Riot Blockchain, Inc.
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(Exact name of registrant as specified in its charter)
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Nevada
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84-1553387
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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202 6th Street, Suite 401 Castle Rock, CO 80104
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(Address of principal executive offices) (Zip Code)
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(303) 794-2000
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(Registrant's telephone number, including area code)
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Page
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PART I - Financial Information
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||||||
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Item 1.
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Consolidated Financial Statements
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||||
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Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016
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3
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||||
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Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)
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4
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Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2017 (unaudited)
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5
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Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited)
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6
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||||
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Notes to Consolidated Financial Statements (unaudited)
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7
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||||
Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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25
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||||
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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29
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Item 4.
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Controls and Procedures
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29
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||||
PART II - Other Information
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||||||
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||||
Item 1.
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Legal Proceedings
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30
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||||
Item 1A.
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Risk Factors
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30
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||||
Item 6.
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Exhibits
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38
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||||
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Signatures
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39
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||||||||
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September 30,
2017
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December 31,
2016
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(Unaudited)
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(Reclassified)
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||
ASSETS
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||||
Current assets (Note 1):
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
13,139,722
|
|
|
$
|
5,529,848
|
|
Short-term investments
|
|
|
-
|
|
|
|
7,506,761
|
|
Prepaid expenses and other current assets
|
|
|
295,059
|
|
|
|
219,991
|
|
Current assets of discontinued operations (Note 9)
|
|
|
11,532
|
|
|
|
486,890
|
|
|
|
|
|
|
|
|
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Total current assets
|
|
|
13,446,313
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|
|
|
13,743,490
|
|
|
||||||||
Property and equipment, net (Note 3)
|
|
|
4,113
|
|
|
|
5,538
|
|
Investment in Coinsquare (Note 2)
|
3,000,000
|
-
|
||||||
|
||||||||
Other long term assets, net (Note 4)
|
|
|
899,319
|
|
|
|
938,038
|
|
|
||||||||
Noncurrent assets of discontinued operations (Note 9)
|
|
|
-
|
|
|
|
2,353,749
|
|
|
|
|
|
|
|
|
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Total assets
|
|
$
|
17,349,745
|
|
|
$
|
17,040,815
|
|
|
|
|
|
|
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|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
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|
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Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
248,820
|
|
|
$
|
253,817
|
|
Accrued compensation
|
|
|
4,659
|
|
|
|
1,520
|
|
Accrued expenses
|
|
|
122,990
|
|
|
|
304,675
|
|
Notes and other obligations, current portion (Note 5)
|
|
|
215,712
|
|
|
|
139,611
|
|
Deferred revenue, current portion (Note 8)
|
|
|
96,698
|
|
|
|
96,698
|
|
Current liabilities of discontinued operations (Note 9)
|
|
|
202,080
|
|
|
|
258,819
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
890,959
|
|
|
|
1,055,140
|
|
|
||||||||
Deferred revenue, less current portion (Note 8)
|
|
|
992,792
|
|
|
|
1,065,316
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,883,751
|
|
|
|
2,120,456
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Notes 6, 8 and 10)
|
||||||||
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|
|
|
|
|
|
|
|
Stockholders' equity (Notes 6 and 7):
|
|
|
|
|
|
|
|
|
Preferred Stock, no par value, 15,000,000 (2017) and 0 (2016) shares authorized; 2,000,000 (2017) and 0 (2016) shares designated as 2% Series A Convertible Stock, 19,194.72 shares issued and outstanding (2017)
|
4,798,671
|
-
|
||||||
Common stock, no par value, 170,000,000 (2017) and 60,000,000 (2016) shares authorized; shares issued and outstanding 5,447,792 (2017) and 4,503,971 (2016)
|
|
|
131,490,219
|
|
|
|
124,775,635
|
|
Accumulated deficit
|
|
|
(120,822,896
|
)
|
|
|
(109,855,276
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
15,465,994
|
|
|
|
14,920,359
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
17,349,745
|
|
|
$
|
17,040,815
|
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Other revenue – fee (Note 8)
|
$
|
24,175
|
$
|
24,175
|
$
|
72,524
|
$
|
72,524
|
||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
597,018
|
1,480,141
|
2,694,211
|
3,333,102
|
||||||||||||
Research and development
|
17,658
|
52,963
|
63,008
|
498,634
|
||||||||||||
|
||||||||||||||||
Total operating expenses
|
614,676
|
1,533,104
|
2,757,219
|
3,831,736
|
||||||||||||
|
||||||||||||||||
Operating loss from continuing operations
|
(590,501
|
)
|
(1,508,929
|
)
|
(2,684,695
|
)
|
(3,759,212
|
)
|
||||||||
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||
Gain on property and equipment sale (Note 3)
|
-
|
13,062
|
-
|
1,933,335
|
||||||||||||
Interest expense
|
(4,773,397
|
)
|
(2,384
|
)
|
(4,802,296
|
)
|
(28,130
|
)
|
||||||||
Investment income
|
30,903
|
23,639
|
83,247
|
103,031
|
||||||||||||
|
||||||||||||||||
Total other income (expense)
|
(4,742,494
|
)
|
34,317
|
(4,719,049
|
)
|
2,008,236
|
||||||||||
|
||||||||||||||||
Loss from continuing operations
|
(5,332,995
|
)
|
(1,474,612
|
)
|
(7,403,744
|
)
|
(1,750,976
|
)
|
||||||||
|
||||||||||||||||
Discontinued operations (Note 9):
|
||||||||||||||||
Income (loss) from operations
|
30,922
|
(236,473
|
)
|
(944,557
|
)
|
(236,473
|
)
|
|||||||||
Escrow forfeiture gain (Note 6)
|
-
|
-
|
134,812
|
-
|
||||||||||||
Impairment (loss)
|
-
|
-
|
(2,754,131
|
)
|
-
|
|||||||||||
Total income (loss) from discontinued operations
|
30,922
|
(236,473
|
)
|
(3,563,876
|
)
|
(236,473
|
)
|
|||||||||
Net loss
|
$
|
(5,302,073
|
)
|
$
|
(1,711,085
|
)
|
$
|
(10,967,620
|
)
|
$
|
(1,987,449
|
)
|
||||
|
||||||||||||||||
Basic and diluted net income (loss) per share (Note 1)
|
||||||||||||||||
Continuing operations
|
$
|
(0.99
|
)
|
$
|
(0.37
|
)
|
$
|
(1.47
|
)
|
$
|
(0.45
|
)
|
||||
Discontinued operations
|
0.01
|
(0.06
|
)
|
(0.71
|
)
|
(0.06
|
)
|
|||||||||
Basic and diluted net loss per share (Note 1)
|
$
|
(0.98
|
)
|
$
|
(0.43
|
)
|
$
|
(2.18
|
)
|
$
|
(0.51
|
)
|
||||
|
||||||||||||||||
Basic and diluted weighted average number of shares outstanding (Note 1)
|
5,401,552
|
3,999,637
|
5,037,764
|
3,918,151
|
Preferred Stock
|
Common Stock
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Deficit
|
Total
|
|||||||||||||||||||
Balance, January 1, 2017
|
—
|
$
|
—
|
4,503,971
|
$
|
124,775,635
|
$
|
(109,855,276
|
)
|
$
|
14,920,359
|
|||||||||||||
Private placement of Common Stock (Note 6)
|
—
|
—
|
900,000
|
1,913,509
|
—
|
1,913,509
|
||||||||||||||||||
Common Shares in escrow forfeited and retired (Note 6)
|
—
|
—
|
(32,801
|
)
|
(134,812
|
)
|
—
|
(134,812
|
)
|
|||||||||||||||
Equity rights redemption (Note 6)
|
—
|
—
|
—
|
(291,995
|
)
|
—
|
(291,995
|
)
|
||||||||||||||||
Discount on Convertible Debt arising from values of (Note 6):
|
||||||||||||||||||||||||
Warrants
|
—
|
—
|
—
|
2,325,151
|
—
|
2,325,151
|
||||||||||||||||||
Beneficial conversion feature
|
—
|
—
|
—
|
2,424,849
|
—
|
2,424,849
|
||||||||||||||||||
Preferred Stock issued upon Notes payable conversion (Note 6)
|
19,194.72
|
4,798,671
|
—
|
—
|
—
|
4,798,671
|
||||||||||||||||||
Exercise of stock options
|
—
|
—
|
34,000
|
98,260
|
—
|
98,260
|
||||||||||||||||||
Stock-based compensation issued for services
|
—
|
—
|
42,622
|
379,622
|
—
|
379,622
|
||||||||||||||||||
Net loss for the period
|
—
|
—
|
—
|
—
|
(10,967,620
|
)
|
(10,967,620
|
)
|
||||||||||||||||
Balance, September 30, 2017
|
19,194.72
|
$
|
4,798,671
|
5,447,792
|
$
|
131,490,219
|
$
|
(120,822,896
|
)
|
$
|
15,465,994
|
|
2017
|
2016
|
||||||
Cash flows from operating activities:
|
||||||||
Continuing operations:
|
||||||||
Net (loss)
|
$
|
(10,967,620
|
)
|
$
|
(1,987,449
|
)
|
||
(Loss) from discontinued operations
|
(3,563,876
|
)
|
(236,473
|
)
|
||||
(Loss) from continuing operations
|
(7,403,744
|
)
|
(1,750,976
|
)
|
||||
Adjustments to reconcile net loss from continuing operations to net cash used
|
||||||||
in operating activities of continuing operations:
|
||||||||
Amortization of discount on convertible debt
|
4,750,000
|
-
|
||||||
Stock-based compensation for services
|
379,622
|
368,459
|
||||||
Depreciation and amortization
|
55,899
|
74,098
|
||||||
Amortization of license fees
|
(72,524
|
)
|
(72,524
|
)
|
||||
Other non-cash (credits) charges
|
-
|
200,108
|
||||||
Gain on sale of property and equipment
|
-
|
(1,933,335
|
)
|
|||||
Change in:
|
||||||||
Prepaid expenses and other current assets
|
192,071
|
222,474
|
||||||
Accounts payable
|
(4,997
|
)
|
(483,410
|
)
|
||||
Accrued compensation
|
3,139
|
(120,775
|
)
|
|||||
Accrued expenses
|
(133,014
|
)
|
30,042
|
|||||
Net cash (used in) operating activities of continuing operations
|
(2,233,548
|
)
|
(3,465,839
|
)
|
||||
Net cash (used in) operating activities of discontinued operations
|
(930,323
|
)
|
(375,228
|
)
|
||||
Net cash (used in) operating activities
|
(3,163,871
|
)
|
(3,841,067
|
)
|
||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Continuing operations:
|
||||||||
Purchases of short-term investments
|
-
|
(13,818,949
|
)
|
|||||
Proceeds from sales of short-term investments
|
7,506,761
|
16,522,853
|
||||||
Investment in Coinsquare
|
(3,000,000
|
)
|
-
|
|||||
Proceeds from sale of property and equipment
|
-
|
1,799,143
|
||||||
Purchases of patent and trademark application costs
|
(14,255
|
)
|
(14,378
|
)
|
||||
Net cash provided by investing activities of continuing operations
|
4,492,506
|
4,488,669
|
||||||
Net cash provided by investing activities of discontinued operations
|
4,004
|
16,673
|
||||||
Net cash provided by investing activities
|
4,496,510
|
4,505,342
|
||||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Continuing operations:
|
||||||||
Net proceeds from issuance of convertible notes
|
4,750,000
|
-
|
||||||
Net proceeds from issuance of common stock, net of $336,491 in offering expenses
|
1,913,509
|
-
|
||||||
Net proceeds from exercise of stock options
|
98,260
|
-
|
||||||
Redemption of equity rights
|
(291,995
|
)
|
-
|
|||||
Repayment of notes payable and other obligations
|
(192,539
|
)
|
(229,238
|
)
|
||||
|
||||||||
Net cash provided by (used in) financing activities of continuing operations
|
6,277,235
|
(229,238
|
)
|
|||||
|
||||||||
Net increase in cash and cash equivalents
|
7,609,874
|
435,037
|
||||||
|
||||||||
Cash and cash equivalents at beginning of period
|
5,529,848
|
2,012,283
|
||||||
|
||||||||
Cash and cash equivalents at end of period
|
$
|
13,139,722
|
$
|
2,447,320
|
||||
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for interest
|
$
|
1,571
|
$
|
33,331
|
||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Conversion of notes payable and accrued interest to preferred stock
|
$
|
4,798,671
|
$
|
-
|
||||
Liability payoffs upon property sale
|
$
|
-
|
$
|
2,064,758
|
• |
exploring other possible strategic options and financing opportunities available to the Company;
|
• |
evaluating options to monetize, partner or license the Company's assets, including the appendicitis product portfolio; and
|
• |
continuing to implement cost control initiatives to conserve cash.
|
|
December 31, 2016
|
|||||||
|
Cost
|
Fair Value
|
||||||
Certificates of deposit / commercial paper
|
$
|
2,378,222
|
$
|
2,373,891
|
||||
|
||||||||
Corporate bonds
|
5,138,182
|
5,132,870
|
||||||
|
||||||||
Total trading securities
|
$
|
7,516,404
|
$
|
7,506,761
|
||||
|
|
2017
|
2016
|
||||||
Interest income
|
$
|
84,177
|
$
|
101,236
|
||||
|
||||||||
Realized (losses)
|
(21
|
)
|
(2,893
|
)
|
||||
|
||||||||
Unrealized gains
|
11,575
|
21,501
|
||||||
|
||||||||
Management fee expenses
|
(12,484
|
)
|
(16,813
|
)
|
||||
|
||||||||
Net investment income
|
$
|
83,247
|
$
|
103,031
|
September 30,
2017
|
December 31,
2016
|
|||||||
Office and computer equipment
|
$
|
114,309
|
$
|
116,510
|
||||
Less accumulated depreciation
|
110,196
|
110,972
|
||||||
|
$
|
4,113
|
$
|
5,538
|
|
Beginning Balance
(December 31, 2016)
|
Additions
|
Impairments
|
Ending Balance
(September 30, 2017)
|
||||||||||||
|
||||||||||||||||
Cost:
|
||||||||||||||||
Patents
|
$
|
1,032,982
|
$
|
14,255
|
$
|
—
|
$
|
1,047,237
|
||||||||
Goodwill
|
447,951
|
—
|
—
|
447,951
|
||||||||||||
Total
|
1,480,933
|
14,255
|
—
|
1,495,188
|
||||||||||||
|
||||||||||||||||
Accumulated Amortization:
|
||||||||||||||||
Patents
|
(482,183
|
)
|
(52,974
|
)
|
—
|
(535,157
|
)
|
|||||||||
Goodwill
|
(60,712
|
)
|
—
|
—
|
(60,712
|
)
|
||||||||||
Total
|
(542,895
|
)
|
(52,974
|
)
|
—
|
(595,869
|
)
|
|||||||||
|
||||||||||||||||
Net Other Long Term Assets
|
$
|
938,038
|
$
|
(38,719
|
)
|
$
|
—
|
$
|
899,319
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
|
||||||||||||||||
Restricted stock awards under the Plan
|
$
|
100,396
|
$
|
—
|
$
|
188,572
|
$
|
—
|
||||||||
Stock option awards under the Plan
|
8,172
|
137,367
|
103,430
|
361,639
|
||||||||||||
Non-qualified stock option awards
|
—
|
6,820
|
87,620
|
6,820
|
||||||||||||
|
||||||||||||||||
Total stock-based compensation
|
$
|
108,568
|
$
|
144,187
|
$
|
379,622
|
$
|
368,459
|
|
Number of Shares
|
Weighted
Average
Grant-Date Fair Value
|
||||||
Unvested at January 1, 2017
|
-
|
$
|
-
|
|||||
Granted
|
422,000
|
3.69
|
||||||
Vested
|
(42,622
|
)
|
3.20
|
|||||
Forfeited
|
(40,000
|
)
|
3.13
|
|||||
Unvested at September 30, 2017
|
339,378
|
$
|
3.75
|
·
|
Grant date exercise price – the closing market price of the Company's common stock on the date of the grant;
|
·
|
Estimated option term – based on historical experience with existing option holders;
|
·
|
Estimated dividend rates – based on historical and anticipated dividends over the life of the option;
|
·
|
Term of the option – based on historical experience, grants have lives of approximately 3-5 years;
|
·
|
Risk-free interest rates – with maturities that approximate the expected life of the options granted;
|
·
|
Calculated stock price volatility – calculated over the expected life of the options granted, which is calculated based on the daily closing price of the Company's common stock over a period equal to the expected term of the option; and
|
·
|
Option exercise behaviors – based on actual and projected employee stock option exercises and forfeitures.
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected price volatility
|
|
|
101
|
%
|
|
|
99-100
|
%
|
Risk free interest rate
|
|
|
1.92
|
%
|
|
|
1.20
|
%
|
Expected term
|
5 years
|
|
5 years
|
|
|
|
Shares
Underlying
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Outstanding at January 1, 2017
|
|
|
566,747
|
|
|
$
|
20.46
|
|
|
|
|
|
||||
Granted
|
|
|
20,000
|
|
|
|
4.02
|
|
|
|
|
|
||||
Exercised
|
|
|
(34,000
|
)
|
|
|
2.89
|
|
|
|
|
|
||||
Forfeited
|
|
|
(495,414
|
)
|
|
|
22.98
|
|
|
|
|
|
||||
Outstanding at September 30, 2017
|
|
|
57,333
|
|
|
$
|
3.32
|
|
|
|
9.1
|
|
|
$
|
105,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2017
|
|
|
27,500
|
|
|
$
|
3.07
|
|
|
|
8.8
|
|
|
$
|
57,500
|
|
Nonvested Shares
|
Nonvested
Shares
Underlying
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Grant Date
Fair Value
|
|||||||||
|
||||||||||||
Nonvested at January 1, 2017
|
97,738
|
$
|
3.51
|
$
|
2.58
|
|||||||
Granted
|
20,000
|
4.02
|
3.04
|
|||||||||
Vested
|
(30,905
|
)
|
4.92
|
3.57
|
||||||||
Forfeited
|
(57,000
|
)
|
2.92
|
2.16
|
||||||||
|
||||||||||||
Nonvested at September 30, 2017
|
29,833
|
$
|
3.54
|
$
|
2.67
|
|
|
Shares
Underlying
Options / Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding at January 1, 2017
|
|
|
527,003
|
|
|
$
|
13.36
|
|
|
|
|
|
|
|
||
Granted
|
|
|
2,800,000
|
|
|
|
3.54
|
|
|
|
|
|
|
|
||
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
||
Forfeited
|
|
|
(169,074
|
)
|
|
|
18.62
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Outstanding at September 30, 2017
|
|
|
3,157,929
|
|
|
$
|
4.37
|
|
|
|
2.3
|
|
|
$
|
4,534,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2017
|
|
|
3,157,929
|
|
|
$
|
4.37
|
|
|
|
2.3
|
|
|
$
|
4,534,000
|
|
• |
milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;
|
• |
potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and
|
• |
royalties, at low double digit rates, based on sales of licensed products.
|
Category
|
Totals
|
|||
License fees and milestone amounts paid / achieved
|
$
|
1,920,000
|
||
Third party obligations recorded, including WU
|
(363,700
|
)
|
||
Deferred revenue balance
|
1,556,300
|
|||
Revenue amortization to September 30, 2017
|
(466,810
|
)
|
||
Net deferred revenue balance at September 30, 2017
|
$
|
1,089,490
|
Commencement of license fees revenue recognition
|
Upon signing or receipt
|
|
Commencement of milestone revenue recognition
|
Upon milestone achievement over then remaining life
|
|
Original amortization period
|
197 months
|
|
Cash and cash equivalents
|
$
|
17,000
|
||
Accounts receivable
|
21,000
|
|||
Inventory
|
379,000
|
|||
Prepaid and other assets
|
51,000
|
|||
Equipment
|
1,000
|
|||
Identifiable intangible assets:
|
||||
Trademarks (5 year estimated useful life)
|
99,000
|
|||
Customer base (6 year estimated useful life)
|
37,000
|
|||
Developed technology (4 year estimated useful life)
|
1,864,000
|
|||
Total identifiable intangible assets
|
2,000,000
|
|||
Goodwill
|
430,000
|
|||
Accounts payable
|
(118,000
|
)
|
||
Accrued and other liabilities
|
(175,000
|
)
|
||
Non-controlling interest
|
(29,000
|
)
|
||
Purchase price
|
$
|
2,577,000
|
Trademarks
|
$
|
99,000
|
||
Customer base
|
37,000
|
|||
Developed technology
|
1,864,000
|
|||
Total
|
2,000,000
|
|||
Less accumulated amortization
|
(148,264
|
)
|
||
Balance at December 31, 2016
|
$
|
1,851,736
|
|
September 30, 2017
|
December 31, 2016
|
||||||
Current assets:
|
||||||||
Accounts receivable
|
$
|
8,000
|
$
|
5,000
|
||||
Inventories
|
-
|
416,000
|
||||||
Prepaid expenses
|
4,000
|
66,000
|
||||||
Total current assets
|
$
|
12,000
|
$
|
487,000
|
||||
|
||||||||
Equipment and furnishings, net
|
$
|
-
|
$
|
36,000
|
||||
Intangible assets, net
|
-
|
2,281,000
|
||||||
Deposit
|
-
|
37,000
|
||||||
Total noncurrent assets
|
$
|
-
|
$
|
2,354,000
|
||||
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
37,000
|
$
|
174,000
|
||||
Accrued expenses
|
28,000
|
85,000
|
||||||
Deferred revenue
|
137,000
|
-
|
||||||
Total current liabilities
|
$
|
202,000
|
$
|
259,000
|
|
Three Months
|
Nine Months
|
||||||
|
||||||||
Sales
|
$
|
7,000
|
$
|
37,000
|
||||
Cost of sales
|
2,000
|
6,000
|
||||||
Gross margin
|
5,000
|
31,000
|
||||||
Operating expenses (credit)
|
(26,000
|
)
|
975,000
|
|||||
Operating income (loss)
|
31,000
|
(944,000
|
)
|
|||||
Escrow forfeiture gain
|
-
|
135,000
|
||||||
Impairment (loss)
|
-
|
(2,754,000
|
)
|
|||||
|
||||||||
Income (loss) from discontinued operations
|
$
|
31,000
|
$
|
(3,563,000
|
)
|
|||
|
• |
continuing to evaluate opportunities for investments in the blockchain and digital currency sector;
|
• |
exploring other possible strategic options and financing opportunities available to the Company;
|
• |
evaluating options to monetize, partner or license the Company's assets, including appendicitis product portfolio; and
|
• |
continuing to implement cost control initiatives to conserve cash.
|
• |
milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;
|
• |
potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and
|
• |
royalties, at low double digit rates, based on sales of licensed products.
|
|
•
|
Continued worldwide growth in the adoption and use of cryptocurrencies;
|
|
•
|
Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems;
|
|
•
|
Changes in consumer demographics and public tastes and preferences;
|
|
•
|
The maintenance and development of the open-source software protocol of the network;
|
|
•
|
The availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
|
|
•
|
General economic conditions and the regulatory environment relating to digital assets; and
|
|
•
|
Negative consumer sentiment and perception of bitcoin specifically and cryptocurrencies generally.
|
|
Riot Blockchain, Inc.
(Registrant)
|
|
|
Dated: November 13, 2017
|
|
|
/s/ John O’Rourke
|
|
John O’Rourke
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
/s/ Jeffrey G. McGonegal
|
Dated: November 13, 2017
|
Jeffrey G. McGonegal
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
(1)
|
the 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
||
|
|
|
||
November 13, 2017
|
|
|
||
|
/s/ John O’Rourke
|
|
||
|
John O’Rourke, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
||
November 13, 2017
|
|
|
||
|
/s/ Jeffrey G. McGonegal
|
|
||
|
Jeffrey G. McGonegal, Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
November 13, 2017
|
|
|
|
/s/ Jeffrey G. McGonegal
|
|
|
Jeffrey G. McGonegal, Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
November 13, 2017
|
|
|
|
/s/ John O’Rourke
|
|
|
John O’Rourke, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
TO:
|
goNumerical ltd. (the “Corporation”)
|
Issuer: goNumerical ltd.
|
Issue: Units
|
Issue Price Per Unit:
|
C$1.73
|
No. of Units Purchased:
|
1,816,079
|
Total Issue Price:
|
C$ 3,141,817.00
|
1. Subscriber Information:
Bioptix Inc.
|
834-F South Perry St.
|
||
(Name of Subscriber - please print)
|
(Subscriber’s Address)
|
||
by
|
Castle Rock, CO 80104
|
||
Authorized Signature
|
(Address)
|
||
CEO
|
|||
(Official Capacity or Title – please print)
|
(Telephone Number)
|
||
Michael M. Beeghley
|
|||
(Please print name of individual whose signature appears above if different than the name of the Subscriber printed above.)
|
(E-mail Address)
|
||
3.
|
4. Delivery Instructions:
|
||
Bioptix Inc.
|
Same
|
||
(Name)
|
(Name)
|
||
(Account Reference, if applicable)
|
(Account Reference, if applicable)
|
||
834-F South Perry St
|
Michael Beeghley
|
||
(Address)
|
(Contact Name)
|
||
Castle Rock, CO 80104
|
|||
(Address)
|
(Address)
|
||
(Address)
|
(Address)
|
||
(Address)
|
|||
(Telephone Number)
|
|||
(E-mail Address)
|
GONUMERICAL LTD
By: _____________________
Name: Cole Diamond
Title: CEO
|
(i) |
is an accredited investor as defined in Rule 501(a) of Regulation D (a “U.S. Accredited Investor”) and is purchasing the Subscriber’s Securities pursuant to the exemption from registration provided by Section 4(a)(2) of the United States Securities Act of 1933, as amended, including the rules and regulation promulgated thereunder (the “U.S. Securities Act”) and Rule 506(b) of Regulation D thereunder, and has executed and delivered herewith a copy of Schedule C;
|
(iii) |
is not a party to any contract, undertaking, agreement or arrangement with any person to sell, transfer or pledge to such person, or anyone else, the Subscriber’s Securities, or any part thereof, or any interest therein and the Subscriber has no present plans to enter into any such contract, undertaking, agreement or arrangement;
|
(iv) |
is not planning to offer, sell or otherwise transfer any of the Subscriber’s Securities, and, if it does, it will not offer, sell or otherwise transfer any of the Subscriber’s Securities, directly or indirectly, unless the sale is:
|
(A) |
to the Corporation;
|
(B) |
made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations; or
|
(C) |
made in a transaction that is exempt from registration under the U.S. Securities Act pursuant to Section 4(a)(7) as a private resale of restricted securities, Rule 144 or Rule 144A, if available, or under applicable States Laws or does not require registration under the U.S. Securities Act or any applicable States Laws and the Purchaser has furnished to the Corporation, prior to such sale, an opinion of counsel of recognized standing or other evidence of exemption reasonably satisfactory to the Corporation confirming the compliance of such sale with the U.S. Securities Act and applicable States Laws;
|
(v) |
is not subscribing for the Subscriber’s Securities as a result of any form of general solicitation or general advertising, as those terms are used in Regulation D under the U.S. Securities Act, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio or television, or other form of telecommunications, or published or broadcast on the Internet or other forms of electronic display, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
|
(vi) |
acknowledges and agrees that, because the Corporation is incorporated outside of the United States, it may not be possible for U.S. shareholders of the Corporation to enforce outside of the United States judgments against the Corporation that are obtained in the United States, including actions predicated upon the civil liability provisions of the U.S. Securities Act. While reciprocal enforcement of judgment legislation exists between Canada and the United States, the Corporation may have defences available to avoid in Canada the effect of U.S. judgments under Canadian law, making enforcement difficult or impossible, and as such there is uncertainty as to whether Canadian courts would enforce (a) judgments of United States courts obtained against the Corporation predicated upon the civil liability provisions of the United States federal and state securities laws or (b) in original actions brought in Canada, liabilities against the Corporation predicated upon the United States federal and state securities laws. Therefore, shareholders of the Corporation in the United States may have to avail themselves of remedies under Canadian corporate and securities laws. Canadian law may not provide for remedies equivalent to those available under U.S. law,
|
· |
ordinary brokerage transactions and transactions in which the broker‑dealer solicits purchasers;
|
· |
block trades in which the broker‑dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
· |
purchases by a broker‑dealer as principal and resale by the broker‑dealer for its account;
|
· |
an exchange distribution in accordance with the rules of the applicable exchange;
|
· |
privately negotiated transactions;
|
· |
settlement of short sales;
|
· |
broker‑dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
|
· |
a combination of any such methods of sale; and
|
· |
any other method permitted pursuant to applicable law.
|
RIOT BLOCKCHAIN, INC.
By:
Name: _____________________________
Title: _____________________________
Date Signed: ________________________
|
|
Executive: JOHN O’ROURKE
Date Signed: _________________________
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 13, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Riot Blockchain, Inc. | |
Entity Central Index Key | 0001167419 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2017 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,321,137 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Preferred stock, par value | ||
Preferred stock, shares authorized | 15,000,000 | 0 |
Preferred stock, shares issued | 19,195 | 0 |
Preferred stock, shares outstanding | 19,195 | 0 |
Common stock, par value | ||
Common stock, shares authorized | 170,000,000 | 60,000,000 |
Common stock, shares issued | 5,447,792 | 4,503,971 |
Common stock, shares outstanding | 5,447,792 | 4,503,971 |
Designated as 2% Series A Convertible Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 |
Consolidated Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||||
Other revenue - fee (Note 8) | $ 24,175 | $ 24,175 | $ 72,524 | $ 72,524 |
Operating expenses: | ||||
Selling, general and administrative | 597,018 | 1,480,141 | 2,694,211 | 3,333,102 |
Research and development | 17,658 | 52,963 | 63,008 | 498,634 |
Total operating expenses | 614,676 | 1,533,104 | 2,757,219 | 3,831,736 |
Operating loss from continuing operations | (590,501) | (1,508,929) | (2,684,695) | (3,759,212) |
Other income (expense): | ||||
Gain on property and equipment sale (Note 3) | 13,062 | 1,933,335 | ||
Interest expense | (4,773,397) | (2,384) | (4,802,296) | (28,130) |
Investment income | 30,903 | 23,639 | 83,247 | 103,031 |
Total other income (expense) | (4,742,494) | 34,317 | (4,719,049) | 2,008,236 |
Loss from continuing operations | (5,332,995) | (1,474,612) | (7,403,744) | (1,750,976) |
Discontinued operations (Note 9): | ||||
Income (loss) from operations | 30,922 | (236,473) | (944,557) | (236,473) |
Escrow forfeiture gain (Note 6) | 134,812 | |||
Impairment (loss) | (2,754,131) | |||
Total income (loss) from discontinued operations | 30,922 | (236,473) | (3,563,876) | (236,473) |
Net loss | $ (5,302,073) | $ (1,711,085) | $ (10,967,620) | $ (1,987,449) |
Basic and diluted net income (loss) per share (Note 1) | ||||
Continuing operations | $ (0.99) | $ (0.37) | $ (1.47) | $ (0.45) |
Discontinued operations | 0.01 | (0.06) | (0.71) | (0.06) |
Basic and diluted net loss per share (Note 1) | $ (0.98) | $ (0.43) | $ (2.18) | $ (0.51) |
Basic and diluted weighted average number of shares outstanding (Note 1) | 5,401,552 | 3,999,637 | 5,037,764 | 3,918,151 |
Consolidated Statements of Cash Flows (Parenthetical) |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Statement of Cash Flows [Abstract] | |
Payment of offering expenses | $ 336,491 |
INTERIM FINANCIAL STATEMENTS |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||
INTERIM FINANCIAL STATEMENTS | INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Riot Blockchain, Inc., (f/k/a Bioptix, Inc.) (the "Company," "we," or "Riot Blockchain") have been prepared in accordance with the instructions to quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at September 30, 2017 and for all periods presented have been made. Certain information and footnote data necessary for fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. It is therefore suggested that these consolidated financial statements be read in conjunction with the summary of significant accounting policies and notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations for the period ended September 30, 2017 are not necessarily an indication of operating results for the full year.
Effective October 19, 2017, the Company's name was changed to Riot Blockchain, Inc., from Bioptix, Inc.
Management's plans and basis of presentation:
The Company has experienced recurring losses and negative cash flows from operations. At September 30, 2017, the Company had approximate balances of cash and cash equivalents of $13,140,000, working capital of $12,555,000, total stockholders' equity of $15,466,000 and an accumulated deficit of $120,823,000. To date, the Company has in large part relied on equity financing to fund its operations.
The recently announced Kairos Global Technology, Inc. (“Kairos”), Tess, Inc., (“TESS”) and goNumerical, Inc. (d/b/a “Coinsquare”) acquisitions, as well as our new name, reflect a new focus (in addition to veterinary and life science oriented businesses of the Company) being pursued by the Company. The decision to invest in companies exposed to blockchain and digital currency related risks is a strategic decision by the Company. The Company’s strategy will be to continue to pursue opportunistic investments and controlling positions in these new and emerging technologies which will continue to expose the Company to the numerous risks and volatility associated with this sector.
Effective January 14, 2017, the Company adopted a plan to exit the business of BiOptix Diagnostics, Inc. ("BDI") and commenced a significant reduction in the workforce. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017, of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. Accordingly, the historical results of BDI have been classified as discontinued operations for all periods presented.
The Company expects to continue to incur losses from operations for the near-term and these losses could be significant as we incur costs and expenses associated with our recent and potential future acquisitions and investments, as well as public company and administrative related expenses are incurred and winding-down BDI’s operations. The Company believes its upcoming near-term cash needs relative to the recent acquisitions will be covered by cash acquired in the acquisitions combined with the Company’s available cash. The Company believes that its current working capital position will be sufficient to meet its estimated cash needs for at least a year and a day from this filing. The Company is closely monitoring its cash balances, cash needs and expense levels.
Management's strategic plans include the following:
• continuing to evaluate opportunities for investments in the blockchain and digital currency sector;
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Significant accounting policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant accounting policies | Note 1. Significant accounting policies:
Principles of consolidation
The consolidated financial statements of the Company include the accounts of Riot Blockchain and its wholly-owned subsidiary, BDI. Intercompany accounts and transactions have been eliminated in the consolidation.
Investment in affiliate
The Company’s 10.9% investment in Coinsquare is accounted for on the cost method.
Cash, cash equivalents and short-term investments:
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. From time to time, the Company's cash account balances exceed the balances as covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances.
The Company invests excess cash from time to time in highly-liquid debt and equity investments of highly-rated entities, which are classified as trading securities. Such amounts are recorded at market values using Level 1 inputs in determining fair value and are generally classified as current, as the Company does not intend to hold the investments beyond twelve months. Investment securities classified as trading are those securities that are bought and held principally for the purpose of selling them in the near term, with the objective of preserving principal and generating profits. These securities are reported at fair value with unrealized gains and losses reported as an element of other (expense) income in current period earnings. The Company's Board of Directors has approved an investment policy covering the investment parameters to be followed with the primary goals being the safety of principal amounts and maintaining liquidity. The policy provides for minimum investment rating requirements as well as limitations on investment duration and concentrations. Based upon market conditions, the investment guidelines have been tightened to increase the minimum acceptable investment ratings required for investments and shorten the maximum investment term. As of September 30, 2017, 100% of the investment portfolio was in cash and cash equivalents, which is presented as such on the accompanying balance sheet.
The Company's short-term investments comprise certificates of deposit, commercial paper and corporate bonds, all of which are classified as trading securities and carried at their fair value based upon quoted market prices of the securities at December 31, 2016. Net realized and unrealized gains and losses on trading securities are included in net loss. For purposes of determining realized gains and losses, the cost of securities sold is based on specific identification.
The composition of trading securities is as follows at December 31, 2016:
Investment income for the nine months ended September 30, 2017 and 2016 consists of the following:
Fair value of financial instruments:
The Company accounts for financial instruments under Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic ("ASC") 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1— quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
Level 3 — assets and liabilities whose significant value drivers are unobservable.
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company's market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. There were no financial assets or liabilities measured at fair value, with the exception of short-term investments as of December 31, 2016.
The carrying amounts of the Company's financial instruments (other than short-term investments as discussed above) approximate fair value because of their variable interest rates and/or short maturities combined with the recent historical interest rate levels.
Revenue Recognition:
Revenue recognition related to the license agreement is based upon the licensee's right to use the technology and the Company's ongoing obligations to maintain and defend the patented rights and comply with the terms of the sub-license agreement whereby the license fees and milestone payments received from the agreement, net of the amounts due to third parties, have been recorded as deferred revenue and are amortized over the term of the license agreement.
Goodwill:
The Company performs a goodwill impairment analysis in the fourth quarter of each year, or whenever there is an indication of impairment. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation to determine if it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. The Company has determined, based on its evaluation, that the goodwill associated with the BDI acquisition was impaired and was written off during the nine months ended September 30, 2017, included as part of the discontinued operations impairment loss.
Recently issued and adopted accounting pronouncements:
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's consolidated financial statements properly reflect the change.
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2041-09"), which supersedes nearly all existing revenue recognition guidance. The standard's core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction's price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (i) the entity's contracts with customers; (ii) the significant judgments, and changes in judgments, made in applying the guidance to those contracts; and (iii) any assets recognized from the costs to obtain or fulfill a contract with a customer.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. The standard allows entities to apply the standard retrospectively to each prior period presented ("full retrospective adoption") or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application ("modified retrospective adoption"). The Company plans to adopt this guidance on January 1, 2018, and continues to evaluate the impact of adopting under the modified retrospective adoption versus the full retrospective method. The Company is currently in the process of determining the impact of the new revenue recognition guidance on its revenue transactions, including any impacts on associated processes, systems, and internal controls. The Company's preliminary assessment indicates implementation of this standard will not have a material impact on financial results. The Company's evaluation has included determining whether the unit of account (i.e., performance obligations) will change as compared to current GAAP, as well as determining the standalone selling price of each performance obligation. The Company continues to evaluate the impact of this guidance and its subsequent amendments on the consolidated financial position, results of operations, and cash flows, and any preliminary assessments are subject to change.
In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 supersedes and amends the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. ASU No. 2016-01 is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires a lessee to recognize the lease assets and lease liabilities arising from operating leases in the balance sheet. Qualitative along with specific quantitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. The Company does not expect the adoption of ASU 2016-02 to have a material impact on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting ("ASU 2016-09"), which amends guidance issued in Accounting Standards Codification ("ASC") Topic 718, Compensation - Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted ASU 2016-09 as of January 1, 2017. The principal impact was that to the extent a tax benefit or expense from stock compensation arises it will be presented in the income tax line of the Statement of Operations rather than the current presentation as a component of equity on the Balance Sheet. Also the tax benefit or expense will be presented as activity in Cash Flow from Operating Activity rather than the current presentation as Cash Flow from Financing Activity in the Statement of Cash Flows. The Company does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance for eight cash flow classification issues in current GAAP. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact that will result from adopting ASU 2016-02.
In January 2017, the FASB issued an ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted this guidance effective January 1, 2017. The adoption of this ASU had no impact on the Company's consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020 and is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09, "Compensation-Stock Compensation: Scope of modification accounting". ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including during an interim period for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the adoption of ASU 2017-09 will have on its consolidated financial statements.
In July 2017, the FASB issued ASU No. 2017-11, "Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)," which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
Income (loss) per share:
ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period, excluding any nonvested restricted common shares. Diluted net income (loss) per share reflect the potential dilution of securities that could share in the Company's income (loss). The effect of the inclusion of the dilutive shares would have resulted in a decrease in loss per share for the periods ended September 30, 2017 and 2016. Outstanding stock options, warrants and other dilutive rights are not considered in the calculation, as the impact of the potential common shares (totaling approximately 5,474,000 shares and 1,061,000 shares for each of the nine month periods ended September 30, 2017 and 2016, respectively) would be anti-dilutive. For the nine months ended September 30, 2017 the dilutive rights not considered in the calculation, include shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) outstanding that are convertible into 1,919,472 common shares.
For periods when shares of preferred stock are outstanding, the two-class method is used to calculate basic and diluted earnings (loss) per common share since such preferred stock is a participating security under ASC 260 Earnings per Share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic earnings (loss) per common share is computed by dividing net earnings (loss) attributable to common share after allocation of earnings to participating securities by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share, when applicable, is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company.
Under the provisions of ASC 260, "Earnings Per Share," basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock and the dividends accumulated for the period on cumulative preferred stock from income from continuing operations. Dividends during the nine months ended September 30, 2017 were de minimis.
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Investment in Coinsquare |
9 Months Ended |
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Sep. 30, 2017 | |
Investments, All Other Investments [Abstract] | |
Investment in Coinsquare | Note 2. Investment in Coinsquare:
As of September 29, 2017, the Company acquired a minority interest for $3,000,000 USD, in Coinsquare, which operates a digital crypto-currency exchange platform operating in Canada. The Company acquired approximately 10.9% of the voting common stock of Coinsquare. In connection with the investment, the Company also received warrants, expiring May 30, 2018, to acquire shares of common stock of Coinsquare, which if exercised in full by the Company, would result in the Company owning an approximate total of 14.7% of Coinsquare, including the initial investment. The fair value of the warrants were determined to be de minimis. The Company has evaluated the guidance ASC 325-20 Investments – Other, in determining to account for the investment on the cost method since the equity securities are not marketable and do not give us significant influence over Coinsquare. As of September 30, 2017, the Company considers the fair value of the investment to approximate the cost of the investment due to the proximity of the time of the investment to period end. |
Property and equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Property and equipment | Note 3. Property and equipment:
Property and equipment consisted of the following:
Depreciation expense totaled approximately $500 and $800, and $1,400 and $2,700, for the three and nine month periods ended September 30, 2017 and 2016, respectively. Depreciation and amortization expenses also included $1,500 and $12,000, for the nine month periods ended September 30, 2017 and 2016, respectively, on short-term assets included with prepaid expenses.
On February 25, 2016, the Company completed the sale of its corporate headquarters, land, building and certain fixtures and equipment to a third party for a purchase price of approximately $4,053,000. The sale and subsequent equipment sales resulted in a gain of approximately $1,933,000 and generated approximately $1,799,000 in net cash after expenses and mortgage payoffs. |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term assets | Note 4. Other long-term assets:
Other long-term assets consisted of the following as of September 30, 2017 and December 31, 2016:
The Company capitalizes legal costs and filing fees associated with obtaining patents on its new discoveries. Once the patents have been issued, the Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. Based upon the current status of the above intangible assets, the aggregate amortization expense is estimated to be approximately $71,000 for each of the next five fiscal years. The Company tests intangible assets with finite lives for impairment upon significant changes in the Company's business environment. The testing resulted in no patent impairment for the three and nine months ended September 30, 2017 and $32,000 and $200,000, for the three and nine months ended September 30, 2016, respectively. The impairment charges are related to the Company's ongoing analysis of which specific country patents in its portfolio are determined as potentially worth pursuing. |
Notes and Other Obligations |
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Debt Disclosure [Abstract] | |
Notes and Other Obligations | Note 5. Notes and Other Obligations:
Notes and other obligations consisted of short-term installment obligations, arising from insurance premium financing programs bearing interest at approximately 4.5%, with outstanding balances of $215,712 and $139,611, as of September 30, 2017 and December 31, 2016, respectively.
Convertible notes:
In March 2017, the Company completed a convertible note financing with certain accredited investors with gross proceeds totaling $4,750,000. The convertible notes bearing interest at 2% were issued March 16, 2017 and had a balloon payment maturity date of September 16, 2018, when any then outstanding principal and accrued interest, would be due. The unsecured notes were convertible into shares of the Company’s common stock at the holder’s option or automatically into shares of preferred stock, upon achievement of defined conditions, including shareholder approval of a class of preferred stock, all at an initial conversion price of $2.50 (initially 1,900,000 common shares). In connection with the financing investors were issued warrants exercisable into a total of 1,900,000 common shares at an exercise price of $3.56, expiring March 15, 2020. The convertible note financing proceeds were held in escrow pending successful completion of defined release conditions. As of August 18, 2017, the lead investor in the convertible note financing, agreed to waive the release conditions and the cash proceeds and securities were released from escrow. Subsequently, upon the successful completion of conditions specified in the offering documents, and as further described in Note 6, the notes automatically converted into shares of Series A Preferred Stock. The convertible notes accrued interest at 2% per annum commencing with their execution and the Company recorded interest expense of $48,671 through the date of conversion, which was also exchanged for shares of preferred stock. See Note 6.
Mortgage notes:
Prior to the February 2016 sale of the corporate headquarters, the Company had a permanent mortgage on its land and building. The mortgage was held by a commercial bank and included a portion guaranteed by the U. S. Small Business Administration ("SBA"). The loan was collateralized by the real property and the SBA portion was also personally guaranteed by a former officer of the Company. The commercial bank loan terms included a payment schedule based on a fifteen year amortization, with a balloon maturity at five years. The commercial bank portion had an interest rate fixed at 3.95%, and the SBA portion bore interest at the rate of 5.86%.
On February 25, 2016, the Company completed the sale of its corporate headquarters, land and building, and also paid off its mortgage obligations. See Note 3. |
Stockholders' equity |
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Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' equity | Note 6. Stockholders' equity:
Articles of Incorporation amendments:
Effective September 19, 2017, the Company changed its state of incorporation from Colorado to Nevada (the “Reincorporation”). In connection with the Reincorporation and as approved by the Company’s shareholders at a special meeting held August 21, 2017 Special Shareholders’ Meeting, the Company’s Articles of Incorporation were amended to increase the number of shares of common stock authorized for issuance to 170,000,000 from 60,000,000. Additionally, the Articles of Incorporation were amended to authorize 15,000,000 shares of “blank check” preferred stock.
On September 20, 2017, 2,000,000 shares of preferred stock were designated as “2% Series A Convertible Preferred Stock” in connection with the filing of a Certificate of Designation of Rights, Powers, Preferences, Privileges and Restrictions of 2% Series A Convertible Preferred Stock with the Secretary of State of the State of Nevada.
Common Share Private Placement offering:
In March 2017, the Company completed a common stock unit financing private placement totaling $2,250,000, with certain accredited investors. The purchase price was $2.50 per unit (the “Units”). Each Unit consisted of one share of the Company's common stock and a three-year warrant to purchase one share of the Company's common stock at an exercise price of $3.50 per share. The fair value of the 900,000 warrants was estimated to be approximately $2,114,000, using the Black-Scholes option-pricing model using the assumptions of a three year term, expected price volatility of 114%, dividend yield of 0% and a risk free interest rate of 1.66%. The Company sold 900,000 units consisting of an aggregate of 900,000 shares of common stock and 900,000 warrants, of which 400,000 units for $1,000,000 were released to the respective parties in March 2017, and the balance of 500,000 units for $1,250,000 were released in May 2017. The offering net of $336,491 of offering expenses, resulted in proceeds of $1,913,509 recorded as additional equity.
In connection with the private placements, the Company also entered into a Registration Rights Agreement, with the investors as further disclosed with the convertible note private placement offering described below.
Convertible Note Private Placement offering:
In March 2017, the Company completed a 2% convertible note financing with certain accredited investors with gross proceeds totaling $4,750,000. The convertible note financing proceeds were held in escrow pending successful completion of defined release conditions. As of August 18, 2017, the lead investor in the convertible note financing, agreed to waive the release conditions and the cash proceeds and securities were released from escrow. Upon the successful completion of conditions specified in the offering documents, primarily approval by the Company’s shareholders for authorization of preferred shares and approval of the Nasdaq Capital Market (“NASDAQ”), the notes automatically converted into shares of Series A Preferred Stock, convertible into shares of common stock at an initial equivalent conversion price of $2.50 per common share. The specified conditions were successfully completed as of September 20, 2017, resulting in the conversion of $4,750,000 in principal and accrued interest of $48,671 for a total of $4,798,671 worth of convertible notes, exchanged for 19,194.72 shares of Series A Preferred Stock, with a stated value of $250 per share, equaling rights to 1,919,472 shares of common stock. The convertible notes accrued interest at 2% per annum commencing with their execution and the Company recorded interest expense of $48,671 through the date of conversion of the notes.
The Series A Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value ($250.00 per share) of such shares of Series A Preferred Stock, plus all accrued and unpaid dividends, if any, on such shares of Series A Preferred Stock, divided by the conversion price of $2.50, subject to adjustments. The shares of Series A Preferred Stock are subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. Shares of capital stock of the Company shall be junior in rank to all shares of Series A Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding-up of the Company. Each holder of shares of Series A Preferred Stock shall be entitled to receive dividends, which dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms hereof, in shares of common stock or cash on the stated value of such shares of Series A Preferred Stock at the dividend rate of two percent (2%) per annum, which shall be cumulative and shall continue to accrue and compound monthly whether or not declared. Holders of shares of Series A Preferred Stock, shall be entitled to vote on any proposals voted on by the common shareholders.
Warrants to purchase 1,900,000 shares of the Company's common stock at an initial exercise price of $3.56 per share and expiring March 15, 2020, were also issued with the convertible note financing.
The Company has evaluated the guidance ASC 480-10 Distinguishing Liabilities from Equity, ASC 815-40 Contracts in an Entity's Own Equity and ASC 470-20 Debt with Conversion and Other Options to determine the appropriate classification of the instruments. Upon their release from escrow, the convertible notes and warrants were evaluated for beneficial conversion feature (“BCF”) resulting from the allocation of proceeds among the convertible notes and warrants. The warrants were determined to meet requirements for equity classification. Accordingly, the relative fair value computed for the warrants, totaling $2,325,151 has been allocated to equity. The fair value of the warrants was estimated using the Black-Scholes option-pricing model using the assumptions of a three year term, expected price volatility of 108%, dividend yield of 0% and a risk free interest rate of 1.47%. The convertible debt was also evaluated for BCF. Based upon the effective conversion price of the convertible notes after considering the stock price at the date of the escrow release and the allocation of value to the warrants, it was determined that the convertible notes contain a BCF. The value of the BCF was computed to be $2,424,849, which has been capped not to exceed the total proceeds from the convertible notes after deducting the value allocated to the warrants. The resulting discount on the convertible debt was being amortized to interest expense over the term of the convertible notes. Upon the September 20, 2017 conversion of the convertible notes into Series A Preferred Stock, the then remaining unamortized discount was recorded as additional interest, resulting in a total of $4,750,000 being recorded as interest expense in the period ended September 30, 2017.
In connection with the private placements, the Company also entered into a registration rights agreement, with the investors pursuant to which the Company agreed to file a registration statement covering the resale of the shares of common stock issuable upon exercise or conversion of the securities and to maintain its effectiveness until all such securities have been sold or may be sold without restriction. In the event a registration statement covering such shares of common stock is not effective, the Company is required to pay to the investors on a monthly basis an amount equal to 1% of the investors' investment, not to exceed a total of 6%, subject to conditions as defined in the agreement. On April 20, 2017, the Company filed a registration statement with the Securities and Exchange Commission. As of the date of this filing, the registration statement is not yet effective.
Restricted common stock award:
During the nine months ended September 30, 2017, 422,000 restricted shares were granted to directors and officers, of which 40,000 were terminated upon the individuals’ separation from the Company. As of September 30, 2017, 42,622 restricted common shares had vested and been issued. See Note 7.
Common stock escrow forfeiture:
During the nine months ended September 30, 2017, under an agreement between the Company and one of the selling shareholders from the Company’s 2016 acquisition of BDI, rights to 32,801 common shares held in escrow on behalf of the selling shareholder were waived by the shareholder and returned to the Company where they were cancelled. Under the agreement each party mutually released each other from any and all claims that might relate to or arise from the acquisition of BDI. As a result of this cancellation, $134,812, which was the estimated fair market value of the 32,801 common shares, based upon $4.11 per share, was recorded as a gain in the BDI discontinued operations and a reduction in common stock.
Equity rights terminations:
During the nine months ended September 30, 2017, the Company negotiated and executed agreements with holders of stock rights (stock options and restricted shares) to have such holders waive their rights to the stock rights in exchange for a one time cash payment. The majority of the holders had previously terminated from the Company or the agreements were made as part of separation agreements upon the individuals’ termination from the Company. Under the agreements, a total of 532,911 rights were forfeited, consisting of; 494,578 stock options under the Company's 2002 Stock Incentive Plan (the “2002 Plan”), 37,500 non-qualified options issued outside of the 2002 Plan and 833 restricted common shares. The total consideration under the agreements was $299,500. For financial reporting purposes the amounts paid to each holder was compared to the fair value of the stock rights forfeited using a Black-Scholes valuation and to the extent the amount paid exceeded the value of the stock rights forfeited, the payment amount was charged to stock-based compensation. For purposes of the Black-Scholes valuation, the Company assumed a dividend yield of 0%, expected price volatility of 49% to 99% risk free interest rates of 0.8% to 2.3% and expected terms based upon the remaining lives of the instruments. Of the total amount paid, $291,995 was charged to stockholders’ equity and $7,505 was charged to compensation expense.
Subsequent Stockholders’ Equity transactions:
See Note 11 for stockholders’ equity transactions subsequent to September 30, 2017.
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Stock based compensation, options and warrants |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation, options and warrants | Note 7. Stock based compensation, options and warrants:
Stock based compensation:
The Company recognized total expenses for stock-based compensation during the three and nine months ended September 30, 2017 and 2016 which are included in the accompanying statements of operations, from the following categories:
Restricted stock awards:
A summary of the Company’s restricted stock activity in the nine months ended September 30, 2017 is presented here:
During the nine months ended September 30, 2017, the Company granted 402,000 restricted shares to members of its Board of Directors and 20,000 restricted shares to an officer. Upon the separation of two Directors, 40,000 restricted shares were subsequently forfeited, including 833 restricted shares that were re-acquired by the Company as part of the equity rights terminations (see Note 6). The weighted-average grant date fair value of restricted shares granted during the nine months ended September 30, 2017 was $3.69 per share based upon the share price as of the date of grant. The total fair value of restricted stock granted, net of forfeitures, during the nine months ended September 30, 2017 was approximately $1,431,000, including approximately $136,000 which vested in the period.
The value of restricted stock grants are measured based on their fair market value on the date of grant and amortized over their respective vesting periods, generally twenty-four months. As of September 30, 2017, there was approximately $1,248,000 of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately 1.6 years.
Stock options:
The Company currently provides stock-based compensation to employees, directors and consultants, both under the Company's 2017 Equity Incentive Plan (the "Plan"), and with non-qualified options and warrants issued outside of the Plan. During August 2017, the Company's shareholders approved the Plan including reservation of 895,000 shares of common stock under the Plan. The Company estimates the fair value of the share-based awards on the date of grant using the Black-Scholes option-pricing model (the "Black-Scholes model"). Using the Black-Scholes model, the value of the award that is ultimately expected to vest is recognized over the requisite service period in the statement of operations. Option forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company attributes compensation to expense using the straight-line single option method for all options granted.
The Company's determination of the estimated fair value of share-based payment awards on the date of grant is affected by the following variables and assumptions:
Stock incentive plan options:
The Company currently provides stock-based compensation to employees, directors and consultants under the Plan. The Company utilized assumptions in the estimation of fair value of stock-based compensation for the nine months ended September 30, 2017 and 2016 as follows:
A summary of activity under the Plan for the nine months ended September 30, 2017 is presented below:
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on September 30, 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on September 30, 2017.
During the nine months ended September 30, 2017, 20,000 options were issued to a director under the Plan, exercisable at $4.02 per share with a grant date fair value of $3.04 per share. The options expire ten years from the date of grant and vest monthly in arrears, over a 24 month period.
During the nine months ended September 30, 2017, 34,000 options outstanding under the Plan were exercised generating $98,260 in cash proceeds. The 34,000 options exercised had a total intrinsic value when exercised of $53,180. During the nine months ended September 30, 2016, no options were exercised.
During the nine months ended September 30, 2016, 77,000 options were issued to non-employee directors under the Plan, exercisable at an average of $2.89 per share. The options expire ten years from the date of grant and vest 50% upon on the date of grant, and 25% on each of July 1, 2016 and October 1, 2016. During the nine months ended September 30, 2016, 150,000 options were issued to officers and employees under the Plan, exercisable at an average of $2.89 per share. The options expire ten years from the date of grant and vest 50% upon each of the nine month and the one year anniversary of the grant date.
During the nine months ended September 30, 2017, a total of 495,414 options granted under the Plan were forfeited as part of the equity rights terminations (see Note 6). Of the total, 438,414 options were vested, exercisable at an average exercise price of $25.59 and 57,000 were unvested, exercisable at an average exercise price of $2.92. During the nine months ended September 30, 2016, a total of 25,445 options that were granted under the Plan were forfeited as a result of option holders’ terminations from the Company, of which 21,825 were vested and 3,620 were unvested. The vested options were exercisable at an average of $39.81 per share and the unvested options were exercisable at an average of $15.13 per share.
The total fair value of stock options granted to employees and directors that vested and became exercisable during the nine months ended September 30, 2017 and 2016, was approximately $110,000 and $363,000, respectively. Based upon the Company’s experience, approximately 80% of the outstanding September 30, 2017 nonvested stock options, or approximately 24,000 options, are expected to vest in the future, under their terms.
A summary of the activity of nonvested options under the Plan to acquire common shares granted to employees, officers, directors and consultants during the nine months ended September 30, 2017 is presented below:
At September 30, 2017, based upon employee and director options granted under the Plan to that point, there was approximately $54,000 of additional unrecognized compensation cost related to stock options that will be recorded over a weighted average future period of approximately one year.
Other common stock purchase options and warrants:
As of September 30, 2017, in addition to the Plan options discussed above, the Company had outstanding 3,157,929 warrants in connection with offerings that were not issued under the Plan.
In March 2017, the Company completed a total of $7.0 million in private placements of securities and in connection with those offerings, granted investors in the offerings, warrants which are classified as equity, exercisable six-months after issuance, to purchase a total of 2,800,000 shares of common stock, with 900,000 warrants at an exercise price of $3.50 per share and 1,900,000 warrants at an exercise price of $3.56 per share, all expiring in March 2020. See Note 6.
During the nine month period ended September 30, 2016, 95,000 options were granted outside of the Plan. During the nine months ended September 30, 2017, these 95,000 options were forfeited. Operating expenses for the nine months ended September 30, 2017 and 2016, included $87,620 and $6,820, respectively, related to stock-based compensation.
Following is a summary of outstanding options and warrants that were issued outside of the Plan for the nine months ended September 30, 2017:
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on September 30, 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on September 30, 2017.
During the nine months ended September 30, 2017 and 2016, no warrants were exercised. At September 30, 2017 the 3,157,959 total outstanding warrants are non-compensatory rights, exercisable at an average of $4.37 per common share, expiring through March 2020, granted in connection with offerings. No rights are outstanding that have been granted under compensatory arrangements.
During the nine months ended September 30, 2017, a total of 169,074 options and warrants that were granted outside of the Plan were forfeited. Of the total forfeited, 71,574 warrants expired under their terms and 60,000 options lapsed (15,000 vested and 45,000 unvested) due to the holders’ terminations from the Company. The 60,000 options which lapsed were exercisable at an average of $3.78 per share. The remaining 37,500, which were forfeited resulted from negotiated payments made to each holder to waive their rights to the outstanding options. See Note 6.
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Animal Health License Agreements |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Animal Health License Agreements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Animal Health License Agreements | Note 8. Animal Health License Agreements:
Effective May 1, 2004, Washington University in St. Louis ("WU") and the Company entered into an Exclusive License Agreement ("WU License Agreement"), which granted the Company exclusive license and right to sublicense WU's technology (as defined under the WU License Agreement) for veterinary products worldwide, except where such products are prohibited under U.S. laws for export. The term of the WU License Agreement continues until the expiration of the last of WU's patents (as defined in the WU License Agreement) expire. The Company agreed to pay minimum annual royalties of $20,000 during the term of the WU License Agreement and such amounts are creditable against future royalties. Royalties payable to WU under the WU License Agreement for covered product sales by the Company carry a mid-single digit royalty rate and for sublicense fees received by the Company carry a low double-digit royalty rate. The WU License Agreement contains customary terms for confidentiality, prosecution and infringement provisions for licensed patents, publication rights, indemnification and insurance coverage. The WU License Agreement is cancelable by the Company with ninety days advance notice at any time and by WU with sixty days advance notice if the Company materially breaches the WU License Agreement and fails to cure such breach.
In July 2012, the Company entered into an Exclusive License Agreement (the "License Agreement") with Ceva Santé Animale S.A. ("Licensee"), pursuant to which the Company granted the Licensee an exclusive royalty-bearing license, until December 31, 2028, to the Company's intellectual property and other assets, including patent rights and know-how, relating to recombinant single chain reproductive hormone technology for use in non-human mammals (the "Company's Animal Health Assets"). The License Agreement is subject to termination by the Licensee (a) for convenience on 180 days prior written notice, (b) in the Licensee's discretion in the event of a sale or other disposal of the Company's animal health assets, (c) in the Licensee's discretion upon a change in control of the Company, (d) for a material breach of the License Agreement by the Company, or (e) in the Licensee's discretion, if the Company becomes insolvent. The License Agreement is also terminable by the Company if there is a material breach of the License Agreement by the Licensee, or if the Licensee challenges the Company's ownership of designated intellectual property. The License Agreement includes a sublicense of the technology licensed to the Company by WU. Under the terms of the WU License Agreement, a portion of license fees and royalties the Company receives from sublicensing agreements will be paid to WU. The obligation for such license fees due to WU is included in accrued expenses at September 30, 2017.
Under the License Agreement, the Licensee obtained a worldwide exclusive license to develop, seek regulatory approval for and offer to sell, market, distribute, import and export luteinizing hormone ("LH") and/or follicle-stimulating hormone ("FSH") products for bovine (cattle), equine and swine in the field of the assistance and facilitation of reproduction in bovine, equine and swine animals.
Under the License Agreement, as of September 30, 2017, the following future milestone payments are provided, assuming future milestones are successfully achieved:
Revenue recognition related to the License Agreement and WU License Agreement is based primarily on the Company's consideration of ASC 808-10-45, "Accounting for Collaborative Arrangements." For financial reporting purposes, the license fees and milestone payments received from the License Agreement, net of the amounts due to third parties, including WU, have been recorded as deferred revenue and are amortized over the term of the License Agreement. License fees and milestone revenue currently totaling a net of approximately $1,556,000 commenced being amortized into income upon the July 2012 date of milestone achievement. As of September 30, 2017, deferred revenue of $96,698 has been classified as a current liability and $992,792 has been classified as a long-term liability. The current liability represents the next twelve months' portion of the amortizable milestone revenue. During each of the nine months ended September 30, 2017 and 2016, $72,524 was recorded as the amortized license fee revenue arising from the License Agreement.
A tabular summary of the revenue categories and cumulative amounts of revenue recognition associated with the License Agreement follows:
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Acquisition and Discontinued Operations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and Discontinued Operations | Note 9. Acquisition and Discontinued Operations:
Acquisition:
On September 12, 2016, the Company completed the strategic acquisition of BDI, a privately-held entity. Pursuant to a purchase agreement (the "Purchase Agreement"), through a wholly-owned subsidiary ("Venaxis Sub"), the Company acquired all of the outstanding shares of Series 1 Preferred Stock of BDI from the selling shareholders (the "Seller"), representing more than 98% of the outstanding voting stock of BDI, and BDI thereupon become a majority owned subsidiary of the Company.
Under the terms of the Purchase Agreement, the consideration consisted of an aggregate of 627,010 shares of the Company's common stock (the "Shares") which Shares were distributed in accordance with the liquidation preferences set forth in BDI's Fifth Amended and Restated Certificate of Incorporation, as amended. The Shares were valued at approximately $2,577,000 (based upon the closing value of our common stock on the acquisition date) and the issuance represented approximately 14% of the Company’s then outstanding common stock at the closing. The Purchase Agreement contained customary representations and warranties of the parties, including BDI, and the Sellers have customary indemnification obligations to the Company relating to BDI, which are subject to certain limitations described further in the Purchase Agreement. The issuance of the Shares was effected as a private placement of securities. The Company also entered into a registration rights agreement with the Sellers.
The total consideration transferred consisted of the 627,010 shares of the Company's common stock with a value of $2,577,000.
Under the acquisition method of accounting, the total estimated purchase consideration was allocated to the acquired tangible and intangible assets and assumed liabilities based on their estimated fair values as of the acquisition date. Following was the allocation of the purchase consideration:
Intangible assets acquired consisted of the following as of December 31, 2016:
As of November 30, 2016, the Company paid approximately $29,000 to acquire the non-controlling interest in BDI, which was accounted for as an equity transaction.
The unaudited supplemental pro forma information for the nine months ended September 30, 2016, as if the BDI acquisition had occurred as of January 1, 2016, would have reflected total revenue of $174,000, net loss of $2,102,000 and loss per share of $0.47. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments to reflect the pro forma results of operations as if the acquisition had occurred as of the beginning of the periods presented, such as increased amortization for the fair value of acquired intangible assets. The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.
As of December 31, 2016 inventories, included with current assets of discontinued operations, totaled approximately $416,000, consisting of $188,000 in raw materials and $228,000 in finished goods, all associated with the BDI operations. As of September 30, 2017 no inventories were on hand.
Discontinued operations:
During the quarter ended March 31, 2017, the Company made the decision to discontinue the operations of its wholly-owned subsidiary BDI. BDI had developed a proprietary Enhanced Surface Plasmon Resonance technology platform for the detection of molecular interactions. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017 of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. The Company expects to dispose of the assets and operations during 2017 by selling the assets and licensing the intellectual property rights. The Company has recognized the exit of BDI in accordance with Accounting Standards Codification (ASC) 205-20, Discontinued Operations. As such, the historical results of BDI, following its 2016 acquisition, have been classified as discontinued operations.
The Company's historical financial statements have been revised to present the operating results of the BDI business as a discontinued operation. Assets and liabilities related to the discontinued operations of BDI are approximately as follows as of September 30, 2017 and December 31, 2016:
Summarized results of the discontinued operation are as follows for the three and nine months ended September 30, 2017:
Included in the impairment loss recognized for the nine months ended September 30, 2017 on the discontinuance of BDI are impairment losses recognized on inventories of $453,000, equipment and furnishings of $29,000, identifiable intangible assets of $1,833,000, goodwill of $430,000, and a $9,000, net expense from all other items, all associated with the assets and operations of BDI. For the three and nine months ended September 30, 2016 the loss from discontinued operations of $236,000, consisted of revenues of $2,000, less operating and other expenses totaling $238,000, including amortization and depreciation of $24,000. Additional costs associated with the exit of operations of the Company's subsidiary BDI may be incurred as strategic options for BDI are evaluated.
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Commitments and contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 10. Commitments and contingencies:
Commitments:
The Company's subsidiary, BDI, had a lease commitment on its office and laboratory space that was scheduled to expire March 31, 2018, requiring future non-cancellable lease payments as of May 2017 of approximately $294,000 for the remainder of its original term. During May 2017, an agreement with the subsidiary's landlord was reached to terminate the lease by surrendering the facility in May 2017, making a $80,419 prepayment of rent through July 31, 2017 and surrendering the $37,000 lease deposit. Rent expense for the nine months ended September 30, 2017 totaled approximately $229,000, including $216,000 in rent expense for BDI, inclusive of the payment of the early termination fee and the surrender of the $37,000 lease deposit and $13,000 in rent expense incurred by the Company under short-term rent agreements. The Company’s rent expense for the nine months ended September 30, 2016 was immaterial.
On February 25, 2016, the Company completed the sale of its corporate headquarters, land, building and certain fixtures and equipment to a third party at a purchase price of $4,053,000. The sale resulted in a gain of approximately $1,933,000 and generated approximately $1,799,000 in net cash after expenses and mortgage payoffs. The Company is renting space in the building under short-term lease agreements that provide certain storage space.
As of September 30, 2017, the Company has an employment agreement with one officer providing aggregate annual minimum commitments totaling approximately $272,000. The agreement contains customary confidentiality and benefit provisions.
Contingencies:
In the ordinary course of business and in the general industry in which the Company is engaged, it is not atypical to periodically receive a third party communication which may be in the form of a notice, threat, or "cease and desist" letter concerning certain activities. For example, this can occur in the context of the Company's pursuit of intellectual property rights. This can also occur in the context of operations such as the using, making, having made, selling, and offering to sell products and services, and in other contexts. The Company makes rational assessments of each situation on a case-by-case basis as such may arise. The Company periodically evaluates its options for trademark positions and considers a full spectrum of alternatives for trademark protection and product branding.
We are currently not a party to any legal proceedings, the adverse outcome of which would, in our management's opinion, have a material adverse effect on our business, financial condition and results of operations. |
Subsequent Events |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11. Subsequent Events:
Corporate Name Change:
On October 2, 2017 the Board of Directors of the Company approved a merger (the “Merger”) of the Company with its wholly-owned subsidiary, Riot Blockchain, Inc., a Nevada corporation (the “Merger Sub”), solely for the purpose of changing the name of the Company. Upon consummation of the Merger, the separate existence of Merger Sub ceased. As permitted by Chapter 92A.180 of Nevada Revised Statutes, the purpose of the Merger was to effect a change of the Company’s name to Riot Blockchain, Inc. from Bioptix, Inc. Upon approval by NASDAQ, on October 19, 2017, the Company’s name was thereupon changed.
Cash Dividend:
On October 2, 2017, the Company’s Board of Directors approved a cash dividend pursuant to which the holders of the Company’s common stock and Series A Preferred Stock, would receive $1.00 for each share of Common Stock held, including each share of Common Stock that would be issuable upon conversion of the Series A Preferred Stock, on an as converted basis. The cash dividend totaled approximately $9,562,000 with a record date of the close of business on October 13, 2017 and payment date of October 18, 2017.
Temporary Reduction in Warrant Exercise Prices:
On October 10, 2017, the Company’s Board of Directors approved a temporary reduction in the exercise price of warrants issued in the March 2017 private offerings to $3.00 per share. The approval covered any of the 2,800,000 outstanding warrants which would be exercised by their holders from October 10, 2017 through October 20, 2017, for cash. During that period 620,000 warrants were exercised for cash, as described below. Any such warrant holder who exercises such warrants for cash at the reduced price shall not be entitled to the benefit of any cashless exercise feature on such exercised warrants for cash. The fair value of the temporary modification of the exercise price will be recorded as an additional expense and a credit to capital in the fourth quarter of 2017. The fair value will be computed based upon the 620,000 warrants actually exercised times the increase in value of the warrants immediately before and immediately after the reduction in exercise price.
Common Stock Transactions:
Subsequent to September 30, 2017, the holders of 8,284.04 shares of Series A Preferred Stock exercised their right to convert such shares into 828,404 shares of common stock. Separately, the holders of 620,000 warrants issued in the March 2017 private offerings (420,000 from the common stock offering and 200,000 from the convertible note offering), exercised their warrants for cash during the temporary reduction in exercise price period, described above, and were issued 620,000 shares of common stock generating $1,860,000 in cash proceeds. Additionally, the holders of 2,060,000 warrants issued in the March 2017 private offerings (360,000 from the common stock offering, exercisable at $3.50 per share and 1,700,000 from the convertible note offering, exercisable at $3.56 per share), exercised their warrants on a cashless basis, as provided in the offering agreements and were issued 1,228,690 shares of common stock in exchange for surrender of their warrants.
Tess Inc. Acquisition:
On October 20, 2017, the Company acquired approximately 52% of TESS which is developing blockchain solutions for telecommunications companies. Under the terms of the Purchase Agreement (the “Purchase Agreement”) the Company invested cash of $320,000 and issued 75,000 shares of restricted Common Stock in exchange for 2,708,333 shares of common stock of TESS. Accordingly, TESS became a majority-owned subsidiary of the Company. In connection with the transaction, the Company and TESS entered into a registration rights agreement pursuant to which the Company agreed to file a registration statement within three months to register the resale of 25,000 shares (of 75,000 shares) of Common Stock issued to TESS. As of October 20, 2017 TESS has net tangible assets of approximately $10,000 and the Company expects that the purchase price will be allocated to intangible assets including in-process research and development and goodwill.
Kairos Global Technology, Inc. Acquisition:
On November 1, 2017, the Company entered into a business combination share exchange agreement (the “Agreement”) with Kairos Global Technology, Inc., a Nevada corporation and on November 3, 2017, closed on the agreement. Under the Agreement, the shareholders of Kairos agreed to exchange all outstanding shares of Kairos’ common stock to the Company and the Company agreed to issue an aggregate of One Million Seven Hundred Fifty Thousand and One (1,750,001) newly-designated shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock”) which are convertible into an aggregate of One Million Seven Hundred Fifty Thousand and One (1,750,001) shares of the Company’s common stock, no par value per share (the transaction, the “Kairos Transaction”) to such shareholders. The shareholders of Kairos also will receive a royalty to be paid from cash flow generated from operations, which shall entitle such shareholders to receive 40% of the gross profits generated on a monthly basis until they have received a total of $1,000,000, at which point the royalty is extinguished. Karios is the owner of certain computer equipment and other assets used for the mining of cryptocurrency, specifically servers consisting of 700 AntMiner S9s and 500 AntMiner L3s, all manufactured by Bitmain.
The shares of Series B Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of the Series B Preferred Stock, plus all accrued and unpaid dividends, if any, on such Series B Preferred Stock, as of such date of determination, divided by the conversion price. The stated value of each share of Series B Preferred Stock is $6.80 and the initial conversion price is $6.80 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The holders of Series B Preferred Stock are entitled to receive dividends if and when declared by the Company’s board of directors. The Series B Preferred Stock will participate on an “as converted” basis, with all dividends when and if declared, on the Company’s common stock. Each holder is entitled to vote on all matters submitted to stockholders of the Company, and will have the number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series B Preferred Stock. Under the agreement the Company is prohibited from effecting a conversion of the Series B Preferred Stock to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% percent of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series B Preferred Stock, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99% percent. The Series B Preferred Stock contains a blocker pursuant to which, if the Company has not obtained the approval of its shareholders in accordance with NASDAQ Listing Rule 5635(d), then the Company may not issue upon conversion of the Series B Preferred Stock a number of shares of common stock, which, when aggregated with any other shares of common stock underlying the Series B Preferred Stock issued pursuant to the Agreement would exceed 19.99% of the shares of common stock issued and outstanding as of the date of the Agreement, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of the Agreement.
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Significant accounting policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of consolidation | Principles of consolidation
The consolidated financial statements of the Company include the accounts of Riot Blockchain and its wholly-owned subsidiary, BDI. Intercompany accounts and transactions have been eliminated in the consolidation. |
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Investment in affiliate | Investment in affiliate
The Company’s 10.9% investment in Coinsquare is accounted for on the cost method. |
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Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments:
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. From time to time, the Company's cash account balances exceed the balances as covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances.
The Company invests excess cash from time to time in highly-liquid debt and equity investments of highly-rated entities, which are classified as trading securities. Such amounts are recorded at market values using Level 1 inputs in determining fair value and are generally classified as current, as the Company does not intend to hold the investments beyond twelve months. Investment securities classified as trading are those securities that are bought and held principally for the purpose of selling them in the near term, with the objective of preserving principal and generating profits. These securities are reported at fair value with unrealized gains and losses reported as an element of other (expense) income in current period earnings. The Company's Board of Directors has approved an investment policy covering the investment parameters to be followed with the primary goals being the safety of principal amounts and maintaining liquidity. The policy provides for minimum investment rating requirements as well as limitations on investment duration and concentrations. Based upon market conditions, the investment guidelines have been tightened to increase the minimum acceptable investment ratings required for investments and shorten the maximum investment term. As of September 30, 2017, 100% of the investment portfolio was in cash and cash equivalents, which is presented as such on the accompanying balance sheet.
The Company's short-term investments comprise certificates of deposit, commercial paper and corporate bonds, all of which are classified as trading securities and carried at their fair value based upon quoted market prices of the securities at December 31, 2016. Net realized and unrealized gains and losses on trading securities are included in net loss. For purposes of determining realized gains and losses, the cost of securities sold is based on specific identification.
The composition of trading securities is as follows at December 31, 2016:
Investment income for the nine months ended September 30, 2017 and 2016 consists of the following:
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Fair value of financial instruments | Fair value of financial instruments:
The Company accounts for financial instruments under Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic ("ASC") 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1— quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
Level 3 — assets and liabilities whose significant value drivers are unobservable.
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company's market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. There were no financial assets or liabilities measured at fair value, with the exception of short-term investments as of December 31, 2016.
The carrying amounts of the Company's financial instruments (other than short-term investments as discussed above) approximate fair value because of their variable interest rates and/or short maturities combined with the recent historical interest rate levels. |
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Revenue Recognition | Revenue Recognition:
Revenue recognition related to the license agreement is based upon the licensee's right to use the technology and the Company's ongoing obligations to maintain and defend the patented rights and comply with the terms of the sub-license agreement whereby the license fees and milestone payments received from the agreement, net of the amounts due to third parties, have been recorded as deferred revenue and are amortized over the term of the license agreement. |
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Goodwill | Goodwill:
The Company performs a goodwill impairment analysis in the fourth quarter of each year, or whenever there is an indication of impairment. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation to determine if it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. The Company has determined, based on its evaluation, that the goodwill associated with the BDI acquisition was impaired and was written off during the nine months ended September 30, 2017, included as part of the discontinued operations impairment loss. |
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Recently issued and adopted accounting pronouncements | Recently issued and adopted accounting pronouncements:
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's consolidated financial statements properly reflect the change.
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2041-09"), which supersedes nearly all existing revenue recognition guidance. The standard's core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five-step model to achieve its core principle: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction's price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (i) the entity's contracts with customers; (ii) the significant judgments, and changes in judgments, made in applying the guidance to those contracts; and (iii) any assets recognized from the costs to obtain or fulfill a contract with a customer.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to interim and annual periods beginning after December 15, 2017. The standard allows entities to apply the standard retrospectively to each prior period presented ("full retrospective adoption") or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application ("modified retrospective adoption"). The Company plans to adopt this guidance on January 1, 2018, and continues to evaluate the impact of adopting under the modified retrospective adoption versus the full retrospective method. The Company is currently in the process of determining the impact of the new revenue recognition guidance on its revenue transactions, including any impacts on associated processes, systems, and internal controls. The Company's preliminary assessment indicates implementation of this standard will not have a material impact on financial results. The Company's evaluation has included determining whether the unit of account (i.e., performance obligations) will change as compared to current GAAP, as well as determining the standalone selling price of each performance obligation. The Company continues to evaluate the impact of this guidance and its subsequent amendments on the consolidated financial position, results of operations, and cash flows, and any preliminary assessments are subject to change.
In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 supersedes and amends the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. ASU No. 2016-01 is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires a lessee to recognize the lease assets and lease liabilities arising from operating leases in the balance sheet. Qualitative along with specific quantitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. The Company does not expect the adoption of ASU 2016-02 to have a material impact on its consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share Based Payment Accounting ("ASU 2016-09"), which amends guidance issued in Accounting Standards Codification ("ASC") Topic 718, Compensation - Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company has adopted ASU 2016-09 as of January 1, 2017. The principal impact was that to the extent a tax benefit or expense from stock compensation arises it will be presented in the income tax line of the Statement of Operations rather than the current presentation as a component of equity on the Balance Sheet. Also the tax benefit or expense will be presented as activity in Cash Flow from Operating Activity rather than the current presentation as Cash Flow from Financing Activity in the Statement of Cash Flows. The Company does not expect the adoption of ASU 2016-09 to have a material impact on its consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance for eight cash flow classification issues in current GAAP. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact that will result from adopting ASU 2016-02.
In January 2017, the FASB issued an ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted this guidance effective January 1, 2017. The adoption of this ASU had no impact on the Company's consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020 and is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09, "Compensation-Stock Compensation: Scope of modification accounting". ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including during an interim period for which financial statements have not yet been made available for issuance. The amendments should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the adoption of ASU 2017-09 will have on its consolidated financial statements.
In July 2017, the FASB issued ASU No. 2017-11, "Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)," which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.
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Income (loss) per share | Income (loss) per share:
ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share ("EPS") with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period, excluding any nonvested restricted common shares. Diluted net income (loss) per share reflect the potential dilution of securities that could share in the Company's income (loss). The effect of the inclusion of the dilutive shares would have resulted in a decrease in loss per share for the periods ended September 30, 2017 and 2016. Outstanding stock options, warrants and other dilutive rights are not considered in the calculation, as the impact of the potential common shares (totaling approximately 5,474,000 shares and 1,061,000 shares for each of the nine month periods ended September 30, 2017 and 2016, respectively) would be anti-dilutive. For the nine months ended September 30, 2017 the dilutive rights not considered in the calculation, include shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) outstanding that are convertible into 1,919,472 common shares.
For periods when shares of preferred stock are outstanding, the two-class method is used to calculate basic and diluted earnings (loss) per common share since such preferred stock is a participating security under ASC 260 Earnings per Share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Under the two-class method, basic earnings (loss) per common share is computed by dividing net earnings (loss) attributable to common share after allocation of earnings to participating securities by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share, when applicable, is computed using the more dilutive of the two-class method or the if-converted method. In periods of net loss, no effect is given to participating securities since they do not contractually participate in the losses of the Company.
Under the provisions of ASC 260, "Earnings Per Share," basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock and the dividends accumulated for the period on cumulative preferred stock from income from continuing operations. Dividends during the nine months ended September 30, 2017 were de minimis. |
Significant accounting policies (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Trading Securities | The composition of trading securities is as follows at December 31, 2016:
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Schedule of Investment Income | Investment income for the nine months ended September 30, 2017 and 2016 consists of the following:
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Property and equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following:
|
Other long-term assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Long-Term Assets | Other long-term assets consisted of the following as of September 30, 2017 and December 31, 2016:
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Stock options and warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Stock-based Compensation | The Company recognized total expenses for stock-based compensation during the three and nine months ended September 30, 2017 and 2016 which are included in the accompanying statements of operations, from the following categories:
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Summary of Stock Restricted Plan Activity | A summary of the Company’s restricted stock activity in the nine months ended September 30, 2017 is presented here:
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Schedule of Fair Value Assumptions Used to Estimate Stock-based Compensation | The Company utilized assumptions in the estimation of fair value of stock-based compensation for the nine months ended September 30, 2017 and 2016 as follows:
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Summary of Stock Incentive Plan Activity | A summary of activity under the Plan for the nine months ended September 30, 2017 is presented below:
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Schedule of Nonvested Share Activity | A summary of the activity of nonvested options under the Plan to acquire common shares granted to employees, officers, directors and consultants during the nine months ended September 30, 2017 is presented below:
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Schedule of Nonqualified Award Activity | Following is a summary of outstanding options and warrants that were issued outside of the Plan for the nine months ended September 30, 2017:
|
Animal Health License Agreements (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
Animal Health License Agreements [Abstract] | ||||||||||||||||||||||||||||||||||||||||
Schedule of Current and Long-Term Deferred Revenues | A tabular summary of the revenue categories and cumulative amounts of revenue recognition associated with the License Agreement follows:
|
Acquisition and Discontinued Operations (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Acquired | Under the acquisition method of accounting, the total estimated purchase consideration was allocated to the acquired tangible and intangible assets and assumed liabilities based on their estimated fair values as of the acquisition date. Following was the allocation of the purchase consideration:
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Schedule of Intangible rights acquired | Intangible assets acquired consisted of the following as of December 31, 2016:
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Schedule of Operation and Assets and Liabilities Related to Discontinued Operations | The Company's historical financial statements have been revised to present the operating results of the BDI business as a discontinued operation. Assets and liabilities related to the discontinued operations of BDI are approximately as follows as of September 30, 2017 and December 31, 2016:
Summarized results of the discontinued operation are as follows for the three and nine months ended September 30, 2017:
|
INTERIM FINANCIAL STATEMENTS (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 13,139,722 | $ 5,529,848 | $ 2,447,320 | $ 2,012,283 |
Working capital | 12,555,000 | |||
Stockholders' equity | 15,465,994 | 14,920,359 | ||
Accumulated deficit | $ 120,822,896 | $ 109,855,276 |
Significant Accounting Policies (Income (Loss) Per Share) (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 5,474,000 | 1,061,000 |
Series A Preferred Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares not included in the computation of EPS | 1,919,472 |
Significant Accounting Policies - (Schedule of Trading Securities) (Details) |
Dec. 31, 2016
USD ($)
|
---|---|
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Trading securities cost, current | $ 7,516,404 |
Trading securities fair value, current | 7,506,761 |
Certificates of deposit / commercial paper [Member] | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Trading securities cost, current | 2,378,222 |
Trading securities fair value, current | 2,373,891 |
Corporate Bonds [Member] | |
Schedule of Trading Securities and Other Trading Assets [Line Items] | |
Trading securities cost, current | 5,138,182 |
Trading securities fair value, current | $ 5,132,870 |
Significant Accounting Policies (Schedule of Investment Income) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest income | $ 84,177 | $ 101,236 |
Realized (losses) | (21) | (2,893) |
Unrealized gains | 11,575 | 21,501 |
Management fee expenses | (12,484) | (16,813) |
Net investment income | $ 83,247 | $ 103,031 |
Investment in Coinsquare (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Minority interest | $ 3,000,000 | |
Coinsquare [Member] | Warrant [Member] | ||
Percentage of minority interest | 14.70% | |
Maturity date | May 30, 2018 | |
Coinsquare [Member] | ||
Minority interest | $ 3,000,000 | |
Percentage of minority interest | 10.90% |
Property and equipment (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Feb. 25, 2016 |
|
Property, Plant and Equipment [Abstract] | |||||
Sales price of corporate headquarters, land and building to a third party | $ 4,053,000 | ||||
Gain on sale of property and equipment | $ 13,062 | $ 1,933,335 | |||
Proceeds from sale of property and equipment | 1,799,143 | ||||
Depreciation expense | $ 500 | $ 800 | 1,400 | 2,700 | |
Depreciation and amortization expense relating to short-term assets included with prepaid expenses | $ 1,500 | $ 12,000 |
Property and equipment (Schedule of Property and Equipment) (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Office and computer equipment | $ 114,309 | $ 116,510 |
Less accumulated depreciation | 110,196 | 110,972 |
Total property and equipment, net | $ 4,113 | $ 5,538 |
Other long-term assets (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Future amortization | ||||
2018 | $ 71,000 | $ 71,000 | ||
2019 | 71,000 | 71,000 | ||
2020 | 71,000 | 71,000 | ||
2021 | 71,000 | 71,000 | ||
2022 | 71,000 | 71,000 | ||
Patent impairment charges | $ 32,000 | $ 200,000 |
Other long-term assets (Schedule of Other Long-Term Assets) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Goodwill: | |
Goodwill, beginning | $ 447,951 |
Additions | |
Impairments | |
Goodwill, ending | 447,951 |
Accumulated amortization | (60,712) |
Total other long-term assets: | |
Cost, beginning | 1,480,933 |
Additions | 14,255 |
Impairments | |
Cost, ending | 1,495,188 |
Cost, beginning | (542,895) |
Additions | (52,974) |
Impairments | |
Cost, ending | (595,869) |
Other long-term assets, net, beginning | 938,038 |
Additions | (38,719) |
Impairments | |
Other long-term assets, net, ending | 899,319 |
Patents [Member] | |
Patents: | |
Cost, beginning | 1,032,982 |
Additions | 14,255 |
Impairments | |
Cost, ending | 1,047,237 |
Accumulated amortization, beginning | (482,183) |
Additions | (52,974) |
Impairments | |
Accumulated amortization, ending | $ (535,157) |
Stock based compensation, options and warrants (Schedule of Stock-based Compensation) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 108,568 | $ 144,187 | $ 379,622 | $ 368,459 |
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 100,396 | 188,572 | ||
Stock options awards under the Plan Member [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | 8,172 | 137,367 | 103,430 | 361,639 |
Non-qualified stock option awards [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock-based compensation | $ 6,820 | $ 87,620 | $ 6,820 |
Stock based compensation, options and warrants (Schedule of Restricted Stock Activity) (Details) - Restricted Stock [Member] |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
Number of shares | |
Beginning balance | shares | |
Granted | shares | 422,000 |
Vested | shares | (42,622) |
Forfeited | shares | (40,000) |
Ending balance | shares | 339,378 |
Weighted Average Grant Date Fair value | |
Beginning balance | $ / shares | |
Granted | $ / shares | 3.69 |
Vested | $ / shares | 3.20 |
Forfeited | $ / shares | 3.13 |
Ending balance | $ / shares | $ 3.75 |
Stock based compensation, options and warrants (Schedule of Assumptions in Estimation of Stock-Based Compensation) (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Expected price volatility | 101.00% | |
Risk free interest rate | 1.92% | 1.20% |
Expected term | 5 years | 5 years |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected price volatility | 99.00% | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected price volatility | 100.00% |
Stock based compensation, options and warrants (Schedule of Nonvested Awards) (Details) - Stock Incentive Plan [Member] |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
Nonvested Shares Underlying Options | |
Beginning balance | shares | 97,738 |
Granted | shares | 20,000 |
Vested | shares | (30,905) |
Forfeited | shares | (57,000) |
Ending balance | shares | 29,833 |
Weighted Average Exercise Price | |
Beginning balance | $ 3.51 |
Granted | 4.02 |
Vested | 4.92 |
Forfeited | 2.92 |
Ending balance | 3.54 |
Weighted Average Grant Date Fair Value | |
Beginning balance | 2.58 |
Granted | 3.04 |
Vested | 3.57 |
Forfeited | 2.16 |
Ending balance | $ 2.67 |
Animal Health License Agreements (Narrative) (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Animal Health License Agreements [Abstract] | |||
Annual royalty commitment | $ 20,000 | ||
Prior written notice period for termination of license agreement by the licensee | 180 days | ||
Aggregate milestone payments, maximum | $ 1,100,000 | ||
Additional milestone payments, maximum | 2,000,000 | ||
Original amount of deferred revenue | 1,556,300 | ||
Deferred revenue | 96,698 | $ 96,698 | |
Deferred revenue, noncurrent | 992,792 | $ 1,065,316 | |
Recognition of license fee revenue | $ 72,524 | $ 72,524 |
Animal Health License Agreements (Schedule of Revenue Recognition Associated with the License Agreement) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Animal Health License Agreements [Abstract] | |
License fees and milestone amounts paid / achieved | $ 1,920,000 |
Third party obligations recorded, including WU | (363,700) |
Deferred revenue balance | 1,556,300 |
Revenue amortization to September 30, 2017 | (466,810) |
Net deferred revenue balance at September 30, 2017 | $ 1,089,490 |
Original amortization period | 197 months |
Acquisition and Discontinued Operations (Schedule of Intangible Assets Acquired) (Details) |
Dec. 31, 2016
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
Total | $ 2,000,000 |
Less accumulated amortization | (148,264) |
Net acquired intangibles | 1,851,736 |
Trademarks [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total | 99,000 |
Customer base [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total | 37,000 |
Developed technology [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total | $ 1,864,000 |
Acquisition and Discontinued Operations (Schedule of Assets and Liabilities related to Discontinued Operations) (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Current assets: | ||
Total current assets | $ 11,532 | $ 486,890 |
Current liabilities: | ||
Total current liabilities | 202,080 | 258,819 |
BDI [Member] | ||
Current assets: | ||
Accounts receivable | 8,000 | 5,000 |
Inventories | 416,000 | |
Prepaid expenses | 4,000 | 66,000 |
Total current assets | 12,000 | 487,000 |
Equipment and furnishings, net | 36,000 | |
Intangible assets, net | 2,281,000 | |
Deposit | 37,000 | |
Total noncurrent assets | 2,354,000 | |
Current liabilities: | ||
Accounts payable | 37,000 | 174,000 |
Accrued expenses | 28,000 | 85,000 |
Deferred revenue | 137,000 | |
Total current liabilities | $ 202,000 | $ 259,000 |
Acquisition and Discontinued Operations (Summarized results of the discontinued operation) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Escrow forfeiture gain | $ 134,812 | |||
Impairment (loss) | (2,754,131) | |||
BDI [Member] | ||||
Sales | 7,000 | $ 2,000 | 37,000 | $ 2,000 |
Cost of sales | 2,000 | 6,000 | ||
Gross margin | 5,000 | 31,000 | ||
Operating expenses | (26,000) | 975,000 | ||
Operating loss | 31,000 | (944,000) | ||
Escrow forfeiture gain | 135,000 | |||
Impairment (loss) | (2,754,000) | |||
Income (loss) from discontinued operations | $ 31,000 | $ (3,563,000) |
Commitments and contingencies (Details) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
Officers
|
Sep. 30, 2016
USD ($)
|
May 31, 2017
USD ($)
|
Feb. 25, 2016
USD ($)
|
|
Operating Leased Assets [Line Items] | ||||||
Rent expense | $ 13,000 | |||||
Sales price of corporate headquarters, land and building to a third party | $ 4,053,000 | |||||
Proceeds from sale of property plant and equipment | $ 1,799,143 | |||||
Gain from sale of property plant and equipment | $ 13,062 | $ 1,933,335 | ||||
BDI [Member] | ||||||
Operating Leased Assets [Line Items] | ||||||
Lease expiration date | Mar. 31, 2018 | |||||
Future minimum operating lease commitments owed in 2017 | $ 294,000 | |||||
Rent expense | $ 216,000 | |||||
Prepayment of rent | $ 80,419 | |||||
Lease deposit | $ 37,000 | |||||
Employment Contracts [Member] | ||||||
Operating Leased Assets [Line Items] | ||||||
Number of officers | Officers | 1 | |||||
Annual commitment amount | $ 272,000 | $ 272,000 | ||||
Subsidiary [Member] | ||||||
Operating Leased Assets [Line Items] | ||||||
Rent expense | $ 229,000 |
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