Commitments and Contingencies	12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 9. Commitments and Contingencies Bitcoin Mining Agreements On May 20, 2019, the Company entered into an agreement with a third-party consultant whereby the consultant would advise and consult with the Company on certain business and financial matters relating to crypto-currency mining. The Company engaged the consultant to: (1) assist in locating at least 5 acres of real property in Georgia within close proximity to a fully operational electric substation with a minimum of 15 MW of available capacity, subject to approval by the power company, (2) negotiate a power rate between the Company and a power company, (3) assist in the identification, purchase, and delivery of transformers required to serve the containerized mining systems, (4) successfully install the aforementioned transformers, and (5) obtain an electrical permit and successfully inspect all electrical infrastructure between the container and substation. The consulting agreement was valued at $400 and such amount was transferred to a third-party escrow account, payable to the consultant upon successful achievement of defined milestones. Upon achievement, the value of the milestone is recorded as a component of general and administrative expenses with an offsetting reduction to prepaid expense. During the second, third and fourth quarters of 2019, $200, $50 and $150 in milestone achievements were earned, respectively, representing the total value of the consulting agreement. On October 23, 2018, the Company entered into a hosting agreement (“Colorado Hosting Agreement”) with a hosting facility in Colorado, whereby the service provider provided a facility to host Bitcoin computing servers. Due to the price of Bitcoin steadily decreasing in 2018 and throughout the first quarter 2019, the Company decided it was not economically responsible to commence mining under this hosting arrangement until May 2019 when Bitcoin mining economics started to improve. The Colorado Hosting Agreement was amended several times during 2019, with the eventual termination on December 27, 2019. In connection with the termination, the Company recovered $56 in cash for prepaid hosting fees and security deposit and conveyed 1,260 of company-owned miners to its hosting partner with a net book value of $131. Given the age of the miners and reduced hashing capacity, the net book value of the conveyed miners and $41 of unamortized power supplies and initial set up fees was recorded as a contract termination charge in December 2019 totaling $172. On May 10, 2019, the Company, entered into a hosting agreement (“Ohio Hosting Agreement”) relating to the generation of Bitcoin mining revenues at a facility located in Coshocton, Ohio (the “Facility”) for a term that is the earlier of (i) two years, or (ii) when the parties determine that the Bitcoin mining business at the Facility is uneconomical. The Ohio Hosting Agreement was amended in September 2019 and was terminated on December 31, 2019. In connection with the termination, the hosting partner agreed to refund the Company’s security deposit of $19 during the first quarter of 2020. Given the age of the miners and reduced hashing capacity, the net book value of the 626 company-owned miners located at the Facility was recorded as an impairment charge in December 2019 totaling $64. During the years ended December 31, 2019 and 2018, the Company recognized revenue of $87 and $0 under these agreements, respectively, $64 of which was accounted for under the management agreements that were terminated on during 2019. Management Agreements On October 12, 2017, MGT entered into two management agreements with accredited investors, Deep South Mining LLC (“Deep South”) and BDLM, LLC (“BDLM”) (together the “Users”, each agreement a “Management Agreement”, and both agreements together are “Management Agreements”). Each of the Users agreed on substantially similar terms to purchase an aggregate of 1,944 Bitmain Antminer S9 mining computers (the “Bitcoin Miners”) to mine Bitcoin with the Company acting as the exclusive manager for each of the Users. Each Management Agreement had an initial term 24 months from the date that the Bitcoin Miners began mining operations and could be terminated by mutual written agreement. On November 21, 2017, the Company entered into a third management agreement with another accredited investor, Buckhead Crypto, LLC (“Buckhead”) and such agreement was terminated on February 28, 2018. The Company purchased the Bitcoin Miners from Buckhead for $767 and refunded prepaid electricity paid by Buckhead of $133. On February 13, 2018, the Company entered into a new management agreement with a third party with terms similar to the other Management Agreements. The third party agreed to purchase 200 Bitcoin Miners to mine Bitcoin with the Company acting as the exclusive manager. This management agreement had an initial term of 24 months from the date that the Bitcoin Miners began mining operations and could be terminated by mutual written agreement. On September 30, 2019, the Company terminated this agreement for a one-time payment of $27 and the acquisition of 200 Bitcoin Miners owned by the third party for 1,250,000 restricted shares of the Company’s common stock valued at $32. Pursuant to the Management Agreements, the Company provided for installation, hosting, maintenance and repair and provided ancillary services necessary to operate the Bitcoin Miners. In accordance with each of the Management Agreements, each of the Users gained a portion of the Bitcoin mined called the user distribution portion (“User Distribution Portion”). The User Distribution Portion was 50% of the amount of Bitcoin mined net of the operating fee (10% of the total Bitcoin mined) and the electricity cost. On September 23, 2018, the Company entered into letter agreements with the Users whereby the parties agreed to cease mining with the Users Bitcoin miners until Bitcoin economics improved. Due to the Company’s transition from Sweden in late 2018 and due to unfavorable Bitcoin economics, the Company ceased all Bitcoin mining operations during the fourth quarter of 2018, including mining with the Users Bitcoin Miners as agreed upon in letter agreements among the parties dated September 23, 2018. On May 2, 2019, the Company entered into amended management agreements with the Users at which time Bitcoin mining resumed. Due to wear and tear, the parties acknowledged the Users’ Bitcoin Miners totaled 1,800, collectively. Additionally, the parties agreed to amend the operating fee to equal ten percent (10%) times the Bitcoin mined minus electricity and to waivers to accrue negative balances. On August 31, 2019, the Company entered into two Settlement and Termination Agreements (the “Settlement Agreements”) to its existing Management Agreements with the Users. Under the terms of the Settlement Agreements, the Company will pay the Users a percentage of profits (“Settlement Distribution”) of Bitcoin mining as defined in the Settlement Agreements. The estimated present value of the Settlement Distributions of $337 was recorded as termination expense with an offsetting liability on August 31, 2019. Since two of the components of the Settlement Distribution, Bitcoin price and Difficulty, as defined in the Settlement Agreements, are based on market conditions, the liability will be adjusted to fair value on a quarterly basis and any changes will be recorded in the statement of operations. As such, the liability is considered a Level 3 financial instrument. During 2019, the Company recognized a gain on the change in the fair value of $176 based on the change of Bitcoin price and Difficulty, and along with the monthly Settlement Distributions, the liability was reduced to $116 as of December 31, 2019. Based on the terms of the Settlement Agreements, Settlement Distributions are scheduled to terminate on September 30, 2020. Additionally, the Company acquired the 1,800 Antminer S-9 Bitcoin miners owned by the Users for 9,000,000 restricted shares of the Company’s common stock valued at $279. Bitcoin Production Equipment and Operations On August 14, 2018, the Company entered into a collaborative venture with Bit5ive, LLC to develop a fully contained crypto currency mining pod (the “POD5 Agreement”) for a term of five years. Pursuant to the POD5 Agreement, the Company assists with the design and development of the pods (“POD5 containers”). The Company retains naming rights to the pods and receives royalty payments from Bit5ive, LLC in exchange for providing capital as well as engineering and design expertise. During the year ended December 31, 2019, the Company received royalties and recognized revenue of $44 under this agreement. Electricity Contract In June 2019, the Company entered a two-year contract for electric power with the City of Lafayette, Georgia, a municipal corporation of the State of Georgia (“the City”). The Company makes monthly payments based upon electricity consumed, at a negotiated kilowatt per hour rate, inclusive of transmission charges and exclusive of state and local sales taxes. Over time, the Company is entitled to utilize a load of 10 megawatts. For each month, the Company estimated its expected electric load, and should the actual load drop below 90% of this estimate, the City reserves the right to impose a modest penalty to the hourly kilowatt rate for electricity consumed. In connection with this agreement, the Company paid a $115 security deposit and such amount is classified as Other Assets in the Company’s consolidated balance sheet as of December 31, 2019. Employment agreements On April 1, 2018, the Company entered into an Amended and Restated Executive Employment Agreement (the “Employment Agreement”) with Robert Ladd, which was executed on April 6, 2018. The Employment Agreement provides that Mr. Ladd has been reappointed for an initial term of two years. Mr. Ladd is entitled to receive an annualized base salary of $360 and is also eligible for a cash and/or equity bonus as the Compensation Committee may determine, from time to time, based on meeting performance objectives and bonus criteria to be mutually identified by Mr. Ladd and the Compensation Committee. In connection with the execution of the Employment Agreement, the Company issued to Mr. Ladd 600,000 shares of the Company’s restricted common stock, pursuant to the Company’s 2016 Stock Option Plan, vesting over a two-year period. On September 10, 2018, Mr. Ladd took a leave of absence from his position as President and Chief Executive Officer in order to focus on allegations levied against him in an SEC complaint filed on September 7, 2018 and was appointed as President and Chief Executive Officer on May 2019. On March 8, 2018, the Company entered into an employment agreement with Mr. Lowrey, effective March 1, 2018. Mr. Lowrey’s employment agreement provides that he has been appointed for an initial term of two years. Mr. Lowrey is entitled to receive an annualized base salary of $240,000. Mr. Lowrey also received a one-time signing bonus of $10,000. Mr. Lowrey is also eligible for a cash and/or equity bonus as the Compensation Committee may determine, from time to time, based on meeting performance objectives and bonus criteria to be mutually identified by Mr. Lowrey and the Compensation Committee. In connection with the execution of his employment agreement, the Company issued to Mr. Lowrey 750,000 shares of the Company’s restricted Common Stock, pursuant to the Company’s 2016 Stock Option Plan, one-third of which vested on March 8, 2019, one-third of which shall vest on September 8, 2019, and one-third of which shall vest on March 8, 2020. On August 1, 2018, the Company issued Mr. Lowrey 250,000 shares of the Company’s Common Stock, pursuant to the Company’s 2016 Stock Option Plan, one-third of which vested on January 31, 2019, one-third of which vested on July 31, 2019, and one-third of which vested on January 1, 2020. This employment agreement expired on February 28, 2020. Mr. Lowrey remains an at will employee with the same title, responsibilities, compensation and benefits. In addition, Mr. Lowrey received a bonus of $20,000 in January 2020 and shall be entitled to receive an additional $20,000 bonus in connection with the filing of the Company’s Form 10-Q for the quarter ended March 31, 2020. Legal On September 15, 2016, the Company received a subpoena from the SEC and in December 2017, the Company’s Chief Executive Officer and President received a subpoena from the SEC, requesting information, including but not limited to, with respect to the company’s communications with certain individuals and entities, the issuance of Company stock, and Company press releases. The time period covered by the subpoenas was January 1, 2013 through the date of issuance of the subpoenas. The Company responded to the subpoenas and cooperated with the SEC and its staff in a timely manner. On January 24, 2017, the Company was served with a summons and complaint filed by plaintiff shareholder Atul Ojha in New York state court against certain officers and directors of the Company, and naming the Company as a nominal defendant. The lawsuit is styled as a derivative action (the “Ojha Derivative Action”) and was originally filed (but not served on any defendant) on October 15, 2016. The Ojha Derivative Action substantively alleges that the defendants, collectively or individually, inadequately managed the business and assets of the Company resulting in the deterioration of the Company’s financial condition. The Ojha Derivative Action asserts claims including, but not limited to, breach of fiduciary duties, unjust enrichment and waste of corporate assets. In November 2018, the Company’s board received a shareholder demand letter dated November 6, 2018, from shareholders Nicholas Fulton and Kelsey Thacker (the “Fulton Demand”). The Fulton Demand referenced the SEC Action (defined below) and the allegations therein, and demanded that the board take action to investigate, address and remedy the allegations raised in the SEC Action. The Company’s counsel has communicated with counsel for the shareholders, advising them concerning the existence and status of the 2018 Securities Class Actions (defined below), the Ojha Derivative Action, and the Thomas Derivative Action (defined below), and counsel continue to communicate concerning the details. On December 12, 2018, a shareholder derivative action was filed by shareholder Bob Thomas against the Company and certain of its current and former directors, officers and shareholders in New York state court, alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste and seeking declaratory relief and damages (the “Thomas Derivative Action”). The underlying allegations in the Thomas Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions. On February 14, 2020, the parties to the Ojha Derivative Action and the Thomas Derivative Action entered into a binding settlement term sheet setting forth the essential terms of a settlement agreement. The terms provide for certain corporate governance reforms to be implemented by the Company, a cash payment to the Company by or on behalf of various individual defendants, and a payment of attorneys’ fees to counsel for plaintiffs, together with dismissal of the actions and the exchange of releases. The settlement is subject to the parties’ agreement to final settlement documentation which all parties have agreed to cooperate to prepare and execute, and to court approval. On September 7, 2018, the SEC commenced a legal action in the United States District Court for the Southern District of New York (the “SEC Action”) which asserts civil charges against multiple individuals and entities who are alleged to have violated the securities laws by engaging in pump-and-dump schemes in connection with certain microcap stocks and three companies that are not identified by name in the SEC Action. The Company is one of the three unidentified companies but is not named as a defendant. However, the SEC named as defendants Robert Ladd, the Company’s Chief Executive Officer and President, as well as certain individuals alleged to have participated in the schemes while they were stockholders in the Company, among others. The SEC filed an amended complaint in the SEC Action on March 8, 2019. The SEC filed a second amended complaint in the SEC Action on March 16, 2020 asserting additional civil charges against Robert Ladd. The Company, through its counsel, is monitoring the progress of the SEC Action and has responded to a third-party document subpoena served on it by the SEC in the matter. In September 2018 and October 2018, various shareholders of the Company filed putative class action lawsuits against the Company, its Chief Executive Officer and certain of its individual officers and shareholders, alleging violations of federal securities laws and seeking damages (the “2018 Securities Class Actions”). The 2018 Securities Class Action followed and referenced the allegations made against the Company’s Chief Executive Officer and others in the SEC Action. The first putative class action lawsuit was filed on September 28, 2018, in the United States District Court for the District of New Jersey, and alleges that the named defendants engaged in a pump-and-dump scheme to artificially inflate the price of the Company’s stock and that, as a result, defendants’ statements about the Company’s business and prospects were materially false and misleading and/or lacked a reasonable basis at relevant times. The second putative class action was filed on October 9, 2018, in the United States District Court for the Southern District of New York and makes similar allegations. On May 28, 2019, the parties to the 2018 Securities Class Actions entered into a binding settlement term sheet, and on September 24, 2019, the parties entered into a stipulation of settlement. On August 7, 2019, the lead plaintiff in the first class action filed a notice and order of voluntary dismissal with prejudice, and on October 11, 2019, the lead plaintiff in the second class action filed in the federal court in New York an unopposed motion for preliminary approval of the proposed class action settlement. On December 17, 2019, the court issued an order granting preliminary approval of the settlement. A hearing on final approval of the settlement has been scheduled for May 27, 2020. On August 28, 2019, a shareholder derivative action was filed by shareholder Tyler Tomczak against the Company and certain of its directors, officers and shareholders in the United States District Court for the Southern District of New York, alleging breach of fiduciary duties, waste and unjust enrichment and seeking declaratory relief and damages (the “Tomczak Derivative Action”). The underlying allegations in the Tomczak Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions (as defined below). On September 11, 2019, a shareholder derivative action was filed by shareholder Arthur Aviles against the Company and certain of its directors, officers and shareholders in the United States District Court for the District of Delaware, alleging breach of fiduciary duties, waste and unjust enrichment and seeking declaratory relief and damages (the “Aviles Derivative Action”). The underlying allegations in the Aviles Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions. On February 12, 2020, the parties to the Tomczak Derivative Action and the Aviles Derivative Action entered into a binding settlement term sheet setting forth the essential terms of a settlement agreement. The terms provide for a certain corporate governance reform to be implemented by the Company (in addition to the reforms agreed to in the settlement of the Ojha Derivative Action and the Thomas Derivative Action) a cash payment to plaintiffs, and a payment of attorneys’ fees to counsel for plaintiffs, together with dismissal of the actions and the exchange of releases. The settlement is subject to the parties’ agreement to final settlement documentation which all parties have agreed to cooperate to prepare and execute, and to court approval. On October 31, 2019, the Company, and its current officers and directors, received subpoenas from the SEC requesting information, including but not limited to, with respect to risk factors contained in certain of the Company’s filings with the SEC, any investigations by any government agency into Robert B. Ladd and certain other matters related to the Company’s securities. The time period covered by the subpoenas is January 1, 2019 through the date of issuance of the subpoenas. The Company and its current officers and directors cooperated with the SEC’s request. The Company is unable to predict, what action, if any, might be taken in the future by the SEC or any other governmental authority as a result of the subpoenas. The Company believes the claims in the actions filed against the Company are without merit and intends to vigorously defend against these actions.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Note 9. Commitments and Contingencies

Bitcoin Mining Agreements

On May 20, 2019, the Company entered into an agreement with a third-party consultant whereby the consultant would advise and consult with the Company on certain business and financial matters relating to crypto-currency mining. The Company engaged the consultant to: (1) assist in locating at least 5 acres of real property in Georgia within close proximity to a fully operational electric substation with a minimum of 15 MW of available capacity, subject to approval by the power company, (2) negotiate a power rate between the Company and a power company, (3) assist in the identification, purchase, and delivery of transformers required to serve the containerized mining systems, (4) successfully install the aforementioned transformers, and (5) obtain an electrical permit and successfully inspect all electrical infrastructure between the container and substation. The consulting agreement was valued at $400 and such amount was transferred to a third-party escrow account, payable to the consultant upon successful achievement of defined milestones. Upon achievement, the value of the milestone is recorded as a component of general and administrative expenses with an offsetting reduction to prepaid expense. During the second, third and fourth quarters of 2019, $200, $50 and $150 in milestone achievements were earned, respectively, representing the total value of the consulting agreement.

On October 23, 2018, the Company entered into a hosting agreement (“Colorado Hosting Agreement”) with a hosting facility in Colorado, whereby the service provider provided a facility to host Bitcoin computing servers. Due to the price of Bitcoin steadily decreasing in 2018 and throughout the first quarter 2019, the Company decided it was not economically responsible to commence mining under this hosting arrangement until May 2019 when Bitcoin mining economics started to improve. The Colorado Hosting Agreement was amended several times during 2019, with the eventual termination on December 27, 2019. In connection with the termination, the Company recovered $56 in cash for prepaid hosting fees and security deposit and conveyed 1,260 of company-owned miners to its hosting partner with a net book value of $131. Given the age of the miners and reduced hashing capacity, the net book value of the conveyed miners and $41 of unamortized power supplies and initial set up fees was recorded as a contract termination charge in December 2019 totaling $172.

On May 10, 2019, the Company, entered into a hosting agreement (“Ohio Hosting Agreement”) relating to the generation of Bitcoin mining revenues at a facility located in Coshocton, Ohio (the “Facility”) for a term that is the earlier of (i) two years, or (ii) when the parties determine that the Bitcoin mining business at the Facility is uneconomical. The Ohio Hosting Agreement was amended in September 2019 and was terminated on December 31, 2019. In connection with the termination, the hosting partner agreed to refund the Company’s security deposit of $19 during the first quarter of 2020. Given the age of the miners and reduced hashing capacity, the net book value of the 626 company-owned miners located at the Facility was recorded as an impairment charge in December 2019 totaling $64.

During the years ended December 31, 2019 and 2018, the Company recognized revenue of $87 and $0 under these agreements, respectively, $64 of which was accounted for under the management agreements that were terminated on during 2019.

Management Agreements

On October 12, 2017, MGT entered into two management agreements with accredited investors, Deep South Mining LLC (“Deep South”) and BDLM, LLC (“BDLM”) (together the “Users”, each agreement a “Management Agreement”, and both agreements together are “Management Agreements”). Each of the Users agreed on substantially similar terms to purchase an aggregate of 1,944 Bitmain Antminer S9 mining computers (the “Bitcoin Miners”) to mine Bitcoin with the Company acting as the exclusive manager for each of the Users. Each Management Agreement had an initial term 24 months from the date that the Bitcoin Miners began mining operations and could be terminated by mutual written agreement.

On November 21, 2017, the Company entered into a third management agreement with another accredited investor, Buckhead Crypto, LLC (“Buckhead”) and such agreement was terminated on February 28, 2018. The Company purchased the Bitcoin Miners from Buckhead for $767 and refunded prepaid electricity paid by Buckhead of $133.

On February 13, 2018, the Company entered into a new management agreement with a third party with terms similar to the other Management Agreements. The third party agreed to purchase 200 Bitcoin Miners to mine Bitcoin with the Company acting as the exclusive manager. This management agreement had an initial term of 24 months from the date that the Bitcoin Miners began mining operations and could be terminated by mutual written agreement. On September 30, 2019, the Company terminated this agreement for a one-time payment of $27 and the acquisition of 200 Bitcoin Miners owned by the third party for 1,250,000 restricted shares of the Company’s common stock valued at $32.

Pursuant to the Management Agreements, the Company provided for installation, hosting, maintenance and repair and provided ancillary services necessary to operate the Bitcoin Miners. In accordance with each of the Management Agreements, each of the Users gained a portion of the Bitcoin mined called the user distribution portion (“User Distribution Portion”). The User Distribution Portion was 50% of the amount of Bitcoin mined net of the operating fee (10% of the total Bitcoin mined) and the electricity cost. On September 23, 2018, the Company entered into letter agreements with the Users whereby the parties agreed to cease mining with the Users Bitcoin miners until Bitcoin economics improved.

Due to the Company’s transition from Sweden in late 2018 and due to unfavorable Bitcoin economics, the Company ceased all Bitcoin mining operations during the fourth quarter of 2018, including mining with the Users Bitcoin Miners as agreed upon in letter agreements among the parties dated September 23, 2018. On May 2, 2019, the Company entered into amended management agreements with the Users at which time Bitcoin mining resumed. Due to wear and tear, the parties acknowledged the Users’ Bitcoin Miners totaled 1,800, collectively. Additionally, the parties agreed to amend the operating fee to equal ten percent (10%) times the Bitcoin mined minus electricity and to waivers to accrue negative balances.

On August 31, 2019, the Company entered into two Settlement and Termination Agreements (the “Settlement Agreements”) to its existing Management Agreements with the Users. Under the terms of the Settlement Agreements, the Company will pay the Users a percentage of profits (“Settlement Distribution”) of Bitcoin mining as defined in the Settlement Agreements. The estimated present value of the Settlement Distributions of $337 was recorded as termination expense with an offsetting liability on August 31, 2019. Since two of the components of the Settlement Distribution, Bitcoin price and Difficulty, as defined in the Settlement Agreements, are based on market conditions, the liability will be adjusted to fair value on a quarterly basis and any changes will be recorded in the statement of operations. As such, the liability is considered a Level 3 financial instrument. During 2019, the Company recognized a gain on the change in the fair value of $176 based on the change of Bitcoin price and Difficulty, and along with the monthly Settlement Distributions, the liability was reduced to $116 as of December 31, 2019. Based on the terms of the Settlement Agreements, Settlement Distributions are scheduled to terminate on September 30, 2020. Additionally, the Company acquired the 1,800 Antminer S-9 Bitcoin miners owned by the Users for 9,000,000 restricted shares of the Company’s common stock valued at $279.

Bitcoin Production Equipment and Operations

On August 14, 2018, the Company entered into a collaborative venture with Bit5ive, LLC to develop a fully contained crypto currency mining pod (the “POD5 Agreement”) for a term of five years. Pursuant to the POD5 Agreement, the Company assists with the design and development of the pods (“POD5 containers”). The Company retains naming rights to the pods and receives royalty payments from Bit5ive, LLC in exchange for providing capital as well as engineering and design expertise. During the year ended December 31, 2019, the Company received royalties and recognized revenue of $44 under this agreement.

Electricity Contract

In June 2019, the Company entered a two-year contract for electric power with the City of Lafayette, Georgia, a municipal corporation of the State of Georgia (“the City”). The Company makes monthly payments based upon electricity consumed, at a negotiated kilowatt per hour rate, inclusive of transmission charges and exclusive of state and local sales taxes. Over time, the Company is entitled to utilize a load of 10 megawatts. For each month, the Company estimated its expected electric load, and should the actual load drop below 90% of this estimate, the City reserves the right to impose a modest penalty to the hourly kilowatt rate for electricity consumed.

In connection with this agreement, the Company paid a $115 security deposit and such amount is classified as Other Assets in the Company’s consolidated balance sheet as of December 31, 2019.

Employment agreements

On April 1, 2018, the Company entered into an Amended and Restated Executive Employment Agreement (the “Employment Agreement”) with Robert Ladd, which was executed on April 6, 2018. The Employment Agreement provides that Mr. Ladd has been reappointed for an initial term of two years. Mr. Ladd is entitled to receive an annualized base salary of $360 and is also eligible for a cash and/or equity bonus as the Compensation Committee may determine, from time to time, based on meeting performance objectives and bonus criteria to be mutually identified by Mr. Ladd and the Compensation Committee. In connection with the execution of the Employment Agreement, the Company issued to Mr. Ladd 600,000 shares of the Company’s restricted common stock, pursuant to the Company’s 2016 Stock Option Plan, vesting over a two-year period. On September 10, 2018, Mr. Ladd took a leave of absence from his position as President and Chief Executive Officer in order to focus on allegations levied against him in an SEC complaint filed on September 7, 2018 and was appointed as President and Chief Executive Officer on May 2019.

On March 8, 2018, the Company entered into an employment agreement with Mr. Lowrey, effective March 1, 2018. Mr. Lowrey’s employment agreement provides that he has been appointed for an initial term of two years. Mr. Lowrey is entitled to receive an annualized base salary of $240,000. Mr. Lowrey also received a one-time signing bonus of $10,000. Mr. Lowrey is also eligible for a cash and/or equity bonus as the Compensation Committee may determine, from time to time, based on meeting performance objectives and bonus criteria to be mutually identified by Mr. Lowrey and the Compensation Committee. In connection with the execution of his employment agreement, the Company issued to Mr. Lowrey 750,000 shares of the Company’s restricted Common Stock, pursuant to the Company’s 2016 Stock Option Plan, one-third of which vested on March 8, 2019, one-third of which shall vest on September 8, 2019, and one-third of which shall vest on March 8, 2020. On August 1, 2018, the Company issued Mr. Lowrey 250,000 shares of the Company’s Common Stock, pursuant to the Company’s 2016 Stock Option Plan, one-third of which vested on January 31, 2019, one-third of which vested on July 31, 2019, and one-third of which vested on January 1, 2020. This employment agreement expired on February 28, 2020. Mr. Lowrey remains an at will employee with the same title, responsibilities, compensation and benefits. In addition, Mr. Lowrey received a bonus of $20,000 in January 2020 and shall be entitled to receive an additional $20,000 bonus in connection with the filing of the Company’s Form 10-Q for the quarter ended March 31, 2020.

Legal

On September 15, 2016, the Company received a subpoena from the SEC and in December 2017, the Company’s Chief Executive Officer and President received a subpoena from the SEC, requesting information, including but not limited to, with respect to the company’s communications with certain individuals and entities, the issuance of Company stock, and Company press releases. The time period covered by the subpoenas was January 1, 2013 through the date of issuance of the subpoenas. The Company responded to the subpoenas and cooperated with the SEC and its staff in a timely manner.

On January 24, 2017, the Company was served with a summons and complaint filed by plaintiff shareholder Atul Ojha in New York state court against certain officers and directors of the Company, and naming the Company as a nominal defendant. The lawsuit is styled as a derivative action (the “Ojha Derivative Action”) and was originally filed (but not served on any defendant) on October 15, 2016. The Ojha Derivative Action substantively alleges that the defendants, collectively or individually, inadequately managed the business and assets of the Company resulting in the deterioration of the Company’s financial condition. The Ojha Derivative Action asserts claims including, but not limited to, breach of fiduciary duties, unjust enrichment and waste of corporate assets.

In November 2018, the Company’s board received a shareholder demand letter dated November 6, 2018, from shareholders Nicholas Fulton and Kelsey Thacker (the “Fulton Demand”). The Fulton Demand referenced the SEC Action (defined below) and the allegations therein, and demanded that the board take action to investigate, address and remedy the allegations raised in the SEC Action. The Company’s counsel has communicated with counsel for the shareholders, advising them concerning the existence and status of the 2018 Securities Class Actions (defined below), the Ojha Derivative Action, and the Thomas Derivative Action (defined below), and counsel continue to communicate concerning the details.

On December 12, 2018, a shareholder derivative action was filed by shareholder Bob Thomas against the Company and certain of its current and former directors, officers and shareholders in New York state court, alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste and seeking declaratory relief and damages (the “Thomas Derivative Action”). The underlying allegations in the Thomas Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions.

On February 14, 2020, the parties to the Ojha Derivative Action and the Thomas Derivative Action entered into a binding settlement term sheet setting forth the essential terms of a settlement agreement. The terms provide for certain corporate governance reforms to be implemented by the Company, a cash payment to the Company by or on behalf of various individual defendants, and a payment of attorneys’ fees to counsel for plaintiffs, together with dismissal of the actions and the exchange of releases. The settlement is subject to the parties’ agreement to final settlement documentation which all parties have agreed to cooperate to prepare and execute, and to court approval.

On September 7, 2018, the SEC commenced a legal action in the United States District Court for the Southern District of New York (the “SEC Action”) which asserts civil charges against multiple individuals and entities who are alleged to have violated the securities laws by engaging in pump-and-dump schemes in connection with certain microcap stocks and three companies that are not identified by name in the SEC Action. The Company is one of the three unidentified companies but is not named as a defendant. However, the SEC named as defendants Robert Ladd, the Company’s Chief Executive Officer and President, as well as certain individuals alleged to have participated in the schemes while they were stockholders in the Company, among others. The SEC filed an amended complaint in the SEC Action on March 8, 2019. The SEC filed a second amended complaint in the SEC Action on March 16, 2020 asserting additional civil charges against Robert Ladd. The Company, through its counsel, is monitoring the progress of the SEC Action and has responded to a third-party document subpoena served on it by the SEC in the matter.

In September 2018 and October 2018, various shareholders of the Company filed putative class action lawsuits against the Company, its Chief Executive Officer and certain of its individual officers and shareholders, alleging violations of federal securities laws and seeking damages (the “2018 Securities Class Actions”). The 2018 Securities Class Action followed and referenced the allegations made against the Company’s Chief Executive Officer and others in the SEC Action. The first putative class action lawsuit was filed on September 28, 2018, in the United States District Court for the District of New Jersey, and alleges that the named defendants engaged in a pump-and-dump scheme to artificially inflate the price of the Company’s stock and that, as a result, defendants’ statements about the Company’s business and prospects were materially false and misleading and/or lacked a reasonable basis at relevant times. The second putative class action was filed on October 9, 2018, in the United States District Court for the Southern District of New York and makes similar allegations.

On May 28, 2019, the parties to the 2018 Securities Class Actions entered into a binding settlement term sheet, and on September 24, 2019, the parties entered into a stipulation of settlement. On August 7, 2019, the lead plaintiff in the first class action filed a notice and order of voluntary dismissal with prejudice, and on October 11, 2019, the lead plaintiff in the second class action filed in the federal court in New York an unopposed motion for preliminary approval of the proposed class action settlement. On December 17, 2019, the court issued an order granting preliminary approval of the settlement. A hearing on final approval of the settlement has been scheduled for May 27, 2020.

On August 28, 2019, a shareholder derivative action was filed by shareholder Tyler Tomczak against the Company and certain of its directors, officers and shareholders in the United States District Court for the Southern District of New York, alleging breach of fiduciary duties, waste and unjust enrichment and seeking declaratory relief and damages (the “Tomczak Derivative Action”). The underlying allegations in the Tomczak Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions (as defined below).

On September 11, 2019, a shareholder derivative action was filed by shareholder Arthur Aviles against the Company and certain of its directors, officers and shareholders in the United States District Court for the District of Delaware, alleging breach of fiduciary duties, waste and unjust enrichment and seeking declaratory relief and damages (the “Aviles Derivative Action”). The underlying allegations in the Aviles Derivative Action largely repeat the allegations of wrongdoing in the 2018 Securities Class Actions.

On February 12, 2020, the parties to the Tomczak Derivative Action and the Aviles Derivative Action entered into a binding settlement term sheet setting forth the essential terms of a settlement agreement. The terms provide for a certain corporate governance reform to be implemented by the Company (in addition to the reforms agreed to in the settlement of the Ojha Derivative Action and the Thomas Derivative Action) a cash payment to plaintiffs, and a payment of attorneys’ fees to counsel for plaintiffs, together with dismissal of the actions and the exchange of releases. The settlement is subject to the parties’ agreement to final settlement documentation which all parties have agreed to cooperate to prepare and execute, and to court approval.

On October 31, 2019, the Company, and its current officers and directors, received subpoenas from the SEC requesting information, including but not limited to, with respect to risk factors contained in certain of the Company’s filings with the SEC, any investigations by any government agency into Robert B. Ladd and certain other matters related to the Company’s securities. The time period covered by the subpoenas is January 1, 2019 through the date of issuance of the subpoenas. The Company and its current officers and directors cooperated with the SEC’s request. The Company is unable to predict, what action, if any, might be taken in the future by the SEC or any other governmental authority as a result of the subpoenas.

The Company believes the claims in the actions filed against the Company are without merit and intends to vigorously defend against these actions.