The following discussion should be read in conjunction with our financial
statements and related notes thereto included elsewhere in this Quarterly Report
on Form 10-Q and the financial statements and related notes thereto in our
Annual Report on Form 10-K for the year ended
This discussion contains certain forward-looking statements that involve risks
and uncertainties. Our actual results and the timing of certain events could
differ materially from those discussed in these forward-looking statements as a
result of certain factors, including, but not limited to, those set forth herein
and elsewhere in this Quarterly Report and in our other filings with the
Plan of Operations
As of the filing of this Report, it is the intention of the board of directors
for our company to develop and manufacture high-performance computer systems
that are scalable, upgradeable, and cost effective for processing
cryptocurrencies, tokens and blockchain-based transactions. In
As we move through the chip and immersion-cooled bitcoin mining system development process, we will continue to refine and finalize the course of action needed to implement our business plan and operations. As a result, management has not fully determined our actual short-term or long-term capital requirements, which management expects to be substantial.
It is anticipated that we will incur expenses in the implementation of the business plan described herein, and such expenses will require substantial financing to complete the development of our ASIC chip and immersion-cooled bitcoin mining system and to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited.
We currently have only limited capital with which to pay these anticipated expenses. To fund our business plan going forward, we intend to raise funds from investors by issuing common stock, preferred stock and/or debt securities.
12 Results of Operations The table summarizes the results of operations for the three months endedMarch 31 : 2022 2021 Revenues $ - $ - Operating expenses Professional fees 3,415,000 73,000 General and administrative expenses 4,000 2,000 Operating expenses 3,419,000 75,000 Loss from operations (3,419,000 ) (75,000 ) Other expenses Financing cost (507,000 ) (17,000 ) (507,000 ) (17,000 ) Loss before provision for income taxes (3,926,000 ) (92,000 ) Provision for income taxes - - Net loss$ (3,926,000 ) $ (92,000 ) Revenues
The Company had no revenues for the three months ended
Expenses
Operating expenses for the three months ended
Liquidity and Capital Resources
The Company's financial position as ofMarch 31, 2022 andDecember 31, 2021 were as follows: Working Deficit March 31, 2022 December 31, 2021 (Unaudited) Current assets$ 2,770,000 $ 3,054,000 Current liabilities 4,143,000 3,632,000 Working deficit$ (1,373,000 ) $ (578,000 )
At
Cash Flows For the Three Months Ended March 31, 2022 2021 Net cash used in operating activities$ (234,000 ) $ (79,000 ) Net cash used in investing activities (37,000 ) - Net cash provided by (used in) financing activities (25,000 ) 90,000 Effect of exchange rate changes (2,000 ) - Increase (decrease) in Cash during the Period (298,000 ) 11,000 Cash, Beginning of Period 3,047,000 - Cash, End of Period$ 2,749,000 $ 11,000 13
Cash flows used in operating activities
Net cash used in operating activities increased by
Cash flows used in investing activities
Net cash used in investing activities increased by
Cash flows used in financing activities
Net cash used in financing activities increased to
Critical Accounting Policies
The preparation of condensed consolidated financial statements in conformity
with
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary from the formation date. All material intercompany transactions and balances have been eliminated in consolidation.
Foreign Currency Translation
The financial statements of our foreign subsidiary, for which the functional
currency is the local currency, are translated into
Debt and Debt Discounts
In accordance with ASC 470-20, Debt with Conversion and Other Options, the Company first allocates the cash proceeds of the notes between the notes and the warrants on a relative fair value basis, secondly, proceeds are then allocated to the conversion feature.
The Company accounts for debt discounts originating in connection with conversion features that remain embedded in the related notes in accordance with ASC 470-20. These costs are classified on the balance sheet as a direct deduction from the debt liability. The Company amortizes these costs over the term of its debt agreements as financing cost in the consolidated statement of operations and comprehensive loss.
Stock-Based Compensation
We account for our stock-based compensation under ASC 718, "Compensation - Stock Compensation" using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
14
We use the fair value method for equity instruments granted to non-employees and use the BSM model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant (measurement date) and is recognized over the vesting periods.
Recent Accounting Pronouncements
The Company's management reviewed all recently issued accounting standard updates ("ASU's") not yet adopted by the Company and does not believe the future adoptions of any such ASU's may be expected to cause a material impact on the Company's condensed consolidated financial condition or the results of its operations.
Off-Balance Sheet Arrangements
As of
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