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Fair Value Measurements
 9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 7 - Fair Value Measurements

 

The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy.

 

The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2016 and December 31, 2015:

 

      Fair value measured at September 30, 2016  
      Total carrying value at September 30,                 Significant other observable inputs       Significant unobservable inputs  
      2016       (Level 1)         (Level 2)       (Level 3)  
Assets                              
Digital Currencies   $ 200     $ 200                
                               
Liabilities                              
Derivative liabilities   $ 11,977,349                   $ 11,977,349  
Derivative liabilities for shortfall of shares   $ 7,401,321                   $ 7,401,321  
Convertible notes at fair value   $ 2,576,819                   $ 2,576,819  

 

    Fair value measured at December 31, 2015  
    Total carrying value at
December 31,		     Quoted prices in active markets     Significant other observable inputs     Significant unobservable inputs  
    2015     (Level 1)     (Level 2)     (Level 3)  
Assets                                
Digital Currencies   $ 17,036     $ 17,036     $ -     $ -  
                                 
Liabilities                                
Derivative liabilities   $ 3,794,153                     $ 3,794,153  
Convertible notes at fair value     1,781,156       -       -       1,781,156  

 

There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2016.

 

The following table presents additional information about Level 3 assets and liabilities measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

 

Changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2016:

  

Derivative liabilities Balance - January 1, 2016   $ 3,794,153  
Change in fair value of derivative liability     8,183,196  
Derivative liabilities Balance - September 30, 2016   $ 11,977,349  

 

Derivative liabilities for shortfall of shares Balance - January 1, 2016   $ -  
Change in fair value of derivative liability shortfall of shares     7,401,321  
Derivative liabilities for shortfall of shares Balance - September 30, 2016   $ 7,401,321  

 

Convertible notes at fair value - January 1, 2016   $ 1,781,156  
Addition of convertible notes     100,000  
Conversion of notes into common stock     (5,409,571 )
Loss on extinguishment of debt     2,859,338  
Change in fair value of convertible notes (including OID discount)     3,245,896  
Convertible notes at fair value - September 30, 2016   $ 2,576,819  

 

The Company’s derivative liabilities are measured at fair value using the Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the nine months ended September 30, 2016 is as follows:

 

Warrant Liabilities

 

Date of valuation   September 30, 2016  
Strike Price     0.0004 - 1.0000  
Volatility     153% - 269 %
Risk-free interest rate     0.35% - 1.03 %
Contractual life (in years)     0.35 to 4.21  
Dividend yield (per share)     0 %

 

Derivative Liabilities for shortfall of shares

 

Date of valuation   September 30, 2016  
Strike Price     0.00042  
Volatility     231.78 %
Risk-free interest rate     1.01 %
Contractual life (in years)     4.0  
Dividend yield (per share)     0 %

 

Convertible Notes at Fair Value

 

Date of valuation   September 30, 2016  
Strike Price     0.00042  
Volatility     181.2% - 297.40 %
Risk-free interest rate     0.25% - 0.31 %
Dividend yield (per share)     0 %

 

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Management.