Forward-Looking Statements

This quarterly report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management's plans and objectives for future operations. In some cases, forward-looking statements can be identified by the use of terminology such as "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or "continues" or the negative of these terms or other comparable terminology. Examples of forward-looking statements made in this quarterly report include or may include, among others, statements about:





  ? our proposed plan of operations;
  ? our financial and operating objectives and strategies to achieve them;
  ? the costs and timing of our services;
  ? our use of available funds;
  ? our capital and funding requirements; and
  ? our other financial or operating performances.

The material assumptions supporting these forward-looking statements include, among other things:





  ? our future growth potential, results of operations, future prospects and
    opportunities;
  ? execution of our business strategy;
  ? there being no material variations in current regulatory environments;
  ? our operating expenses, including general and administrative expenses;
  ? our ability to obtain any necessary financing on acceptable terms;
  ? timing and amount of capital expenditures;
  ? retention of skilled personnel;
  ? continuation of current tax and regulatory regimes; and
  ? general economic and financial market conditions.

Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.





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These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:





  ? inability to efficiently manage our operations;
  ? general economic and business conditions;
  ? our negative operating cash flow;
  ? our ability to obtain additional financing;
  ? increases in capital and operating costs;
  ? general cryptocurrency risks;
  ? technological changes and developments in the blockchain and cryptocurrencies;
  ? risks relating to regulatory changes or actions;
  ? competition for blockchain platforms and technologies; and
  ? other risk factors discussed in our annual report on Form 10-K filed on April
    15, 2022,

any of which may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Further, although we have attempted to identify factors that could cause actual results, levels of activity, performance or achievements to differ materially from those described in forward-looking statements, there may be other factors that cause results, levels of activity, performance or achievements not to be as anticipated, estimated or intended.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect management's current judgment regarding the direction of our business, actual results may vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Accordingly, readers should not place undue reliance on forward-looking statements. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results. All forward-looking statements in this quarterly report are qualified by this cautionary statement.

All financial information contained herein is shown in United States dollars unless otherwise stated. Our financial statements are prepared in accordance with United States generally accepted accounting principles. Unless otherwise stated, "$" refers to United States dollars.

In this quarterly report, unless otherwise specified, all references to "shares" refer to shares of common stock in the capital of our company.

As used in this quarterly report, the terms "we", "us", "the Company", "our" and "CurrencyWorks" mean CurrencyWorks Inc. and its wholly-owned subsidiary, CurrencyWorks USA Inc., and its majority-owned subsidiaries EnderbyWorks LLC, and Motoclub LLC, unless otherwise specified.





Overview

CurrencyWorks aims to build and operate a full-service blockchain platform for Non Fungible Tokens (NFTs), digital currencies, digital assets and security tokens.

Since 2017, our services and development business provide a turnkey set of services for companies to develop and integrate blockchain and payment technologies into their business operations. We intend to offer Fintech (financial technology) services and infrastructure offerings in key categories, including: digital currencies; digital assets including Non Fungible Tokens (NFTs); and, digital securities.





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We anticipate that we will enable companies to digitize, sell and manage new or existing asset classes on blockchain infrastructure, transact in digital/ cryptocurrencies (Payments, Rewards and Credit infrastructure), issue or create digital/crypto assets and/or manage their digital/crypto assets (Non Fungible Tokens, Fungible Cold Storage, Mining).

Our core revenue streams are expected to remain as consulting revenues and transaction fees. We may also earn equity stakes in payment for our services, to the extent permitted under applicable law.





Results of Operations

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021





Revenue

We recognized total revenue of $1,324,387, with $1,250,000 coming from the sale of movie rights, $24,886 coming from the sale of NFTs and $49,501 from consulting services, for the three months ended March 31, 2022. We had no revenue for the three months ended March 31, 2021.





Operating Expenses

We incurred general and administrative expenses of $2,050,960 and $1,548,742 for the three months ended March 31, 2022 and 2021, respectively, representing an increase of $502,218 between the two periods. These expenses consisted primarily of stock-based compensation expense for issuance of options, consulting fees, pre-licensing fees, professional fees, amortization, and other general and administrative costs. The increase in general and administrative expenses was mainly due to additional projects in 2022 which increased our consulting fees by $218,985, general and administrative costs by $208,705 and professional fees increased by $81,261 compared to March 31, 2021. There are also service costs of $457,434 incurred for the three months ended March 31, 2022 related to contract projects that began in the third quarter of the fiscal year ended December 31, 2021 that are ongoing related to NFT sales ($nil - March 31, 2021).





Other Income (Expense)

Other income includes $41,625 note interest revenue and $303,469 in change in derivative liability for the three months ending March 31, 2022, compared to $16,500 interest receivable for the three months ending March 31, 2021. Other expenses were $nil for the three months ended March 31, 2022 compared to $45,959 note interest expense and $43,294,771 in change in derivative liability for the three months ended March 31, 2021.





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Net Loss from Operations

We incurred net losses from operations of $1,184,007 and $1,548,742 for the three months ended March 31, 2022 and 2021, respectively, representing a net change of $364,735, primarily attributable to the factors discussed above under the headings "Revenue" and "Operating Expenses".

Liquidity and Capital Resources





Working Capital



                               As at            As at
                             March 31,       December 31,
                               2022              2021
Current Assets              $   994,550     $      655,321
Current Liabilities           1,332,935          1,249,904
Working Capital/(Deficit)   $  (338,385 )   $     (594,583 )




Current Assets

Current assets were $994,550 as at March 31, 2022 and $655,321 at December 31, 2021. The increase in current assets is mainly due to increase in cash and accounts receivables in the three months ended March 31, 2022.





Current Liabilities

Current liabilities of $1,332,935 as at March 31, 2022 were attributable to accounts payable and accrued expenses, compared to $1,249,904 in accounts payable and accrued expenses as at December 31, 2021.





Cash Flow



                                                   Three months ended       Three months ended
                                                     March 31, 2022           March 31, 2021
Net cash used in operating activities              $          (328,903 )   $           (605,662 )
Net cash provided by financing activities                      518,499                4,894,825
Net changes in cash and cash equivalents           $           189,596     $          4,289,163




Operating Activities

Net cash used in operating activities was $328,903 for the three-month period ended March 31, 2022, as compared to net cash used of $605,662 for the three-month period ended March 31, 2021, a decrease of $276,759. The decrease in net cash used in operating activities was primarily due to repayment of accounts payables and accrued liabilities in the prior year.





Investing Activities

There were no investing activities for the three-month periods ended March 31, 2022 and March 31, 2021.





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Financing Activities

Financing activities provided cash of $518,499 for the three months ended March 31, 2022 and $4,894,825 for the three months ended March 31, 2021, a decrease of $4,376,326. This decrease is mainly due to less share issuances during the quarter ended March 31, 2022.





Cash Requirements

We expect that we will require $2,400,000, including our current working capital, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:





      Estimated Working Capital Expenditures During the Next Twelve Months



General and administrative expenses   $ 2,400,000
Total                                 $ 2,400,000

Our estimated general and administrative expenses for the next 12 months are $2,400,000 and are comprised of: consulting fees, accounting services, board of directors and our advisory board, investor relations consultants, and to our public relations and marketing consultants; legal and professional fees (including auditing fees); for insurance; marketing and advertising expenses; trade shows; travel expenses; office rent and miscellaneous and office expenses.

We will require additional cash resources to meet our planned capital expenditures and working capital requirements for the next 12 months. We expect to derive such cash through the sale of equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.





Going Concern

Our unaudited condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $36,474,899 as at March 31, 2022 (December 31, 2021: $35,248,384). Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

In its report on our financial statements for the periods ended December 31, 2021 and 2020, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

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

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