Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 25, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Marathon Patent Group, Inc. | ||
Entity Central Index Key | 0001507605 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 25,519,940 | ||
Trading Symbol | MARA | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 2,551,171 | $ 14,948,529 |
Accounts receivable - net of allowance for bad debt of $0 and $387,976 for December 31, 2018 and December 31, 2017, respectively | 6,826 | |
Prepaid expenses and other current assets | 464,006 | 92,855 |
Total current assets | 3,015,177 | 15,048,210 |
Other assets: | ||
Property and equipment, net of accumulated depreciation and impairment charges of $4,338,931 and $134,513 for December 31, 2018 and December 31, 2017, respectively | 1,034,575 | 10,011 |
Intangible assets, net of accumulated amortization of $65,245 for December 31, 2018 | 1,144,755 | |
Total other assets | 2,179,330 | 10,011 |
TOTAL ASSETS | 5,194,507 | 15,058,221 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,235,444 | 1,961,784 |
Litigation liability | 2,150,000 | |
Warrant liability | 39,083 | 1,794,396 |
Convertible notes payable, net of discount of $2,290,028 for December 31, 2017 | 999,106 | 1,763,920 |
Total current liabilities | 2,273,633 | 7,670,100 |
Total liabilities | 2,273,633 | 7,670,100 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.0001 par value, 50,000,000 shares authorized, 0 and 5,513 issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 1 | |
Common stock, $0.0001 par value; 200,000,000 shares authorized; 25,519,940 and 12,477,781 issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 2,552 | 1,248 |
Additional paid-in capital | 105,459,482 | 97,113,723 |
Accumulated other comprehensive loss | (450,719) | (450,734) |
Accumulated deficit | (102,090,441) | (89,276,117) |
Total stockholders' equity | 2,920,874 | 7,388,121 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 5,194,507 | $ 15,058,221 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for bad debt | $ 0 | $ 387,976 |
Accumulated depreciation of property and equipment | 4,338,931 | 134,513 |
Accumulated amortization of intangible assets | 65,245 | |
Discount on notes payable, current | $ 2,290,028 | |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 5,513 |
Preferred stock, shares outstanding | 0 | 5,513 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 25,519,940 | 12,477,781 |
Common stock, shares outstanding | 25,519,940 | 12,477,781 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | ||
Total revenues | $ 1,562,372 | $ 519,622 |
Operating costs and expenses | ||
Cost of revenue | 3,351,758 | 3,470,847 |
Impairment of mining equipment | 2,222,688 | |
Compensation and related taxes | 1,984,301 | 4,362,371 |
Consulting fees | 639,094 | 537,695 |
Professional fees | 1,216,820 | 2,797,648 |
General and administrative | 1,374,047 | 831,001 |
Goodwill impairment | 228,401 | |
Patent impairment | 2,475,149 | |
Break-up fee - issuance of shares to GBV | 2,850,000 | |
Total operating expenses | 13,638,708 | 14,703,112 |
Operating loss | (12,076,336) | (14,183,490) |
Other income (expenses) | ||
Other income (expenses) | 112,471 | (3,173,341) |
Foreign exchange gain (loss) | 28,918 | (463,821) |
Gain on debt extinguishment | 2,970,313 | |
Gain on Fortress debt settlement | 11,940,493 | |
Loss on sale of companies | (2,610,783) | |
Realized loss on sale of digital currencies | (152,485) | |
Change in fair value adjustment of Clouding IP earn out | 1,482,012 | |
Change in fair value of warrant liability | 1,699,522 | (21,855,723) |
Loss on warrants exchanged for common stock | (980,400) | |
Gain on exchange of warrants to series E | 305,358 | |
Amortization of debt discount | (2,290,028) | (3,561,109) |
Interest income | 14,230 | 2,793 |
Interest expense | (81,482) | (1,309,823) |
Loss before income taxes | (12,745,190) | (31,437,521) |
Income tax (expense) benefit | (69,134) | 103,952 |
Net loss attributable to common stockholders | $ (12,814,324) | $ (31,333,569) |
Net loss per share, basic and diluted: | $ (0.60) | $ (4.80) |
Weighted average shares outstanding, basic and diluted: | 21,263,774 | 6,522,649 |
Net loss attributable to common stockholders | $ (12,814,324) | $ (31,333,569) |
Other comprehensive income: | ||
Unrealized gain on foreign currency translation | 15 | 609,656 |
Comprehensive loss attributable to Marathon Patent Group, Inc. | (12,814,309) | (30,723,913) |
Cryptocurrency Mining Revenue [Member] | ||
Revenues | ||
Total revenues | 1,495,402 | |
Other Revenue [Member] | ||
Revenues | ||
Total revenues | $ 66,970 | $ 519,622 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Equity (Deficit) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Non-Controlling Interest [Member] | Total |
Beginning balance at Dec. 31, 2016 | $ 20 | $ 463 | $ 49,879,161 | $ (57,942,548) | $ (1,060,390) | $ (163,848) | $ (9,287,142) |
Beginning balance, shares at Dec. 31, 2016 | 195,501 | 4,638,118 | |||||
Stock-based compensation expense | $ 78 | 1,976,738 | 1,976,816 | ||||
Stock-based compensation expense, shares | 775,000 | ||||||
Issuance of Series D Preferred Stock | $ 13 | 678,700 | 678,713 | ||||
Issuance of Series D Preferred Stock, shares | 125,688 | ||||||
Conversion of Series B Preferred Stock | $ (20) | $ 20 | |||||
Conversion of Series B Preferred Stock, shares | (195,500) | 195,500 | |||||
Conversion of Series D Preferred Stock | $ (13) | $ 63 | 107,224 | 107,274 | |||
Conversion of Series D Preferred Stock, shares | (125,688) | 628,438 | |||||
Warrants converted to Series E preferred stock | $ 1 | 21,525,410 | 21,525,411 | ||||
Warrants converted to Series E preferred stock, shares | 5,512 | ||||||
Common stock issued for note conversion | $ 181 | 1,445,871 | 1,446,052 | ||||
Common stock issued for note conversion, shares | 1,807,565 | ||||||
Beneficial conversion feature | 4,017,729 | 4,017,729 | |||||
Proceeds received from private placement | $ 349 | 16,074,067 | 16,074,416 | ||||
Proceeds received from private placement, shares | 3,492,047 | ||||||
Issue common stock for conversion of Warrants | $ 62 | 1,183,966 | 1,184,028 | ||||
Issue common stock for conversion of Warrants, shares | 619,250 | ||||||
Warrant liability | 137,334 | 137,334 | |||||
Convertible debt warrant repricing | |||||||
Common stock issued for account payable | $ 32 | 435,457 | 435,489 | ||||
Common stock issued for account payable, shares | 320,449 | ||||||
Loss on sale of companies | (42,576) | (42,576) | |||||
Gain on extinguishment of warrant liability | (305,358) | (305,358) | |||||
Par value adjustment and additional shares issued due to reverse split | |||||||
Par value adjustment and additional shares issued due to reverse split, shares | 1,414 | ||||||
Currency translation gain\loss | $ 609,656 | 609,656 | |||||
Net Loss | (31,333,569) | 163,848 | (31,333,569) | ||||
Ending balance at Dec. 31, 2017 | $ 1 | $ 1,248 | 97,113,723 | (89,276,117) | (450,734) | 7,388,121 | |
Ending balance, shares at Dec. 31, 2017 | 5,513 | 12,477,781 | |||||
Stock-based compensation expense | $ 44 | 1,425,639 | 1,425,683 | ||||
Stock-based compensation expense, shares | 443,400 | ||||||
Common stock issued for note conversion | $ 382 | 3,055,206 | 3,055,588 | ||||
Common stock issued for note conversion, shares | 3,819,485 | ||||||
Proceeds received from private placement | |||||||
Currency translation gain\loss | 15 | 15 | |||||
Conversion of Series E preferred stock | $ (1) | $ 551 | (550) | ||||
Conversion of Series E preferred stock, shares | (5,513) | 5,511,543 | |||||
Common stock issued for acquisition of patents | $ 25 | 959,975 | 960,000 | ||||
Common stock issued for acquisition of patents, shares | 250,000 | ||||||
Issue common stock for exercise of warrants | $ 2 | 55,789 | 55,791 | ||||
Issue common stock for exercise of warrants, shares | 17,731 | ||||||
Break-up fee - issuance of shares to GBV | $ 300 | 2,849,700 | 2,850,000 | ||||
Break-up fee - issuance of shares to GBV, shares | 3,000,000 | ||||||
Net Loss | (12,814,324) | (12,814,324) | |||||
Ending balance at Dec. 31, 2018 | $ 2,552 | $ 105,459,482 | $ (102,090,441) | $ (450,719) | $ 2,920,874 | ||
Ending balance, shares at Dec. 31, 2018 | 25,519,940 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (12,814,324) | $ (31,333,569) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Depreciation | 2,003,695 | 26,106 |
Amortization of patents and website | 66,017 | 1,824,162 |
Loss on sale of companies | 2,610,784 | |
Gain on debt extinguishment | (2,970,313) | |
Gain on extinguishment of warrant liability | (305,358) | |
Gain on Fortress loan extinguishment | (11,940,493) | |
Realized loss on sale of digital currencies | 152,485 | |
Change in fair value of warrant liability | (1,699,522) | 21,855,723 |
Impairment of intangible assets | 2,475,149 | |
Impairment of goodwill | 228,401 | |
Impairment of mining equipment | 2,222,688 | |
Stock based compensation | 1,425,683 | 1,976,816 |
Amortization of debt discount | 2,290,028 | 3,561,109 |
Warrants exchanged for common stock | 980,400 | |
Bad debt allowance | 6,826 | |
Change in fair value of Clouding earnout | (1,482,012) | |
Break-up fee - issuance of shares to GBV | 2,850,000 | |
Non-controlling interest | 163,848 | |
Litigation liability | 2,150,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivables | 88,243 | |
Digital currencies | (1,495,402) | |
Litigation liability | (2,150,000) | |
Prepaid expenses and other assets | (371,151) | 335,194 |
Other non current assets | 201,203 | |
Accounts payable and accrued expenses | (725,594) | (1,253,875) |
Net cash used in operating activities | (8,238,571) | (10,808,483) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of digital currencies | 1,342,917 | |
Acquisition of patents | (250,000) | |
Purchase of property and equipment | (5,251,719) | (7,788) |
Net cash used in investing activities | (4,158,802) | (7,788) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payment on note payable | (1,273,000) | |
Proceeds received on issuance of notes payable | 5,488,693 | |
Proceeds received on private placement | 16,074,416 | |
Proceeds from warrant purchase | 17,410 | |
Proceeds received on exercise of warrants | 141,100 | |
Net cash provided by financing activities | 20,448,619 | |
Effect of foreign exchange rate changes | 15 | 317,867 |
Net (decrease) increase in cash and cash equivalents | (12,397,358) | 9,950,215 |
Cash and cash equivalents - beginning of period | 14,948,529 | 4,998,314 |
Cash and cash equivalents - end of period | 2,551,171 | 14,948,529 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest expense | 1,543,925 | |
Cash paid during the year for income taxes | 5,459 | |
Supplemental schedule of non-cash investing and financing activities: | ||
Issuance of Series D Preferred Stock | 678,713 | |
Conversion of Series B Preferred Stock to common stock | 20 | |
Conversion of Series D Preferred Stock to common stock | 63 | |
Conversion of Series E Preferred Stock to common stock | 551 | |
Warrants converted to Series E preferred stock | 21,525,410 | |
Warrants reclassed to equity | 18,187 | |
Common stock issued for acquisition of patents | 960,000 | |
Common stock issued for note conversion | 3,055,588 | 1,549,803 |
Restricted stock issuance | 44 | 78 |
Beneficial conversion feature | 4,017,729 | |
Common stock issued for account payable | 331,739 | |
Warrants exercised into common shares | $ 55,791 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Marathon Patent Group, Inc. (the “Company”) was incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. On December 7, 2011, the Company changed its name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium minerals business. In June 2012, the Company discontinued the minerals business and began to invest in real estate properties in Southern California. In October 2012, the Company discontinued its real estate business when the former CEO joined the firm and the Company commenced IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. On November 1, 2017, the Company entered into a merger agreement with Global Bit Ventures, Inc. (“GBV”), which is focused on mining digital assets. The Company purchased cryptocurrency mining machines and established a data center in Canada to mine digital assets. As part of the cancellation of certain indebtedness owed to Fortress Investment Group, LLC, we transferred ownership of various patents, including U.S. Patent No. 7,177,798, commonly referred to as “Patent 798.” Fortress created a new Special Purpose Entity, CF Dynamic Advances LLC, in which we own a 30% interest. There was no activity in 2018. On January 1, 2018, our Board adopted the 2018 Equity Incentive Plan, subsequently approved by the stockholders on March 7, 2018, pursuant to which up to 10,000,000 shares of common stock, stock options, restricted stock, preferred stock, stock-based awards and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On June 28, 2018, the Board has determined that it is in the best interests of the Company and its shareholders to allow the Amended Merger Agreement with GBV to expire on its current termination date of June 28, 2018 without further negotiation or extension. The Board approved to issue 3,000,000 shares of the Company’s common stock to GBV as a termination fee for the Company canceling the proposed merger between the two companies. All share and per share values for all periods presented in the accompanying consolidated financial statements have been retroactively adjusted to reflect the 1:4 Reverse Split which occurred on October 30, 2017. Going Concern The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, the Company had an accumulated deficit of approximately $102.1 million at December 31, 2018, a net loss of approximately $12.8 million and approximately $8.2 million net cash used in operating activities for the year ended December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Based on the Company’s current revenue and profit projections, management is uncertain that the Company’s existing cash will be sufficient to fund its operations through at least the next twelve months from the issuance date of the financial statements, raising substantial doubt regarding the Company’s ability to continue operating as a going concern. If we do not meet our revenue and profit projections or the business climate turns negative, then we will need to: ● raise additional funds to support the Company’s operations; provided, however, there is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all. If the Company raises additional funds by issuing securities, existing stockholders may be diluted; and ● review strategic alternatives. If adequate funds are not available, we may be required to curtail our operations or other business activities or obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to certain technologies or potential markets. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company’s subsidiaries, Marathon Crypto Mining, Inc., Crypto Currency Patent Holding Company and Soems Acquisition Corp.. For consolidated entities where the Company owns less than 100% of the subsidiary, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. The Company’s consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the useful lives of patent assets, the assumptions used to calculate fair value of warrants and options granted, goodwill impairment, realization of long-lived assets, deferred income taxes, unrealized tax positions and business combination accounting. Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. The Company’s accounts at this institution are insured, up to $250,000, by the Federal Deposit Insurance Corporation (“FDIC”). For the years ended December 31, 2018 and 2017, the Company’s bank balances exceeded the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. As of December 31, 2018 and 2017, the Company did not have any cash equivalents. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group (“CODM”) is composed of the chief executive officer and chief financial officer. The Company currently operates in the Digital Currency Blockchain segment. The Company’s Crypto-currency Machines are located in Canada and the Company has employees only in the United States and views its operations as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance. Digital Currencies 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. Subsequent reversal of impairment losses is not permitted. The following table presents the activities of the digital currencies for the year ended December 31, 2018: Digital currencies at December 31, 2017 $ - Additions of digital currencies 1,495,402 Realized loss on sale of digital currencies (152,485 ) Sale of digital currencies (1,342,917 ) Digital Currencies at December 31, 2018 $ - Crypto-currency Machines Management has assessed the basis of depreciation of the Company’s Crypto-currency Machines used to verify digital currency transactions and generate digital currencies and believes they should be depreciated over a 2 year period. The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following: ● the complexity of the transaction verification process which is driven by the algorithms contained within the bitcoin open source software; ● the general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as hashing capacity which is measured in Petahash units); and ● technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs i.e. the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and a lower cost of purchase. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Management has determined that a two year diminishing value best reflects the current expected useful life of transaction verification servers. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period either as a result of changes in circumstances or through the availability of greater quantities of data then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets. Intangible Assets Intangible assets include the Crypto Currency Patent with original estimated useful live of 17 years. The Company amortize the cost of the intangible assets over their estimated useful lives on a straight-line basis. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company will perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company will measure any impairment by comparing the fair value of the asset or asset group to its carrying value. During the year ended December 31, 2018, there is no impairment to the intangible assets. Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Providing computing power in crypto asset transaction verification services is an output of the Company’s ordinary activities. The provision of computing power is the only performance obligation in the Company’s contracts with pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the related digital currency at the time of receipt. Expenses associated with running the digital currency mining business, such as rent and electricity cost are also recorded as cost of revenues. Depreciation on digital currency mining equipment is recorded as a component of costs and expenses. Related Party Transactions Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. On October 11, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension, with Merrick Okamoto, pursuant to which Mr. Okamoto will serve as the Executive Chairman and Chief Executive Officer of the Company. Pursuant to the terms of the Agreement, Mr. Okamoto shall receive a base salary at an annual base salary of $350,000 (subject to annual 3% cost of living increase) and an annual bonus up to 100% of base salary as determined by the Compensation Committee or the Board. As further consideration for Mr. Okamoto’s services, the Company agreed to issue Mr. Okamoto 10-year stock options to purchase 5,000,000 shares of Common Stock, with a strike price of $0.58 per share, vesting 50 % on the date of grant and 25% on each 6 months anniversary of the date of grant. As of December 31, 2018 no bonus has been accrued. On October 15, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension, with David Lieberman, pursuant to which Mr. Lieberman will serve as the Chief Financial Officer of the Company. Pursuant to the terms of the Lieberman Agreement, Mr. Lieberman shall receive a base salary at an annual base salary of $180,000 (subject to annual 3% cost of living increase) and an annual bonus up to 100% of base salary as determined by the Compensation Committee or the Board. As further consideration for Mr. Lieberman’s services, the Company agreed to issue Mr. Lieberman 10-year stock options to purchase 200,000 shares of Common Stock, with a strike price of $0.58 per share, vesting 50% on the date of grant and 25% on each 6 months anniversary of the date of grant. As of December 31, 2018 no bonus has been accrued. At December 31, 2018 and 2017, the Company has fully reserved a Note Receivable on the Balance Sheets which consists of an uncollateralized note receivable in the amount of $588,864 from nXn, an entity owned or controlled or previously owned or controlled by Erich Spangenberg, the Company’s former director. The note receivable does not carry interest and was repayable to the Company at the earlier of March 31, 2018 or based upon certain milestones. The note receivable was not repaid by nXn and the Company took a full reserve for bad debt as of December 31, 2018 and 2017. At December 31, 2018 and 2017, the Company owed Doug Croxall (former CEO), $0 and $124,297, respectively (comprised of $187,500 bonus payable and $63,203 advance). Fair Value of Financial Instruments The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable, and accrued expenses, approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying value of notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2018 and December 31, 2017, respectively: Fair value measured at December 31, 2018 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083 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 Warrant liability $ 1,794,396 $ - $ - $ 1,794,396 There were no transfers between Level 1, 2 or 3 during the year ended December 31, 2018. At December 31, 2018, the Company had an outstanding warrant liability in the amount of $39,083 associated with warrants that were issued in January 2017 and warrants issued related to the Convertible Notes issued in August and September of 2017. The following table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs for the year ended December 31, 2018. FV of warrant liabilities Fair value Outstanding as of December 31, 2016 $ - Issued 2,600,930 Equity warrant purchase (1,118,660 ) Exercised (13,280 ) Exchanged to Series E (21,525,410 ) Change to equity (4,907 ) Change in fair value of warrants 21,855,723 Outstanding as of December 31, 2017 1,794,396 Exercised (55,791 ) Change in fair value of warrants (1,699,522 ) Outstanding as of December 31, 2018 $ 39,083 Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of the ASC 740-10 related to Accounting for Uncertain Income Tax Position. When tax returns are filed, it is more likely than not that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is most likely that not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions will more likely than not be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. Basic and Diluted Net Loss per Share Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2018 and 2017 are as follows: As of December 31, 2018 2017 Warrants to purchase common stock 728,764 773,966 Options to purchase common stock 5,866,079 448,772 Preferred stock to exchange common stock - 5,511,701 Convertible notes to exchange common stock 1,248,882 3,503,948 Total 7,843,725 10,238,387 The following table sets forth the computation of basic and diluted loss per share: For the year ended December 31, 2018 2017 Net loss attributable to common shareholders $ (12,814,324 ) $ (31,333,569 ) Denominator: Weighted average common shares - basic and diluted 21,263,774 6,522,649 Loss per common share - basic and diluted $ (0.60 ) $ (4.80 ) Impairment of Long-lived Assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Based on its reviews, management determined that its crypto-currency machines were impaired by a total of $2,222,688 based upon an assessment as of December 31, 2018, including consideration of the decline in bitcoin values which occurred commencing in late December 2017 and into 2018. Stock-Based Compensation The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company remeasures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. We are evaluating the impact of this guidance on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815) In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, Leases Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Patent Purchases
Patent Purchases | 12 Months Ended |
Dec. 31, 2018 | |
Patent Purchases | |
Patent Purchases | NOTE 3 – PATENT PURCHASES On January 11, 2018, Marathon Patent Group, Inc. (the “Company”) entered into a Patent Rights Purchase and Assignment Agreement (the “Agreement”), with XpresSpa Group, Inc., a Delaware Corporation (the “Seller”) and Crypto Currency Patent Holdings Company LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“CCPHC”). Pursuant to the Agreement, the Seller agreed to irrevocably assign, sell, grant, transfer and convey, and CCPHC agreed to accept and acquire, the exclusive right, title and interest in and to certain patents owned by the Seller (“Assigned IP”), subject to the terms and conditions set forth in the Agreement. As consideration for the Assigned IP, the Seller shall receive (i) payment in the amount of $250,000 from CCPHC and (ii) 250,000 shares of common stock of the Company, par value $0.0001 per share (the “Consideration Shares”), with piggyback registration rights. The Consideration Shares shall be issued by the Company to the Seller, subject to the terms and conditions of a lock-up agreement. The fair value of the 250,000 shares was $960,000 and was based upon the closing price of the Company’s common stock. As a condition to the Agreement, the Seller agreed to enter into a lock-up agreement with the Company, which lock-up agreement is included as an exhibit to the Agreement (the “Lock-up Agreement”). Pursuant to the Lock-up Agreement, the Seller shall not directly or indirectly offer, sell, pledge or transfer, or otherwise dispose of, the Consideration Shares for a period of 180 days commencing on January 11, 2018 and ending on July 11, 2018; provided, however, upon the effective date of the registration for resale of the Consideration Shares, and on each day thereafter, one twentieth (1/20) of the Consideration Shares shall be released from the restrictions contained in the Lock-up Agreement and may be freely sold, transferred, traded or otherwise disposed of. Notwithstanding the foregoing, in the event that the Consideration Shares, in whole or in part, are not registered for resale on the 6-month anniversary of the date of issuance of the Consideration Shares (“Six-Month Date”), the holders thereof may sell, transfer, trade or otherwise dispose of one twentieth (1/20) of the Consideration Shares on the Six-Month Date and on each day thereafter. In addition, the Company agreed to issue 25,000 shares of the Company’s common stock to Andrew Kennedy Lang, one of the named inventors of the patents, in exchange for consulting services, and 50,000 shares of the Company’s common stock to another individual in exchange for consulting services, in connection with the acquisition of the Assigned IP. The fair value of these shares was $278,750 and was based upon the closing price of the Company’s common stock on date of agreement. The Company recorded the fair value of these shares as a component of compensation and related taxes expense. |
Digital Asset Mining
Digital Asset Mining | 12 Months Ended |
Dec. 31, 2018 | |
Digital Asset Mining | |
Digital Asset Mining | NOTE 4 – DIGITIAL ASSET MINING On February 7, 2018, Marathon Crypto Mining, Inc. (“MCM”), a Nevada corporation and wholly owned subsidiary of the Company, entered into an agreement to acquire 1,400 Bitmain’s Antminer S9 miners (“Antminer S9s”). The purchase price was $4,557,072. The Company also paid installation costs of $694,647 (total paid and capitalized was $5,251,719). The Company will depreciate the Antminer S9’s and related installation costs over a two-year period. Depreciation for the year ended December 31, 2018 was $2,003,696 million. During the year ended December 31, 2018, the Company recorded a $2,222,688 charge for the impairment of the mining equipment. On February 12, 2018, in connection with the intended mining operations of MCM, the Company assumed a lease contract dated November 11, 2017 (the “Lease Agreement”) by and between 9349-0001 Quebec Inc. (the “Lessor”) and Blocespace Inc., formerly known as Cryptoespace Inc. (the “Lessee”). Pursuant to the Lease Agreement, among other things, the Lessee leases a building of 26,700 square feet (the “Property”) in Quebec, Canada, for an initial term of five (5) years (the “Term”), commencing on December 1, 2017 and terminating on November 30, 2022. The Lessee shall pay a monthly rent of $10,013 Canadian Dollars (“CAD”) plus tax, or an annual rent of $120,150 CAD plus tax (“Yearly Rent”). At the signing of the Lease Agreement, the Lessee paid the Lessor a deposit equal to the Yearly Rent which amount will be dispersed during the Term as set forth in the Lease Agreement. Lease expense for the year ended December 31, 2018 was $88,043. The Lessee assigned the Lease Agreement to MCM pursuant to an Assignment and Assumption Agreement (the “Assignment”) by and between the Company and the Lessee’s parent company, Bloctechnologies Canada Inc. Subject to the terms and conditions of the Assignment, MCM agreed to observe all the covenants and conditions of the Lease Agreement, including the payment of all rents due. The Company shall be responsible for all necessary capital expenditures in connection with capital improvements to the Property to set up MCM’s mining operations. The components of property, equipment and intangible assets as of December 31, 2018 and 2017 are: Useful life (Years) December 31, 2018 December 31, 2017 Website 7 $ 121,787 $ 121,787 Mining equipment 2 3,029,031 - Mining patent 17 1,210,000 - Gross property, equipment and intangible assets 4,360,818 121,787 Less: Accumulated depreciation and amortization (2,181,488 ) (111,776 ) Property, equipment and intangible assets, net $ 2,179,330 $ 10,011 The Company’s depreciation expense for the years ended December 31, 2018 and 2017 were $2.0 million and $0, and amortization expense were $66,017 and $24,802 for the year ended December 31, 2018 and 2017, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 5 - STOCKHOLDERS’ EQUITY Series B Convertible Preferred Stock As of December 31, 2018 and 2017, there was no share of Series B Convertible Preferred Stock outstanding. Series E Preferred Stock During the year ended December 31, 2018, 5,513 shares of the Series E Convertible Preferred Stock had been converted to the Company’s Common Stock and there was no Series E Convertible Preferred Stock outstanding as of December 31, 2018 and 5,513 shares of Series E Convertible Preferred Stock outstanding as of December 31, 2017, respectively. Common Stock During the year ended December 31, 2018, the Company issued 3,819,485 shares of Common Stock to Note Holders in connection with debt conversions, 218,400 shares of Common Stock were issued to Board members for their services, 5,511,543 shares of Common Stock with respect to the conversion of Series E Convertible Preferred Stock, 17,731 shares of Common Stock in connection with the exercise of a warrant, 250,000 shares of Common Stock issued pursuant to a patent purchase, 225,000 shares of Common Stock issued to consultants and 3,000,000 to GBV as a termination fee for canceling the merger agreement. The termination fee was valued based upon the closing stock price as of June 28, 2018 or $0.95 per common share. During the year ended December 31, 2017, the Company issued 238,750 shares of Common Stock to vendors to settle partial or total payment of outstanding invoices, 1,807,565 shares of Common Stock were issued to Note Holders in connection with debt conversions, 1,631,699 shares of Common Stock were issued to consultants and employees for their services, 628,438 shares of Common Stock with respect to the conversion of Series D Convertible Preferred Stock, 195,500 shares of Common Stock with respect to the conversion of Series B Convertible Preferred Stock, 598,500 shares of Common Stock in connection with the exercise of a warrant. Common Stock Warrants As of December 31, 2018, the Company had warrants outstanding to purchase 728,764 shares of Common Stock with a weighted average remaining life of 3.1 years. A summary of the status of the Company’s outstanding stock warrants and changes during year ended is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2017 773,966 $ 5.99 4.1 Expired (1,202 ) 15.60 - Exercised (44,000 ) 1.20 - Outstanding as of December 31, 2018 728,764 $ 6.26 3.1 Warrants exercisable as of December 31, 2018 728,764 $ 6.26 3.1 As of December 31, 2017, the Company had warrants outstanding to purchase 773,966 shares of Common Stock with a weighted average remaining life of 4.1 years. A summary of the status of the Company’s outstanding stock warrants and changes during year ended is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2016 116,519 $ 15.18 3.2 Granted 7,941,374 1.70 5.0 Expired (37,177 ) 15.60 - Exercised (7,246,750 ) 1.38 - Outstanding as of December 31, 2017 773,966 $ 5.99 4.1 Warrants exercisable as of December 31, 2017 773,966 $ 5.99 4.1 Common Stock Options On October 12, 2018, the Company granted its executive officers and board members 5,450,000 option to purchase 5,450,000 shares of the Company’s common stock, with an exercise price of $0.58 per share, vesting 50 % on the date of grant and 25% on each 6 months anniversary of the date of grant. The options were valued based on the Black-Scholes model, using the strike of $0.58 per share, an average expected term of 5.19 years, volatility of 39.35% based on the average volatility of comparable companies over the comparable prior period. The grant date fair value of stock options granted to employees during the years ended December 31, 2018 and 2017 were $1,377,678 and $0, respectively. Estimated future stock-based compensation expense relating to unvested stock options is approximately $0.5 million as of December 31, 2018 and will be amortized over the remaining 1.0 years. A summary of the stock options as of December 31, 2018 and changes during the period are presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2017 448,771 $ 15.50 6.23 Granted 5,450,000 $ 0.58 9.78 Expired (32,692 ) 10.71 - Outstanding as of December 31, 2018 5,866,079 $ 1.67 9.49 Options vested and expected to vest as of December 31, 2018 5,866,079 $ 1.67 9.49 Options vested and exercisable as of December 31, 2018 3,132,051 $ 2.58 9.25 A summary of the stock options as of December 31, 2017 and changes during the period are presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2016 879,034 $ 14.34 6.79 Forfeited (430,263 ) 13.13 - Outstanding as of December 31, 2017 448,771 $ 15.50 6.23 Options vested and expected to vest as of December 31, 2017 448,771 $ 15.50 6.23 Options vested and exercisable as of December 31, 2017 433,667 $ 15.53 6.16 |
Debt, Commitments and Contingen
Debt, Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Debt, Commitments and Contingencies | NOTE 6 - DEBT, COMMITMENTS AND CONTINGENCIES Debt consists of the following: Maturity Interest December 31, December 31, Date Rate 2018 2017 Convertible Note 4/30/2019 5 % $ 999,106 $ 4,053,948 Less: debt discount and 4/30/2019 - (2,290,028 ) Total Convertible notes, net of discount $ 999,106 $ 1,763,920 Total $ 999,106 $ 1,763,920 Less: current portion (999,106 ) (1,763,920 ) Total, net of current portion $ - $ - On August 14, 2017, the Company entered into a unit purchase agreement (the “Unit Purchase Agreement”) with certain accredited investors providing for the sale of up to $5,500,000 of 5% secured convertible promissory notes (the “Convertible Notes”), which are convertible into shares of the Corporation’s common stock, and the issuance of warrants to purchase 6,875,000 shares of the Company’s Common Stock (the “Warrants”). The Convertible Notes are convertible into shares of the Company’s Common Stock at a price equal to the lesser of (i) $0.80 per share or (ii) the closing bid price of the Company’s common stock on the day prior to conversion of a Convertible Note; provided that such conversion price may not be less than $0.40 per share. The Convertible Notes contain “blocker” provisions which state that the holder may not initiate any conversion that would result in the holder and its affiliates owning above 4.99% of the issued and outstanding stock of the Company upon effecting the conversion. The holder may increase this limitation with 61 days’ prior notice, but in no case, may a conversion be effected if it would result in the holder and affiliates owning more than 9.9% of the issued and outstanding stock of the Company upon completion of the conversion. During the year ended December 31, 2018, the amortization of debt discount was $2,290,028 million, and $3,561,109 for the year ended December 31, 2017, respectively. Office Lease Effective June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month to month basis. The monthly rent is $1,907. A security deposit of $3,815 has been paid. Legal Proceedings Feinberg Litigation On March 27, 2018, Jeffrey Feinberg, purportedly joined by the Jeffrey L. Feinberg Personal Trust and the Jeffrey L. Feinberg Family Trust, filed a complaint against the Company and certain of its former officers and directors. The complaint was filed in the Supreme Court of the State of New York, County of New York. The plaintiffs purported to state claims under Sections 11, 12(a)(2) and 15 of the federal Securities Act of 1933 and common law claims for “actual fraud and fraudulent concealment,” constructive fraud, and negligent misrepresentation, seeking unspecified money damages (including punitive damages), as well as costs and attorneys’ fees, and equitable or injunctive relief. On June 15, 2018, the defendants filed a motion to dismiss all claims asserted in the complaint and, on July 27, 2018, the plaintiffs filed an opposition to that motion. The court heard argument on the motion and, on January 15, 2019, the court granted the motion to dismiss, allowing 30 days for the filing of an amended complaint. On February 15, 2019, Jeffrey Feinberg, individually and as trustee of the Jeffrey L. Feinberg Personal Trust, and Terrence K. Ankner, as trustee of the Jeffrey L. Feinberg Family Trust, filed an amended complaint that purports to state the same claims and seeks the same relief sought in the original complaint. Defendants have not yet responded to the amended complaint. Ramirez Litigation On July 20, 2018, Tony Ramirez filed a complaint against the Company and certain of its former directors. The complaint was filed in the United States District Court for the Central District of California. Mr. Ramirez alleged that he was a shareholder of the Company and purported to assert a single claim under Section 14(a) of the Securities and Exchange Act of 1934 and SEC Rule 14a-9 promulgated thereunder. The parties entered into a “Settlement Agreement and Mutual Release” and the case was voluntarily dismissed with prejudice on December 17, 2018. Amazon Litigation As part of the cancellation of certain indebtedness owed to Fortress Investment Group, LLC, we transferred ownership of various patents, including U.S. Patent No. 7,177,798, commonly referred to as “Patent 798.” Fortress created a new Special Purpose Entity, CF Dynamic Advances LLC, in which we own a 30% interest. In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc. in the United States District Court for the Northern District of New York, which alleges, among other things, that “Alexa Voice Software and Alexa enabled devices” infringe U.S. Patent No. 7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint seeks an injunction, monetary damages, an ongoing royalty, pre- and post-judgment interest, attorneys’ fees, and costs. If plaintiffs are successful, and if the recoveries or settlement proceeds are sufficient following litigation expenses and recovery of amounts due in connection with the cancelled loan, the special purpose entity could be entitled to a portion of the net proceeds. There can be no assurance that the plaintiff will be successful or that any recoveries will exceed amounts due under the debt settlement arrangements or that our 30% interest in the special purpose entity will have any value even if the plaintiffs are successful in their case against Amazon. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 7 - INCOME TAXES The Company accounts for income taxes under ASC Topic 740: Income Taxes, which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The table below summarizes the differences between the Companies’ effective tax rate and the statutory federal rate as follows for the years ended December 31, 2018 and 2017: 2018 2017 Computed “expected” tax expense (benefit) (21.00 )% (34.00 )% State income taxes - % (7.99 )% Permanent differences - % 1.33 % Change in federal rate - % 28.52 % Timing differences - % - % Change in valuation allowance 21.00 % 12.10 % Effective tax rate - % (0.33 )% The Company has a deferred tax asset, which is summarized as follows at December 31: 2018 2017 Deferred tax assets: Total deferred tax assets $ 22,907,783 $ 21,119,444 Total deferred tax liabilities - - Less: valuation allowance (22,907,783 ) (21,119,444 ) Net deferred tax asset $ - $ 57,349 The Company does not have any taxable income in carryback years in which net operating losses (“NOLs”) can be carried back to. At December 31, 2018, the Company did not have any taxable temporary differences that will reverse and generate taxable income and was still in a cumulative loss position. Based on all the available information, including tax planning strategies and future forecast, the Company does not believe that it is more likely than not that the net deferred tax assets will be realized; therefore, a full valuation allowance has been recorded against its net deferred tax assets. As of December 31, 2018 and 2017, the Company had NOL carry-forwards for federal and state purposes of approximately $11.4 million and $29.9 million, respectively, which will begin to expire in 2033. The utilization of NOL and credit carry-forwards may be limited under the provisions of the Internal Revenue Code (“IRC”) Section 382, as amended, and similar state provisions. IRC Section 382 generally imposes an annual limitation on the amount of NOL carry-forwards that may be used to offset taxable income where a corporation has undergone significant changes in stock ownership. On December 22, 2017, the U.S. federal government enacted the Tax Cuts and Jobs Act, as amended (the “2017 Tax Act”). Management reviewed and incorporated the new tax bill implications in the 2017 financial statements. The main change is the re-measurement of deferred taxes at the new corporate tax rate of 21%, which reduced the Company’s net deferred tax assets, before valuation allowance, by $1.2 million and $9.0 million for the years ended December 2018 and 2017, respectively. Due to full valuation allowance, the change in deferred taxes was fully offset by the change in valuation allowance. As of December 31, 2018 and 2017, the Company has not recorded liability for unrecognized tax benefit. As of December 31, 2018 and 2017 the Company did not increase or decrease penalties or interest in connection with liability for unrecognized tax benefit. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company files U.S. and state income tax returns with varying statutes of limitations. The 2014 through 2017 tax years generally remain subject to examination by federal and state tax authorities. In 2018, the company dissolved those subsidiaries that were required to file tax returns that had no tax due for 2018. Marathon Patent Group, Inc. moved its headquarters to Las Vegas, Nevada on June 1, 2018 so it is required to file a final tax return with the state of California for 2018. The company believes there will be no tax due the state of California other than the $800 Franchise fee all companies are required to file. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 8 – Subsequent Events The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued and has concluded that no such events or transactions took place that would require disclosure herein. On March 11, 2019, the board of directors approved a reverse stock split of the Company’s Common Stock by a ratio 4-for-1 upon the filing and effectiveness, which shall occur on April 8, 2019 pursuant to the Nevada Revised Statutes of this amendment of the Corporation’s Amended and Restated Articles of Incorporations. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company’s subsidiaries, Marathon Crypto Mining, Inc., Crypto Currency Patent Holding Company and Soems Acquisition Corp.. For consolidated entities where the Company owns less than 100% of the subsidiary, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties. The Company’s consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the useful lives of patent assets, the assumptions used to calculate fair value of warrants and options granted, goodwill impairment, realization of long-lived assets, deferred income taxes, unrealized tax positions and business combination accounting. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. The Company’s accounts at this institution are insured, up to $250,000, by the Federal Deposit Insurance Corporation (“FDIC”). For the years ended December 31, 2018 and 2017, the Company’s bank balances exceeded the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. As of December 31, 2018 and 2017, the Company did not have any cash equivalents. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group (“CODM”) is composed of the chief executive officer and chief financial officer. The Company currently operates in the Digital Currency Blockchain segment. The Company’s Crypto-currency Machines are located in Canada and the Company has employees only in the United States and views its operations as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance. |
Digital Currencies | Digital Currencies 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. Subsequent reversal of impairment losses is not permitted. The following table presents the activities of the digital currencies for the year ended December 31, 2018: Digital currencies at December 31, 2017 $ - Additions of digital currencies 1,495,402 Realized loss on sale of digital currencies (152,485 ) Sale of digital currencies (1,342,917 ) Digital Currencies at December 31, 2018 $ - |
Crypto-currency Machines | Crypto-currency Machines Management has assessed the basis of depreciation of the Company’s Crypto-currency Machines used to verify digital currency transactions and generate digital currencies and believes they should be depreciated over a 2 year period. The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following: ● the complexity of the transaction verification process which is driven by the algorithms contained within the bitcoin open source software; ● the general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as hashing capacity which is measured in Petahash units); and ● technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs i.e. the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and a lower cost of purchase. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. Management has determined that a two year diminishing value best reflects the current expected useful life of transaction verification servers. This assessment takes into consideration the availability of historical data and management’s expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period either as a result of changes in circumstances or through the availability of greater quantities of data then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets. |
Intangible Assets | Intangible Assets Intangible assets include the Crypto Currency Patent with original estimated useful live of 17 years. The Company amortize the cost of the intangible assets over their estimated useful lives on a straight-line basis. Costs incurred to acquire patents, including legal costs, are also capitalized as long-lived assets and amortized on a straight-line basis with the associated patent. The Company monitors the carrying value of long-lived assets for potential impairment and tests the recoverability of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If a change in circumstance occurs, the Company will perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, the Company will determine whether impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, the Company will measure any impairment by comparing the fair value of the asset or asset group to its carrying value. During the year ended December 31, 2018, there is no impairment to the intangible assets. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Providing computing power in crypto asset transaction verification services is an output of the Company’s ordinary activities. The provision of computing power is the only performance obligation in the Company’s contracts with pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the related digital currency at the time of receipt. Expenses associated with running the digital currency mining business, such as rent and electricity cost are also recorded as cost of revenues. Depreciation on digital currency mining equipment is recorded as a component of costs and expenses. |
Related Party Transactions | Related Party Transactions Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. On October 11, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension, with Merrick Okamoto, pursuant to which Mr. Okamoto will serve as the Executive Chairman and Chief Executive Officer of the Company. Pursuant to the terms of the Agreement, Mr. Okamoto shall receive a base salary at an annual base salary of $350,000 (subject to annual 3% cost of living increase) and an annual bonus up to 100% of base salary as determined by the Compensation Committee or the Board. As further consideration for Mr. Okamoto’s services, the Company agreed to issue Mr. Okamoto 10-year stock options to purchase 5,000,000 shares of Common Stock, with a strike price of $0.58 per share, vesting 50 % on the date of grant and 25% on each 6 months anniversary of the date of grant. As of December 31, 2018 no bonus has been accrued. On October 15, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension, with David Lieberman, pursuant to which Mr. Lieberman will serve as the Chief Financial Officer of the Company. Pursuant to the terms of the Lieberman Agreement, Mr. Lieberman shall receive a base salary at an annual base salary of $180,000 (subject to annual 3% cost of living increase) and an annual bonus up to 100% of base salary as determined by the Compensation Committee or the Board. As further consideration for Mr. Lieberman’s services, the Company agreed to issue Mr. Lieberman 10-year stock options to purchase 200,000 shares of Common Stock, with a strike price of $0.58 per share, vesting 50% on the date of grant and 25% on each 6 months anniversary of the date of grant. As of December 31, 2018 no bonus has been accrued. At December 31, 2018 and 2017, the Company has fully reserved a Note Receivable on the Balance Sheets which consists of an uncollateralized note receivable in the amount of $588,864 from nXn, an entity owned or controlled or previously owned or controlled by Erich Spangenberg, the Company’s former director. The note receivable does not carry interest and was repayable to the Company at the earlier of March 31, 2018 or based upon certain milestones. The note receivable was not repaid by nXn and the Company took a full reserve for bad debt as of December 31, 2018 and 2017. At December 31, 2018 and 2017, the Company owed Doug Croxall (former CEO), $0 and $124,297, respectively (comprised of $187,500 bonus payable and $63,203 advance). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable, and accrued expenses, approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying value of notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2018 and December 31, 2017, respectively: Fair value measured at December 31, 2018 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083 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 Warrant liability $ 1,794,396 $ - $ - $ 1,794,396 There were no transfers between Level 1, 2 or 3 during the year ended December 31, 2018. At December 31, 2018, the Company had an outstanding warrant liability in the amount of $39,083 associated with warrants that were issued in January 2017 and warrants issued related to the Convertible Notes issued in August and September of 2017. The following table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs for the year ended December 31, 2018. FV of warrant liabilities Fair value Outstanding as of December 31, 2016 $ - Issued 2,600,930 Equity warrant purchase (1,118,660 ) Exercised (13,280 ) Exchanged to Series E (21,525,410 ) Change to equity (4,907 ) Change in fair value of warrants 21,855,723 Outstanding as of December 31, 2017 1,794,396 Exercised (55,791 ) Change in fair value of warrants (1,699,522 ) Outstanding as of December 31, 2018 $ 39,083 |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of the ASC 740-10 related to Accounting for Uncertain Income Tax Position. When tax returns are filed, it is more likely than not that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is most likely that not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions will more likely than not be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss per Share Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2018 and 2017 are as follows: As of December 31, 2018 2017 Warrants to purchase common stock 728,764 773,966 Options to purchase common stock 5,866,079 448,772 Preferred stock to exchange common stock - 5,511,701 Convertible notes to exchange common stock 1,248,882 3,503,948 Total 7,843,725 10,238,387 The following table sets forth the computation of basic and diluted loss per share: For the year ended December 31, 2018 2017 Net loss attributable to common shareholders $ (12,814,324 ) $ (31,333,569 ) Denominator: Weighted average common shares - basic and diluted 21,263,774 6,522,649 Loss per common share - basic and diluted $ (0.60 ) $ (4.80 ) |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Based on its reviews, management determined that its crypto-currency machines were impaired by a total of $2,222,688 based upon an assessment as of December 31, 2018, including consideration of the decline in bitcoin values which occurred commencing in late December 2017 and into 2018. |
Stock-based Compensation | Stock-Based Compensation The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates. For stock-based compensation awards to non-employees, the Company remeasures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. We are evaluating the impact of this guidance on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815) In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, Leases Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Change in Fair Value of Assets Measured Level 1 | The following table presents the activities of the digital currencies for the year ended December 31, 2018: Digital currencies at December 31, 2017 $ - Additions of digital currencies 1,495,402 Realized loss on sale of digital currencies (152,485 ) Sale of digital currencies (1,342,917 ) Digital Currencies at December 31, 2018 $ - |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2018 and December 31, 2017, respectively: Fair value measured at December 31, 2018 Total carrying value at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2018 (Level 1) (Level 2) (Level 3) Liabilities Warrant liability $ 39,083 $ - $ - $ 39,083 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 Warrant liability $ 1,794,396 $ - $ - $ 1,794,396 |
Schedule of Fair Value of Warrant Liabilities | FV of warrant liabilities Fair value Outstanding as of December 31, 2016 $ - Issued 2,600,930 Equity warrant purchase (1,118,660 ) Exercised (13,280 ) Exchanged to Series E (21,525,410 ) Change to equity (4,907 ) Change in fair value of warrants 21,855,723 Outstanding as of December 31, 2017 1,794,396 Exercised (55,791 ) Change in fair value of warrants (1,699,522 ) Outstanding as of December 31, 2018 $ 39,083 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2018 and 2017 are as follows: As of December 31, 2018 2017 Warrants to purchase common stock 728,764 773,966 Options to purchase common stock 5,866,079 448,772 Preferred stock to exchange common stock - 5,511,701 Convertible notes to exchange common stock 1,248,882 3,503,948 Total 7,843,725 10,238,387 |
Schedule of Computation of Basic and Diluted Loss Per Share | The following table sets forth the computation of basic and diluted loss per share: For the year ended December 31, 2018 2017 Net loss attributable to common shareholders $ (12,814,324 ) $ (31,333,569 ) Denominator: Weighted average common shares - basic and diluted 21,263,774 6,522,649 Loss per common share - basic and diluted $ (0.60 ) $ (4.80 ) |
Digital Asset Mining (Tables)
Digital Asset Mining (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Components of Property, Equipment and Intangible Assets | The components of property, equipment and intangible assets as of December 31, 2018 and 2017 are: Useful life (Years) December 31, 2018 December 31, 2017 Website 7 $ 121,787 $ 121,787 Mining equipment 2 3,029,031 - Mining patent 17 1,210,000 - Gross property, equipment and intangible assets 4,360,818 121,787 Less: Accumulated depreciation and amortization (2,181,488 ) (111,776 ) Property, equipment and intangible assets, net $ 2,179,330 $ 10,011 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Company's Outstanding Stock Warrants and Changes During the Period | A summary of the status of the Company’s outstanding stock warrants and changes during year ended is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2017 773,966 $ 5.99 4.1 Expired (1,202 ) 15.60 - Exercised (44,000 ) 1.20 - Outstanding as of December 31, 2018 728,764 $ 6.26 3.1 Warrants exercisable as of December 31, 2018 728,764 $ 6.26 3.1 A summary of the status of the Company’s outstanding stock warrants and changes during year ended is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2016 116,519 $ 15.18 3.2 Granted 7,941,374 1.70 5.0 Expired (37,177 ) 15.60 - Exercised (7,246,750 ) 1.38 - Outstanding as of December 31, 2017 773,966 $ 5.99 4.1 Warrants exercisable as of December 31, 2017 773,966 $ 5.99 4.1 |
Summary of Stock Options and Changes During the Period | A summary of the stock options as of December 31, 2018 and changes during the period are presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2017 448,771 $ 15.50 6.23 Granted 5,450,000 $ 0.58 9.78 Expired (32,692 ) 10.71 - Outstanding as of December 31, 2018 5,866,079 $ 1.67 9.49 Options vested and expected to vest as of December 31, 2018 5,866,079 $ 1.67 9.49 Options vested and exercisable as of December 31, 2018 3,132,051 $ 2.58 9.25 A summary of the stock options as of December 31, 2017 and changes during the period are presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2016 879,034 $ 14.34 6.79 Forfeited (430,263 ) 13.13 - Outstanding as of December 31, 2017 448,771 $ 15.50 6.23 Options vested and expected to vest as of December 31, 2017 448,771 $ 15.50 6.23 Options vested and exercisable as of December 31, 2017 433,667 $ 15.53 6.16 |
Debt, Commitments and Conting_2
Debt, Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following: Maturity Interest December 31, December 31, Date Rate 2018 2017 Convertible Note 4/30/2019 5 % $ 999,106 $ 4,053,948 Less: debt discount and 4/30/2019 - (2,290,028 ) Total Convertible notes, net of discount $ 999,106 $ 1,763,920 Total $ 999,106 $ 1,763,920 Less: current portion (999,106 ) (1,763,920 ) Total, net of current portion $ - $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Differences Between the Company's Effective Tax Rate and the Statutory Federal Rate (as a Percent) | The table below summarizes the differences between the Companies’ effective tax rate and the statutory federal rate as follows for the years ended December 31, 2018 and 2017: 2018 2017 Computed “expected” tax expense (benefit) (21.00 )% (34.00 )% State income taxes - % (7.99 )% Permanent differences - % 1.33 % Change in federal rate - % 28.52 % Timing differences - % - % Change in valuation allowance 21.00 % 12.10 % Effective tax rate - % (0.33 )% |
Schedule of Deferred Tax Assets | The Company has a deferred tax asset, which is summarized as follows at December 31: 2018 2017 Deferred tax assets: Total deferred tax assets $ 22,907,783 $ 21,119,444 Total deferred tax liabilities - - Less: valuation allowance (22,907,783 ) (21,119,444 ) Net deferred tax asset $ - $ 57,349 |
Organization and Description _2
Organization and Description of Business (Details Narrative) - USD ($) | Jun. 28, 2018 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2018 | Nov. 01, 2017 |
Organization And Description Of Business [Line Items] | ||||||
Reverse stock split | 1:4 reverse stock split | |||||
Accumulated deficit | $ (102,090,441) | $ (89,276,117) | ||||
Net loss | (12,814,324) | (31,333,569) | ||||
Net cash used in operating activities | $ (8,238,571) | $ (10,808,483) | ||||
GBV [Member] | ||||||
Organization And Description Of Business [Line Items] | ||||||
Number of shares issued as termination fee | 3,000,000 | 3,000,000 | ||||
2018 Equity Incentive Plan [Member] | Employees, Directors, Consultants, Advisors and Other Service Providers [Member] | ||||||
Organization And Description Of Business [Line Items] | ||||||
Number of shares reserved for issuance | 10,000,000 | |||||
CF Dynamic Advances LLC [Member] | ||||||
Organization And Description Of Business [Line Items] | ||||||
Percentage of ownership interest | 30.00% | 30.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | Oct. 15, 2018USD ($)$ / sharesshares | Oct. 11, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Significant Accounting Policies [Line Items] | |||||
FDIC insured amount | $ 250,000 | ||||
Cash equivalents | |||||
Number of operating segment | Segment | 1 | ||||
Crypto-currency machines depreciation period | 2 years | ||||
Estimated useful life of asset | 17 years | ||||
Impairment of intangible assets | 2,475,149 | ||||
Outstanding warrant liability | 39,083 | 1,794,396 | |||
Impairment of crypto-currency machines | 2,222,688 | ||||
nXn [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Uncollateralized note receivable | 588,864 | 588,864 | |||
Doug Croxall [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Due to related parties | 0 | $ 124,297 | |||
Bonus payable | 187,500 | ||||
Advance from related party debt | 63,203 | ||||
2-Year Employment Agreement [Member] | Merrick Okamoto [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Agreement term description | On October 11, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension. | ||||
Base salary | $ 350,000 | ||||
Cost of annual salary increased, percentage | 3.00% | ||||
Annual bonus percentage | 100.00% | ||||
Stock option term | 10 years | ||||
Option to purchase shares of common stock | shares | 5,000,000 | ||||
Options exercise price per share | $ / shares | $ 0.58 | ||||
Options vesting percentage | 50.00% | ||||
Fair value of options granted percentage | 25.00% | ||||
Vesting term | 6 months | ||||
2-Year Employment Agreement [Member] | David Lieberman [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Agreement term description | On October 15, 2018, the Company entered into a 2-year Employment Agreement, subject to successive 1 year extension. | ||||
Base salary | $ 180,000 | ||||
Cost of annual salary increased, percentage | 3.00% | ||||
Annual bonus percentage | 100.00% | ||||
Stock option term | 10 years | ||||
Option to purchase shares of common stock | shares | 200,000 | ||||
Options exercise price per share | $ / shares | $ 0.58 | ||||
Options vesting percentage | 50.00% | ||||
Fair value of options granted percentage | 25.00% | ||||
Vesting term | 6 months | ||||
Accrued bonus payable |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Change in Fair Value of Assets Measured Level 1 (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Accounting Policies [Abstract] | |
Digital currencies, Beginning balance | |
Additions of digital currencies | 1,495,402 |
Realized loss on sale of digital currencies | (152,485) |
Sale of digital currencies | (1,342,917) |
Digital currencies, Ending balance |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Warrant liability | $ 39,083 | $ 1,794,396 | |
Level 1 [Member] | |||
Warrant liability | |||
Level 2 [Member] | |||
Warrant liability | |||
Level 3 [Member] | |||
Warrant liability | $ 39,083 | $ 1,794,396 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Fair Value of Warrant Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Fair value of warrant outstanding beginning balance | $ 1,794,396 | |
Fair value of warrant, Issued | 2,600,930 | |
Fair value of warrant, Equity warrant purchase | (1,118,660) | |
Fair value of warrant, Exercised | (55,791) | (13,280) |
Fair value of warrant, Exchanged to series E | (21,525,410) | |
Fair value of warrant, Change to equity | (4,907) | |
Change in fair value of warrants | (1,699,522) | 21,855,723 |
Fair value of warrant, Outstanding ending balance | $ 39,083 | $ 1,794,396 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 7,843,725 | 10,238,387 |
Warrants to Purchase Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 728,764 | 773,966 |
Options to Purchase Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 5,866,079 | 448,772 |
Preferred Stock to Exchange Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 5,511,701 | |
Convertible Notes to Exchange Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 1,248,882 | 3,503,948 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Computation of Basic and Diluted Loss Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Net loss | $ (12,814,324) | $ (31,333,569) |
Weighted average common shares - basic and Diluted | 21,263,774 | 6,522,649 |
Loss per common share - basic and diluted | $ (0.60) | $ (4.80) |
Patent Purchases (Details Narra
Patent Purchases (Details Narrative) - USD ($) | Jan. 11, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Number of stock issued for purchase of patent | 250,000 | ||
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Number of shares issued for services | 218,400 | ||
Number of shares issued for services, value | $ 278,750 | ||
Andrew Kennedy Lang [Member] | |||
Number of shares issued for services | 25,000 | ||
Another Individual [Member] | |||
Number of shares issued for services | 50,000 | ||
Patent Rights Purchase and Assignment Agreement [Member] | Delaware Corporation and Crypto Currency Patent Holdings Company LLC [Member] | |||
Consideration paid for purchase of patent | $ 250,000 | ||
Number of stock issued for purchase of patent | 250,000 | ||
Common stock, par value | $ 0.0001 | ||
Number of stock issued for purchase of patent, value | $ 960,000 |
Digital Asset Mining (Details N
Digital Asset Mining (Details Narrative) | Jun. 01, 2018USD ($) | Feb. 12, 2018CAD ($)ft² | Feb. 07, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Purchase price | $ 5,251,719 | ||||
Depreciation | $ 2,003,695 | $ 26,106 | |||
Impairment of mining equipment | 2,222,688 | ||||
Annual rent | $ 1,907 | ||||
Lease Agreement [Member] | |||||
Depreciation | 2,000,000 | 0 | |||
Amortization expense | 66,017 | $ 24,802 | |||
Marathon Crypto Mining, Inc [Member] | |||||
Purchase price | 4,557,072 | ||||
Installation costs | $ 694,647 | ||||
Installation costs period | 2 years | ||||
Depreciation | 2,003,696 | ||||
Impairment of mining equipment | 2,222,688 | ||||
Lease expense | $ 88,043 | ||||
Marathon Crypto Mining, Inc [Member] | Lease Agreement [Member] | |||||
Area of land | ft² | 26,700 | ||||
Lease term | 5 years | ||||
Lease termination date | Nov. 30, 2022 | ||||
Monthly rental payment | $ 10,013 | ||||
Annual rent | $ 120,150 |
Digital Asset Mining - Componen
Digital Asset Mining - Components of Property, Equipment and Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Gross property, equipment and intangible assets | $ 4,360,818 | $ 121,787 |
Less: Accumulated depreciation and amortization | (2,181,488) | (111,776) |
Property, equipment and intangible assets, net | $ 2,179,330 | 10,011 |
Website [Member] | ||
Useful life (Years) | 7 years | |
Gross property, equipment and intangible assets | $ 121,787 | 121,787 |
Mining Equipment [Member] | ||
Useful life (Years) | 2 years | |
Gross property, equipment and intangible assets | $ 3,029,031 | |
Mining Patent [Member] | ||
Useful life (Years) | 17 years | |
Gross property, equipment and intangible assets | $ 1,210,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Oct. 12, 2018 | Jun. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, shares outstanding | 0 | 5,513 | ||
Number of common shares issued for services | 218,400 | |||
Number of shares issued for patent purchase | 250,000 | |||
Closing stock price per share | $ 0.95 | |||
Number of common shares issued to settle vendors for outstanding invoices | 238,750 | |||
Number of warrant to purchase shares of common stock | 728,764 | 773,966 | ||
Warrants weighted average remaining life | 3 years 1 month 6 days | 4 years 1 month 6 days | ||
Strike price per share | $ 0.95 | |||
Fair value of options granted to employees | $ 1,377,678 | $ 0 | ||
Unvested Stock Options [Member] | ||||
Estimated stock-based compensation expense | $ 500,000 | |||
Amortized period | 1 year | |||
GBV [Member] | ||||
Number of shares issued as termination fee | 3,000,000 | 3,000,000 | ||
Consultants [Member] | ||||
Number of common shares issued for services | 225,000 | |||
Executive Officers and Board Members [Members] | ||||
Closing stock price per share | $ 0.58 | |||
Number of warrant to purchase shares of common stock | 5,450,000 | |||
Options exercise price per share | $ 0.58 | |||
Options vesting percentage | 50.00% | |||
Option vesting, description. | vesting 50 % on the date of grant and 25% on each 6 months anniversary of the date of grant. | |||
Vesting term | 6 months | |||
Strike price per share | $ 0.58 | |||
Average expected term | 5 years 2 months 8 days | |||
Volatility rate | 39.35% | |||
Note Holders [Member] | ||||
Number of shares issued for debt conversion | 3,819,485 | 1,807,565 | ||
Consultants and Employees [Member] | ||||
Number of common shares issued for services | 1,631,699 | |||
Series B Convertible Preferred Stock [Member] | ||||
Number of shares issued for conversion | 195,500 | |||
Series E Convertible Preferred Stock [Member] | ||||
Preferred stock, shares outstanding | 5,513 | |||
Conversion of converted shares | 5,513 | |||
Number of shares issued for conversion | 5,511,543 | |||
Warrants [Member] | ||||
Number of shares issued for conversion | 17,731 | 598,500 | ||
Series D Convertible Preferred Stock [Member] | ||||
Number of shares issued for conversion | 628,438 | |||
Common Stock [Member] | ||||
Conversion of converted shares | 195,500 | |||
Common Stock [Member] | Executive Officers and Board Members [Members] | ||||
Number of shares issued for the period | 5,450,000 | |||
Common Stock [Member] | Series B Convertible Preferred Stock [Member] | ||||
Preferred stock, shares outstanding | ||||
Common Stock [Member] | Series E Convertible Preferred Stock [Member] | ||||
Conversion of converted shares |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Company's Outstanding Stock Warrants and Changes During the Period (Details) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Warrants Balance Beginning | 773,966 | 116,519 |
Number of warrants Granted | 7,941,374 | |
Number of Warrants Expired | (1,202) | (37,177) |
Number of Warrants Exercised | (44,000) | (7,246,750) |
Number of Warrants Balance Ending | 728,764 | 773,966 |
Number of Warrants Exercisable | 728,764 | 773,966 |
Weighted Average Exercise Price Balance Beginning | $ 5.99 | $ 15.18 |
Weighted Average Exercise Price Granted | 1.70 | |
Weighted Average Exercise Price Expired | 15.60 | 15.60 |
Weighted Average Exercise Price Exercised | 1.20 | 1.38 |
Weighted Average Exercise Price Balance Ending | 6.26 | 5.99 |
Weighted Average Exercise Price Exercisable | $ 6.26 | $ 5.99 |
Weighted Average Remaining Contractual Life Balance Beginning | 4 years 1 month 6 days | 3 years 2 months 12 days |
Weighted Average Remaining Contractual Life Granted | 5 years | |
Weighted Average Remaining Contractual Life Balance Ending | 3 years 1 month 6 days | 4 years 1 month 6 days |
Weighted Average Remaining Contractual Life Exercisable | 3 years 1 month 6 days | 4 years 1 month 6 days |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Stock Options and Changes During the Period (Details) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Options, Beginning Balance | 448,771 | 879,034 |
Number of Options, Granted | 5,450,000 | |
Number of Options, Expired/Forfeited | (32,692) | (430,263) |
Number of Options, Ending Balance | 5,866,079 | 448,771 |
Number of Options Vested and Expected to Vest | 5,866,079 | 448,771 |
Number of Options Vested and Exercisable | 3,132,051 | 433,667 |
Weighted Average Exercise Price, Beginning Balance | $ 15.50 | $ 14.34 |
Weighted Average Exercise Price, Granted | 0.58 | |
Weighted Average Exercise Price, Expired/Forfeited | 10.71 | 13.13 |
Weighted Average Exercise Price, Ending Balance | 1.67 | 15.50 |
Weighted Average Exercise Price, Options expected to vest | 1.67 | 15.50 |
Weighted Average Exercise Price, Vested and Exercisable | $ 2.58 | $ 15.53 |
Weighted Average Remaining Contractual Life, Beginning Balance | 6 years 2 months 23 days | 6 years 9 months 14 days |
Weighted Average Remaining Contractual Life, Granted | 9 years 9 months 11 days | |
Weighted Average Remaining Contractual Life, Ending Balance | 9 years 5 months 27 days | 6 years 2 months 23 days |
Weighted Average Remaining Contractual Life, Options expected to vest | 9 years 5 months 27 days | 6 years 2 months 23 days |
Weighted Average Remaining Contractual Life, Vested and Exercisable | 9 years 2 months 30 days | 6 years 1 month 27 days |
Debt, Commitments and Conting_3
Debt, Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 01, 2018 | Aug. 14, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 01, 2017 |
Debt interest rate | 5.00% | 5.00% | |||
Number of warrant to purchase shares of common stock | 728,764 | 773,966 | |||
Debt maturity date | Apr. 30, 2019 | Apr. 30, 2019 | |||
Interest expense | $ 81,482 | $ 1,309,823 | |||
Amortization of debt discount | $ 2,290,028 | 3,561,109 | |||
Monthly rental payment | $ 1,907 | ||||
Security deposit | $ 3,815 | ||||
CF Dynamic Advances LLC [Member] | |||||
Percentage of ownership interest | 30.00% | 30.00% | |||
Unit Purchase Agreement [Member] | |||||
Secured convertible promissory note | $ 5,500,000 | ||||
Debt interest rate | 5.00% | ||||
Number of warrant to purchase shares of common stock | 6,875,000 | ||||
Debt conversion, description | The Convertible Notes are convertible into shares of the Company's Common Stock at a price equal to the lesser of (i) $0.80 per share or (ii) the closing bid price of the Company's common stock on the day prior to conversion of a Convertible Note; provided that such conversion price may not be less than $0.40 per share. | ||||
Debt conversion price per share | $ 0.80 | ||||
Warrant exercise price per share | $ 1.20 | ||||
Debt maturity date | May 31, 2018 | Apr. 30, 2019 | |||
Convertible notes payable | $ 999,106 | ||||
Accrued interest | 144,981 | ||||
Interest expense | $ 72,104 | $ 73,622 | |||
Unit Purchase Agreement [Member] | Holders and Affiliates [Member] | |||||
Debt conversion, description | The Convertible Notes contain "blocker" provisions which state that the holder may not initiate any conversion that would result in the holder and its affiliates owning above 4.99% of the issued and outstanding stock of the Company upon effecting the conversion. The holder may increase this limitation with 61 days' prior notice, but in no case, may a conversion be effected if it would result in the holder and affiliates owning more than 9.9% of the issued and outstanding stock of the Company upon completion of the conversion. | ||||
Percentage of issued and outstanding stock upon conversion maximum | 4.99% | ||||
Increase in notice period limitation | 61 days |
Debt, Commitments and Conting_4
Debt, Commitments and Contingencies - Schedule of Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Maturity date | Apr. 30, 2019 | Apr. 30, 2019 |
Maturity date. range end | Apr. 30, 2019 | Apr. 30, 2019 |
Interest rate | 5.00% | 5.00% |
Convertible Note | $ 999,106 | $ 4,053,948 |
Less: debt discount | (2,290,028) | |
Total Convertible notes, net of discount | 999,106 | 1,763,920 |
Total | 999,106 | 1,763,920 |
Less: current portion | (999,106) | (1,763,920) |
Total, net of current portion |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net loss carry forwards, expiry date | Dec. 31, 2033 | Dec. 31, 2033 |
Corporated tax rate, percentage | 21.00% | |
Decrease in deferred tax assets, valuation allowance | $ 1,200,000 | $ 9,000,000 |
Unrecognized tax benefits | ||
Franchise fee | 800 | |
Federal [Member] | ||
Net loss carry forwards | 11,400,000 | 11,400,000 |
State [Member] | ||
Net loss carry forwards | $ 29,900,000 | $ 29,900,000 |
Income Taxes - Schedule of Diff
Income Taxes - Schedule of Differences Between the Company's Effective Tax Rate and the Statutory Federal Rate (as a Percent) (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" tax expense (benefit) | (21.00%) | (34.00%) |
State income taxes | (0.00%) | (7.99%) |
Permanent differences | 0.00% | 1.33% |
Change in federal rate | 0.00% | 28.52% |
Timing differences | 0.00% | 0.00% |
Change in valuation allowance | 21.00% | 12.10% |
Effective tax rate | 0.00% | (0.33%) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Total deferred tax assets | $ 22,907,783 | $ 21,119,444 |
Total deferred tax liabilities | ||
Less: valuation allowance | (22,907,783) | (21,119,444) |
Net deferred tax asset | $ 57,349 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Mar. 11, 2019 | Oct. 31, 2017 |
Reverse stock split | 1:4 reverse stock split | |
Subsequent Event [Member] | ||
Reverse stock split | Common Stock by a ratio 4-for-1 upon the filing and effectiveness | |
Reverse stock split, ratio | 4 | |
Date of occurance | Apr. 8, 2019 |