0001554795-18-000141.txt : 20180521 0001554795-18-000141.hdr.sgml : 20180521 20180521101622 ACCESSION NUMBER: 0001554795-18-000141 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180521 DATE AS OF CHANGE: 20180521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TimefireVR Inc. CENTRAL INDEX KEY: 0000748268 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 880490034 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-31587 FILM NUMBER: 18848600 BUSINESS ADDRESS: STREET 1: 7150 E. CAMELBACK ROAD STREET 2: SUITE 444 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 602-617-888 MAIL ADDRESS: STREET 1: 7150 E. CAMELBACK ROAD STREET 2: SUITE 444 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 FORMER COMPANY: FORMER CONFORMED NAME: EnergyTEK Corp. DATE OF NAME CHANGE: 20140723 FORMER COMPANY: FORMER CONFORMED NAME: BROADLEAF CAPITAL PARTNERS INC DATE OF NAME CHANGE: 20040928 FORMER COMPANY: FORMER CONFORMED NAME: BROADLEAF CAPITAL PARTNERS INC DATE OF NAME CHANGE: 20020503 10-Q 1 tfvr0518form10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
  OF THE SECURITIES EXCHANGE ACT OF 1934 

 

For the quarterly period ended March 31, 2018

 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
  OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission File Number 814-00175

 

TimefireVR Inc.

(Exact name of Registrant as specified in its charter)

 

 

Nevada 86-0490034
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
   

7150 E. Camelback Rd.

Suite 444 

 
Scottsdale, AZ 85251
(Address of principal executive offices) (Zip Code)

 

(602)-617-8888

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

  Yes   No  

  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

 

  Yes   No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer, "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

 Large accelerated filer  ☐ Accelerated filer  ☐
 Non-accelerated filer ☐ Smaller reporting company   ☑
 Emerging Growth Company ☐  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Yes

No

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

 

Yes

No

 

 

As of May 18, 2018, there were 209,218,470 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 
 

 

 INDEX TO FORM 10-Q

 

PART I. FINANCIAL INFORMATION Page
     
Item 1. Financial Statements: 3
     
  Unaudited Balance Sheet as of March 31, 2018 and Audited Balance Sheet as of December 31, 2017 3
     
  Unaudited Statements of Operations for the Three Months Ended March 31, 2018 and 2017 4
     
  Unaudited Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 5
     
  Notes to Financial Statements 6
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
     
Item 4. Controls and Procedures 20

 

PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 21
     
Item 1A. Risk Factors 21
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
     
Item 3.   Defaults Upon Senior Securities 21
     
Item 4. Mine Safety Disclosures 21
     
Item 5. Other Information 21
     
Item 6. Exhibits 22
     
SIGNATURES 23

 

 

 
 

 

PART I - FINANCIAL INFORMATION

 

ITEM  1. FINANCIAL STATEMENTS

 

 

TIMEFIREVR INC.
BALANCE SHEETS
           
    March 31,    December 31, 
    2018    2017 
    (Unaudited)      
ASSETS          
Current Assets:          
Cash  $1,161,773   $559,237 
Investment in ether   43,400    —   
Note receivable   120,000    —   
Interest receivable   1,800    —   
Accounts receivable   —      38 
Prepaid expenses and other current assets   189,269    131,250 
Total current assets   1,516,242    690,525 
           
Other Assets:          
Property and equipment, net   51,237    26,128 
Deposit   —      33,500 
Total Assets  $1,567,479   $750,153 
           
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)          
Current Liabilities:          
Accounts payable and accrued expenses  $73,494   $349,469 
Demand obligation payable - related party   —      116,883 
Convertible notes payable, net   1,777,326    1,564,814 
Accrued interest   200,154    321,824 
Short-term advance - related party   —      57,400 
Total current liabilities   2,050,974    2,410,390 
           
           
Long Term Liabilities:          
Derivative liabilities   338,088    198,994 
Total long term liabilities   338,088    198,994 
           
Total liabilities   2,389,062    2,609,384 
           
Commitments and Contingencies   —      —   
           
Mezzanine Equity          
Preferred Series A stock, par value $.01 per share, 134,000 shares authorized; 0 and 133,334 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively. Stated at redemption value.   —      1,500,004 
           
Shareholders' Deficit:          
Preferred Stock, par value $.01, 10,000,000 shares authorized all series:          
Preferred Series A-1 stock, par value $.01 per share, 21,000 shares authorized; 0 and 14,923 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   —      149 
Preferred Series B stock, par value $.01 per share, 300,000 shares authorized; no shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   —      —   
Preferred Series C stock, par value $.01 per share, 0 and 502 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   —      5 
Preferred Series E stock, par value $.01 per share, 195,382 and 0 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   1,954    —   
Obligation to issue common stock   7,667    —   
Common stock, par value $.001 per share, 500,000,000 shares authorized; 155,601,804 and 47,269,804 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   155,602    47,270 
Additional paid-in capital   2,205,830    (666,101)
Accumulated deficit   (3,192,636)   (2,740,558)
Total shareholders' deficit   (821,583)   (3,359,235)
           
Total Liabilities and Shareholders' Deficit  $1,567,479   $750,153 
           
           
The accompanying notes are an integral part of these unaudited financial statements.

 

 3 

 

 

TIMEFIREVR INC.
STATEMENTS OF OPERATIONS
(Unaudited)
    
   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Revenues  $—     $—   
           
Operating expenses:          
Occupancy   3,095    —   
Depreciation and amortization   868    —   
Officer compensation   276,490    141,195 
Professional fees   290,084    217,201 
Other operating expenses   65,968    92,376 
Total operating expenses   636,505    450,772 
           
Loss from operations   (636,505)   (450,772)
           
Other income (expense):          
Change in fair value of derivative liabilities   (268,928)   2,623,178 
Loss in fair value of ether   (56,600)   —   
Interest income   1,841    —   
Interest expense   (162,134)   (31,491)
Total other income (expense)   (485,821)   2,591,687 
           
Income (loss) from continuing operations   (1,122,326)   2,140,915 
           
Gain on disposal of Timefire, LLC   670,428    —   
Loss from discontinued operations   (180)   (712,223)
Income (loss) from discontinued operations   670,248    (712,223)
           
Income tax expense   —      —   
           
Net income (loss)  $(452,078)  $1,428,692 
           
Basic net income (loss) per common share  $(0.00)  $0.03 
Diluted net income (loss) per common share  $(0.00)  $0.02 
           
Basic weighted average common shares outstanding   114,181,237    44,864,716 
           
Diluted weighted average common shares outstanding   114,181,237    69,244,021 
           
           
The accompanying notes are an integral part of these unaudited financial statements.

 

 4 

 

 

TIMEFIREVR INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
 
   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Operating Activities:          
Net income (loss) from continuing operations  $(1,122,326)  $2,140,915 
Net income (loss) from discontinued operations   670,248    (712,223)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   868    3,152 
Common stock issued for services   71,339    32,500 
Warrants and options issued for services   348,587    265,558 
Change in derivative liabilities   268,928    (2,623,178)
Loss in fair value of ether   56,600    —   
Restricted stock units issued for services   —      128,693 
Interest expense from amortization of debt discount   25,670    5,910 
Straight line non-cash rent expense   —      32,147 
Gain on sale of subsidiary   (670,428)   —   
Changes in operating assets and liabilities:          
Interest receivable   (1,800)   —   
Prepaid expenses and other current assets   (58,019)   (91,076)
Escrow fund   —      59,386 
Deposits   —      78,000 
Accrued interest   136,645    28,936 
Accounts payable and accrued expenses   (71,166)   24,614 
Net Cash Used in Operating Activities   (344,854)   (626,666)
           
Investing Activities:          
Purchases of property and equipment   (52,105)   —   
Proceeds from sale of subsidiary net of subsidiary cash   99,495    —   
Purchases of ether   (100,000)   —   
Net Cash Used in Investing Activities   (52,610)   —   
           
Financing Activities:          
Net proceeds from convertible notes payable   1,000,000    617,500 
Net proceeds from convertible notes payable - related party   —      95,000 
Net Cash Provided by Financing Activities   1,000,000    712,500 
           
Net Increase in Cash   602,536    85,834 
           
Cash - Beginning of Period   559,237    225,379 
           
Cash - End of Period  $1,161,773   $311,213 
           
Supplemental disclosure of non-cash investing and financing activities:          
Issuance of Series E Preferred for Series A, A-1 and C Preferred and warrants  $1,629,992   $—   
Issuance of Series E Preferred for convertible debt and accrued interest  $939,966   $—   
Conversion of Series E Preferred stock to common stock  $108,332   $—   
Conversion of Series C Preferred stock to common stock  $—     $1,300 
Conversion of Series A-1 Preferred stock to common stock  $—     $3,752 
Note receivable from sale of subsidiary  $120,000   $—   
           
Supplemental disclosure of cash flow information:          
Interest paid in cash  $—     $92 
Income taxes paid in cash  $—     $—   
           
           
The accompanying notes are an integral part of these unaudited financial statements.

 

 5 

 

  

TIMEFIREVR INC.

NOTES TO FINANCIAL STATEMENTS

 

1.Summary of Significant Accounting Policies and Use of Estimates

Basis of Presentation and Organization and Reorganization

Effective September 13, 2016, TimefireVR Inc., a Nevada corporation (“Timefire,” “we,” “us,” “our” or the “Company”) entered into an Agreement and Plan of Merger (“Merger Agreement” or the “Merger”) through which it acquired Timefire LLC, a Phoenix-based virtual reality content developer and Arizona Limited Liability Company (“TLLC”). As consideration for the Merger, the Company issued the equity holders of TLLC a total of 41,400,000 shares of its common stock, and 2,800,000 five-year warrants exercisable at $0.58 per share for 100% of the membership interests of TLLC. As a result, the former members of TLLC owned approximately 99% of the then outstanding shares of common stock.

On January 3, 2018, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) by and between the Company and Mitchell Saltz (“Saltz”). Pursuant to the terms of the Agreement, Saltz acquired all the membership interests of the Company’s subsidiary, Timefire LLC (“TLLC”).

 

In consideration for entering in the Agreement, the Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest maturing in nine months. Additionally, Saltz or TLLC assumed certain of the Company’s liabilities including a sublease agreement entered into by the Company, loans made by Saltz to the Company, a certain $100,000 senior convertible note of the Company dated March 3, 2017, a certain services agreement entered into by the Company, certain past compensation owed to the Company’s former executive officers, and certain credit card debts owed by the Company.

 

On January 3, 2018, the Company purchased $100,000 of ether, the cryptocurrency offered by the Ethereum network. This purchase is the Company’s first material cryptocurrency purchase and signifies the start of the Company’s entry into the cryptocurrency business. The Company records its ether holdings at fair value per Coindesk.com as of the valuation date, and as a result, $56,600 in loss on fair value of ether was recorded for the three months ended March 31, 2018.

 

Unaudited Interim Financial Statements

 

The interim financial statements of the Company as of March 31, 2018 and 2017, and for the periods then ended, are prepared in accordance with the instructions to Form 10-Q. Accordingly, the accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2018 and the results of its operations and its cash flows for the periods ended March 31, 2018 and 2017. These results are not necessarily indicative of the results expected for the year ended December 31, 2018. The financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 9, 2018. The balance sheet as of December 31, 2017 has been derived from the audited financial statements included in that filing.

 

Principles of Consolidation

For accounting purposes, the Merger transaction was recorded as a reverse recapitalization, with TLLC as the accounting acquirer. Consequently, the historical pre-Merger financial statements of TLLC were then those of the Company. The financial statements for periods December 31, 2017 and prior include the accounts of the Company and TLLC. All significant intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee's activities are accounted for using the equity method where applicable.

Reclassifications

Certain reclassifications have been made in the March 31, 2017 financial statements to conform to the current period presentation, primarily relating to segregating continuing and discontinued operations. The reclassified financial statement items had no effect on net income for the period. For the three months ended March 31, 2017, the Company’s Statement of Operations and Cash Flows have been reclassified to the current presentation to reflect the discontinued operations resulting from the sale of TLLC.

 6 

 

Discontinued Operations

The Company has classified the operating results related to the TLLC virtual reality business, which was sold on January 3, 2018, as discontinued operations in the financial statements. As per SEC guidelines, the December 31, 2017 balance sheet has not been retrospectively adjusted to reflect discontinued operations. Such adjustment will be reflected when the December 31, 2017 balance sheet is first presented with annual financial statements that report discontinued operations.

Discontinued operations consist of specifically identified expenses as follows:

   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Revenues  $—     $—   
           
Operating expenses:          
Research and development   —      448,891 
Occupancy   —      23,207 
Depreciation and amortization   —      3,152 
Officer compensation   —      212,856 
Professional fees   —      500 
Other operating expenses   —      20,171 
Total operating expenses   —      708,777 
           
Loss from operations   —      (708,777)
           
Other income (expense):          
Gain on disposal of Timefire, LLC   670,428    —   
Interest income   —      2 
Interest expense   (180)   3,448 
Total other income (expense)   670,248    (3,446)
           
Income (loss) from continuing operations   670,248    (712,223)

Accounting Estimates

 

The preparation of financial statements in conformity with U.S. 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 revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, derivative liabilities, accruals and contingencies, the fair value of the Company’s common stock and the estimated fair value of warrants.

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, and (iii) collectability is reasonably assured.

 

 7 

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments, with original maturity of three months or less when purchased, to be cash equivalents. We place our cash and cash equivalents with major financial institutions. Such amounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). From time to time, balances may exceed FDIC coverage limits.

 

Property and Equipment

 

Property and equipment is recorded at cost reduced by accumulated depreciation. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred.

 

The estimated useful lives of property and equipment are:

 

·Office furniture and equipment 5 years

 

Impairment of Long-Lived Assets and Intangible Assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 360-10, "Property, Plant, and Equipment," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset and amortizable intangible asset to be held and used. Long-lived assets and amortizable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset and amortizable intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets and amortizable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Business Segments

 

ASC 280, "Segment Reporting" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of March 31, 2018.

 

Research and Development Costs

 

Research and development costs, including design, development and testing of software, are expensed as incurred.

 

Income Taxes

 

The Company accounts for income taxes under FASB ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

 

 8 

 

Stock-Based Compensation

 

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of stock-based compensation arrangements based on the grant date fair value of granted instruments and recognizes the costs in the financial statements over the period during which such awards vest. Stock-based compensation arrangements include stock options and restricted stock awards.

 

Equity instruments (“Instruments”) issued to non-employees are recorded on the basis of the fair value of the Instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such Instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the Instruments are vested. The measured fair value related to the Instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

 

Net Income (Loss) Per Share

 

Basic earnings per share does not include dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. As of March 31, 2018 and 2017, there were total shares of 258,424,724 and 24,379,305, respectively, issuable upon conversion of preferred stock, exercise of warrants and options.

Fair Value Measurements

 

ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.

 

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:

 

Level 1- fair value measurements are those derived from quoted prices (unadjusted in active markets for identical assets or liabilities);

 

Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

 

Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.

 

Financial instruments classified as Level 1 - quoted prices in active markets include cash.

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2018. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts payable and accrued expenses.

 

 9 

 

Derivative Liabilities

 

The Company issued common stock purchase warrants in September 2016 in conjunction with the Merger Agreement.  Additional warrants were issued in March and August 2017 as part of private placement offerings. Warrants were also issued in March 2018 as part of a private placement offering (see Note 5) and per an advisory agreement (see Note 7). In accordance with ASC No. 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants is classified as a liability on the Company’s Balance Sheets because, according to the warrants' terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to certain warrant holders. Corresponding changes in the fair value of the warrants are recognized as a gain or loss on the Company’s Statements of Operations in each subsequent period.

The fair value of the warrants at March 31, 2018 and December 31, 2017 was $338,088 and 198,994, respectively. The difference has been recorded as a change in change in fair value of derivatives.

2.Going Concern

The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern. The combination of these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in response to these factors include the issuances of debt in exchange for cash such as that which is described in Note 5, Convertible Notes Payable.

 

The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining additional financing. If this is not achieved, the Company will be unable to obtain sufficient cash flow to fund its operations and obligations, and as a result there is substantial doubt the Company will be able to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets.

 

 10 

 

3.Gain on Disposal of Timefire LLC

 

As discussed in Note 1, on January 3, 2018, the Company entered into the Agreement. Pursuant to the terms of the Agreement, Mr. Saltz acquired all the membership interests of TLLC.

 

In consideration for entering into the Agreement, the Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest that matures in nine months. Additionally, Mr. Saltz and TLLC each assumed certain of the Company’s liabilities including a sublease agreement entered into by the Company, loans made by Mr. Saltz to the Company, a certain $100,000 senior convertible note from the March 2017 Notes, as defined below, a certain services agreement entered into by the Company, certain past compensation owed to the Company’s former executive officers, and certain credit card debts owed by the Company. Total gross proceeds from the sale were $220,000, including the cash payment and secured promissory note, plus $510,599 in liabilities relieved, less $60,171 of assets sold to TLLC resulted in a gain on disposal of $670,428.

 

Assets sold:   
Cash   (505)
Property & equipment, net   (26,128)
Accounts receivable   (38)
Deposit   (33,500)
    (60,171)
      
Liabilities relieved:     
Accounts payable & accrued expenses   204,809 
Demand obligation payable - related party   116,883 
Convertible notes payable   100,000 
Accrued interest   31,507 
Short-term advance - related party   57,400 
    510,599 
      
Additional consideration:     
Note receivable   120,000 
Cash   100,000 
    220,000 
      
Gain on disposal of Timefire, LLC   670,428 

 

The gain on disposal is included in the income from discontinued operations on the profit and loss statement for the three months ended March 31, 2018.

 

4.Investment in Ether

 

On January 3, 2018, the Company purchased $100,000 of ether, the cryptocurrency offered by the Ethereum network. The fair value of ether on March 31, 2018 was $43,400 and the Company took a charge to operations of $56,600 in the three months ended March 31, 2018.

 

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5.Convertible Notes Payable

 

On March 6, 2017, the Company closed on a private placement offering with institutional investors and one of the Company’s former directors pursuant to which the Company issued and sold the investors senior convertible notes (the “March 2017 Notes”) in the aggregate principal amount of $750,000, with an original issue discount of 5%, for gross proceeds to the Company of $712,500 prior to payment of $20,000 in reimbursement of legal fees of the lead investor. The March 2017 Notes matured on September 3, 2017 with an initial interest rate of 8%, and a default interest rate of 18% which became effective as of the maturity date. On the maturity date, the Company was obligated to repay an amount equal to 120% of outstanding principal and accrued interest. On the maturity date (and subsequently, if the holders elect to extend the maturity date), the investors may elect to convert the Notes into the common stock of the Company at $0.30 per share, subject to adjustment (the “Conversion Price”). As additional consideration, the Company issued the investors a total of 2,500,000 five-year warrants to purchase the Company’s common stock, which are exercisable on or after the maturity date at $0.35 per share. The Company failed to pay the March 2017 Notes on the maturity date, which date the investors did not elect to extend.

On August 18, 2017, the Company closed on an offering of convertible notes and warrants on terms substantially identical to the March 6, 2017 financing. The purchasers are the same investors as in the March 2017 Notes except for the former director who did not participate in this financing. The Company received $60,000 in net proceeds from the issuance of $63,158 of convertible notes (the “August 2017 Notes”). Additionally, the Company issued the investors a total of 210,526 five-year warrants exercisable at $.35 per share. The Company failed to pay the August 2017 Notes when due on September 3, 2017.

The March 2017 Notes and August 2017 Notes and accompanying warrants were converted on January 3, 2018 into Series E Preferred stock. See Note 8.

On October 27, 2017, the Company closed on an offering of convertible notes with two institutional investors in the principal amount of $70,000 (the “October 2017 Notes”). The October 2017 Notes matured on November 29, 2017 and bear interest at 8% per annum. On the maturity date, the Company was obligated to repay an amount equal to 120% of the outstanding principal and accrued interest. The investors may elect to convert the October 2017 Notes into common stock of the Company at $.03 per share. The Company failed to pay these October 2017 Notes when due.

On December 21, 2017, the Company closed on an offering with three institutional investors pursuant to which the Company issued and sold convertible notes in the aggregate principal amount of $703,947 (the “December 2017 Notes”). The December 2017 Notes had an original issue discount of 5%, for proceeds to the Company in the amount of $668,750. The notes matured on January 20, 2018, bear interest at 8%, and require the repayment of 120% of principal and accrued interest at maturity. The investors may elect to convert the December 2017 Notes into common stock of the Company at $.03 per share.

On March 6, 2018, the holders of the October 2017 Notes and December 2017 Notes agreed to extend the due date of these notes to April 15, 2019 as discussed below.

On March 6, 2018, the Company closed on a private placement offering with institutional investors pursuant to which the Company issued and sold Senior Secured Convertible Notes (the “2018 Notes”) to the Investors in the aggregate principal amount of $1,052,632 with an original issue discount of 5% and received gross proceeds of $1,000,000. The 2018 Notes mature on April 15, 2019 and bear interest at 8% per annum. The 2018 Notes are secured by a first lien on all of the assets of the Company. On the maturity date, the Company must repay an amount equal to 120% of the outstanding principal and accrued interest. Beginning on the six-month anniversary of the issuance of the 2018 Notes, the investors may elect to convert the 2018 Notes into common stock of the Company at $0.03 per share, subject to adjustment. In addition, the 2018 Notes are redeemable by the Company up to 90 days following issuance at an amount equal to 110% of outstanding principal and accrued interest, and thereafter at an amount equal to 120% of outstanding principal and accrued interest, subject in either case to upward adjustment to the extent the closing price of the Company’s common stock on the OTCQB exceeds the Conversion Price. As additional consideration, the Company issued the investors a total of 35,087,720 five-year warrants to purchase the Company’s common stock, which are exercisable on or after the six-month anniversary of the issuance at $0.06 per share. In addition, the Investors agreed to extend the due date of the October 2017 Notes and December 2017 Notes.

The aggregate principal amount of the above described notes is $1,826,579, which is shown in the accompanying balance sheet as of March 31, 2018, net of $49,253 debt discount, as convertible notes payable-net. Accrued interest amounted to $200,154 as of that date and interest expense aggregated $162,314 for the three months ended March 31, 2018.

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6.Related Party Transactions

 

On March 6, 2017, the Company issued one of the March 2017 Notes to a former director as an investor for $100,000. The Company’s obligation under the March 2017 Notes was cancelled on January 3, 2018 as described below.  

On June 2, 2017, the Company entered into an agreement with an entity managed by a former director of the Company to provide services to the entity. A retainer deposit of $57,400 was received, and services were to be initiated within sixty days. The Company’s obligation under this agreement was cancelled on January 3, 2018 as described below.

 

During the year ended December 31, 2017, the Company received advances totaling $116,883 from a related party, an original TLLC investor. These advances are not evidenced by a promissory note, and are non-interest bearing. The Company’s obligation to repay this amount was cancelled on January 3, 2018 as described below.

On January 3, 2018, the Company effected the sale of TLLC to a group of persons including TLLC’s former owners and two of the Company’s former executive officers and directors.

7.Commitments and Contingencies

 

Employment Agreements

 

Effective September 13, 2016, the Company entered into an employment agreement with its former President, John Wise. The agreement was for a two year period at the rate of $150,000 per annum. The Company was in default on this agreement, and the payroll for this officer accrued from July 8, 2017 until his resignation in October 2017.

Effective September 13, 2016, the Company entered into an employment agreement with its former Chief Strategy Officer, who was later named Chief Executive Officer, Jeffrey Rassas. The Company was in default on this agreement, and the payroll for this officer accrued from May 16, 2017 until his resignation in October 2017.

Aggregate accrued payroll for these two former officers was approximately $106,000 as of December 31, 2017. These obligations were cancelled on January 3, 2018 as part of the sale of TLLC.

Effective January 3, 2018, the Company entered into an oral employment agreement (the “Read Agreement”) with the Company’s current Chief Executive Officer (the “CEO”), Jonathan Read. Under the terms of the Read Agreement the Company is paying Mr. Read an annual salary of $240,000 subject to his continued employment with the Company. Additionally, the Company paid Mr. Read compensation for his services as the Company’s CEO from October 20, 2017, to December 31, 2017, calculated as a pro-rata portion of an annual salary of $150,000. Additionally, on January 3, 2018 (the “Grant Date”) the Company’s Board of Directors (the “Board”) granted Mr. Read 15,000,000 stock options of which 5,000,000 vested on the Grant Date, 5,000,000 will vest one-year from the Grant Date, and 5,000,000 will vest two years from the Grant Date subject to continued employment with the Company.

Effective January 3, 2018, the Company agreed to compensate Gary Smith for his service as a non-employee director by paying him $2,500 per calendar quarter effective as of July 10, 2017.

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Lease Agreements

 

On September 23, 2016, the Company entered into an office lease agreement commencing October 1, 2016.  This lease expires December 31, 2018.  As part of the sale of TLLC, the Company was released of this lease obligation as well as the rights to the security deposit. The Company has been renting an office space on a month-to-month basis, and incurred rent expense of approximately $3,100 during the three months ended March 31, 2018.

 

Other Agreements

 

On January 20, 2017, the Company entered into an agreement with a firm to provide their artificial intelligence conversational voice platform for integration into the Company’s product. Per the agreement, the Company issued 50,000 shares of common stock and was scheduled to make monthly payments towards a $127,500 integration fee. As of December 31, 2017, the Company had expensed $46,000, with $35,000 remaining in accounts payable. On January 3, 2018, the Company sold TLLC, and this payable, and any future obligations under this agreement, were relieved as part of this transaction.

On November 7, 2016, the Company entered into an agreement with a firm to provide general advisory and business development advisory services for a fee of $75,000. The Company remitted $75,000, but the contract was ultimately cancelled and the services were postponed. The amount was recorded as a deposit on contract. Later, on March 27, 2017, the Company entered into an agreement with the same firm to provide these services on an expanded scale for a fee of $150,000. Per the agreement, the firm applied our previously remitted funds and we paid the remaining $75,000 balance. In addition to the cash compensation, the firm was also compensated via a one-time equity retainer of 25,000 shares of common stock.

On April 4, 2017, the Company entered into an agreement with a firm to provide management and general business consulting services. The term of the agreement is 24 months, and the firm will be compensated via the issuance of 1,000,000 shares of common stock. The shares will be expensed ratably over the term of the agreement.

On January 18, 2018, the Company entered into an agreement for corporate communications counsel. The agreement is for an initial period of six months with a monthly fee of $5,000. Should the Company raise $2,000,000 or more, the monthly fee increases to $7,500 per month. The Company will issue 1,000,000 shares of common stock per this agreement. They have not yet been issued as of the date of this report.

 

On March 16, 2018, the Company entered into an Advisor Agreement with a third party (the “Advisor”), and David Drake (“Drake”), a well-known consultant to the cryptocurrency industry. Under the terms of the Agreement, Drake was appointed to the Company’s Advisory Board and Drake and the Advisor agreed to assist the Company in the implementation and execution of its cryptocurrency business model, including initiation of its mining business and recommending to the Company potential acquisitions and joint ventures in this sector. Drake is required to devote at least three business days per month to assisting the Company. The Company agreed to issue the Advisor 6,666,666 shares of common stock valued at $0.03 per share, which shares shall vest quarterly over a 12-month period subject to the Advisor Agreement not having been terminated as of each applicable vesting date. The Company also issued the Advisor 6,666,666 3-year warrants, with the same vesting period, exercisable at $0.05 per share. The Company agreed to pay the Advisor a royalty from revenues received from its mining of cryptocurrency with the royalties decreasing over a five-year period. Finally, the Company agreed to reimburse the Advisor $5,000 a month for the services of an engineer to operate the Company’s cryptocurrency mining business.

 

8.Shareholders’ Deficit

 

Common Stock

 

There is currently only one class of common stock. Each share of common stock is entitled to one vote. The authorized number of shares of common stock of the Company at March 31, 2018 was 500,000,000 shares with a par value per share of $0.001. Authorized shares that have been issued and fully paid amounted to 155,601,804 as of March 31, 2018.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.01 per share, with rights, preferences and limitations as may be decided from time-to-time by the Board of Directors.

 

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Series E

Effective January 3, 2018, the Board of Directors authorized the issuance of up to 305,000 shares of Series E Convertible Preferred Stock ("Series E"). Each share of Series E has a stated value of $1,000 and is convertible into shares of our common stock at a conversion price of $1.00 per share. The Series E does not have any price protection from future issuances of securities by the Company at a price below the conversion price then in effect.

 

Pursuant to an Exchange Agreement entered into effective January 3, 2018, we issued 303,714 shares of the Series E in exchange for the cancellation of the following securities:

 

  • 133,333.69 shares of Series A Convertible Preferred Stock (extinguishing such series) - 133,334 Series E shares;
  • 14,923.30 shares of Series A-1 Convertible Preferred Stock (extinguishing such series) – 44,770 Series E shares;
  • 501.54 shares of Series C Convertible Preferred Stock (extinguishing such series) – 50,154 Series E shares;
  • $650,000 of Senior Convertible Notes issued March 3, 2017 – 63,368 Series E shares;
  • $63,158 of Senior Convertible Notes issued August 21, 2017 – 7,125 Series E shares; and
  • Warrants to purchase 4,963,402 shares of our common stock – 4,963 Series E shares.

During the three months ended March 31, 2018, holders of 108,332 shares of Series E converted them into 108,332,000 shares of our common stock. At March 31, 2018, there are 195,382 shares of Series E outstanding, which are convertible into an aggregate of 195,382,000 shares of our common stock.

 

Series C

In 2014, the Board approved the issuance of Series C Preferred Stock (“Series C”). Each share of Series C shall be convertible at the option of the holder at any time, into 10,000 shares of common stock. During the year ended December 31, 2017, holders of 113 shares of Series C converted them into 1,130,000 shares of our common stock. At December 31, 2017, there are 501.54 shares of Series C outstanding. Effective January 3, 2018, all Series C shares were cancelled in exchange for 50,154 Series E shares.

 

Series A-1

Effective August 24, 2016, the Board approved the issuance of Series A-1 Preferred Stock (“Series A-1”). Each share of Series A-1 shall be convertible at the option of the holder at any time, into 100 shares of common stock. During the year ended December 31, 2017, holders of 5447.39 shares of Series A-1 converted them into 544,739 shares of common stock. At December 31, 2017, there are 14,923 shares of Series A-1 outstanding. Effective January 3, 2018, all Series A-1 shares were cancelled in exchange for 44,770 Series E shares.

 

Series A

Effective September 13, 2016, the Company closed on the SPA and the Board approved the issuance of a newly designated Series A Convertible Preferred Stock (“Series A”). At December 31, 2017, there were 133,334 shares of Series A outstanding. Effective January 3, 2018, all Series A shares were cancelled in exchange for 133,334 Series E shares.

 

The Series A contained certain provisions that were outside the Company's control and which the Company believed caused the Series A to be classified as mezzanine equity.

 

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Warrants

 

The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2018 is as follows:

 

   Common Shares Issuable Upon Exercise of Warrants  Exercise Price of Warrants 

 

Date

Issued

 

 

Expiration

Date

Balance of warrants at December 31, 2017   8,096,736            
Cancelled in exchange for Series E (1)   (4,963,402)           
Issued per offering (2)   35,087,720   $.06   3/6/2018  9/6/2023
Issued for services (3)   6,666,666   $.05   3/16/2018  3/16/2021
Balance of warrants at December 31, 2017   44,887,720            

 

(1) As discussed above, on January 3, 2018, 4,963,402 warrants to purchase shares of common stock were cancelled in exchange for 4,963 Series E shares.

 

(2) On March 6, 2018, pursuant to the 2018 Notes (see Note 5), the Company issued warrants at $.06 to purchase 35,087,720 shares of common stock. The warrants may not be exercised for six months after their effective date of March 6, 2018. The warrants have an expiration date of five years after the initial six months have passed. As of March 31, 2018, the Company has recorded $270,175 as a derivative liability for these warrants.

 

(3) On March 16, 2018, per the terms of the Advisor Agreement (see Note 7), the Company issued warrants at $.05 to purchase 6,666,666 shares of common stock. The warrants have an expiration date of March 16, 2021. As of March 31, 2018, the Company has recorded $48,800 as a derivative liability for these warrants.

 

2016 Equity Incentive Plan

 

Effective September 13, 2016, the Company adopted the 2016 Equity Incentive Plan (the "2016 Plan") to provide an incentive to our employees, consultants, officers and directors who are responsible for or contribute to our long-range success. A total of 3,300,000 shares of our common stock were originally reserved for the implementation of the 2016 Plan, either through the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, or restricted stock units. Whenever practical, the 2016 Plan is to be administered by a committee of not less than two members of the Board of Directors appointed by the full Board, and the 2016 Plan has a term of ten years, unless sooner terminated by the Board. On January 3, 2018, the Board amended the Company’s 2016 Equity Incentive Plan by increasing the authorized number of shares available under the plan by 30,000,000. As of March 31, 2018, 15,145,000 shares of common stock remain available for issuance under the 2016 Plan.

 

Effective September 13, 2016, pursuant to his employment agreement, the Company entered into a Restricted Stock Unit (“RSU”) Agreement with Mr. Read which granted him 500,000 RSUs pursuant to the 2016 Plan. The RSUs were to vest in three approximately equal increments with the first tranche being fully vested on the grant date and the remaining tranches vesting on the first-year and second-year anniversaries of the grant date. The fair value of the award was calculated based on the price of the common stock on the grant date and was to be expensed over the vesting period. Effective January 31, 2017, Mr. Read’s former employment agreement was terminated and the RSUs became fully vested. The Company recorded $0 and $128,695 in expense related to this grant during the three months ended March 31, 2018 and 2017, respectively.

On January 20, 2017, the Company granted options to purchase 1,655,000 shares of its common stock at $.50 to employees including a total of 800,000 options to its then Chief Executive Officer and Chief Financial Officer per the 2016 Plan. The shares will vest based on months of service as of the grant date. Employees that had worked for twelve months or more as of the grant date had one-third of their options vested as of grant date. All other employees received pro-rata vesting for the portion of a year that they had worked. The remaining options will equally vest on the 1st and 2nd anniversary of the grant date. The Company recorded $72,775 and $265,558 in expense related to this grant during the three months ended March 31, 2018 and 2017, respectively.

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On January 3, 2018, as part of an oral employment agreement with the Company’s Chief Executive Officer, the Company granted Mr. Read 15,000,000 stock options of which 5,000,000 vested on the grant date, 5,000,000 will vest one-year from the grant date, and 5,000,000 will vest two years from the grant date subject to continued employment with the Company. The Company recorded $182,625 in expense related to this grant during the three months ended March 31, 2018.

 

On January 22, 2018, the Company granted board member Gary Smith 1,000,000 stock options under the 2016 Plan, exercisable at $.03 per share, vesting quarterly over one year beginning in three months subject to continued service as a director on each applicable vesting date. The Company recorded $5,253 in expense related to this grant during the three months ended March 31, 2018.

 
9.Fair Value Measurements

 

Our financial instruments consist of cash, accounts payable, accrued liabilities, and warrant liability. We do not believe that we are exposed to significant interest, currency, or credit risks arising from these financial instruments. The fair values of the warrants approximates their carrying values using Level 3 inputs. Gains and losses recognized on changes in fair value of the warrants are reported in other income (expense). Our warrant valuation was measured at fair value by applying the Black-Scholes option valuation model, which utilizes Level 3 inputs.

The assumptions used in the Black-Scholes option re-valuation for the September 2016 warrants at March 31, 2018 are as follows:

Dividend yield – 0% Expected life – 3.5 years
Risk-free interest rate - 2.39% Volatility – 214.719%.  

 

The assumptions used for the March 2017 warrants at March 31, 2018 are as follows:

Dividend yield – 0% Expected life – 4.5 years
Risk-free interest rate - 2.56% Volatility – 222.540%.  

 

The assumptions used for the March 6, 2018 warrants at March 31, 2018 are as follows:

 

Dividend yield – 0% Expected life – 5.5 years
Risk-free interest rate - 2.56% Volatility – 218.873%.  

 

The assumptions used for the March 16, 2018 warrants at March 31, 2018 are as follows:

 

Dividend yield – 0% Expected life – 3.0 years
Risk-free interest rate - 2.39% Volatility – 247.097%.  

 

The following summarizes the Company's financial liabilities that are measured at fair value on a recurring basis at March 31, 2018.

 

   Level 1  Level 2  Level 3  Total
Liabilities                    
Derivative liabilities  $—     $—     $338,088   $338,088 

 

10.Subsequent Events

 

Between April 2 and May 11, 2018, the Company issued 46,950,000 shares of common stock for the conversion of 46,950 shares of Series E. Additionally, on April 13, 2018, the Company issued 6,666,666 shares of common stock per the Advisor Agreement (see Note 8).

 

On May 10, 2018, the Company purchased $276,200 of additional cryptocurrency mining equipment.

 

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following Management's Discussion and Analysis should be read in conjunction with TimefireVR Inc. financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, cryptocurrency business, business objectives, and intentions of pursuing business in the cryptocurrency area. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. Investors should review the Risk Factors in the Company’s Form 10-K for the year ended December 31, 2017. Except as required by U.S. securities laws, the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

 

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this 10-Q. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

OVERVIEW

  

The Company is a Nevada corporation incorporated on April 10, 2002. On November 21, 2016, we changed our name to TimefireVR, Inc. We are currently in the process of changing our name to TeraForge Ventures Inc., subject to shareholder approval.

 

Effective September 13, 2016, the Company acquired TLLC, a Phoenix-based virtual reality content developer. As consideration for the Merger Agreement, the Company issued the equity holders of TLLC a total of 41,400,000 shares of the Company's common stock and 2,800,000 five-year warrants.

 

On January 3, 2018, the Company effected the sale of TLLC to a group which included its former owners including two of our former executive officers and directors. The Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest that matures in September 2018. Additionally, the buyers of TLLC assumed certain of the Company’s liabilities totaling approximately $558,054. The Company’s business model in the virtual reality business was not successful and the Company was unable to continue to finance its business due to a loss of confidence in the virtual reality business by the Company’s investors and threats of resignation from the Company’s officers, directors and lead technologist and TLLC employees. While shareholder approval was required by Nevada law, the purchasers refused to fund TLLC unless we closed immediately. Certain investors that had financed the Company had agreed to provide further funding if we sold TLLC and received a release from key liabilities including past due promissory notes. Rather than cease operations and have no working capital, we adhered to the TLLC purchasers' demands and closed the sale. Pending finalization of the sale of TLLC over the year-end holidays, investors lent us approximately $669,000 on December 21, 2017 and cancelled past due notes held by the investors on January 3, 2018 as explained in the following paragraph. Because we needed to eliminate state law liabilities, we opted to get irrevocable proxies which would permit us to seek shareholder ratification. We have filed a preliminary proxy statement which has not yet been finalized. We expect to file an amendment by mid-May 2018.

 

Effective January 3, 2018, the Company entered into an exchange agreement with certain of the Company’s investors pursuant to which the Company issued 303,714 shares of the Company’s new Convertible Series E Preferred Stock in exchange for the cancellation of the Company’s Series A, Series A-1, Series C, the March 2017 Notes, the August 2017 Notes, and certain of the Company’s outstanding Warrants. This exchange had the effect of simplifying our capital structure and eliminating past due secured debt while substantially increasing future potential dilution.

 

On March 6, 2018, we borrowed $1 million from these same investors and issued them $1,052,632 of the 2018 Notes which are due on April 15, 2019. The 2018 Notes pay 8% per annum interest and are convertible at $0.03 per share. On the maturity date, we must pay 120% of the principal of the 2018 Notes. The 2018 Notes are secured by a first lien on the Company's assets. On March 6, 2018, the investors extended their October 2017 Notes and December 2017 Notes to April 15, 2019.

 

On January 3, 2018, we announced our entry into the cryptocurrency business. The Company’s current business is focused on the mining of bitcoin from a location in Brooklyn, NY. The Company is expanding that business and looking at other locations.

 

In order to enter the cryptocurrency mining business, we entered into the Advisory Agreement with two parties on March 16, 2018. See Note 7.

 

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Results of Operations

 

Comparison of the Three Months Ended March 31, 2018 and 2017

 

The following discussion analyzes our results of operations for the three months ended March 31, 2018 and 2017. The following information should be considered together with our financial statements for such period and the accompanying notes thereto.

 

Revenues for the three months ended March 31, 2018 and 2017 were $0.

 

Operating expenses for the quarter ended March 31, 2018 amounted to $636,505 as compared to $450,772 (net of loss from discontinued operations) for the quarter ended March 31, 2017. This was primarily due to increased officer compensation and professional fees expense.

 

The net loss for the three months ended March 31, 2018 was $452,078 as compared to a net income of $1,428,692 for the quarter ended March 31, 2017. This difference is primarily due to the change in fair value of derivative, which created a non-cash gain for the three months ended March 31, 2017.

 

Liquidity and Capital Resources

 

Historically, our primary source of liquidity has been from the issuances of debt financing. The primary uses of cash are payroll related expenses and professional fees.

 

Our balance sheet as of March 31, 2018 reflects $1,161,773 in cash. As of May 15, 2018, the Company had approximately $795,000 in cash.

 

Management is continuing to pursue financing from various sources, including private placements from investors and institutions. We do not have capital to satisfy our estimated needs for the next 12 months. Because of the uncertainty regarding the cryptocurrency business costs as well as the sums we owe our principal lenders, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate enough liquidity. At this time, our Company does not have a commitment from any party to provide additional financing. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable. Any financing will be extremely dilutive to our common shareholders. If we cannot obtain financing, we will cease operations.

 

Going Concern

 

The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern. The combination of these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

Critical Accounting Policies and Estimates

 

Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2018.

 

Because of our working capital limitations, our management is presently unable to spend any efforts in remediating these control deficiencies. 

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 2. RECENT UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

We have previously disclosed all sales of securities without registration under the Securities Act of 1933 except for the following:

 

Between April 2 and May 11, 2018, the Company issued 46,950,000 shares of common stock for the conversion of 46,950 shares of Series E. Additionally, on April 13, 2018, the Company issued 6,666,666 shares of common stock per the Advisor Agreement.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

On March 6, 2017, the Company issued the March 2017 Notes in the aggregate principal amount of $750,000 which matured on September 3, 2017. On the maturity date the Company was unable to repay the March 2017 Notes.

 

On August 18, 2017, the Company issued the August 2017 Notes in the aggregate principal amount of $63,158 which matured on September 3, 2017. On the maturity date the Company was unable to repay the August 2017 Notes.

 

The March 2017 Notes and August 2017 Notes were converted on January 3, 2018 into the Series E. See Note 8

 

On March 6, 2018, the holders of the October 2017 Notes and December 2017 Notes agreed to extend the due date of its debt to April 15, 2019.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

N/A.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 21 

 

ITEM 6. EXHIBITS

EXHIBIT INDEX

 

        Incorporated by Reference   Filed or Furnished
 Exhibit #   Exhibit Description  Form   Date   Number   Herewith
 2.1   Agreement and Plan of Merger**  8-K   9/13/16   2.1    
 2.2   Articles of Merger - Nevada  8-K   9/13/16   2.2    
 2.3   Statement of Merger - Arizona  8-K   9/13/16   2.3    
 3.1   Articles of Incorporation, as amended  S-1   2/8/17   3.1    
 3.2   Bylaws, as amended  S-1   2/8/17   3.2    
 4.1   Certificate of Designation of Series E Convertible Preferred Stock of TimefireVR Inc.  8-K   1/4/18   3.1    
 4.2   Amendment No. 1 to the Certificate of Designations of Series E Convertible Preferred Stock of TimefireVR Inc.  8-K   1/4/18   3.2    
 10.1   Form of Senior Secured Promissory Note  8-K   1/4/18   4.1    
 10.2   Form of Warrant dated March 6, 2018  8-K   3/7/18   10.3    
 10.3   Form of Securities Purchase Agreement  8-K   3/7/18   10.1    
 10.4   Form of Senior Secured Convertible Note  8-K   3/7/18   10.2    
 10.5   Form of Exchange Agreement**  8-K   1/4/18   10.1    
 10.6   Form of Membership Interest Purchase Agreement**  8-K   1/4/18   10.2    
 10.7   2016 Equity Incentive Plan, as amended  10-K   4/9/18   10.14    
 10.8   Form of Non-Qualified Stock Option Agreement  10-Q   8/21/17   10.1    
 31.1   Certification of Principal Executive Officer (302)              Filed
 31.2   Certification of Principal Financial Officer (302)              Filed
 32.1   Certification of Principal Executive and Principal Financial Officer (906)              Furnished*
 101.INS  XBRL Instance Document              Filed
 101.SCH  XBRL Taxonomy Extension Schema Document              Filed
 101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document              Filed
 101.DEF  XBRL Taxonomy Extension Definition Linkbase Document              Filed
 101.LAB  XBRL Taxonomy Extension Label Linkbase Document              Filed
 101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document              Filed

———————

 

  *

This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

     
  ** Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request.

 

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to TimefireVR Inc., at the address on the cover page of this report, Attention: Corporate Secretary.

  

 22 

 

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized, this 21st day of May, 2018.

 

TimefireVR Inc.    
     
     
 Signature   Title
     
/s/ Jonathan Read   Chief Executive Officer and Director
 Jonathan Read    
     
     
 Signature   Title
     
/s/ Jessica L. Smith   Chief Accounting and Financial Officer
 Jessica L. Smith    

 

 

23

EX-31.1 2 tfvr0518form10qexh31_1.htm EXHIBIT 31.1

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

I, Jonathan Read, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of TimefireVR Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

By: /s/ Jonathan Read          

Jonathan Read

Chief Executive Officer

(Principal Executive Officer)

Date: May 21, 2018

EX-31.2 3 tfvr0518form10qexh31_2.htm EXHIBIT 31.2

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

 

I, Jessica L. Smith, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of TimefireVR Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

By: /s/ Jessica L. Smith          

Jessica L. Smith

Chief Financial Officer

(Principal Financial Officer)

Date: May 21, 2018

EX-32.1 4 tfvr0518form10qexh32_1.htm EXHIBIT 32.1

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the quarterly report of TimefireVR Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Jonathan Read, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

  1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

 

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Jonathan Read          

Jonathan Read

Chief Executive Officer

(Principal Executive Officer)

Dated: May 21, 2018

 

 

 

In connection with the quarterly report of TimefireVR Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Jessica Smith, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

  1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

 

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Jessica L. Smith          

Jessica L. Smith

Chief Financial Officer

(Principal Financial Officer)

Dated: May 18, 2018

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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
May 18, 2018
Document And Entity Information    
Entity Registrant Name TimefireVR Inc.  
Entity Central Index Key 0000748268  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   209,218,470
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Current Assets:    
Cash $ 1,161,773 $ 559,237
Investment in ether 43,400
Note receivable 120,000
Interest receivable 1,800
Accounts receivable 38
Prepaid expenses and other current assets 189,269 131,250
Total current assets 1,516,242 690,525
Other Assets:    
Property and equipment, net 51,237 26,128
Deposit 33,500
Total Assets 1,567,479 750,153
Current Liabilities:    
Accounts payable and accrued expenses 73,494 349,469
Demand obligation payable - related party 116,883
Convertible notes payable, net 1,777,326 1,564,814
Accrued interest 200,154 321,824
Short-term advance - related party 57,400
Total current liabilities 2,050,974 2,410,390
Long Term Liabilities:    
Derivative liabilities 338,088 198,994
Total long term liabilities 338,088 198,994
Total liabilities 2,389,062 2,609,384
Commitments and Contingencies
Mezzanine Equity    
Preferred Series A stock, par value $.01 per share, 134,00 shares authorized; 133,334 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively. Stated at redemption value. 1,500,004
Shareholders' Deficit:    
Preferred Stock, par value $.01, 10,000,000 shares authorized all series 1,954 154
Obligation to issue common stock 7,667
Common stock, par value $.001 per share, 500,000,000 shares authorized; 155,601,804 and 47,269,804 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively 155,602 47,270
Additional paid-in capital 2,205,830 (666,101)
Accumulated deficit (3,192,636) (2,740,558)
Total shareholders' deficit (821,583) (3,359,235)
Total Liabilities and Shareholders' Deficit $ 1,567,479 $ 750,153
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2018
Dec. 31, 2017
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 195,382 15,425
Preferred stock, shares outstanding 195,382 15,425
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 155,601,804 47,269,804
Common stock, shares outstanding 155,601,804 27,269,804
Mezzanine Equity Preferred Series A stock    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 134,000 134,000
Preferred stock, shares issued 133,334
Preferred stock, shares outstanding 133,334
Preferred Series A-1 stock    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 21,000 21,000
Preferred stock, shares issued 14,923
Preferred stock, shares outstanding 14,923
Preferred Series B stock    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 300,000 300,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Preferred Series C stock    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares issued 502
Preferred stock, shares outstanding 502
Preferred Series E stock    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares issued 195,382
Preferred stock, shares outstanding 195,382
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Revenues
Operating expenses:    
Occupancy 3,095
Depreciation and amortization 868
Officer compensation 276,490 141,195
Professional fees 290,084 217,201
Other operating expenses 65,968 92,376
Total operating expenses 636,505 450,772
Loss from operations (636,505) (450,772)
Other income (expense):    
Change in fair value of derivative liabilities (268,928) 2,623,178
Loss in fair value of ether (56,600)
Interest income 1,841
Interest expense (162,134) (31,491)
Total other income (expense) (485,821) 2,591,687
Income (loss) from continuing operations (1,122,326) 2,140,915
Gain on disposal of Timefire, LLC 670,428
Loss from discontinued operations (180) (712,223)
Income (loss) from discontinued operations 670,248 (712,223)
Income tax expense
Net income (loss) $ (452,078) $ 1,428,692
Basic net income (loss) per common share $ (0.00) $ 0.03
Diluted net income (loss) per common share $ (0.00) $ 0.02
Basic weighted average common shares outstanding 114,181,237 44,864,716
Diluted weighted average common shares outstanding 114,181,237 69,244,021
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Operating Activites:    
Income (loss) from continuing operations $ (1,122,326) $ 2,140,915
Income (loss) from discontinued operations 670,248 (712,223)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 868 3,152
Common stock issued for services 71,339 32,500
Warrants and options issued for services 348,587 265,558
Change in derivative liabilities 268,928 (2,623,178)
Loss in fair value of ether 56,600
Restricted stock units issued for services 128,693
Interest expense from amortization of debt discount 25,670 5,910
Straight line non-cash rent expense 32,147
Gain on sale of subsidiary (670,428)
Changes in operating assets and liabilities:    
Interest receivable 136,645 28,936
Prepaid expenses and other current assets (58,019) (91,076)
Escrow fund 59,386
Deposits 78,000
Accrued interest 136,645 28,936
Accounts payable and accrued expenses (71,166) 24,614
Net Cash Used in Operating Activities (344,854) (626,666)
Investing Activities:    
Purchases of property and equipment (52,105)
Proceeds from sale of subsidiary net of subsidiary cash 99,495
Purchases of ether (100,000)
Net Cash Used in Investing Activities (52,610)
Financing Activities:    
Net proceeds from convertible notes payable 1,000,000 617,500
Net proceeds from convertible notes payable - related party 95,000
Net Cash Provided by Financing Activities 1,000,000 712,500
Net Increase in Cash 602,536 85,834
Cash - Beginning of Period 559,237 225,379
Cash - End of Period 1,161,773 311,213
Supplemental disclosure of non-cash investing and financing activities:    
Issuance of Series E Preferred for Series A, A-1 and C Preferred and warrants 1,629,992
Issuance of Series E Preferred for convertible debt and accrued interest 939,966
Conversion of Series E Preferred stock to common stock 108,332
Conversion of Series C Preferred stock to common stock 1,300
Conversion of Series A-1 Preferred stock to common stock 3,752
Note receivable from sale of subsidiary 120,000
Supplemental disclosure of cash flow information:    
Interest paid in cash 92
Income taxes paid in cash
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Cash Flows [Abstract]    
Conversion of Series A-1 Preferred stock to common stock $ 3,752
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies and Use of Estimates
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies and Use of Estimates
1.Summary of Significant Accounting Policies and Use of Estimates

Basis of Presentation and Organization and Reorganization

Effective September 13, 2016, TimefireVR Inc., a Nevada corporation (“Timefire,” “we,” “us,” “our” or the “Company”) entered into an Agreement and Plan of Merger (“Merger Agreement” or the “Merger”) through which it acquired Timefire LLC, a Phoenix-based virtual reality content developer and Arizona Limited Liability Company (“TLLC”). As consideration for the Merger, the Company issued the equity holders of TLLC a total of 41,400,000 shares of its common stock, and 2,800,000 five-year warrants exercisable at $0.58 per share for 100% of the membership interests of TLLC. As a result, the former members of TLLC owned approximately 99% of the then outstanding shares of common stock.

On January 3, 2018, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) by and between the Company and Mitchell Saltz (“Saltz”). Pursuant to the terms of the Agreement, Saltz acquired all the membership interests of the Company’s subsidiary, Timefire LLC (“TLLC”).

 

In consideration for entering in the Agreement, the Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest maturing in nine months. Additionally, Saltz or TLLC assumed certain of the Company’s liabilities including a sublease agreement entered into by the Company, loans made by Saltz to the Company, a certain $100,000 senior convertible note of the Company dated March 3, 2017, a certain services agreement entered into by the Company, certain past compensation owed to the Company’s former executive officers, and certain credit card debts owed by the Company.

 

On January 3, 2018, the Company purchased $100,000 of ether, the cryptocurrency offered by the Ethereum network. This purchase is the Company’s first material cryptocurrency purchase and signifies the start of the Company’s entry into the cryptocurrency business. The Company records its ether holdings at fair value per Coindesk.com as of the valuation date, and as a result, $56,600 in loss on fair value of ether was recorded for the three months ended March 31, 2018.

 

Unaudited Interim Financial Statements

 

The interim financial statements of the Company as of March 31, 2018 and 2017, and for the periods then ended, are prepared in accordance with the instructions to Form 10-Q. Accordingly, the accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2018 and the results of its operations and its cash flows for the periods ended March 31, 2018 and 2017. These results are not necessarily indicative of the results expected for the year ended December 31, 2018. The financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 9, 2018. The balance sheet as of December 31, 2017 has been derived from the audited financial statements included in that filing.

 

Principles of Consolidation

For accounting purposes, the Merger transaction was recorded as a reverse recapitalization, with TLLC as the accounting acquirer. Consequently, the historical pre-Merger financial statements of TLLC were then those of the Company. The financial statements for periods December 31, 2017 and prior include the accounts of the Company and TLLC. All significant intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee's activities are accounted for using the equity method where applicable.

Reclassifications

Certain reclassifications have been made in the March 31, 2017 financial statements to conform to the current period presentation, primarily relating to segregating continuing and discontinued operations. The reclassified financial statement items had no effect on net income for the period. For the three months ended March 31, 2017, the Company’s Statement of Operations and Cash Flows have been reclassified to the current presentation to reflect the discontinued operations resulting from the sale of TLLC.

Discontinued Operations

The Company has classified the operating results related to the TLLC virtual reality business, which was sold on January 3, 2018, as discontinued operations in the financial statements. As per SEC guidelines, the December 31, 2017 balance sheet has not been retrospectively adjusted to reflect discontinued operations. Such adjustment will be reflected when the December 31, 2017 balance sheet is first presented with annual financial statements that report discontinued operations.

Discontinued operations consist of specifically identified expenses as follows:

   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Revenues  $—     $—   
           
Operating expenses:          
Research and development   —      448,891 
Occupancy   —      23,207 
Depreciation and amortization   —      3,152 
Officer compensation   —      212,856 
Professional fees   —      500 
Other operating expenses   —      20,171 
Total operating expenses   —      708,777 
           
Loss from operations   —      (708,777)
           
Other income (expense):          
Gain on disposal of Timefire, LLC   670,428    —   
Interest income   —      2 
Interest expense   (180)   3,448 
Total other income (expense)   670,248    (3,446)
           
Income (loss) from continuing operations   670,248    (712,223)

Accounting Estimates

 

The preparation of financial statements in conformity with U.S. 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 revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, derivative liabilities, accruals and contingencies, the fair value of the Company’s common stock and the estimated fair value of warrants.

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, and (iii) collectability is reasonably assured.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments, with original maturity of three months or less when purchased, to be cash equivalents. We place our cash and cash equivalents with major financial institutions. Such amounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). From time to time, balances may exceed FDIC coverage limits.

 

Property and Equipment

 

Property and equipment is recorded at cost reduced by accumulated depreciation. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred.

 

The estimated useful lives of property and equipment are:

 

·Office furniture and equipment 5 years

 

Impairment of Long-Lived Assets and Intangible Assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 360-10, "Property, Plant, and Equipment," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset and amortizable intangible asset to be held and used. Long-lived assets and amortizable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset and amortizable intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets and amortizable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Business Segments

 

ASC 280, "Segment Reporting" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of March 31, 2018.

 

Research and Development Costs

 

Research and development costs, including design, development and testing of software, are expensed as incurred.

 

Income Taxes

 

The Company accounts for income taxes under FASB ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

 

Stock-Based Compensation

 

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of stock-based compensation arrangements based on the grant date fair value of granted instruments and recognizes the costs in the financial statements over the period during which such awards vest. Stock-based compensation arrangements include stock options and restricted stock awards.

 

Equity instruments (“Instruments”) issued to non-employees are recorded on the basis of the fair value of the Instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such Instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the Instruments are vested. The measured fair value related to the Instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

 

Net Income (Loss) Per Share

 

Basic earnings per share does not include dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. As of March 31, 2018 and 2017, there were total shares of 258,424,724 and 24,379,305, respectively, issuable upon conversion of preferred stock, exercise of warrants and options.

Fair Value Measurements

 

ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.

 

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:

 

Level 1- fair value measurements are those derived from quoted prices (unadjusted in active markets for identical assets or liabilities);

 

Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

 

Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.

 

Financial instruments classified as Level 1 - quoted prices in active markets include cash.

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2018. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts payable and accrued expenses.

 

Derivative Liabilities

 

The Company issued common stock purchase warrants in September 2016 in conjunction with the Merger Agreement.  Additional warrants were issued in March and August 2017 as part of private placement offerings. Warrants were also issued in March 2018 as part of a private placement offering (see Note 5) and per an advisory agreement (see Note 7). In accordance with ASC No. 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants is classified as a liability on the Company’s Balance Sheets because, according to the warrants' terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to certain warrant holders. Corresponding changes in the fair value of the warrants are recognized as a gain or loss on the Company’s Statements of Operations in each subsequent period.

The fair value of the warrants at March 31, 2018 and December 31, 2017 was $338,088 and 198,994, respectively. The difference has been recorded as a change in change in fair value of derivatives.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Going Concern
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern
2.Going Concern

The Company has incurred losses since inception and requires additional funds for future operating activities. The Company’s selling activity has not reached a level of revenue sufficient to fund its operating activities. These factors create an uncertainty as to how the Company will fund its operations and maintain sufficient cash flow to operate as a going concern. The combination of these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in response to these factors include the issuances of debt in exchange for cash such as that which is described in Note 5, Convertible Notes Payable.

 

The Company’s ability to meet its cash requirements in the next year is dependent upon obtaining additional financing. If this is not achieved, the Company will be unable to obtain sufficient cash flow to fund its operations and obligations, and as a result there is substantial doubt the Company will be able to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, and accordingly, do not include any adjustments relating to the recoverability and classification of recorded asset amounts; nor do they include adjustments to the amounts and classification of liabilities that might be necessary should the Company be unable to continue operations or be required to sell its assets.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Gain on Disposal of Timefire LLC
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Gain on Disposal of Timefire LLC
3.Gain on Disposal of Timefire LLC

 

As discussed in Note 1, on January 3, 2018, the Company entered into the Agreement. Pursuant to the terms of the Agreement, Mr. Saltz acquired all the membership interests of TLLC.

 

In consideration for entering into the Agreement, the Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest that matures in nine months. Additionally, Mr. Saltz and TLLC each assumed certain of the Company’s liabilities including a sublease agreement entered into by the Company, loans made by Mr. Saltz to the Company, a certain $100,000 senior convertible note from the March 2017 Notes, as defined below, a certain services agreement entered into by the Company, certain past compensation owed to the Company’s former executive officers, and certain credit card debts owed by the Company. Total gross proceeds from the sale were $220,000, including the cash payment and secured promissory note, plus $510,599 in liabilities relieved, less $60,171 of assets sold to TLLC resulted in a gain on disposal of $670,428.

 

Assets sold:   
Cash   (505)
Property & equipment, net   (26,128)
Accounts receivable   (38)
Deposit   (33,500)
    (60,171)
      
Liabilities relieved:     
Accounts payable & accrued expenses   204,809 
Demand obligation payable - related party   116,883 
Convertible notes payable   100,000 
Accrued interest   31,507 
Short-term advance - related party   57,400 
    510,599 
      
Additional consideration:     
Note receivable   120,000 
Cash   100,000 
    220,000 
      
Gain on disposal of Timefire, LLC   670,428 

 

The gain on disposal is included in the income from discontinued operations on the profit and loss statement for the three months ended March 31, 2018.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investment in Ether
3 Months Ended
Mar. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Investment in Ether
4.Investment in Ether

 

On January 3, 2018, the Company purchased $100,000 of ether, the cryptocurrency offered by the Ethereum network. The fair value of ether on March 31, 2018 was $43,400 and the Company took a charge to operations of $56,600 in the three months ended March 31, 2018.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Notes Payable
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Convertible Notes Payable

5.Convertible Notes Payable

 

On March 6, 2017, the Company closed on a private placement offering with institutional investors and one of the Company’s former directors pursuant to which the Company issued and sold the investors senior convertible notes (the “March 2017 Notes”) in the aggregate principal amount of $750,000, with an original issue discount of 5%, for gross proceeds to the Company of $712,500 prior to payment of $20,000 in reimbursement of legal fees of the lead investor. The March 2017 Notes matured on September 3, 2017 with an initial interest rate of 8%, and a default interest rate of 18% which became effective as of the maturity date. On the maturity date, the Company was obligated to repay an amount equal to 120% of outstanding principal and accrued interest. On the maturity date (and subsequently, if the holders elect to extend the maturity date), the investors may elect to convert the Notes into the common stock of the Company at $0.30 per share, subject to adjustment (the “Conversion Price”). As additional consideration, the Company issued the investors a total of 2,500,000 five-year warrants to purchase the Company’s common stock, which are exercisable on or after the maturity date at $0.35 per share. The Company failed to pay the March 2017 Notes on the maturity date, which date the investors did not elect to extend.

On August 18, 2017, the Company closed on an offering of convertible notes and warrants on terms substantially identical to the March 6, 2017 financing. The purchasers are the same investors as in the March 2017 Notes except for the former director who did not participate in this financing. The Company received $60,000 in net proceeds from the issuance of $63,158 of convertible notes (the “August 2017 Notes”). Additionally, the Company issued the investors a total of 210,526 five-year warrants exercisable at $.35 per share. The Company failed to pay the August 2017 Notes when due on September 3, 2017.

The March 2017 Notes and August 2017 Notes and accompanying warrants were converted on January 3, 2018 into Series E Preferred stock. See Note 8.

On October 27, 2017, the Company closed on an offering of convertible notes with two institutional investors in the principal amount of $70,000 (the “October 2017 Notes”). The October 2017 Notes matured on November 29, 2017 and bear interest at 8% per annum. On the maturity date, the Company was obligated to repay an amount equal to 120% of the outstanding principal and accrued interest. The investors may elect to convert the October 2017 Notes into common stock of the Company at $.03 per share. The Company failed to pay these October 2017 Notes when due.

On December 21, 2017, the Company closed on an offering with three institutional investors pursuant to which the Company issued and sold convertible notes in the aggregate principal amount of $703,947 (the “December 2017 Notes”). The December 2017 Notes had an original issue discount of 5%, for proceeds to the Company in the amount of $668,750. The notes matured on January 20, 2018, bear interest at 8%, and require the repayment of 120% of principal and accrued interest at maturity. The investors may elect to convert the December 2017 Notes into common stock of the Company at $.03 per share.

On March 6, 2018, the holders of the October 2017 Notes and December 2017 Notes agreed to extend the due date of these notes to April 15, 2019 as discussed below.

On March 6, 2018, the Company closed on a private placement offering with institutional investors pursuant to which the Company issued and sold Senior Secured Convertible Notes (the “2018 Notes”) to the Investors in the aggregate principal amount of $1,052,632 with an original issue discount of 5% and received gross proceeds of $1,000,000. The 2018 Notes mature on April 15, 2019 and bear interest at 8% per annum. The 2018 Notes are secured by a first lien on all of the assets of the Company. On the maturity date, the Company must repay an amount equal to 120% of the outstanding principal and accrued interest. Beginning on the six-month anniversary of the issuance of the 2018 Notes, the investors may elect to convert the 2018 Notes into common stock of the Company at $0.03 per share, subject to adjustment. In addition, the 2018 Notes are redeemable by the Company up to 90 days following issuance at an amount equal to 110% of outstanding principal and accrued interest, and thereafter at an amount equal to 120% of outstanding principal and accrued interest, subject in either case to upward adjustment to the extent the closing price of the Company’s common stock on the OTCQB exceeds the Conversion Price. As additional consideration, the Company issued the investors a total of 35,087,720 five-year warrants to purchase the Company’s common stock, which are exercisable on or after the six-month anniversary of the issuance at $0.06 per share. In addition, the Investors agreed to extend the due date of the October 2017 Notes and December 2017 Notes.

The aggregate principal amount of the above described notes is $1,826,579, which is shown in the accompanying balance sheet as of March 31, 2018, net of $49,253 debt discount, as convertible notes payable-net. Accrued interest amounted to $200,154 as of that date and interest expense aggregated $162,314 for the three months ended March 31, 2018.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

6.Related Party Transactions

 

On March 6, 2017, the Company issued one of the March 2017 Notes to a former director as an investor for $100,000. The Company’s obligation under the March 2017 Notes was cancelled on January 3, 2018 as described below.  

On June 2, 2017, the Company entered into an agreement with an entity managed by a former director of the Company to provide services to the entity. A retainer deposit of $57,400 was received, and services were to be initiated within sixty days. The Company’s obligation under this agreement was cancelled on January 3, 2018 as described below.

 

During the year ended December 31, 2017, the Company received advances totaling $116,883 from a related party, an original TLLC investor. These advances are not evidenced by a promissory note, and are non-interest bearing. The Company’s obligation to repay this amount was cancelled on January 3, 2018 as described below.

On January 3, 2018, the Company effected the sale of TLLC to a group of persons including TLLC’s former owners and two of the Company’s former executive officers and directors.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

7.Commitments and Contingencies

 

Employment Agreements

 

Effective September 13, 2016, the Company entered into an employment agreement with its former President, John Wise. The agreement was for a two year period at the rate of $150,000 per annum. The Company was in default on this agreement, and the payroll for this officer accrued from July 8, 2017 until his resignation in October 2017.

Effective September 13, 2016, the Company entered into an employment agreement with its former Chief Strategy Officer, who was later named Chief Executive Officer, Jeffrey Rassas. The Company was in default on this agreement, and the payroll for this officer accrued from May 16, 2017 until his resignation in October 2017.

Aggregate accrued payroll for these two former officers was approximately $106,000 as of December 31, 2017. These obligations were cancelled on January 3, 2018 as part of the sale of TLLC.

Effective January 3, 2018, the Company entered into an oral employment agreement (the “Read Agreement”) with the Company’s current Chief Executive Officer (the “CEO”), Jonathan Read. Under the terms of the Read Agreement the Company is paying Mr. Read an annual salary of $240,000 subject to his continued employment with the Company. Additionally, the Company paid Mr. Read compensation for his services as the Company’s CEO from October 20, 2017, to December 31, 2017, calculated as a pro-rata portion of an annual salary of $150,000. Additionally, on January 3, 2018 (the “Grant Date”) the Company’s Board of Directors (the “Board”) granted Mr. Read 15,000,000 stock options of which 5,000,000 vested on the Grant Date, 5,000,000 will vest one-year from the Grant Date, and 5,000,000 will vest two years from the Grant Date subject to continued employment with the Company.

Effective January 3, 2018, the Company agreed to compensate Gary Smith for his service as a non-employee director by paying him $2,500 per calendar quarter effective as of July 10, 2017.

Lease Agreements

 

On September 23, 2016, the Company entered into an office lease agreement commencing October 1, 2016.  This lease expires December 31, 2018.  As part of the sale of TLLC, the Company was released of this lease obligation as well as the rights to the security deposit. The Company has been renting an office space on a month-to-month basis, and incurred rent expense of approximately $3,100 during the three months ended March 31, 2018.

 

Other Agreements

 

On January 20, 2017, the Company entered into an agreement with a firm to provide their artificial intelligence conversational voice platform for integration into the Company’s product. Per the agreement, the Company issued 50,000 shares of common stock and was scheduled to make monthly payments towards a $127,500 integration fee. As of December 31, 2017, the Company had expensed $46,000, with $35,000 remaining in accounts payable. On January 3, 2018, the Company sold TLLC, and this payable, and any future obligations under this agreement, were relieved as part of this transaction.

On November 7, 2016, the Company entered into an agreement with a firm to provide general advisory and business development advisory services for a fee of $75,000. The Company remitted $75,000, but the contract was ultimately cancelled and the services were postponed. The amount was recorded as a deposit on contract. Later, on March 27, 2017, the Company entered into an agreement with the same firm to provide these services on an expanded scale for a fee of $150,000. Per the agreement, the firm applied our previously remitted funds and we paid the remaining $75,000 balance. In addition to the cash compensation, the firm was also compensated via a one-time equity retainer of 25,000 shares of common stock.

On April 4, 2017, the Company entered into an agreement with a firm to provide management and general business consulting services. The term of the agreement is 24 months, and the firm will be compensated via the issuance of 1,000,000 shares of common stock. The shares will be expensed ratably over the term of the agreement.

On January 18, 2018, the Company entered into an agreement for corporate communications counsel. The agreement is for an initial period of six months with a monthly fee of $5,000. Should the Company raise $2,000,000 or more, the monthly fee increases to $7,500 per month. The Company will issue 1,000,000 shares of common stock per this agreement. They have not yet been issued as of the date of this report.

 

On March 16, 2018, the Company entered into an Advisor Agreement with a third party (the “Advisor”), and David Drake (“Drake”), a well-known consultant to the cryptocurrency industry. Under the terms of the Agreement, Drake was appointed to the Company’s Advisory Board and Drake and the Advisor agreed to assist the Company in the implementation and execution of its cryptocurrency business model, including initiation of its mining business and recommending to the Company potential acquisitions and joint ventures in this sector. Drake is required to devote at least three business days per month to assisting the Company. The Company agreed to issue the Advisor 6,666,666 shares of common stock valued at $0.03 per share, which shares shall vest quarterly over a 12-month period subject to the Advisor Agreement not having been terminated as of each applicable vesting date. The Company also issued the Advisor 6,666,666 3-year warrants, with the same vesting period, exercisable at $0.05 per share. The Company agreed to pay the Advisor a royalty from revenues received from its mining of cryptocurrency with the royalties decreasing over a five-year period. Finally, the Company agreed to reimburse the Advisor $5,000 a month for the services of an engineer to operate the Company’s cryptocurrency mining business.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Deficit
3 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
Shareholders' Deficit
8.Shareholders’ Deficit

 

Common Stock

 

There is currently only one class of common stock. Each share of common stock is entitled to one vote. The authorized number of shares of common stock of the Company at March 31, 2018 was 500,000,000 shares with a par value per share of $0.001. Authorized shares that have been issued and fully paid amounted to 155,601,804 as of March 31, 2018.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.01 per share, with rights, preferences and limitations as may be decided from time-to-time by the Board of Directors.

 

Series E

Effective January 3, 2018, the Board of Directors authorized the issuance of up to 305,000 shares of Series E Convertible Preferred Stock ("Series E"). Each share of Series E has a stated value of $1,000 and is convertible into shares of our common stock at a conversion price of $1.00 per share. The Series E does not have any price protection from future issuances of securities by the Company at a price below the conversion price then in effect.

 

Pursuant to an Exchange Agreement entered into effective January 3, 2018, we issued 303,714 shares of the Series E in exchange for the cancellation of the following securities:

 

  • 133,333.69 shares of Series A Convertible Preferred Stock (extinguishing such series) - 133,334 Series E shares;
  • 14,923.30 shares of Series A-1 Convertible Preferred Stock (extinguishing such series) – 44,770 Series E shares;
  • 501.54 shares of Series C Convertible Preferred Stock (extinguishing such series) – 50,154 Series E shares;
  • $650,000 of Senior Convertible Notes issued March 3, 2017 – 63,368 Series E shares;
  • $63,158 of Senior Convertible Notes issued August 21, 2017 – 7,125 Series E shares; and
  • Warrants to purchase 4,963,402 shares of our common stock – 4,963 Series E shares.

During the three months ended March 31, 2018, holders of 108,332 shares of Series E converted them into 108,332,000 shares of our common stock. At March 31, 2018, there are 195,382 shares of Series E outstanding, which are convertible into an aggregate of 195,382,000 shares of our common stock.

 

Series C

In 2014, the Board approved the issuance of Series C Preferred Stock (“Series C”). Each share of Series C shall be convertible at the option of the holder at any time, into 10,000 shares of common stock. During the year ended December 31, 2017, holders of 113 shares of Series C converted them into 1,130,000 shares of our common stock. At December 31, 2017, there are 501.54 shares of Series C outstanding. Effective January 3, 2018, all Series C shares were cancelled in exchange for 50,154 Series E shares.

 

Series A-1

Effective August 24, 2016, the Board approved the issuance of Series A-1 Preferred Stock (“Series A-1”). Each share of Series A-1 shall be convertible at the option of the holder at any time, into 100 shares of common stock. During the year ended December 31, 2017, holders of 5447.39 shares of Series A-1 converted them into 544,739 shares of common stock. At December 31, 2017, there are 14,923 shares of Series A-1 outstanding. Effective January 3, 2018, all Series A-1 shares were cancelled in exchange for 44,770 Series E shares.

 

Series A

Effective September 13, 2016, the Company closed on the SPA and the Board approved the issuance of a newly designated Series A Convertible Preferred Stock (“Series A”). At December 31, 2017, there were 133,334 shares of Series A outstanding. Effective January 3, 2018, all Series A shares were cancelled in exchange for 133,334 Series E shares.

 

The Series A contained certain provisions that were outside the Company's control and which the Company believed caused the Series A to be classified as mezzanine equity.

 

Warrants

 

The balance of warrants outstanding for purchase of the Company’s common stock as of March 31, 2018 is as follows:

 

   Common Shares Issuable Upon Exercise of Warrants  Exercise Price of Warrants 

 

Date

Issued

 

 

Expiration

Date

Balance of warrants at December 31, 2017   8,096,736            
Cancelled in exchange for Series E (1)   (4,963,402)           
Issued per offering (2)   35,087,720   $.06   3/6/2018  9/6/2023
Issued for services (3)   6,666,666   $.05   3/16/2018  3/16/2021
Balance of warrants at December 31, 2017   44,887,720            

 

(1) As discussed above, on January 3, 2018, 4,963,402 warrants to purchase shares of common stock were cancelled in exchange for 4,963 Series E shares.

 

(2) On March 6, 2018, pursuant to the 2018 Notes (see Note 5), the Company issued warrants at $.06 to purchase 35,087,720 shares of common stock. The warrants may not be exercised for six months after their effective date of March 6, 2018. The warrants have an expiration date of five years after the initial six months have passed. As of March 31, 2018, the Company has recorded $270,175 as a derivative liability for these warrants.

 

(3) On March 16, 2018, per the terms of the Advisor Agreement (see Note 7), the Company issued warrants at $.05 to purchase 6,666,666 shares of common stock. The warrants have an expiration date of March 16, 2021. As of March 31, 2018, the Company has recorded $48,800 as a derivative liability for these warrants.

 

2016 Equity Incentive Plan

 

Effective September 13, 2016, the Company adopted the 2016 Equity Incentive Plan (the "2016 Plan") to provide an incentive to our employees, consultants, officers and directors who are responsible for or contribute to our long-range success. A total of 3,300,000 shares of our common stock were originally reserved for the implementation of the 2016 Plan, either through the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, or restricted stock units. Whenever practical, the 2016 Plan is to be administered by a committee of not less than two members of the Board of Directors appointed by the full Board, and the 2016 Plan has a term of ten years, unless sooner terminated by the Board. On January 3, 2018, the Board amended the Company’s 2016 Equity Incentive Plan by increasing the authorized number of shares available under the plan by 30,000,000. As of March 31, 2018, 15,145,000 shares of common stock remain available for issuance under the 2016 Plan.

 

Effective September 13, 2016, pursuant to his employment agreement, the Company entered into a Restricted Stock Unit (“RSU”) Agreement with Mr. Read which granted him 500,000 RSUs pursuant to the 2016 Plan. The RSUs were to vest in three approximately equal increments with the first tranche being fully vested on the grant date and the remaining tranches vesting on the first-year and second-year anniversaries of the grant date. The fair value of the award was calculated based on the price of the common stock on the grant date and was to be expensed over the vesting period. Effective January 31, 2017, Mr. Read’s former employment agreement was terminated and the RSUs became fully vested. The Company recorded $0 and $128,695 in expense related to this grant during the three months ended March 31, 2018 and 2017, respectively.

On January 20, 2017, the Company granted options to purchase 1,655,000 shares of its common stock at $.50 to employees including a total of 800,000 options to its then Chief Executive Officer and Chief Financial Officer per the 2016 Plan. The shares will vest based on months of service as of the grant date. Employees that had worked for twelve months or more as of the grant date had one-third of their options vested as of grant date. All other employees received pro-rata vesting for the portion of a year that they had worked. The remaining options will equally vest on the 1st and 2nd anniversary of the grant date. The Company recorded $72,775 and $265,558 in expense related to this grant during the three months ended March 31, 2018 and 2017, respectively.

On January 3, 2018, as part of an oral employment agreement with the Company’s Chief Executive Officer, the Company granted Mr. Read 15,000,000 stock options of which 5,000,000 vested on the grant date, 5,000,000 will vest one-year from the grant date, and 5,000,000 will vest two years from the grant date subject to continued employment with the Company. The Company recorded $182,625 in expense related to this grant during the three months ended March 31, 2018.

 

On January 22, 2018, the Company granted board member Gary Smith 1,000,000 stock options under the 2016 Plan, exercisable at $.03 per share, vesting quarterly over one year beginning in three months subject to continued service as a director on each applicable vesting date. The Company recorded $5,253 in expense related to this grant during the three months ended March 31, 2018.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
9.Fair Value Measurements

 

Our financial instruments consist of cash, accounts payable, accrued liabilities, and warrant liability. We do not believe that we are exposed to significant interest, currency, or credit risks arising from these financial instruments. The fair values of the warrants approximates their carrying values using Level 3 inputs. Gains and losses recognized on changes in fair value of the warrants are reported in other income (expense). Our warrant valuation was measured at fair value by applying the Black-Scholes option valuation model, which utilizes Level 3 inputs.

The assumptions used in the Black-Scholes option re-valuation for the September 2016 warrants at March 31, 2018 are as follows:

Dividend yield – 0% Expected life – 3.5 years
Risk-free interest rate - 2.39% Volatility – 214.719%.  

 

The assumptions used for the March 2017 warrants at March 31, 2018 are as follows:

Dividend yield – 0% Expected life – 4.5 years
Risk-free interest rate - 2.56% Volatility – 222.540%.  

 

The assumptions used for the March 6, 2018 warrants at March 31, 2018 are as follows:

 

Dividend yield – 0% Expected life – 5.5 years
Risk-free interest rate - 2.56% Volatility – 218.873%.  

 

The assumptions used for the March 16, 2018 warrants at March 31, 2018 are as follows:

 

Dividend yield – 0% Expected life – 3.0 years
Risk-free interest rate - 2.39% Volatility – 247.097%.  

 

The following summarizes the Company's financial liabilities that are measured at fair value on a recurring basis at March 31, 2018.

 

   Level 1  Level 2  Level 3  Total
Liabilities                    
Derivative liabilities  $—     $—     $338,088   $338,088 

 

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events
3 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
Subsequent Events
10.Subsequent Events

 

Between April 2 and May 11, 2018, the Company issued 46,950,000 shares of common stock for the conversion of 46,950 shares of Series E. Additionally, on April 13, 2018, the Company issued 6,666,666 shares of common stock per the Advisor Agreement (see Note 8).

 

On May 10, 2018, the Company purchased $276,200 of additional cryptocurrency mining equipment.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies and Use of Estimates (Policies)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation and Organization and Reorganization

Basis of Presentation and Organization and Reorganization

Effective September 13, 2016, TimefireVR Inc., a Nevada corporation (“Timefire,” “we,” “us,” “our” or the “Company”) entered into an Agreement and Plan of Merger (“Merger Agreement” or the “Merger”) through which it acquired Timefire LLC, a Phoenix-based virtual reality content developer and Arizona Limited Liability Company (“TLLC”). As consideration for the Merger, the Company issued the equity holders of TLLC a total of 41,400,000 shares of its common stock, and 2,800,000 five-year warrants exercisable at $0.58 per share for 100% of the membership interests of TLLC. As a result, the former members of TLLC owned approximately 99% of the then outstanding shares of common stock.

On January 3, 2018, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) by and between the Company and Mitchell Saltz (“Saltz”). Pursuant to the terms of the Agreement, Saltz acquired all the membership interests of the Company’s subsidiary, Timefire LLC (“TLLC”).

 

In consideration for entering in the Agreement, the Company received: (i) $100,000 in cash and (ii) a secured promissory note in the principal amount of $120,000 bearing 6% annual interest maturing in nine months. Additionally, Saltz or TLLC assumed certain of the Company’s liabilities including a sublease agreement entered into by the Company, loans made by Saltz to the Company, a certain $100,000 senior convertible note of the Company dated March 3, 2017, a certain services agreement entered into by the Company, certain past compensation owed to the Company’s former executive officers, and certain credit card debts owed by the Company.

 

On January 3, 2018, the Company purchased $100,000 of ether, the cryptocurrency offered by the Ethereum network. This purchase is the Company’s first material cryptocurrency purchase and signifies the start of the Company’s entry into the cryptocurrency business. The Company records its ether holdings at fair value per Coindesk.com as of the valuation date, and as a result, $56,600 in loss on fair value of ether was recorded for the three months ended March 31, 2018.

Unaudited Interim Financial Statements

Unaudited Interim Financial Statements

 

The interim financial statements of the Company as of March 31, 2018 and 2017, and for the periods then ended, are prepared in accordance with the instructions to Form 10-Q. Accordingly, the accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2018 and the results of its operations and its cash flows for the periods ended March 31, 2018 and 2017. These results are not necessarily indicative of the results expected for the year ended December 31, 2018. The financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 9, 2018. The balance sheet as of December 31, 2017 has been derived from the audited financial statements included in that filing.

Principles of Consolidation

Principles of Consolidation

For accounting purposes, the Merger transaction was recorded as a reverse recapitalization, with TLLC as the accounting acquirer. Consequently, the historical pre-Merger financial statements of TLLC were then those of the Company. The financial statements for periods December 31, 2017 and prior include the accounts of the Company and TLLC. All significant intercompany transactions and balances have been eliminated. Equity investments through which we exercise significant influence over but do not control the investee and are not the primary beneficiary of the investee's activities are accounted for using the equity method where applicable.

Reclassifications

Reclassifications

Certain reclassifications have been made in the March 31, 2017 financial statements to conform to the current period presentation, primarily relating to segregating continuing and discontinued operations. The reclassified financial statement items had no effect on net income for the period. For the three months ended March 31, 2017, the Company’s Statement of Operations and Cash Flows have been reclassified to the current presentation to reflect the discontinued operations resulting from the sale of TLLC.

Discontinued Operations

Discontinued Operations

The Company has classified the operating results related to the TLLC virtual reality business, which was sold on January 3, 2018, as discontinued operations in the financial statements. As per SEC guidelines, the December 31, 2017 balance sheet has not been retrospectively adjusted to reflect discontinued operations. Such adjustment will be reflected when the December 31, 2017 balance sheet is first presented with annual financial statements that report discontinued operations.

Discontinued operations consist of specifically identified expenses as follows:

   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Revenues  $—     $—   
           
Operating expenses:          
Research and development   —      448,891 
Occupancy   —      23,207 
Depreciation and amortization   —      3,152 
Officer compensation   —      212,856 
Professional fees   —      500 
Other operating expenses   —      20,171 
Total operating expenses   —      708,777 
           
Loss from operations   —      (708,777)
           
Other income (expense):          
Gain on disposal of Timefire, LLC   670,428    —   
Interest income   —      2 
Interest expense   (180)   3,448 
Total other income (expense)   670,248    (3,446)
           
Income (loss) from continuing operations   670,248    (712,223)
Accounting Estimates

Accounting Estimates

 

The preparation of financial statements in conformity with U.S. 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 revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include accounting for depreciation and amortization, derivative liabilities, accruals and contingencies, the fair value of the Company’s common stock and the estimated fair value of warrants.

Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable, and (iii) collectability is reasonably assured.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments, with original maturity of three months or less when purchased, to be cash equivalents. We place our cash and cash equivalents with major financial institutions. Such amounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). From time to time, balances may exceed FDIC coverage limits.

Property and Equipment

Property and Equipment

 

Property and equipment is recorded at cost reduced by accumulated depreciation. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred.

 

The estimated useful lives of property and equipment are:

 

·Office furniture and equipment 5 years

 

Impairment of Long-Lived Assets and Intangible Assets

Impairment of Long-Lived Assets and Intangible Assets

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 360-10, "Property, Plant, and Equipment," which established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset and amortizable intangible asset to be held and used. Long-lived assets and amortizable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset and amortizable intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets and amortizable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Business Segments

Business Segments

 

ASC 280, "Segment Reporting" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of March 31, 2018.

Research and Development Costs

Research and Development Costs

 

Research and development costs, including design, development and testing of software, are expensed as incurred.

Income Taxes

Income Taxes

 

The Company accounts for income taxes under FASB ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Stock-Based Compensation

Stock-Based Compensation

 

In accordance with ASC No. 718, Compensation – Stock Compensation (“ASC 718”), the Company measures the compensation costs of stock-based compensation arrangements based on the grant date fair value of granted instruments and recognizes the costs in the financial statements over the period during which such awards vest. Stock-based compensation arrangements include stock options and restricted stock awards.

 

Equity instruments (“Instruments”) issued to non-employees are recorded on the basis of the fair value of the Instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees (“ASC 505”), defines the measurement date and recognition period for such Instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete and (ii) the Instruments are vested. The measured fair value related to the Instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

Net Income (Loss) per Share

Net Income (Loss) Per Share

 

Basic earnings per share does not include dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. As of March 31, 2018 and 2017, there were total shares of 258,424,724 and 24,379,305, respectively, issuable upon conversion of preferred stock, exercise of warrants and options.

Fair Value Measurements

Fair Value Measurements

 

ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.

 

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:

 

Level 1- fair value measurements are those derived from quoted prices (unadjusted in active markets for identical assets or liabilities);

 

Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

 

Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment to estimation. Valuations based on unobservable inputs are highly subjective and require significant judgments. Changes in such judgments could have a material impact on fair value estimates. In addition, since estimates are as of a specific point in time, they are susceptible to material near-term changes. Changes in economic conditions may also dramatically affect the estimated fair values.

 

Financial instruments classified as Level 1 - quoted prices in active markets include cash.

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2018. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts payable and accrued expenses.

Derivative Liabilities

Derivative Liabilities

 

The Company issued common stock purchase warrants in September 2016 in conjunction with the Merger Agreement.  Additional warrants were issued in March and August 2017 as part of private placement offerings. Warrants were also issued in March 2018 as part of a private placement offering (see Note 5) and per an advisory agreement (see Note 7). In accordance with ASC No. 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants is classified as a liability on the Company’s Balance Sheets because, according to the warrants' terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to certain warrant holders. Corresponding changes in the fair value of the warrants are recognized as a gain or loss on the Company’s Statements of Operations in each subsequent period.

The fair value of the warrants at March 31, 2018 and December 31, 2017 was $338,088 and 198,994, respectively. The difference has been recorded as a change in change in fair value of derivatives.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies and Use of Estimates (Tables)
3 Months Ended
Mar. 31, 2018
Summary Of Significant Accounting Policies And Use Of Estimates Tables  
Discontinued operations
   Three Months Ended
   March 31,  March 31,
   2018  2017
       
Revenues  $—     $—   
           
Operating expenses:          
Research and development   —      448,891 
Occupancy   —      23,207 
Depreciation and amortization   —      3,152 
Officer compensation   —      212,856 
Professional fees   —      500 
Other operating expenses   —      20,171 
Total operating expenses   —      708,777 
           
Loss from operations   —      (708,777)
           
Other income (expense):          
Gain on disposal of Timefire, LLC   670,428    —   
Interest income   —      2 
Interest expense   (180)   3,448 
Total other income (expense)   670,248    (3,446)
           
Income (loss) from continuing operations   670,248    (712,223)
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Gain on Disposal of Timefire LLC (Tables)
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Gain on disposal of Timefire LLC included in income from discontinued operations
Assets sold:   
Cash   (505)
Property & equipment, net   (26,128)
Accounts receivable   (38)
Deposit   (33,500)
    (60,171)
      
Liabilities relieved:     
Accounts payable & accrued expenses   204,809 
Demand obligation payable - related party   116,883 
Convertible notes payable   100,000 
Accrued interest   31,507 
Short-term advance - related party   57,400 
    510,599 
      
Additional consideration:     
Note receivable   120,000 
Cash   100,000 
    220,000 
      
Gain on disposal of Timefire, LLC   670,428 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Deficit (Tables)
3 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
Balance of warrants outstanding for purchase of Company's common stock
   Common Shares Issuable Upon Exercise of Warrants  Exercise Price of Warrants 

 

Date

Issued

 

 

Expiration

Date

Balance of warrants at December 31, 2017   8,096,736            
Cancelled in exchange for Series E (1)   (4,963,402)           
Issued per offering (2)   35,087,720   $.06   3/6/2018  9/6/2023
Issued for services (3)   6,666,666   $.05   3/16/2018  3/16/2021
Balance of warrants at December 31, 2017   44,887,720            
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Financial liabilities measure at fair value on a recurring basis
   Level 1  Level 2  Level 3  Total
Liabilities                    
Derivative liabilities  $—     $—     $338,088   $338,088 
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies and Use of Estimates - Discontinued operations (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Summary Of Significant Accounting Policies And Use Of Estimates - Discontinued Operations Details    
Revenues
Operating expenses:    
Research and development 448,891
Occupancy 23,207
Depreciation and amortization 3,152
Officer compensation 212,856
Professional fees 500
Other operating expenses 20,171
Total operating expenses 708,777
Loss from operations (708,777)
Other income (expense):    
Gain on disposal of Timefire, LLC 670,428
Interest income 2
Interest expense (180) 3,448
Total other income (expense) 670,248 (3,446)
Income (loss) from continuing operations $ 670,248 $ (712,223)
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies and Use of Estimates (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Sep. 30, 2016
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Cash proceeds received for subsidiary Purchase Agreement   $ 100,000    
Promissory note received for subsidiary Purchase Agreement, principal amount   $ 120,000    
Useful life of office furniture and equipment   5 years    
Antidilutive securities excluded from calculation of earnings per share   258,424,724 24,379,305  
Fair value of warrants   $ 338,088   $ 198,994
Merger Agreement        
Company common stock issued to equity holders of Timefire, shares 41,400,000      
Warrants issued to equity holders of Timefire, shares 2,800,000      
Warrants issued to equity holders of Timefire, exercise price $ 0.058      
Membership interest of Timefire acquired 100.00%      
Company voting interest owned by former Timeshare members 99.00%      
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Gain on Disposal of Timefire LLC - Gain on disposal of Timefire LLC included in income from discontinued operations (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Assets sold:    
Cash $ (505)  
Property & equipment, net (26,128)  
Accounts receivable (38)  
Deposit (33,500)  
Assets sold, total (60,171)  
Liabilities relieved:    
Accounts payable & accrued expenses 204,809  
Demand obligation payable - related party 116,883  
Convertible notes payable 100,000  
Accrued interest 31,507  
Short-term advance - related party 57,400  
Liabilities relieved, total 510,599  
Additional consideration:    
Note receivable 120,000  
Cash 100,000  
Additional consideration, total 220,000  
Gain on disposal of Timefire, LLC $ 670,428
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Gain on Disposal of Timefire LLC (Details Narrative)
3 Months Ended
Mar. 31, 2018
USD ($)
Discontinued Operations and Disposal Groups [Abstract]  
Total gross proceeds from sale $ 220,000
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investment in Ether (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Investments, Debt and Equity Securities [Abstract]    
Payments for purchase of ether $ (100,000)
Fair value of ether 43,400  
Charge to operations $ 56,600  
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Notes Payable (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 13 Months Ended
Jan. 20, 2018
Nov. 29, 2017
Sep. 03, 2017
Mar. 31, 2018
Sep. 03, 2017
Apr. 15, 2019
Convertible notes payable, amount       $ 1,826,579    
Debt discount on convertible notes payable       49,253    
Accrued interest on convertible notes payable       200,154    
Interest expense on convertible notes payable       $ 162,314    
March 2017 Notes            
Convertible notes payable, amount     $ 750,000   $ 750,000  
Original issue discount percentage         5.00%  
Gross proceeds received by Company         $ 712,500  
Reimbursement of legal fees         $ 20,000  
Maturity date         Sep. 03, 2017  
Interest per annum         8.00%  
Conversion price per share     $ .30   $ .30  
Warrants issued as additional compensation         2,500,000  
Warrant term         5 years  
Exercise price of warrants issued         $ 0.35  
August 2017 Notes            
Convertible notes payable, amount     $ 63,158   $ 63,158  
Gross proceeds received by Company     $ 60,000      
Maturity date     Sep. 03, 2017      
Warrants issued as additional compensation     210,526      
Warrant term     5 years      
Exercise price of warrants issued     $ 0.35      
October 2017 Notes            
Convertible notes payable, amount   $ 70,000        
Maturity date   Nov. 29, 2017       Apr. 15, 2019
Interest per annum   8.00%        
Conversion price per share   $ 0.03        
December 2017 Notes            
Convertible notes payable, amount $ 703,947          
Original issue discount percentage 5.00%          
Gross proceeds received by Company $ 668,750          
Maturity date Jan. 20, 2018         Apr. 15, 2019
Interest per annum 8.00%          
Conversion price per share $ 0.03          
2018 Notes            
Convertible notes payable, amount           $ 1,052,632
Original issue discount percentage           5.00%
Gross proceeds received by Company           $ 1,000,000
Maturity date           Apr. 15, 2019
Interest per annum           8.00%
Conversion price per share           $ 0.03
Warrants issued as additional compensation           35,087,720
Warrant term           5 years
Exercise price of warrants issued           $ 0.06
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2017
Jun. 02, 2017
Mar. 06, 2017
Related Party Transactions [Abstract]      
Investors' note amount     $ 100,000
Retainer deposit received for services to entity managed by former director   $ 57,400  
Advances received from related party $ 116,883    
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 2 Months Ended 3 Months Ended 11 Months Ended 14 Months Ended
Apr. 04, 2017
Mar. 27, 2017
Nov. 07, 2016
May 11, 2018
Mar. 31, 2018
Mar. 31, 2018
Mar. 31, 2018
Mar. 31, 2018
Dec. 31, 2017
Oct. 30, 2017
Employment Agreements                    
Accrued payroll for former officers                 $ 106,000  
Lease Agreements                    
Rent expense               $ 3,100    
Other Agreements                    
Shares of common stock issued per agreement with firm 1,000,000               50,000  
Total expense for agreement with firm                 $ 46,000  
Remaining amounts owed to firm in accounts payable                 35,000  
Integration fee paid to firm                 $ 127,500  
Fee paid to firm for advisory services upon execution of contract   $ 75,000 $ 75,000              
Common stock to be issued to firm   25,000                
Monthly consulting fee for corporate communications counsel           $ 5,000        
Common stock to be issued for corporate communications counsel           1,000,000        
Common stock issued to Advisor, shares       6,666,666 6,666,666          
Common stock issued to Advisor, value per share         $ 0.03          
Warrants issued to Advisor, shares         6,666,666          
Warrants issued to Advisor, exercise price per share         $ 0.05          
Monthly reimbursement amount for services of engineer         $ 5,000          
Former CEO                    
Employment Agreements                    
Annual compensation                   $ 150,000
CEO                    
Employment Agreements                    
Annual compensation             $ 240,000      
Stock options granted             15,000,000      
Non-employee director                    
Employment Agreements                    
Compensation fee per quarter             $ 2,500      
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Deficit - Balance of warrants outstanding for purchase of Company's common stock (Details)
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Balance of warrants  
Common shares issuable upon exercise of warrants, beginning 8,096,736
Common shares issuable upon exercise of warrants, ending 44,887,720
Cancelled in exchange for Series E (1)  
Warrants cancelled (4,963,402)
Issued per Offering (2)  
Warrants issued 35,087,720
Exercise price of warrants | $ / shares $ 0.06
Date issued Mar. 06, 2018
Expiration date Sep. 06, 2023
Issued for services (3)  
Warrants issued 6,666,666
Exercise price of warrants | $ / shares $ 0.05
Date issued Mar. 16, 2018
Expiration date Mar. 16, 2021
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Deficit (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
May 11, 2018
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Common Stock        
Common stock, par value   $ 0.001   $ 0.001
Common stock, shares authorized   500,000,000   500,000,000
Common stock, shares issued   155,601,804   47,269,804
Common stock, shares outstanding   155,601,804   27,269,804
Preferred Stock        
Preferred stock, par value   $ 0.01   $ 0.01
Preferred stock, shares authorized   10,000,000   10,000,000
Series E Convertible Preferred Stock, shares authorized   305,000    
Series E Convertible Preferred Stock, value per share   $ 1,000    
Series E Convertible Preferred Stock, conversion price per share into common stock   $ 1.00    
Series E Convertible Preferred Stock, shares issued in exchange for cancellation of securities   303,714    
Series E Convertible Preferred Stock, shares converted 46,950 108,332    
Series E Convertible Preferred Stock, common shares issued upon conversion 46,950,000 108,332,000    
2016 Equity Incentive Plan        
Common stock reserved for implementation of 2016 Equity Incentive Plan, shares   30,000,000    
Common stock available for issuance under 2016 Plan, shares   15,145,000    
Restricted Stock Units granted to CEO   500,000    
Expense recorded on grant of restricted stock units to CEO   $ 128,693    
Options granted, shares   1,655,000    
Options granted, price per share   $ 0.50    
Expense related to grants of options   $ 72,775 $ 265,558  
Chief Executive Officer options        
2016 Equity Incentive Plan        
Options granted, shares   15,000,000    
Expense related to grants of options   $ 182,625    
Non-employee director options        
2016 Equity Incentive Plan        
Options granted, shares   1,000,000    
Options granted, price per share   $ 0.03    
Expense related to grants of options   $ 5,253    
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements - Financial liabilities measure at fair value on a recurring basis (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Liabilities    
Derivative liabilities $ 338,088 $ 198,994
Level 1    
Liabilities    
Derivative liabilities  
Level 2    
Liabilities    
Derivative liabilities  
Level 3    
Liabilities    
Derivative liabilities $ 338,088  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements (Details Narrative)
3 Months Ended
Mar. 31, 2018
September 2016 warrants re-valuation  
Assumptions used to determine fair value of warrants, dividend yield 0.00%
Assumptions used to determine fair value of warrants, risk-free interest rate 2.39%
Assumptions used to determine fair value of warrants, expected life 3 years 6 months
Assumptions used to determine fair value of warrants, volatility 214.719%
March 2017 warrants valuation  
Assumptions used to determine fair value of warrants, dividend yield 0.00%
Assumptions used to determine fair value of warrants, risk-free interest rate 2.56%
Assumptions used to determine fair value of warrants, expected life 4 years 6 months
Assumptions used to determine fair value of warrants, volatility 222.54%
March 6, 2018 warrants valuation  
Assumptions used to determine fair value of warrants, dividend yield 0.00%
Assumptions used to determine fair value of warrants, risk-free interest rate 2.56%
Assumptions used to determine fair value of warrants, expected life 5 years 6 months
Assumptions used to determine fair value of warrants, volatility 218.873%
March 16, 2018 warrants valuation  
Assumptions used to determine fair value of warrants, dividend yield 0.00%
Assumptions used to determine fair value of warrants, risk-free interest rate 2.39%
Assumptions used to determine fair value of warrants, expected life 3 years
Assumptions used to determine fair value of warrants, volatility 247.097%
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
May 11, 2018
May 11, 2018
Mar. 31, 2018
Mar. 31, 2018
Mar. 31, 2017
Subsequent Events [Abstract]          
Common stock issued for conversion of Series E, common shares issued   46,950,000   108,332,000  
Common stock issued for conversion of Series E, preferred shares converted   46,950   108,332  
Common stock issued per Advisor Agreement, shares   6,666,666 6,666,666    
Payments for purchase of equipment $ 276,200     $ 52,105
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