in cash | (270,894) | (77,791) | 208,266 | (29,467) |
Cash, beginning of period | 303,334 | 95,068 | 95,068 | 124,535 |
Cash, end of period | 32,440 | 17,277 | 303,334 | 95,068 |
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of convertible notes to common stock | (4,208,546) | |||
Issuance of common stock due to Anti-Dilution provision | 14,517 | 14,517 | ||
Cashless warrant exercise | 24,628 | 12,277,968 | 3,537 | |
Management redemption from escrow account | 400 | 400 | ||
Fractional shares adjusted for reverse split | 4 | 4 | ||
Issuance of common stock for settlement of debt | 90,168,290 | 61,667 | ||
Preferred converted to Common Stock | (162) | |||
Preferred issued for conversion of notes | 1,160 | 1,160 | ||
Debt settlement from sale of fixed assets | 22,200 | |||
Reclassification between convertible notes and derivative liabilities | 4,138,704 | 92,601 | ||
Issuance of Series C-1 Convertible Preferred Stock and warrants in exchange of digital currencies | 250,000 | |||
Issuance of Series B Convertible Preferred Stock to settle convertible notes payable | 74,300,224 | |||
Series C-1 Convertible Preferred Stock [Member] | ||||
Net Cash flows used from operating activities: | ||||
Net loss | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Issuance of common stock for services | ||||
Issuance of common stock as consideration for warrant Amendment | ||||
Loss on issuance of Convertible Preferred stock | 478,035 | |||
Net cash provided by financing activities: | ||||
Net proceeds from issuance of Convertible Preferred Stock and warrants for cash in an offering | 825,005 | |||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of convertible notes to common stock | 4,118 | 2,941 | ||
Cashless warrant exercise | ||||
Issuance of common stock for settlement of debt | ||||
Series C Convertible Preferred Stock [Member] | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Loss on issuance of Convertible Preferred stock | 2,809,497 | 2,809,497 | ||
Net cash provided by financing activities: | ||||
Net proceeds from issuance of Convertible Preferred Stock and warrants for cash in an offering | 925,114 | 925,115 | ||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of convertible notes to common stock | 15,874 | |||
Series B Convertible Preferred Stock [Member] | ||||
Net Cash flows used from operating activities: | ||||
Net loss | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Issuance of common stock for services | ||||
Issuance of common stock as consideration for warrant Amendment | ||||
Supplemental disclosure of non-cash financing and investing activities: | ||||
Conversion of convertible notes to common stock | $ 5,175 | $ 32,403 | 227,013 | |
Cashless warrant exercise | ||||
Issuance of common stock for settlement of debt |
Business Organization and Natur
Business Organization and Nature of Operations | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 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. Subject to additional financing, the Company plans to acquire additional Digital Assets to provide investors with indirect ownership of Digital Assets that are not securities, such as bitcoin and ether. The Company intends to acquire Digital Assets through open market purchases. Additionally, the Company may acquire Digital Assets by resuming its transaction verification services business through outsourced data centers and earning rewards in Digital Assets by securing their respective blockchains. We are not limiting our assets to a single type of Digital Asset and may purchase a variety of Digital Assets that appear to benefit our investors and/or blockchain, subject to the limitations regarding Digital Securities. The Company is also seeking to acquire controlling interests in businesses in the blockchain industry. We do not intend to operate outside of the Digital Asset and blockchain industries. The Company has not participated in any initial coin offerings as it believes most of the offerings entail the offering of Digital Securities and require registration under the Securities Act and under state securities laws, or can only be sold to accredited investors in the United States. Since about July 2017, initial coin offerings using Digital Securities have been (or should be) limited to accredited investors. Because we cannot qualify as an accredited investor, we do not intend to acquire coins in initial coin offerings or from purchasers in such offerings. Further, the Company does not intend to participate in registered or unregistered initial coin offerings. The Company will carefully review its purchases of Digital Securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities laws. Digital asset blockchains are typically maintained by a network of participants which run servers which secure their blockchain. The market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have greater resources than us. | Note 1 - Organization and Description of Business and Recent Developments BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008. In February 2014, the Company entered the business of hosting an online ecommerce marketplace where consumers can purchase merchandise using digital 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. 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. On February 15, 2017, the Company’s Common Stock began trading on the OTCQB under the symbol “BTCSD.” On approximately March 15, 2017, the Common Stock resumed trading under the symbol “BTCS.” The Reverse Stock Split reduced the number of outstanding shares of Common Stock from 952,756,004 shares to 15,879,262 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. |
Restatement of the Consolidated
Restatement of the Consolidated Financial Statements | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | ||
Restatement of the Consolidated Financial Statements | Note 2 - Restatement of the Consolidated Financial Statements The purpose of restatement is to correct errors in the Company’s previously issued financial statements for the period ended June 30, 2018 in connection with the accounting for digital currencies as intangible assets with indefinite lives and record such digital currencies at cost less impairment, if any. Management determined that the Company’s digital currencies for the three and six months ended June 30, 2018 were accounted for in error and were overstated by approximately $43,000. The originally filed accounting policy regarding digital currencies transactions and remeasurement stated that: “The Company accounts for digital currencies, which it considers to be an operating asset, at their initial cost and subsequently remeasures the carrying amounts of digital currencies it owns at each reporting date based on their current fair value. The changes in the fair value of digital currencies are included as a component of income or loss from operations. The Company currently classifies digital currencies as a current asset. Digital currencies are considered a crypto-currency and the Company receives deposits in various kinds of digital currencies including but not limited to bitcoins, litecoins and dogecoins from customer trade transactions. The Company obtains the equivalency rate of bitcoins to USD from various exchanges including, Bitstamp and Coinbase. The equivalency rate obtained from these sources represents a generally well recognized quoted price in an active market for bitcoins, which market and related database are accessible to the Company on an ongoing basis.” The updated accounting policy regarding digital currencies transactions and remeasurement state that: “Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations.” The effect of the restatement on the Company’s consolidated balance sheet as of June 30, 2018 are as follows: June 30, 2018 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 139,655 $ (42,945 ) $ 96,710 Total current assets 240,428 (42,945 ) 197,483 Total Assets 243,816 (42,945 ) 200,871 Accumulated deficit (114,855,450 ) (42,945 ) (114,898,395 ) Total stockholders’ equity 174,749 (42,945 ) 131,804 Total Liabilities and stockholders’ equity 243,816 (42,945 ) 200,871 The effect of the restatement on the Company’s consolidated statement of operations for the three and six months ended June 30, 2018 are as follows: For the three months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Total operating expenses 235,616 (2 ) 235,614 Net loss from operations (235,616 ) 2 (235,614 ) Revaluation of digital currencies (12,419 ) 12,419 - Realized gain on sale of digital currencies 11,265 7,661 18,926 Total other expenses (income) (1,154 ) 20,080 18,926 Net loss (236,770 ) 20,082 (216,688 ) Basic and Diluted Loss per Share (0.00 ) - (0.00 ) Basic and Diluted Shares 371,326,525 - 371,326,525 For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Total operating expenses 492,762 - 492,762 Net loss from operations (492,762 ) - (492,762 ) Revaluation of digital currencies (193,235 ) 193,235 - Realized gain (loss) on sale of digital currencies (51,914 ) 163,053 111,139 Total other expenses (income) (245,149 ) 356,288 111,139 Net loss (737,911 ) 356,288 (381,623 ) Basic and Diluted Loss per Share (0.00 ) - (0.00 ) Basic and Diluted Shares 369,781,431 - 369,781,431 The effect of the restatement on the Company’s consolidated statement of cash flows for the six months ended June 30, 2018 are as follows: For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Net loss $ (737,911 ) $ 356,288 $ (381,623 ) Change in fair value of digital currencies 193,235 (193,235 ) - Realized loss (gain) on sale of digital currencies 51,914 (163,053 ) (111,139 ) Net cash used in operating activities (499,844 ) 231,548 (268,296 ) Net cash provided by investing activities 231,548 (231,548 ) - The impacts of the restatement has been reflected throughout these financial statements, including the applicable footnotes, as appropriate | Note 2 - Restatement of the Consolidated Financial Statements The purpose of restatement is to correct errors in the Company’s previously issued financial statements for the period ended December 31, 2017 in connection with the accounting for digital currencies as intangible assets with indefinite lives and record such digital currencies at cost less impairment, if any. Management determined that the Company’s digital currencies as of December 31, 2017 were accounted for in error and were overstated by approximately $399,000. The originally filed accounting policy regarding digital currencies transactions and remeasurement stated that: “The Company accounts for digital currencies, which it considers to be an operating asset, at their initial cost and subsequently remeasures the carrying amounts of digital currencies it owns at each reporting date based on their current fair value. The changes in the fair value of digital currencies are included as a component of income or loss from operations. The Company currently classifies digital currencies as a current asset. Digital currencies are considered a crypto-currency and the Company receives deposits in various kinds of digital currencies including but not limited to bitcoins, litecoins and dogecoins from customer trade transactions. The Company obtains the equivalency rate of bitcoins to USD from various exchanges including, Bitstamp and Coinbase. The equivalency rate obtained from these sources represents a generally well recognized quoted price in an active market for bitcoins, which market and related database are accessible to the Company on an ongoing basis.” The updated accounting policy regarding digital currencies transactions and remeasurement state that: “Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations.” The effect of the restatement on the Company’s consolidated balance sheet as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 616,352 $ (399,233 ) $ 217,119 Total current assets 987,422 (399,233 ) 588,189 Total Assets 988,657 (399,233 ) 589,424 Accumulated deficit (114,117,539 ) (399,233 ) (114,516,772 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 Total Liabilities and stockholders’ equity 988,657 (399,233 ) 589,424 The effect of the restatement on the Company’s consolidated statement of operations for the year ended December 31, 2017 are as follows: For the years ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Gross profit $ 709,266 $ (704,946 ) $ 4,320 Revaluation of digital currencies 704,946 (704,946 ) - Net loss from operations (864,827 ) (704,946 ) (1,569,773 ) Realized gain on sale of digital currencies - 299,092 299,092 Other income 33,022 6,621 39,643 Total other expenses (44,200,509 ) 305,713 (43,894,796 ) Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Basic and Diluted Loss per Share (0.36 ) (0.01 ) (0.37 ) Basic and Diluted Shares 123,548,858 - 123,548,858 The effect of the restatement on the Company’s consolidated statement of stockholders’ equity (deficit) as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 The effect of the restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2017 are as follows: For the years ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (45,065,336 ) $ (399,233 ) $ (45,464,569 ) Change in fair value of digital currencies (704,946 ) 704,946 - Realized gain on sale of digital currencies - (299,092 ) (299,092 ) Proceeds from sale of digital currencies - 332,172 332,172 Decrease in Digital Currencies 338,793 (338,793 ) - Net cash used in operating activities (1,488,254 ) - (1,488,254 ) There was no impact to net cash used in investing activities or net cash used in financing activities within our consolidated statement of cash flows nor was there an impact on the net decrease in cash resulting from restatement. The impacts of the restatement has been reflected throughout these financial statements, including the applicable footnotes, as appropriate |
Basis of Presentation
Basis of Presentation | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Basis of Presentation | Note 3 - 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 unaudited condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2017. | Note 3 - Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, DM. The Company maintains its books of account and prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Company’s fiscal year ends on December 31. All significant intercompany balances and transactions have been eliminated in consolidation. |
Liquidity, Financial Condition
Liquidity, Financial Condition and Management's Plans | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Liquidity Financial Condition And Managements Plans | ||
Liquidity, Financial Condition and Management's Plans | Note 4 - Liquidity, Financial Condition and Management’s Plans The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions. Notwithstanding, the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical of an early stage enterprise. Significant uncertainties include, among others, whether the Company will be able to raise the capital it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations as a profitable enterprise. Our working capital needs are influenced by our level of operations, and generally decrease with higher levels of revenue. The Company used approximately $0.3 million of cash in its operating activities for the six months ended June 30, 2018. The Company incurred $0.4 million net loss for the six months ended June 30, 2018. The Company had cash of approximately $32,000, digital currencies of approximately $97,000 and a working capital of approximately $0.1 million at June 30, 2018. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer-term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying condensed 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 | Note 4 - Liquidity, Financial Condition and Management’s Plans The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions. 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. 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 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. On October 24, 2017, upon filing its Form 10-Q for the six months ended June 30, 2017, 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. The total gross proceeds raised were $1.1 million, with net proceeds of $825,005, after deducting the offering expenses. Notwithstanding, the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical of an early stage enterprise. Significant uncertainties include, among others, whether the Company will be able to raise the capital it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations as a profitable enterprise. Our working capital needs are influenced by our level of operations, and generally decrease with higher levels of revenue. The Company used approximately $1.5 million of cash in its operating activities for the year ended December 31, 2017. The Company incurred $45.5 million net loss for the year ended December 31, 2017. The Company had cash of approximately $303,000 and a working capital of approximately $0.5 million at December 31, 2017. The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business plans. The Company will require significant additional capital to sustain its short-term operations and make the investments it needs to execute its longer-term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures for the foreseeable future. The Company is currently seeking to obtain additional debt or equity financing, however there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made adjustments to the accompanying consolidated financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities should the Company be unable to continue as a going concern. The Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of revenues. While the Company continues to implement its business strategy, it intends to finance its activities by: ● managing current cash and cash equivalents on hand from the Company’s past debt and equity offerings by controlling costs, ● seeking additional financing through sales of additional securities |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Note 5 - Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2017 Annual Report. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary BTCS Digital Manufacturing. All significant intercompany balances and transactions have been eliminated in consolidation. Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents. As of June 30, 2018 and December 31, 2017, the Company had approximately $32,000 and $303,000 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. Digital Currencies Translations and Remeasurements Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations. 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. Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of June 30, 2018 and 2017 because their effect was anti-dilutive: As of June 30, 2018 2017 Warrants to purchase common stock 62,064,634 122,418,645 Series B Convertible Preferred stock - 199,785,600 Series C-1 Convertible Preferred stock 5,882,800 15,873,600 Total 67,947,434 338,077,845 Adoption of Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company adopted ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Because the Company doesn’t have any customer contracts as of January 1, 2018, the adoption of ASU 2014-09 did not have a material impact on the Company’s condensed consolidated financial position, results of operations, equity or cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | Note 5 - Summary of Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements is as follows: Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. As of December 31, 2017 and 2016, the Company had $303,000 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. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2017 and 2016, the Company had $53,000 and $0 in excess of the FDIC insured limit, respectively. Digital Currencies Translations and Remeasurements Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations. Property and Equipment Property and equipment consists of leasehold improvements, computer, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. Due to the financial nature of the Company, the Company impaired all fixed assets and recorded an approximately $237,000 impairment charge in June 2016. Intangible Asset The Company has applied the provision of ASC topic 350-50-50 Intangible - Goodwill and Other/Website Development Costs, in accounting for its costs incurred to purchase its website. Capitalized website costs are being amortized by the straight-line method over an estimated useful life of three (3) years. Amortization cost was approximately $900 and $5,000 for the years ended December 31, 2017 and 2016, respectively. Investments Shares in Group undertakings are stated at cost less any provision for impairment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is written down to its recoverable amount. An impairment loss is recognized immediately in the profit and loss account. During the year ended 2016, the Company recorded impairment loss of approximately $2.3 million. Derivative Instruments We account 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 in order to take into account the possibility of an adjustment to the exercise price associated with new rounds of financing in the future. Reclassifications Certain reclassifications have been made in prior years’ consolidated financial statements to conform to the current year’s presentation. Use of Estimates In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the provision for income taxes, estimating the fair value of equity instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply. Revenue Recognition The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured. Transaction Verification Servers Our material revenue stream is related to the mining of digital currencies. The Company derives its revenue by providing transaction verification services within the digital currency networks of crypto-currencies, such as Bitcoin and Ethereum, commonly termed “crypto- currency mining.” In consideration for these services, the Company receives digital currency (“Coins”). The Coins are recorded as revenue, using the average spot price of digital currencies on the date of receipt. The coins are recorded on the balance sheet at their fair value and re–measured at each reporting date. Revaluation gains or losses, as well gains or losses on sale of Coins are recorded as a component of cost of revenues in the statement of operations. Expenses associated with running the crypto-currency mining business, such as equipment deprecation, rent and electricity cost are also recorded as cost of revenues. There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations and the guidance in ASC 605, Revenue Recognition Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred. Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) Employee Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising expenses amounted to approximately $9,000 and $11,000 for the years ended December 31, 2017 and 2016, respectively. Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Net income (loss) attributable to common stockholders includes the effect of the deemed capital contribution on extinguishment of preferred stock and the deemed dividend related to the immediate accretion of beneficial conversion feature of convertible preferred stock. 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 December 31, 2017 and 2016 because their effect was anti-dilutive: As of December 31, 2017 2016 Warrants to purchase common stock 62,064,634 268,788,732 Convertible notes - 50,198,041 Favored Nations - 108,747,774 Series B Convertible Preferred stock 5,175,400 - Series C-1 Convertible Preferred stock 10,000,800 - Total 77,240,834 427,734,547 Preferred Stock The Company applies the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares in stockholders’ equity. The Company’s preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within the Company’s control as of December 31, 2017. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity. Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company has evaluated its convertible preferred stock conversion component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of its convertible preferred stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that its convertible preferred stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. Fair Value Option As permitted under FASB ASC 825, Financial Instruments, (“ASC 825”), the Company has elected the fair value option to account for its convertible notes that were issued during the year ended December 31, 2016. ASC 825 requires that the entity record the financial asset or financial liability, including those instruments when the fair value options is elected at fair value rather than historical cost at a discounted carrying amount with changes in fair value recorded in the statement of operations. In addition, it requires that upfront costs and fees related to items for which the fair value option is elected be recognized in earnings as incurred and not deferred. Adoption of Recent Accounting Pronouncements In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-15, Interest - Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU No. 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In particular, ASU No. 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of such arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted ASU No. 2015-15 during the first quarter of fiscal 2016, and its adoption did not have a material impact on its consolidated financial statements. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company will adopt the new standard effective January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern, which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and requires related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. ASU No. 2014-15 is effective for the Company for the fiscal year ending on June 30, 2017. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2014-15 will not have an impact on its consolidated financial statements and related disclosures. In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU No. 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU No. 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2015-17 will not have an impact on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). Under ASU 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU 2016-09 requires a company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current U.S. GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2016-09 will not have an impact on its consolidated financial statements and related disclosures. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer (“ASU 2016-10”). The new guidance is an update to ASC 606 and provides clarity on: identifying performance obligations and licensing implementation. For public companies, ASU 2016-10 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2016-10 will not have an impact on its consolidated financial statements and related disclosures. 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). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact of adopting this standard on the consolidated financial statements and disclosures. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Stockholders' Equity | Note 6 - Stockholders’ Equity On January 1, 2018, the Company issued 5,175,400 shares of Common Stock upon the conversion of 25,877 shares of Series B Convertible Preferred stock. On April 20, 2018, the Company issued 392,200 shares of Common Stock upon the conversion of 1,961 shares of Series C-1 Convertible Preferred stock. On April 23, 2018, the Company issued 1,176,600 shares of Common Stock upon the conversion of 5,883 shares of Series C-1 Convertible Preferred stock. On April 24, 2018, the Company issued 2,549,200 shares of Common Stock upon the conversion of 12,746 shares of Series C-1 Convertible Preferred stock. | Note 6 - Stockholders’ Equity Reverse Stock Split and Amendment to Certificate of Incorporation On February 13, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to implement a reverse stock split at a ratio of one-for-60. The reverse stock split became effective immediately. On February 15, 2017, the Company’s Common Stock began trading on the OTCQB under the symbol “BTCSD.” On approximately March 15, 2017, the Common Stock resumed trading under the symbol “BTCS.” The Reverse Stock Split reduced the number of outstanding shares of Common Stock from 952,756,004 shares to 15,879,262 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 were not affected by the Reverse Stock Split; however, the conversion ratios have been adjusted to reflect the Reverse Stock Split. 2016 Activities On June 3, 2016, the Company and investors from a private placement as of April 20, 2015 (the “Subscription Agreement”) entered into 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 Company’s fiscal-year-ends payment will be made in the amount of available cash prior to any payments of bonuses payable to Mr. Allen, the Company’s CEO, CFO and Chairman, and Mr. Handerhan, the Company’s 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 Company’s 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 38,750 shares (the “Warrant Shares”) of the Company’s 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 8,333 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 68,750 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. Over the course of June 8, 2016 and June 28, 2016, the Company issued a total of 1,039,013 shares of the Company’s Common Stock for: i) the conversion of $890,179 of principal and accrued interest on the Senior Notes, and ii) the cashless exercise of the 2016 Warrants. Over the course of July 1, 2016 through August 1, 2016, the Company issued a total of 12,146,820 shares of the Company’s Common Stock for: i) the conversion of $822,685 of principal and accrued interest on the Senior Notes, and ii) the cashless 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. None of the securities were sold through a broker-dealer and accordingly, there were no placement agent commissions involved. No registration rights were granted to any of the purchasers. Following these issuances, there were 16,095,929 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) 108,747,774 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; (ii) warrants to purchase 171,349,405 shares of Common Stock pursuant to “favored nations” provisions in certain common stockholder subscription agreements which includes those anti-dilution warrants previously disclosed, and (iii) warrants to purchase 97,423,579 shares of Common Stock 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 Company’s outstanding Senior Notes and Junior Notes to $0.0252. 2017 Activities On February 28, 2017, the Company issued 4,370 shares of Common Stock in connection with the one-for-60 reverse stock split resulting from the rounding up of fractional shares of Common Stock to the whole shares of Common Stock. On March 9, 2017, the Company completed a securities exchange offer (the “Note Offer”) with its three convertible note holders (the “Note Holders”). Pursuant to the Note Offer the Note Holders agreed to exchange i) $868,897 of 5% Original Issue Discount 10% Senior Convertible Note Due September 16, 2016, originally issued in December 2015 and all accrued interest and liquidated damages owed (collectively the “Senior Notes”), ii) $175,000 of 20% Original Issue Discount Junior Convertible Notes Due December 5, 2016, originally issued in June 2016 and all accrued interest and liquidated damages owed (collectively the “Junior Notes”), iii) $220,000 of 8% Convertible Notes Due June 6, 2017, originally issued in December 2016 and all accrued interest owed (collectively the “Convertible Notes”), and iv) 97,423,579 warrants (the “Senior Warrants”) for 845,631 shares of Series B Convertible Preferred Stock (the “Preferred”). After giving effect to the Note Offer the Company no longer has any Senior Notes, Junior Notes or Convertible Notes outstanding. The Note Offer also provided the Note Holders with a three month right of first refusal to participate in the Company’s next financing and a one year participation right with respect to the Company next fully underwritten offering. On March 9, 2017, as a result of the Note Offer (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. As a result of the Note Offer, the January Offer and April Offer the Company issues a total of 1,160,941 shares of Preferred. On March 15, 2017, the Company issued investors who participated in its: i) January 19, 2015 financing and rejected the January Offer, and ii) April 19, 2015 financing and rejected the April Offer an aggregate of 14,517,352 share of Common Stock and 112,782,487 warrants. The Common Stock and warrant issuances were made pursuant to the favored nations provision of the January Agreement and April Agreement. On March 15, 2017, the Company filed a Certificate of Designation for the Preferred with the Secretary of State of the State of Nevada. The Preferred Certificate of Designation provides authorization for the issuance of 1,160,941 shares of Preferred, par value $0.001. On March 22, 2017, the Company entered into a Settlement Agreement and Note (the “CSC Agreement”) with CSC Leasing Company (“CSC”) with respect to the equipment lease schedule entered into between CSC and the Company (the “CSC Lease”). Pursuant to the CSC Agreement the Company has agreed to: i) issue CSC 833,333 shares valued at $61,667 of the Company’s common stock (the “Shares”), and ii) pay CSC $200,000 (the “Cash Payment”). On April 4, 2017, the Company entered into a Settlement Agreement with RK Equity Advisors, LLC and Pickwick Capital Partners, LLC with respect to the tail provision of the Engagement Letter dated August 19, 2015. Pursuant to the Settlement Agreement the Company has agreed to: i) terminate the Engagement Letter including all provisions thereof and including any obligations to future fees, and ii) convert the Estimated Liability into 125,000 shares of common stock of the Company, par value $0.001 per share at a price of $0.10 per share. The total value of this transaction is $10,000. On May 25, 2017, the Company raised $1 million in cash from four institutional investors in exchange for the issuance of $1,111,111 of Series C. See Note 3- Liquidity, Financial Condition and Management’s Plans. On October 10, 2017, the Company entered into a Securities Purchase Agreement with four investors who committed $750,000 in cash and $250,000 in bitcoin in exchange for a new class of Series C-1 Convertible Preferred Stock (the “Series C-1”) and Series B Warrants exercisable at $0.135 per share (the “October Financing”). The Series C-1 is initially convertible into shares of the Company’s common stock at an effective price $0.085 per share. Both the Series C-1 and Series B Warrants are subject to adjustment in the event of future sales of the Company’s equity securities or common stock equivalents at a lower price, subject to elimination of the price protection on the Exchange Date. The Company subsequently received another $100,000 from an institutional investor which was held in escrow until the filing of the 10-Q. Between March 15, 2017 and December 19, 2017, the Company issued 81,856,798 shares of Common Stock for the cashless exercise of 111,244,318 warrants. Between March 28, 2017 and December 31, 2017, the Company issued 227,012,800 shares of Common Stock upon the conversion of 1,135,064 shares of Series B Convertible Preferred stock. Between November 27, 2017 and November 29, 2017, the Company issued 15,873,600 shares of Common Stock upon the conversion of 79,368 shares of Series C Convertible Preferred stock. On November 27, 2017, the Company issued 2,941,200 shares of Common Stock upon the conversion of 14,706 shares of Series C-1 Convertible Preferred stock. On December 7, 2017, the Company entered into an Amendment to Securities Agreement with the holders of a majority of the Company’s outstanding Convertible Preferred Stock Series C-1 amending the terms of the Company’s May 2017 Securities Purchase Agreement, the Company’s October 2017 Securities Purchase Agreement (the “October SPA”), the Certificate of Designations, Preferences, and Rights of the Series C-1 Convertible Preferred Stock, and the terms of the Series A Warrants, Additional Warrants, Bonus Warrants, and Series B Warrants. The Company issued, on a pro-rata basis to the subscribers of the October SPA a total of 4,400,000 shares of common stock of the Company. The sales of unregistered securities of our Company subsequent to the year ended December 31, 2017 are summarized below: On January 1, 2018, the Company issued 5,175,400 shares of Common Stock upon the conversion of 25,877 shares of Series B Convertible Preferred stock. Stock Purchase Warrants The following is a summary of warrant activity for the year ended December 31, 2017 and 2016: Number of Warrants Outstanding as of December 31, 2015 486,723 Ratchet warrants issued due to price reset 271,641,648 Cashless warrant exercise (3,270,888 ) Warrants exercise for cash (68,750 ) Outstanding as of December 31, 2016 268,788,733 Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 47,302,176 Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 12,942,000 Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants (163,178,007 ) Ratchet warrants issued due to price reset 7,454,050 Cashless warrant exercise (111,244,318 ) Outstanding as of December 31, 2017 62,064,634 |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 7 - 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 bear 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 Company’s Common Stock at a conversion price equal to $18.00 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 Company’s 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, each Purchaser will not have the right to convert any portion of the Junior Note if such Purchaser, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to its conversion. In connection with the Company’s 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 Company’s 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. As a result of the Senior Note conversions, the Company became obligated to issue, subject to certain limitations, the following additional securities: (i) 108,747,774 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 268,788,732 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 Company’s outstanding Junior Notes and Senior Notes to $0.0252. As of December 31, 2016, the Company does not 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 Company’s capitalization. As of the December 31, 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 $14,915,419 to account for the shortfall. As of December 31, 2016, the Company was in default on its Senior Notes and Junior Notes. 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 has any Senior Notes, Junior Notes or Convertible Notes outstanding. 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. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8 - 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 December 31, 2017 and 2016: Fair value measured at December 31, 2017 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2017 (Level 1) (Level 2) (Level 3) Liabilities Derivative liabilities $ - - - $ - Fair value measured at December 31, 2016 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (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 years ended December 31, 2017 and 2016. Level 3 Valuation Techniques The following table presents additional information about Level 3 assets and liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Changes in Level 3 liabilities measured at fair value for the years ended December 31, 2017 and 2016: Derivative liabilities balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability (5,921,409 ) Reclassification from derivative 92,601 Fair value adjustments for warrant liabilities 25,266,593 Derivative liabilities balance - December 31, 2016 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 39,222,099 Cashless warrant exercise (12,277,968 ) Loss on issuance of Series C Convertible Preferred stock 2,809,497 Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 925,115 Loss on issuance of Series C-1 Convertible Preferred stock 478,035 Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 825,005 Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 250,000 Reclassification between convertible notes and derivative liabilities (4,138,704 ) Derivative liabilities balance - December 31, 2017 - Derivative liabilities for shortfall of shares balance - January 1, 2016 $ - Change in fair value of derivative liability shortfall of shares 14,915,419 Derivative liabilities for shortfall of shares balance - December 31, 2016 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - December 31, 2017 $ - Convertible notes at fair value - January 1, 2016 $ 1,781,156 Addition of convertible notes 320,002 Conversion of notes into common stock 4,208,546 Gain on extinguishment of debt (837,369 ) Change in fair value of convertible notes (including OID discount) (2,096,700 ) Reclassification to derivative liability (92,601 ) Convertible notes at fair value - December 31, 2016 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - December 31, 2017 $ - The Company’s derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 December 7, 2017 December 31, 2016 Strike Price 0.025 - 18.000 0.085 0.025 - 0.085 0.03 - 60.0 Volatility 186.7% - 208.3 % 210.10% - 254.70 % 255.89% - 465.94 % 118% - 230 % Risk-free interest rate 1.25% - 1.83 % 1.24% - 1.79 % 1.67% - 2.14 % 0.35% - 2.23 % Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 0.98 to 4.88 0.10 to 3.96 Dividend yield (per share) 0 0 0 0 Senior Convertible Notes at Fair Value Date of valuation March 2, 2017 December 31, 2016 Strike Price 0.32 0.0252 Volatility 267.8 % 300.42% - 328.04 % Risk-free interest rate 0.68 % 0.51% - 0.63 % Dividend yield (per share) 0 0 % The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Management. |
Employment Agreements
Employment Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employment Agreements | Note 9 - Employment Agreements Charles W. Allen On June 22, 2017, we entered into an employment agreement with Charles Allen (the “Allen Employment Agreement”), whereby Mr. Allen agreed to serve as our Chief Executive Officer and Chief Financial Officer for a period of two (2) years, subject to renewal, in consideration for an annual salary of $245,000. Additionally, under the terms of the Allen Employment Agreement, Mr. Allen shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors. Mr. Allen shall be entitled to participate in all benefits plans we provide to our senior executive. We shall reimburse Mr. Allen for all reasonable expenses incurred in the course of his employment. The Company shall pay the Executive $500 per month to cover telephone and internet expenses. If the Company does not provide office space to the Executive the Company will pay the Executive an additional $500 per month to cover expenses in connection with their office space needs. Michal Handerhan On June 22, 2017, we entered into an employment agreement with Michal Handerhan (the “Handerhan Employment Agreement”), whereby Mr. Handerhan agreed to serve as our Chief Operating Officer and Secretary for a period of two (2) years, subject to renewal, in consideration for an annual salary of $190,000. Additionally, under the terms of the Handerhan Employment Agreement, Mr. Handerhan shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors. Mr. Handerhan shall be entitled to participate in all benefits plans we provide to our senior executive. We shall reimburse Mr. Handerhan for all reasonable expenses incurred in the course of his employment. The Company shall pay the Executive $500 per month to cover telephone and internet expenses. If the Company does not provide office space to the Executive the Company will pay the Executive an additional $500 per month to cover expenses in connection with their office space needs. The terms of the Allen Employment Agreement and Handerhan Employment Agreement (collectively the “Employment Agreements”) provide each of Messrs. Allen and Handerhan (the “Executives”) certain, severance and change of control benefits if the Executive resigns from the Company for good reason or the Company terminates him other than for cause. In such circumstances, the Executive would be entitled to a lump sum payment equal to (i) the Executive’s then-current base salary, and (ii) payment on a pro-rated basis of any bonus or other payments earned in connection with any bonus plan to which the Executive was a participant. In addition, the severance benefit for the Executives the employment agreements include the Company continuing to pay for medical and life insurance coverage for up to one year following termination. If, within eighteen months following a change of control (as defined below), the Executive’s employment is terminated by the Company without cause or he resigns from the Company for good reason, the Executive will receive certain severance compensation. In such circumstances, the cash benefit to the Executive will be a lump sum payment equal to two times (i) his then-current base salary and (ii) his prior year cash bonus and incentive compensation. Upon the occurrence of a change of control, irrespective of whether his employment with the Company terminates, each Executive’s stock options and equity-based awards will immediately vest. A “change of control” for purposes of the Employment Agreements means any of the following: (i) the sale or partial sale of the Corporation to an un-affiliated person or entity or group of un-affiliated persons or entities pursuant to which such party or parties acquire shares of capital stock of the Corporation representing at least twenty five (25%) of the fully diluted capital stock (including warrants, convertible notes, and preferred stock on an as converted basis) of the Corporation; (ii) the sale of the Corporation to an un-affiliated person or entity or group of such persons or entities pursuant to which such party or parties acquire all or substantially all of the Corporation’s assets determined on a consolidated basis, or (iii) Incumbent Directors (Mr. Allen and Mr. Handerhan) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the board of directors of the Company. Additionally, pursuant to the terms of the Employment Agreements, we have agreed to execute and deliver in favor of the Executives an indemnification agreement and to maintain directors’ and officers’ insurance with terms and in the amounts commensurate with our senior executive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 - Related Party Transactions On February 19, 2016, the Company entered into a securities escrow agreement (the “Securities Escrow Agreement”) with Charles Allen its Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, its Chief Operating Officer and corporate secretary (collectively, the “Principal Stockholders”). Pursuant to the Securities Escrow Agreement and for the benefit of the Company’s public shareholders the Principal Stockholders voluntarily agreed to place stock certificates representing 400,000 shares of Common Stock (the “Escrow Shares”) into escrow. The return of 200,000 escrowed shares (the “Listing Escrow Shares”) to the Principal Stockholders shall be based upon the successful listing of the Company’s Common Stock on a National Stock Exchange on or before December 31, 2016 (the “Listing Condition”). The Listing Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Listing Condition. The return of 200,000 escrowed shares (the “Merger Escrow Shares”) to the Principal Stockholders shall be based upon the successful consummation of the merger with Spondoolies on or before December 31, 2016 (the “Merger Condition”). The Merger Escrow Shares will be returned to the Company for cancelation for no consideration if the Company fails to achieve the Merger Condition. Pursuant to the June 3, 2016 Amendment Agreement (as defined in Note 5) the Principal Stockholders each received $86 in connection with their pro-rata portion of the Payment (as defined in Note 5). In April 2015, the Principal Stockholders each subscribed for $20,000 in the Subscription Agreement (as defined in Note 5) for an aggregate of $40,000. On January 30, 2017, the Company received 24,000,000 shares 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 a securities escrow agreement dated February 19, 2016 (the “Securities Escrow Agreement”). Pursuant to the Securities Escrow Agreement and for the benefit of the Company’s public shareholders the Principal Stockholders voluntarily agreed to place stock certificates representing the Escrow Shares into escrow. The Company failed to list the Company’s Common Stock on a national securities exchange on or before December 31, 2016 and failed to consummated the merger with Spondoolies-Tech Ltd. on or before December 31, 2016. The escrow agent returned the shares to the Company for cancelation for no consideration. On January 30, 2017, the Company received 24,000,000 pre-split shares (400,000 shares post-split) of Common Stock for cancelation for no consideration (the “Escrow Shares”). The Escrow Shares were placed in escrow by Charles Allen our Chief Executive Officer, Chief Financial Officer and Chairman, and Michal Handerhan, our Chief Operating Officer and corporate secretary (collectively, the “Principal Stockholders”) pursuant to a securities escrow agreement dated February 19, 2016 (the “Securities Escrow Agreement”). The Company recorded an adjustment to additional paid-in capital for $400 related to this transaction. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies On May 28, 2015 the Company entered an operating sub-lease agreement ending on May 31, 2016 for its headquarters in Arlington, Virginia. Prepaid expenses include $12,000 of fixed minimum lease payment that was prepaid through May 31, 2016. The sub-lease was subsequently extended on a month-to-month basis for $500 per month from June 1, 2016 through December 31, 2016. After December 31, 2016 the Company was not party to any lease agreements for corporate office space and its employees have been working virtually. The Company is paying each of Mr. Allen and Mr. Handerhan $1,000 per month to cover out of pocket expenses associated with phone, internet and office space. |
North Carolina Facility
North Carolina Facility | 12 Months Ended |
Dec. 31, 2017 | |
North Carolina Facility | |
North Carolina Facility | Note 12 - North Carolina Facility 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 subsequently ceased operations at DM. 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 were stolen. The value of the stolen equipment owned by the Company did not appear to be material. The Company reported the theft to local authorities as well its insurance company regarding next steps. The Company received payment from the insurance company in the amount of approximately $85,000 and has assigned the payment to the benefit of CSC as part of the settlement agreement with CSC the Company’s equipment finance provider which owned the stolen serves. On September 1, 2016, DM gave cancelation notice to the landlord with respect to the Lease of its North Carolina facility. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13 - Income Taxes The Company had no income tax expense due to operating loss incurred for the years ended December 31, 2017 and 2016. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which makes broad and complex changes to the U.S. tax code. Certain of these changes may be applicable to the Company, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, creating a new limitation on deductible interest expense, eliminating the corporate alternative minimum tax (“AMT”), modifying the rules related to uses and limitations of net operating loss carryforwards generated in tax years ending after December 31, 2017, and changing the rules pertaining to the taxation of profits earned abroad. Changes in tax rates and tax laws are accounted for in the period of enactment. The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, we have recorded a decrease related to deferred tax assets of approximately $0.7 million dollars exclusive of the corresponding change in the valuation allowance, for the year ended December 31, 2017. Due to the full valuation allowance on the deferred tax assets, there is no net adjustment to deferred tax expense or benefit due to the reduction of the corporate tax rate. The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2017 and 2016 are comprised of the following: As of December 31, 2017 2016 Deferred tax assets: Net-operating loss carryforward $ 1,689,152 $ 2,430,737 Other - 1,478 Total Deferred Tax Assets 1,689,152 2,432,215 Valuation allowance (1,689,152 ) (2,432,215 ) Deferred Tax Asset, Net of Allowance $ - $ - At December 31, 2017, the Company had net operating loss carry forwards for federal and state tax purposes of approximately $6 million which expires in 2037. Prior to the merger, the Company had generated net operating losses, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382. The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because of potential Change of Ownerships might be completely worthless. Therefore, Management of the Company has recorded a Full Valuation Reserve, since it is more likely than not that no benefit will be realized for the Deferred Tax Assets. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2017. The valuation allowance decreased by approximately $0.7 million as of December 31, 2017. The valuation allowance decreased by approximately $0.7 million as of December 31, 2017, generally do to a decrease in the tax rate applied based upon the “Tax Act”. The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: For the years ended December 31, 2017 2016 Statutory Federal Income Tax Rate (34.0 )% (34.0 )% State Taxes, Net of Federal Tax Benefit (5.4 )% (5.4 )% Federal tax rate change 11.9 % - Other 38.8 % - Change in Valuation Allowance (11.3 )% 39.4 % Income Taxes Provision (Benefit) - % - % The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2017. |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 7 - Subsequent Events: None | Note 14 - Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed. On January 1, 2018, the Company issued 5,175,400 shares of Common Stock upon the conversion of 25,877 shares of Series B Convertible Preferred stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary BTCS Digital Manufacturing. All significant intercompany balances and transactions have been eliminated in consolidation. | |
Concentration of Cash | Concentration of Cash The Company maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents. As of June 30, 2018 and December 31, 2017, the Company had approximately $32,000 and $303,000 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. | 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 December 31, 2017 and 2016, the Company had $303,000 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. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2017 and 2016, the Company had $53,000 and $0 in excess of the FDIC insured limit, respectively. |
Digital Currencies Translations and Remeasurements | Digital Currencies Translations and Remeasurements Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations. | Digital Currencies Translations and Remeasurements Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any. Subsequent reversal of impairment losses is not permitted. Realized gain (loss) on sale of digital currencies is included in other income (expense) in the consolidated statements of operations. |
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. | Use of Estimates In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the provision for income taxes, estimating the fair value of equity instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) | Fair Value of Financial Instruments Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) |
Net Loss Per Share | Net Loss per Share Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of June 30, 2018 and 2017 because their effect was anti-dilutive: As of June 30, 2018 2017 Warrants to purchase common stock 62,064,634 122,418,645 Series B Convertible Preferred stock - 199,785,600 Series C-1 Convertible Preferred stock 5,882,800 15,873,600 Total 67,947,434 338,077,845 | 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. Net income (loss) attributable to common stockholders includes the effect of the deemed capital contribution on extinguishment of preferred stock and the deemed dividend related to the immediate accretion of beneficial conversion feature of convertible preferred stock. 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 December 31, 2017 and 2016 because their effect was anti-dilutive: As of December 31, 2017 2016 Warrants to purchase common stock 62,064,634 268,788,732 Convertible notes - 50,198,041 Favored Nations - 108,747,774 Series B Convertible Preferred stock 5,175,400 - Series C-1 Convertible Preferred stock 10,000,800 - Total 77,240,834 427,734,547 |
Adoption of Recent Accounting Pronouncements | Adoption of Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company adopted ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Because the Company doesn’t have any customer contracts as of January 1, 2018, the adoption of ASU 2014-09 did not have a material impact on the Company’s condensed consolidated financial position, results of operations, equity or cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. | Adoption of Recent Accounting Pronouncements In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-15, Interest - Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU No. 2015-03, Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In particular, ASU No. 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of such arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted ASU No. 2015-15 during the first quarter of fiscal 2016, and its adoption did not have a material impact on its consolidated financial statements. |
Property and Equipment | Property and Equipment Property and equipment consists of leasehold improvements, computer, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. Due to the financial nature of the Company, the Company impaired all fixed assets and recorded an approximately $237,000 impairment charge in June 2016. | |
Intangible Asset | Intangible Asset The Company has applied the provision of ASC topic 350-50-50 Intangible - Goodwill and Other/Website Development Costs, in accounting for its costs incurred to purchase its website. Capitalized website costs are being amortized by the straight-line method over an estimated useful life of three (3) years. Amortization cost was approximately $900 and $5,000 for the years ended December 31, 2017 and 2016, respectively. | |
Investments | Investments Shares in Group undertakings are stated at cost less any provision for impairment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is written down to its recoverable amount. An impairment loss is recognized immediately in the profit and loss account. During the year ended 2016, the Company recorded impairment loss of approximately $2.3 million. | |
Derivative Instruments | Derivative Instruments We account 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 in order to take into account the possibility of an adjustment to the exercise price associated with new rounds of financing in the future. | |
Reclassifications | Reclassifications Certain reclassifications have been made in prior years’ consolidated financial statements to conform to the current year’s presentation. | |
Revenue Recognition | Revenue Recognition The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured. | |
Transaction Verification Servers | Transaction Verification Servers Our material revenue stream is related to the mining of digital currencies. The Company derives its revenue by providing transaction verification services within the digital currency networks of crypto-currencies, such as Bitcoin and Ethereum, commonly termed “crypto- currency mining.” In consideration for these services, the Company receives digital currency (“Coins”). The Coins are recorded as revenue, using the average spot price of digital currencies on the date of receipt. The coins are recorded on the balance sheet at their fair value and re–measured at each reporting date. Revaluation gains or losses, as well gains or losses on sale of Coins are recorded as a component of cost of revenues in the statement of operations. Expenses associated with running the crypto-currency mining business, such as equipment deprecation, rent and electricity cost are also recorded as cost of revenues. There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations and the guidance in ASC 605, Revenue Recognition | |
Income Taxes | Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, the Company’s policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred. | |
Employee Stock-Based Compensation | Employee Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. | |
Advertising Expense | Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising expenses amounted to approximately $9,000 and $11,000 for the years ended December 31, 2017 and 2016, respectively. | |
Preferred Stock | Preferred Stock The Company applies the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares in stockholders’ equity. The Company’s preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within the Company’s control as of December 31, 2017. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity. | |
Convertible Preferred Stock | Convertible Preferred Stock The Company has evaluated its convertible preferred stock and warrants in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company has evaluated its convertible preferred stock conversion component of the Private Placement and determined it should be considered an “equity host” and not a “debt host” as defined by ASC 815, Derivatives and Hedging. This evaluation is necessary in order to determine if any embedded features require bifurcation and, therefore, separate accounting as a derivative liability. The Company’s analysis followed the “whole instrument approach,” which compares an individual feature against the entire preferred stock instrument which includes that feature. The Company’s analysis was based on a consideration of its convertible preferred stock’s economic characteristics and risks and more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the Preferred Stock and (iv) the existence and nature of any conversion rights. As a result of the Company’s determination that its convertible preferred stock is an “equity host,” the embedded conversion feature is not considered a derivative liability. | |
Fair Value Option | Fair Value Option As permitted under FASB ASC 825, Financial Instruments, (“ASC 825”), the Company has elected the fair value option to account for its convertible notes that were issued during the year ended December 31, 2016. ASC 825 requires that the entity record the financial asset or financial liability, including those instruments when the fair value options is elected at fair value rather than historical cost at a discounted carrying amount with changes in fair value recorded in the statement of operations. In addition, it requires that upfront costs and fees related to items for which the fair value option is elected be recognized in earnings as incurred and not deferred. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified by ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon adoption approach. The Company will adopt the new standard effective January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 will not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern, which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and requires related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. ASU No. 2014-15 is effective for the Company for the fiscal year ending on June 30, 2017. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2014-15 will not have an impact on its consolidated financial statements and related disclosures. In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU No. 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU No. 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2015-17 will not have an impact on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). Under ASU 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU 2016-09 requires a company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current U.S. GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2016-09 will not have an impact on its consolidated financial statements and related disclosures. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customer (“ASU 2016-10”). The new guidance is an update to ASC 606 and provides clarity on: identifying performance obligations and licensing implementation. For public companies, ASU 2016-10 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company will adopt the new standard on January 1, 2018. The adoption of ASU 2016-10 will not have an impact on its consolidated financial statements and related disclosures. 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). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact of adopting this standard on the consolidated financial statements and disclosures. |
Restatement of the Consolidat_2
Restatement of the Consolidated Financial Statements (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | ||
Schedule of Error Corrections and Prior Period Adjustments | The effect of the restatement on the Company’s consolidated balance sheet as of June 30, 2018 are as follows: June 30, 2018 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 139,655 $ (42,945 ) $ 96,710 Total current assets 240,428 (42,945 ) 197,483 Total Assets 243,816 (42,945 ) 200,871 Accumulated deficit (114,855,450 ) (42,945 ) (114,898,395 ) Total stockholders’ equity 174,749 (42,945 ) 131,804 Total Liabilities and stockholders’ equity 243,816 (42,945 ) 200,871 The effect of the restatement on the Company’s consolidated statement of operations for the three and six months ended June 30, 2018 are as follows: For the three months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Total operating expenses 235,616 (2 ) 235,614 Net loss from operations (235,616 ) 2 (235,614 ) Revaluation of digital currencies (12,419 ) 12,419 - Realized gain on sale of digital currencies 11,265 7,661 18,926 Total other expenses (income) (1,154 ) 20,080 18,926 Net loss (236,770 ) 20,082 (216,688 ) Basic and Diluted Loss per Share (0.00 ) - (0.00 ) Basic and Diluted Shares 371,326,525 - 371,326,525 For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Total operating expenses 492,762 - 492,762 Net loss from operations (492,762 ) - (492,762 ) Revaluation of digital currencies (193,235 ) 193,235 - Realized gain (loss) on sale of digital currencies (51,914 ) 163,053 111,139 Total other expenses (income) (245,149 ) 356,288 111,139 Net loss (737,911 ) 356,288 (381,623 ) Basic and Diluted Loss per Share (0.00 ) - (0.00 ) Basic and Diluted Shares 369,781,431 - 369,781,431 The effect of the restatement on the Company’s consolidated statement of cash flows for the six months ended June 30, 2018 are as follows: For the six months ended June 30, 2018 As Previously Reported Restatement Adjustment As Restated Net loss $ (737,911 ) $ 356,288 $ (381,623 ) Change in fair value of digital currencies 193,235 (193,235 ) - Realized loss (gain) on sale of digital currencies 51,914 (163,053 ) (111,139 ) Net cash used in operating activities (499,844 ) 231,548 (268,296 ) Net cash provided by investing activities 231,548 (231,548 ) - | The effect of the restatement on the Company’s consolidated balance sheet as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Digital currencies $ 616,352 $ (399,233 ) $ 217,119 Total current assets 987,422 (399,233 ) 588,189 Total Assets 988,657 (399,233 ) 589,424 Accumulated deficit (114,117,539 ) (399,233 ) (114,516,772 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 Total Liabilities and stockholders’ equity 988,657 (399,233 ) 589,424 The effect of the restatement on the Company’s consolidated statement of operations for the year ended December 31, 2017 are as follows: For the years ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Gross profit $ 709,266 $ (704,946 ) $ 4,320 Revaluation of digital currencies 704,946 (704,946 ) - Net loss from operations (864,827 ) (704,946 ) (1,569,773 ) Realized gain on sale of digital currencies - 299,092 299,092 Other income 33,022 6,621 39,643 Total other expenses (44,200,509 ) 305,713 (43,894,796 ) Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Basic and Diluted Loss per Share (0.36 ) (0.01 ) (0.37 ) Basic and Diluted Shares 123,548,858 - 123,548,858 The effect of the restatement on the Company’s consolidated statement of stockholders’ equity (deficit) as of December 31, 2017 are as follows: December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss (45,065,336 ) (399,233 ) (45,464,569 ) Total stockholders’ equity 912,660 (399,233 ) 513,427 The effect of the restatement on the Company’s consolidated statement of cash flows for the year ended December 31, 2017 are as follows: For the years ended December 31, 2017 As Previously Reported Restatement Adjustment As Restated Net loss $ (45,065,336 ) $ (399,233 ) $ (45,464,569 ) Change in fair value of digital currencies (704,946 ) 704,946 - Realized gain on sale of digital currencies - (299,092 ) (299,092 ) Proceeds from sale of digital currencies - 332,172 332,172 Decrease in Digital Currencies 338,793 (338,793 ) - Net cash used in operating activities (1,488,254 ) - (1,488,254 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 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 June 30, 2018 and 2017 because their effect was anti-dilutive: As of June 30, 2018 2017 Warrants to purchase common stock 62,064,634 122,418,645 Series B Convertible Preferred stock - 199,785,600 Series C-1 Convertible Preferred stock 5,882,800 15,873,600 Total 67,947,434 338,077,845 | The following financial instruments were not included in the diluted loss per share calculation as of December 31, 2017 and 2016 because their effect was anti-dilutive: As of December 31, 2017 2016 Warrants to purchase common stock 62,064,634 268,788,732 Convertible notes - 50,198,041 Favored Nations - 108,747,774 Series B Convertible Preferred stock 5,175,400 - Series C-1 Convertible Preferred stock 10,000,800 - Total 77,240,834 427,734,547 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Summary of Warrant Activity | The following is a summary of warrant activity for the year ended December 31, 2017 and 2016: Number of Warrants Outstanding as of December 31, 2015 486,723 Ratchet warrants issued due to price reset 271,641,648 Cashless warrant exercise (3,270,888 ) Warrants exercise for cash (68,750 ) Outstanding as of December 31, 2016 268,788,733 Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 47,302,176 Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 12,942,000 Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants (163,178,007 ) Ratchet warrants issued due to price reset 7,454,050 Cashless warrant exercise (111,244,318 ) Outstanding as of December 31, 2017 62,064,634 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2017 and 2016: Fair value measured at December 31, 2017 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2017 (Level 1) (Level 2) (Level 3) Liabilities Derivative liabilities $ - - - $ - Fair value measured at December 31, 2016 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2016 (Level 1) (Level 2) (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 Derivative liabilities | Derivative liabilities balance - January 1, 2016 $ 3,794,153 Change in fair value of derivative liability (5,921,409 ) Reclassification from derivative 92,601 Fair value adjustments for warrant liabilities 25,266,593 Derivative liabilities balance - December 31, 2016 $ 23,231,938 Conversion of warrant liabilities (51,325,017 ) Fair value adjustments for warrant liabilities 39,222,099 Cashless warrant exercise (12,277,968 ) Loss on issuance of Series C Convertible Preferred stock 2,809,497 Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering 925,115 Loss on issuance of Series C-1 Convertible Preferred stock 478,035 Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 825,005 Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering 250,000 Reclassification between convertible notes and derivative liabilities (4,138,704 ) |
Schedule of Derivative Liabilities for Shortfall of Shares | Derivative liabilities balance - December 31, 2017 - Derivative liabilities for shortfall of shares balance - January 1, 2016 $ - Change in fair value of derivative liability shortfall of shares 14,915,419 Derivative liabilities for shortfall of shares balance - December 31, 2016 $ 14,915,419 Conversion of shortfall shares liabilities (14,915,419 ) Derivative liabilities for shortfall of shares balance - December 31, 2017 $ - |
Schedule of Changes in Fair Value of Convertible Notes | Convertible notes at fair value - January 1, 2016 $ 1,781,156 Addition of convertible notes 320,002 Conversion of notes into common stock 4,208,546 Gain on extinguishment of debt (837,369 ) Change in fair value of convertible notes (including OID discount) (2,096,700 ) Reclassification to derivative liability (92,601 ) Convertible notes at fair value - December 31, 2016 $ 3,283,034 Conversion of convertible notes (20,132,105 ) Change in fair value of convertible notes (including OID discount) 16,849,071 Convertible notes at fair value - December 31, 2017 $ - |
Summary of Quantitative Information to Valuation Methodology | . A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2017 is as follows: Warrant Liabilities Date of valuation March 2, 2017 May 24, 2017 December 7, 2017 December 31, 2016 Strike Price 0.025 - 18.000 0.085 0.025 - 0.085 0.03 - 60.0 Volatility 186.7% - 208.3 % 210.10% - 254.70 % 255.89% - 465.94 % 118% - 230 % Risk-free interest rate 1.25% - 1.83 % 1.24% - 1.79 % 1.67% - 2.14 % 0.35% - 2.23 % Contractual life (in years) 1.79 to 3.79 1.52 to 5.00 0.98 to 4.88 0.10 to 3.96 Dividend yield (per share) 0 0 0 0 Senior Convertible Notes at Fair Value Date of valuation March 2, 2017 December 31, 2016 Strike Price 0.32 0.0252 Volatility 267.8 % 300.42% - 328.04 % Risk-free interest rate 0.68 % 0.51% - 0.63 % Dividend yield (per share) 0 0 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets | The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2017 and 2016 are comprised of the following: As of December 31, 2017 2016 Deferred tax assets: Net-operating loss carryforward $ 1,689,152 $ 2,430,737 Other - 1,478 Total Deferred Tax Assets 1,689,152 2,432,215 Valuation allowance (1,689,152 ) (2,432,215 ) Deferred Tax Asset, Net of Allowance $ - $ - |
Schedule of Income Tax Rate | The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: For the years ended December 31, 2017 2016 Statutory Federal Income Tax Rate (34.0 )% (34.0 )% State Taxes, Net of Federal Tax Benefit (5.4 )% (5.4 )% Federal tax rate change 11.9 % - Other 38.8 % - Change in Valuation Allowance (11.3 )% 39.4 % Income Taxes Provision (Benefit) - % - % |
Organization and Description of
Organization and Description of Business and Recent Developments (Details Narrative) (10-K) - shares | 12 Months Ended | |||
Dec. 31, 2016 | Jun. 30, 2018 | Dec. 31, 2017 | Aug. 01, 2016 | |
Number of outstanding shares of common stock | 16,095,929 | 372,337,169 | 363,043,769 | 16,095,929 |
Reverse stock split | 1-for-60 | |||
Maximum [Member] | ||||
Number of outstanding shares of common stock | 952,756,004 | |||
Minimum [Member] | ||||
Number of outstanding shares of common stock | 15,879,262 |
Restatement of the Consolidat_3
Restatement of the Consolidated Financial Statements (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Restatement Adjustment [Member] | ||
Digital currencies | $ 42,945 | $ 399,233 |
Restatement of the Consolidat_4
Restatement of the Consolidated Financial Statements - Schedule of Error Corrections and Prior Period Adjustments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Digital currencies | $ 96,710 | $ 96,710 | $ 217,119 | $ 199 | |||
Total current assets | 197,483 | 197,483 | 588,189 | 95,267 | |||
Total Assets | 200,871 | 200,871 | 589,424 | 98,071 | |||
Accumulated deficit | (114,898,395) | (114,898,395) | (114,516,772) | (69,052,203) | |||
Total stockholders' equity | 131,804 | 131,804 | 513,427 | (45,250,567) | $ (2,789,920) | ||
Total Liabilities and stockholders' equity | 200,871 | 200,871 | 589,424 | 98,071 | |||
Total operating expenses | 235,614 | $ 215,102 | 492,762 | $ 394,548 | 1,574,093 | 1,547,627 | |
Net loss from operations | (235,614) | (214,744) | (492,762) | (391,009) | (1,569,773) | (1,456,284) | |
Revaluation of digital currencies | |||||||
Realized gain (loss) on sale of digital currencies | (18,926) | (111,139) | (299,092) | ||||
Total other expenses (income) | 18,926 | 806,417 | 111,139 | (34,212,862) | (43,894,796) | (42,808,992) | |
Net loss | $ (216,688) | $ 591,673 | $ (381,623) | $ (34,603,871) | $ (45,464,569) | $ (44,265,276) | |
Basic and Diluted Loss per Share | $ 0 | $ 0.01 | $ 0 | $ (0.80) | $ (0.37) | $ (4.89) | |
Basic and Diluted Shares | 371,326,525 | 66,171,066 | 369,781,431 | 43,079,285 | 123,548,858 | 9,058,785 | |
Change in fair value of digital currencies | $ 8,665 | ||||||
Net cash used in operating activities | (268,296) | $ (947,421) | (1,488,254) | (828,459) | |||
Net cash provided by investing activities | (2,598) | $ (1,484) | 400 | $ 387,225 | |||
Previously Reported [Member] | |||||||
Digital currencies | $ 139,655 | 139,655 | 616,352 | ||||
Total current assets | 240,428 | 240,428 | 987,422 | ||||
Total Assets | 243,816 | 243,816 | 988,657 | ||||
Accumulated deficit | (114,855,450) | (114,855,450) | (114,117,539) | ||||
Total stockholders' equity | 174,749 | 174,749 | 912,660 | ||||
Total Liabilities and stockholders' equity | 243,816 | 243,816 | 988,657 | ||||
Total operating expenses | 235,616 | 492,762 | |||||
Net loss from operations | (235,616) | (492,762) | (864,827) | ||||
Revaluation of digital currencies | (12,419) | (193,235) | |||||
Realized gain (loss) on sale of digital currencies | 11,265 | (51,914) | |||||
Total other expenses (income) | (1,154) | (245,149) | (44,200,509) | ||||
Net loss | $ (236,770) | $ (737,911) | $ (45,065,336) | ||||
Basic and Diluted Loss per Share | $ 0 | $ 0 | $ (0.36) | ||||
Basic and Diluted Shares | 371,326,525 | 369,781,431 | 123,548,858 | ||||
Change in fair value of digital currencies | $ 193,235 | $ (704,946) | |||||
Net cash used in operating activities | (499,844) | (1,488,254) | |||||
Net cash provided by investing activities | 231,548 | ||||||
Restatement Adjustment [Member] | |||||||
Digital currencies | $ (42,945) | (42,945) | (399,233) | ||||
Total current assets | (42,945) | (42,945) | (399,233) | ||||
Total Assets | (42,945) | (42,945) | (399,233) | ||||
Accumulated deficit | (42,945) | (42,945) | (399,233) | ||||
Total stockholders' equity | (42,945) | (42,945) | (399,233) | ||||
Total Liabilities and stockholders' equity | (42,945) | (42,945) | (399,233) | ||||
Total operating expenses | (2) | ||||||
Net loss from operations | 2 | (704,946) | |||||
Revaluation of digital currencies | 12,419 | 193,235 | |||||
Realized gain (loss) on sale of digital currencies | 7,661 | 163,053 | (299,092) | ||||
Total other expenses (income) | 20,080 | 356,288 | 305,713 | ||||
Net loss | $ 20,082 | $ 356,288 | $ (399,233) | ||||
Basic and Diluted Loss per Share | $ (0.01) | ||||||
Basic and Diluted Shares | |||||||
Change in fair value of digital currencies | $ (193,235) | $ 704,946 | |||||
Net cash used in operating activities | 231,548 | ||||||
Net cash provided by investing activities | $ (231,548) |
Restatement of the Consolidat_5
Restatement of the Consolidated Financial Statements - Schedule of Error Corrections and Prior Period Adjustments (Details) (10-K) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Digital currencies | $ 96,710 | $ 96,710 | $ 217,119 | $ 199 | |||
Total current assets | 197,483 | 197,483 | 588,189 | 95,267 | |||
Total Assets | 200,871 | 200,871 | 589,424 | 98,071 | |||
Accumulated deficit | (114,898,395) | (114,898,395) | (114,516,772) | (69,052,203) | |||
Total stockholders' equity | 131,804 | 131,804 | 513,427 | (45,250,567) | $ (2,789,920) | ||
Total Liabilities and stockholders' equity | 200,871 | 200,871 | 589,424 | 98,071 | |||
Gross profit | 4,320 | 91,343 | |||||
Revaluation of digital currencies | (8,665) | ||||||
Net loss from operations | (235,614) | $ (214,744) | (492,762) | $ (391,009) | (1,569,773) | (1,456,284) | |
Realized gain on sale of digital currencies | 18,926 | 111,139 | 299,092 | ||||
Other income | 39,643 | 49,121 | |||||
Total other expenses | 18,926 | 806,417 | 111,139 | (34,212,862) | (43,894,796) | (42,808,992) | |
Net loss | $ (216,688) | $ 591,673 | $ (381,623) | $ (34,603,871) | $ (45,464,569) | $ (44,265,276) | |
Basic and Diluted Loss per Share | $ 0 | $ 0.01 | $ 0 | $ (0.80) | $ (0.37) | $ (4.89) | |
Basic and Diluted Shares | 371,326,525 | 66,171,066 | 369,781,431 | 43,079,285 | 123,548,858 | 9,058,785 | |
Change in fair value of digital currencies | $ 8,665 | ||||||
Proceeds from sale of digital currencies | 231,548 | 332,172 | |||||
Decrease in Digital Currencies | (25,502) | ||||||
Net cash used in operating activities | (268,296) | $ (947,421) | (1,488,254) | $ (828,459) | |||
Previously Reported [Member] | |||||||
Digital currencies | $ 139,655 | 139,655 | 616,352 | ||||
Total current assets | 240,428 | 240,428 | 987,422 | ||||
Total Assets | 243,816 | 243,816 | 988,657 | ||||
Accumulated deficit | (114,855,450) | (114,855,450) | (114,117,539) | ||||
Total stockholders' equity | 174,749 | 174,749 | 912,660 | ||||
Total Liabilities and stockholders' equity | 243,816 | 243,816 | 988,657 | ||||
Gross profit | 709,266 | ||||||
Revaluation of digital currencies | 704,946 | ||||||
Net loss from operations | (235,616) | (492,762) | (864,827) | ||||
Realized gain on sale of digital currencies | (11,265) | 51,914 | |||||
Other income | 33,022 | ||||||
Total other expenses | (1,154) | (245,149) | (44,200,509) | ||||
Net loss | $ (236,770) | $ (737,911) | $ (45,065,336) | ||||
Basic and Diluted Loss per Share | $ 0 | $ 0 | $ (0.36) | ||||
Basic and Diluted Shares | 371,326,525 | 369,781,431 | 123,548,858 | ||||
Change in fair value of digital currencies | $ 193,235 | $ (704,946) | |||||
Proceeds from sale of digital currencies | |||||||
Decrease in Digital Currencies | 338,793 | ||||||
Net cash used in operating activities | (499,844) | (1,488,254) | |||||
Restatement Adjustment [Member] | |||||||
Digital currencies | $ (42,945) | (42,945) | (399,233) | ||||
Total current assets | (42,945) | (42,945) | (399,233) | ||||
Total Assets | (42,945) | (42,945) | (399,233) | ||||
Accumulated deficit | (42,945) | (42,945) | (399,233) | ||||
Total stockholders' equity | (42,945) | (42,945) | (399,233) | ||||
Total Liabilities and stockholders' equity | (42,945) | (42,945) | (399,233) | ||||
Gross profit | (704,946) | ||||||
Revaluation of digital currencies | (704,946) | ||||||
Net loss from operations | 2 | (704,946) | |||||
Realized gain on sale of digital currencies | (7,661) | (163,053) | 299,092 | ||||
Other income | 6,621 | ||||||
Total other expenses | 20,080 | 356,288 | 305,713 | ||||
Net loss | $ 20,082 | $ 356,288 | $ (399,233) | ||||
Basic and Diluted Loss per Share | $ (0.01) | ||||||
Basic and Diluted Shares | |||||||
Change in fair value of digital currencies | $ (193,235) | $ 704,946 | |||||
Proceeds from sale of digital currencies | 332,172 | ||||||
Decrease in Digital Currencies | (338,793) | ||||||
Net cash used in operating activities | $ 231,548 |
Liquidity, Financial Conditio_2
Liquidity, Financial Condition and Management's Plans (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Liquidity Financial Condition And Managements Plans | |||||||
Net cash used in operating activities | $ (268,296) | $ (947,421) | $ (1,488,254) | $ (828,459) | |||
Net loss | $ (216,688) | $ 591,673 | (381,623) | (34,603,871) | (45,464,569) | (44,265,276) | |
Cash | 32,440 | $ 17,277 | 32,440 | $ 17,277 | 303,334 | 95,068 | $ 124,535 |
Digital currencies | 96,710 | 96,710 | 217,119 | $ 199 | |||
Working capital | $ 100,000 | $ 100,000 | $ 500,000 |
Liquidity, Financial Conditio_3
Liquidity, Financial Condition and Management's Plans (Details Narrative) (10-K) - USD ($) | Oct. 24, 2017 | Oct. 10, 2017 | May 25, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 16, 2017 | 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 | $ 268,296 | $ 947,421 | 1,488,254 | $ 828,459 | |||||||
Net loss | $ 216,688 | $ (591,673) | 381,623 | 34,603,871 | 45,464,569 | 44,265,276 | |||||
Cash | 32,440 | $ 17,277 | 32,440 | $ 17,277 | 303,334 | 95,068 | $ 124,535 | ||||
Working capital | $ 100,000 | $ 100,000 | $ 500,000 | ||||||||
Securities Purchase Agreement [Member] | |||||||||||
Gross proceeds from may fund raising | $ 1,100,000 | ||||||||||
Net proceeds from may fund raising | 825,005 | ||||||||||
Proceeds from investments | 100,000 | ||||||||||
Common Stock [Member] | |||||||||||
Number of preferred stock shares convertible into common stock | 15,873,600 | ||||||||||
Net loss | |||||||||||
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 | ||||||||||
Series C-1 Convertible Preferred Stock [Member] | Series B Warrants [Member] | Securities Purchase Agreement [Member] | |||||||||||
Proceeds from issuance of preferred stock | $ 750,000 | ||||||||||
Warrant exercise price per share | $ 0.135 | ||||||||||
Share issued price per share | $ 0.085 | ||||||||||
Proceeds from investments | $ 100,000 | ||||||||||
Series C-1 Convertible Preferred Stock [Member] | Series B Warrants [Member] | Securities Purchase Agreement [Member] | Bitcoin [Member] | |||||||||||
Proceeds from issuance of preferred stock | $ 250,000 | ||||||||||
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 Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | |||||
Cash and cash equivalents | $ 32,440 | $ 303,334 | $ 17,277 | $ 95,068 | $ 124,535 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) (10-K) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2015 | |
Cash and cash equivalents | $ 303,334 | $ 95,068 | $ 32,440 | $ 17,277 | $ 124,535 | |
Cash, FDIC Insured Amount | $ 53,000 | 0 | ||||
Impairment charge | $ 237,000 | |||||
Intangible asset estimated useful life | 3 years | |||||
Intangible asset amortization cost | $ 900 | 5,000 | ||||
Impairment loss related to investment | 2,250,000 | |||||
Income tax likehood percentage description | Likelihood of greater than 50% | |||||
Advertising expenses | $ 9,000 | $ 11,000 | ||||
Maximum [Member] | ||||||
Cash, FDIC Insured Amount | $ 250,000 | |||||
Property and equipment depreciated over period | 5 years | |||||
Minimum [Member] | ||||||
Property and equipment depreciated over period | 3 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Earnings Per Share Anti-Diluted (Details) - shares | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Excluded potentially dilutive securities | 67,947,434 | 338,077,845 | 77,240,834 | 427,734,547 |
Warrants to Purchase Common Stock [Member] | ||||
Excluded potentially dilutive securities | 62,064,634 | 122,418,645 | 62,064,634 | 268,788,732 |
Series B Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 199,785,600 | 5,175,400 | ||
Series C-1 Convertible Preferred Stock [Member] | ||||
Excluded potentially dilutive securities | 5,882,800 | 15,873,600 | 10,000,800 | |
Convertible Notes [Member] | ||||
Excluded potentially dilutive securities | 50,198,041 | |||
Favored Nations [Member] | ||||
Excluded potentially dilutive securities | 108,747,774 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - shares | Apr. 24, 2018 | Apr. 23, 2018 | Apr. 20, 2018 | Jan. 02, 2018 |
Series B Convertible Preferred Stock [Member] | ||||
Conversion of common stock, shares issued | 5,175,400 | |||
Conversion of common stock, shares converted | 25,877 | |||
Series C-1 Convertible Preferred Stock [Member] | ||||
Conversion of common stock, shares issued | 2,549,200 | 1,176,600 | 392,200 | |
Conversion of common stock, shares converted | 12,746 | 5,883 | 1,961 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details Narrative) (10-K) - USD ($) | Dec. 19, 2017 | Nov. 29, 2017 | Nov. 27, 2017 | Oct. 24, 2017 | Oct. 10, 2017 | May 25, 2017 | Apr. 04, 2017 | Mar. 28, 2017 | Mar. 22, 2017 | Mar. 15, 2017 | Mar. 09, 2017 | Feb. 28, 2017 | Jun. 28, 2016 | Jun. 08, 2016 | Jun. 03, 2016 | Jan. 19, 2015 | Aug. 01, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2018 | Dec. 07, 2017 | Mar. 16, 2017 | Dec. 16, 2016 | Apr. 19, 2015 |
Reverse stock split | 1-for-60 | |||||||||||||||||||||||
Common stock, shares outstanding | 16,095,929 | 363,043,769 | 16,095,929 | 372,337,169 | ||||||||||||||||||||
Warrants exercise value | $ 91,765 | $ 91,765 | $ 91,765 | |||||||||||||||||||||
Number of common stock shares issued for cashless exercise of warrants | 68,750 | 68,750 | ||||||||||||||||||||||
Number of common stock shares issued | 1,039,013 | 1,039,013 | ||||||||||||||||||||||
Number of common stock issued to convert estimated liability, value | $ 890,179 | $ 890,179 | $ 822,685 | $ 1,712,864 | ||||||||||||||||||||
Number of common stock issued to convert estimated liability | 12,146,820 | |||||||||||||||||||||||
Common stock, shares issued | 16,095,929 | 363,043,769 | 16,095,929 | 372,337,169 | ||||||||||||||||||||
Common stock, shares authorized | 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 | ||||||||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Preferred stock, shares issued | 25,877 | 0 | 0 | |||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | January 1 2018 [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 25,877 | |||||||||||||||||||||||
Common stock, shares issued | 5,175,400 | |||||||||||||||||||||||
2017 Activities [Member] | ||||||||||||||||||||||||
Reverse stock split | one-for-60 reverse stock split | |||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 111,244,318 | 111,244,318 | ||||||||||||||||||||||
Number of common stock shares issued for cashless exercise of warrants | 81,856,798 | 81,856,798 | ||||||||||||||||||||||
Number of common stock shares issued | 4,370 | |||||||||||||||||||||||
2017 Activities [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 1,135,064 | 1,135,064 | ||||||||||||||||||||||
Common stock, shares issued | 227,012,800 | 227,012,800 | ||||||||||||||||||||||
2017 Activities [Member] | Series C Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 79,368 | 79,368 | ||||||||||||||||||||||
Common stock, shares issued | 15,873,600 | 15,873,600 | ||||||||||||||||||||||
2017 Activities [Member] | Series C-1 Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 14,706 | |||||||||||||||||||||||
Common stock, shares issued | 2,941,200 | |||||||||||||||||||||||
Senior Notes and Junior Notes [Member] | ||||||||||||||||||||||||
Debt conversion price per share | $ 0.0252 | |||||||||||||||||||||||
Senior Convertible Notes [Member] | ||||||||||||||||||||||||
Debt instrument principal amount | $ 868,897 | |||||||||||||||||||||||
Original issue discount percentage | 5.00% | |||||||||||||||||||||||
Notes interest rate percentage | 10.00% | |||||||||||||||||||||||
Debt maturity date | Sep. 16, 2016 | |||||||||||||||||||||||
Junior Convertible Notes [Member] | ||||||||||||||||||||||||
Debt instrument principal amount | $ 175,000 | |||||||||||||||||||||||
Original issue discount percentage | 20.00% | |||||||||||||||||||||||
Debt maturity date | Dec. 5, 2016 | |||||||||||||||||||||||
8% Convertible Notes [Member] | ||||||||||||||||||||||||
Debt instrument principal amount | $ 220,000 | |||||||||||||||||||||||
Debt maturity date | Jun. 6, 2017 | |||||||||||||||||||||||
Senior Warrants [Member] | ||||||||||||||||||||||||
Debt convertible into warrant, shares | 97,423,579 | |||||||||||||||||||||||
Senior Warrants [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 845,631 | |||||||||||||||||||||||
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 | |||||||||||||||||||||||
Subscription Agreement [Member] | ||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 171,349,405 | 97,423,579 | ||||||||||||||||||||||
Number of common stock shares issued | 108,747,774 | |||||||||||||||||||||||
Subscription Agreement [Member] | Subscribers [Member] | ||||||||||||||||||||||||
Payment of offering | $ 250,000 | |||||||||||||||||||||||
Percentage of beneficially own in excess of number of common stock shares outstanding | 4.99% | |||||||||||||||||||||||
Subscription Agreement [Member] | Charles Allen and Michal Handerhan [Member] | ||||||||||||||||||||||||
Proceeds from equity or debt financing | $ 1,000,000 | |||||||||||||||||||||||
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% | |||||||||||||||||||||||
Exercise Agreement [Member] | ||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 8,333 | |||||||||||||||||||||||
Warrants exercise value | $ 27,500 | |||||||||||||||||||||||
Exercise Agreement [Member] | Investor [Member] | ||||||||||||||||||||||||
Warrants issued to purchase of shares of common stock | 38,750 | |||||||||||||||||||||||
January Agreement [Member] | ||||||||||||||||||||||||
Common stock, shares authorized | 12,052,344 | |||||||||||||||||||||||
Number of warrant shares issued | 30,130,861 | |||||||||||||||||||||||
Preferred stock, shares issued | 210,919 | |||||||||||||||||||||||
April Agreement [Member] | ||||||||||||||||||||||||
Common stock, shares authorized | 20,110,699 | |||||||||||||||||||||||
Number of warrant shares issued | 28,154,980 | |||||||||||||||||||||||
Preferred stock, shares issued | 104,391 | |||||||||||||||||||||||
Note Offer [Member] | ||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||
January Offer [Member] | ||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||
April Offer [Member] | ||||||||||||||||||||||||
Preferred stock, shares issued | 1,160,941 | |||||||||||||||||||||||
January Agreement and April Agreement [Member] | ||||||||||||||||||||||||
Common stock, shares authorized | 14,517,352 | |||||||||||||||||||||||
Number of warrant shares issued | 112,782,487 | |||||||||||||||||||||||
CSC Agreement [Member] | ||||||||||||||||||||||||
Number of common stock shares issued | 833,333 | |||||||||||||||||||||||
Number of common stock shares issued value | $ 61,667 | |||||||||||||||||||||||
Payment to acquire cash payment | $ 200,000 | |||||||||||||||||||||||
Settlement Agreement [Member] | RK Equity Advisors, LLC and Pickwick Capital Partners, LLC [Member] | ||||||||||||||||||||||||
Number of common stock issued to convert estimated liability, value | $ 10,000 | |||||||||||||||||||||||
Number of common stock issued to convert estimated liability | 125,000 | |||||||||||||||||||||||
Debt conversion price per share | $ 0.10 | |||||||||||||||||||||||
Common stock, par value | $ 0.001 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||||||||
Proceeds from investments | $ 100,000 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Series C-1 Convertible Preferred Stock [Member] | Series B Warrants [Member] | ||||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 750,000 | |||||||||||||||||||||||
Warrant price per share exceeds | $ 0.135 | |||||||||||||||||||||||
Equity price per share | $ 0.085 | |||||||||||||||||||||||
Proceeds from investments | $ 100,000 | |||||||||||||||||||||||
Securities Purchase Agreement [Member] | Series C-1 Convertible Preferred Stock [Member] | Series B Warrants [Member] | Bitcoin [Member] | ||||||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 250,000 | |||||||||||||||||||||||
October 2017 Securities Purchase Agreement [Member] | ||||||||||||||||||||||||
Common stock, shares issued | 4,400,000 | |||||||||||||||||||||||
Maximum [Member] | ||||||||||||||||||||||||
Common stock, shares outstanding | 952,756,004 | |||||||||||||||||||||||
Minimum [Member] | ||||||||||||||||||||||||
Common stock, shares outstanding | 15,879,262 | |||||||||||||||||||||||
Minimum [Member] | Subscription Agreement [Member] | ||||||||||||||||||||||||
Proceeds from equity or debt financing | $ 1,000,000 | |||||||||||||||||||||||
Percentage of remaining payment of gross proceeds from equity or debt financing | 20.00% |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Warrant Activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Number of Warrants Outstanding Beginning Balance | 268,788,733 | 486,723 |
Number of Warrants Ratchet warrants issued due to price reset | 7,454,050 | 271,641,648 |
Number of Warrants Cashless warrant exercise | (111,244,318) | (3,270,888) |
Number of Warrants exercise for cash | (68,750) | |
Number of Warrants Issuance of Series C Convertible Preferred Stock and warrants for cash in an offering | 47,302,176 | |
Number of Warrants Issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 12,942,000 | |
Number of Warrants Issuance of Series B Convertible Preferred Stock in exchange for convertible notes payable and warrants | (163,178,007) | |
Number of Warrants Outstanding Ending Balance | 62,064,634 | 268,788,733 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | Mar. 09, 2017USD ($)shares | Jun. 06, 2016USD ($)TradingDays$ / shares | Aug. 01, 2016shares | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Number of common stock shares issued for conversion of debt | shares | 12,146,820 | |||||||||
Derivative liabilities for shortfall of shares | $ 14,915,419 | |||||||||
Gain on extinguishment of debt | $ (6,870) | $ 15,866,197 | 15,918,867 | 837,369 | ||||||
Derivative liabilities | $ 23,231,938 | $ 3,794,153 | ||||||||
Convertible Notes, Warrant Liabilities, Shortfall Shares Liabilities and Liquidated Damages [Member] | ||||||||||
Derivative liabilities | $ 90,200,000 | |||||||||
Convertible Notes [Member] | ||||||||||
Debt instrument principal amount | $ 220,002 | |||||||||
Original issue discount percentage | 8.00% | |||||||||
Senior Convertible Notes [Member] | ||||||||||
Debt instrument principal amount | $ 868,897 | |||||||||
Debt maturity date | Sep. 16, 2016 | |||||||||
Original issue discount percentage | 5.00% | |||||||||
Notes interest rate percentage | 10.00% | |||||||||
Junior Convertible Notes [Member] | ||||||||||
Debt instrument principal amount | $ 175,000 | |||||||||
Debt maturity date | Dec. 5, 2016 | |||||||||
Original issue discount percentage | 20.00% | |||||||||
Senior Warrants [Member] | ||||||||||
Debt convertible into warrant, shares | shares | 97,423,579 | |||||||||
Senior Warrants [Member] | Series B Convertible Preferred Stock [Member] | ||||||||||
Number of common stock shares issued for conversion of debt | shares | 845,631 | |||||||||
Securities Purchase Agreement [Member] | Institutional Investor [Member] | Junior Secured Convertible Notes [Member] | ||||||||||
Debt original amount | $ 375,000 | |||||||||
Percentage of original issuance of debt | 20.00% | |||||||||
Debt instrument principal 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 | $ / shares | $ 18 | |||||||||
Debt convertible into common stock lowest closing price rate | 60.00% | |||||||||
Debt trading days | TradingDays | 20 | |||||||||
Percentage of beneficially own in excess of number of common stock shares outstanding | 4.99% | |||||||||
Subscription Agreement [Member] | Senior Secured Convertible Notes [Member] | ||||||||||
Debt conversion price per share | $ / shares | $ 0.0252 | |||||||||
Number of common stock shares issued for conversion of debt | shares | 108,747,774 | |||||||||
Number of warrant to purchase shares of common stock | shares | 268,788,732 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value Liabilities Measured at Fair Value on Recurring Basis (Details) (10-K) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Digital currencies | $ 199 | ||
Derivative Liabilities | 23,231,938 | $ 3,794,153 | |
Derivative liabilities for shortfall of shares | 14,915,419 | ||
Convertible notes inclusive of derivative liabilities | 3,283,034 | $ 1,781,156 | |
Level 1 [Member] | |||
Digital currencies | 199 | ||
Derivative Liabilities | |||
Derivative liabilities for shortfall of shares | |||
Convertible notes inclusive of derivative liabilities | |||
Level 2 [Member] | |||
Digital currencies | |||
Derivative Liabilities | |||
Derivative liabilities for shortfall of shares | |||
Convertible notes inclusive of derivative liabilities | |||
Level 3 [Member] | |||
Digital currencies | |||
Derivative Liabilities | 23,231,938 | ||
Derivative liabilities for shortfall of shares | 14,915,419 | ||
Convertible notes inclusive of derivative liabilities | $ 3,283,034 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Derivative liabilities (Details) (10-K) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||||||
Derivative liabilities beginning balance | $ 23,231,938 | $ 23,231,938 | $ 3,794,153 | |||
Change in fair value of derivative liability | (5,921,409) | |||||
Reclassification of derivative liability | 92,601 | |||||
Fair value adjustments for warrant liabilities | $ (1,485,813) | $ 31,687,073 | 39,222,099 | 25,266,593 | ||
Conversion of warrant liabilities | (51,325,017) | |||||
Cashless warrants exercise | (12,277,968) | |||||
Loss on issuance of Series C Convertible Preferred stock | 2,809,497 | |||||
Net proceeds from issuance of Series C Convertible Preferred Stock and warrants for cash in an offering | 925,115 | |||||
Loss on issuance of Series C-1 Convertible Preferred stock | 478,035 | |||||
Net cash proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 825,005 | |||||
Net digital currency proceeds from issuance of Series C-1 Convertible Preferred Stock and warrants for cash and digital currency in an offering | 250,000 | |||||
Reclassification between convertible notes and derivative liabilities | (4,138,704) | |||||
Derivative liabilities ending balance | $ 23,231,938 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Derivative Liabilities for Shortfall of Shares (Details) (10-K) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||
Derivative liabilities for shortfall of shares beginning balance | $ 14,915,419 | |
Change in fair value of derivative liability shortfall of shares | 14,915,419 | |
Conversion of shortfall shares liabilities | (14,915,419) | |
Derivative liabilities for shortfall of shares ending balance | $ 14,915,419 |
Fair Value Measurements - Sch_3
Fair Value Measurements - Schedule of Changes in Fair Value of Convertible Notes (Details) (10-K) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | ||||||
Convertible note at fair value beginning balance | $ 3,283,034 | $ 3,283,034 | $ 1,781,156 | |||
Addition of convertible note | 320,002 | |||||
Conversion of notes into common stock | (20,132,105) | 4,208,546 | ||||
Gain on extinguishment pf debt | $ 6,870 | $ (15,866,197) | (15,918,867) | (837,369) | ||
Change in fair value of convertible notes (including OID discount) | 16,849,071 | (2,096,700) | ||||
Reclassification to derivative liability | (92,601) | |||||
Convertible note at fair value ending balance | $ 3,283,034 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Quantitative Information to Valuation Methodology (Details) (10-K) - $ / shares | Dec. 07, 2017 | May 24, 2017 | Mar. 02, 2017 | Dec. 31, 2016 |
Measurement Input, Exercise Price [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Strike Price | $ 0.32 | $ 0.0252 | ||
Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 267.80% | |||
Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.68% | |||
Measurement Input, Expected Dividend Payment [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Strike Price | $ 0 | $ 0 | ||
Minimum [Member] | Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 300.42% | |||
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.51% | |||
Maximum [Member] | Measurement Input, Price Volatility [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 328.04% | |||
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | Senior Convertible Notes at Fair Value [Member] | ||||
Fair value assumptions, measurement input, percentages | 0.63% | |||
Warrant Liabilities [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.085 | |||
Warrant Liabilities [Member] | Measurement Input, Expected Dividend Payment [Member] | ||||
Strike Price | $ 0 | $ 0 | 0 | $ 0 |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.025 | $ 0.025 | $ 0.03 | |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Price Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 255.89% | 210.10% | 186.70% | 118.00% |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 1.67% | 1.24% | 1.25% | 0.35% |
Warrant Liabilities [Member] | Minimum [Member] | Measurement Input, Expected Term [Member] | ||||
Fair value assumptions, measurement input, term | 11 months 23 days | 1 year 6 months 7 days | 1 year 9 months 14 days | 1 month 6 days |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Exercise Price [Member] | ||||
Strike Price | $ 0.085 | $ 18 | $ 60 | |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Price Volatility [Member] | ||||
Fair value assumptions, measurement input, percentages | 465.70% | 254.70% | 208.30% | 230.00% |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||
Fair value assumptions, measurement input, percentages | 2.14% | 1.79% | 1.83% | 2.23% |
Warrant Liabilities [Member] | Maximum [Member] | Measurement Input, Expected Term [Member] | ||||
Fair value assumptions, measurement input, term | 4 years 10 months 17 days | 5 years | 3 years 9 months 14 days | 3 years 11 months 15 days |
Employment Agreements (Details
Employment Agreements (Details Narrative) - USD ($) | Jun. 22, 2017 | Dec. 31, 2017 |
Charles W. Allen [Member] | ||
Employment agreement term | 2 years | |
Annual salary | $ 245,000 | |
Compensation | 500 | |
Charles W. Allen [Member] | Office Space [Member] | ||
Compensation | $ 500 | |
Michal Handerhan [Member] | ||
Employment agreement term | 2 years | |
Annual salary | $ 190,000 | |
Compensation | 500 | |
Diluted capital stock percentage | 25.00% | |
Michal Handerhan [Member] | Office Space [Member] | ||
Compensation | $ 500 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jan. 30, 2017 | Jun. 03, 2016 | Feb. 19, 2016 | Apr. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 |
Principal Stockholders [Member] | ||||||
Payments for repurchase of private placement | $ 86 | $ 20,000 | ||||
Principal Stockholders [Member] | Subscription Agreement [Member] | ||||||
Payments for repurchase of private placement | $ 40,000 | |||||
Securities Escrow Agreement [Member] | Principal Stockholders [Member] | ||||||
Number of common stock shares into escrow | 400,000 | |||||
Listing Escrow Shares [Member] | Principal Stockholders [Member] | ||||||
Number of escrowed shares returned | 200,000 | |||||
Spondoolies-Tech Ltd [Member] | Merger Escrow Shares [Member] | Principal Stockholders [Member] | ||||||
Number of escrowed shares returned | 200,000 | |||||
Charles Allen [Member] | ||||||
Number of escrowed shares cancelation | 24,000,000 | |||||
Charles Allen [Member] | Chief Financial Officer [Member] | ||||||
Number of escrowed shares cancelation | 24,000,000 | |||||
Post-split shares of commons stock | 400,000 | |||||
Adjustment to additional paid in capital | $ 400 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - Sub-lease Agreement [Member] - USD ($) | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | May 31, 2016 | |
Future minimum lease payment | $ 12,000 | ||
Operating lease rental expense | $ 500 | ||
Mr. Allen and Mr. Handerhan [Member] | |||
Payment to cover pocket expenses | $ 1,000 |
North Carolina Facility (Detail
North Carolina Facility (Details Narrative) - USD ($) | Aug. 08, 2016 | Jul. 20, 2016 | Dec. 31, 2017 |
North Carolina Facility | |||
North Carolina transaction, description | 165 Bitmain transaction verification servers leased from CSC were stolen. | 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. | |
Prepaid expenses of fixed minimum lease payment | $ 85,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 22, 2017 | Dec. 31, 2017 |
Deferred tax assets, valuation allowance decreased amount | $ 700,000 | |
Net operating loss carry forwards for federal and state tax | $ 6,000,000 | |
Operating loss carry forwards expiration years | 2,037 | |
January 1 2018 [Member] | ||
Federal corporate tax rate | 21.00% | |
Tax Cuts and Jobs Act [Member] | ||
Deferred tax assets, valuation allowance decreased amount | $ 700,000 | |
Maximum [Member] | Tax Cuts and Jobs Act [Member] | ||
Federal corporate tax rate | 35.00% | |
Minimum [Member] | Tax Cuts and Jobs Act [Member] | ||
Federal corporate tax rate | 21.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net-operating loss carryforward | $ 1,689,152 | $ 2,430,737 |
Other | 1,478 | |
Total Deferred Tax Assets | 1,689,152 | 2,432,215 |
Valuation allowance | (1,689,152) | (2,432,215) |
Deferred Tax Asset, Net of Allowance |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory Federal Income Tax Rate | (34.00%) | (34.00%) |
State Taxes, Net of Federal Tax Benefit | (5.40%) | (5.40%) |
Federal tax rate change | 11.90% | |
Other | 38.80% | |
Change in Valuation Allowance | (11.30%) | 39.40% |
Income Taxes Provision (Benefit) | 0.00% | 0.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Jan. 02, 2018shares |
Common Stock [Member] | |
Number of shares issued upon conversion, shares | 5,175,400 |
Series B Convertible Preferred Stock [Member] | |
Number of shares issued upon conversion, shares | 25,877 |