You should read the following discussion of our financial condition and results
of operations in conjunction with the consolidated financial statements and the
related notes included elsewhere in this Quarterly Report on Form 10-Q
("Quarterly Report") and with our audited consolidated financial statements,
including the notes thereto, and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Annual
Report"), as filed with the U.S. Securities and Exchange Commission ("SEC"). In
addition to historical consolidated financial information, the following
discussion and analysis contain forward-looking statements that reflect our
plans, estimates, and beliefs and involve risks and uncertainties. The words
"may," "could," "should," "estimate," "project," "forecast," "intend," "expect,"
"anticipate," "believe," "target," "plan" and similar expressions are intended
to identify forward-looking statements. Our actual results could differ
materially from those anticipated in the forward-looking statements. Factors
that could cause or contribute to these differences include those discussed
below and elsewhere in this Quarterly Report, as well as risks referenced in our
other filings with the SEC.
Overview of Our Business
We are primarily engaged in the business of providing consulting, training, and
educational services for distributed ledger technologies ("blockchain"), for
individual and corporate clients, enterprises for general blockchain education,
as well as for the building of technological infrastructure and enterprise
blockchain technology solutions. We currently generate revenues and incur
expenses through these consulting and educational operations. We have disposed
of our entire ownership interest in CoinTracking GmbH and also divested all of
our cryptocurrency assets owned by our former cryptocurrency investment segment,
which has ceased operations.
The Company entered into a Stock Purchase Agreement (the "SPA") effective as of
March 24, 2021 with Blockchain Training Alliance, Inc ("BTA") and its
stockholders. On April 8, 2021, the Company completed the acquisition of all of
the issued and outstanding stock of BTA and BTA became a wholly owned subsidiary
of the Company.
BTA is a blockchain training company and service provider that provides training
and educational courses focused on blockchain technology and education as to the
general understanding of blockchain to corporate and individual clients.
During the first quarter of 2022 the Company acquired bitcoin mining equipment
and entered into an arrangement with a third party to host and operate the
equipment. The mining equipment mines bitcoin and the Company began to monetize
the bitcoin mined from its equipment during the six months ended June 30, 2022
and generated $19,000 in revenue.
Comparison of the three months ended June 30, 2022, and the three months June
30, 2021
Revenue
Revenues for the three months ended June 30, 2022, and June 30, 2021, were
$151,869 and $109,745, respectively. Revenue for the 2022 period consisted
primarily of fees received for blockchain training and consulting generated by
the Company's BTA subsidiary which was acquired in April 2021.
General and administrative expenses
For the three months ended June 30, 2022, our general and administrative
expenses were $1,448,980, an increase of $699,770 compared to $749,210 for the
period ended June 30, 2021. General and administrative expenses consist
primarily of costs relating to professional services, payroll, and
payroll-related expenses. Professional services included in general and
administrative expenses consist primarily of contracting fees, consulting fees,
and accounting fees. A significant portion of the increase in expense is
attributable to the BTA acquisition that occurred in the 2021 period.
Amortization expense was $10,833 and $22,491 for the three months ended June 30,
2022, and June 30, 2021, respectively.
Depreciation expense was $32,708 and $-0- for the three months ended June 30,
2022, and June 30, 2021, respectively.
Share-based compensation was $899,049 and $192,759 for the three months ended
June 30, 2022, and June 30, 2021, respectively.
Other income(expense)
During the three months ended June 30, 2022, other income was $66,765 compared
to $794,700 during the three months ended June 30, 2021. The decrease is
attributable to cryptocurrency investments that had previously been written off
became valuable during the 2021 period and the Company liquidated the extent of
its holdings at that time for cash.
Interest expense
During the three months ended June 30, 2022, interest expense was $600,317
compared to $4,127 during the three months ended June 30, 2021. The increase is
primarily attributed to debt discount calculated on the issuance of warrants,
and the issuance of notes payable during the period.
Comparison of the six months ended June 30, 2022, and the six months June 30,
2021
Revenue
Revenues for the six months ended June 30, 2022, and June 30, 2021, were
$294,381 and $111,145, respectively. Revenue for the 2022 period consisted
primarily of fees received for blockchain training and consulting generated by
the Company's BTA subsidiary which was acquired in April 2021.
General and administrative expenses
For the six months ended June 30, 2022, our general and administrative expenses
were $2,973,157, an increase of $1,960,703 compared to $1,012,454 for the period
ended June 30, 2021. General and administrative expenses consist primarily of
costs relating to professional services, payroll, and payroll-related expenses.
Professional services included in general and administrative expenses consist
primarily of contracting fees, consulting fees, and accounting fees. A
significant portion of the increase in expense is attributable to the BTA
acquisition that occurred in the 2021 period.
Amortization expense was $21,666 and $22,491 for the six months ended June 30,
2022, and June 30, 2021, respectively.
Depreciation expense was $43,611 and $-0- for the six months ended June 30,
2022, and June 30, 2021, respectively.
Share-based compensation was $1,784,510 and $333,594 for the six months ended
June 30, 2022, and June 30, 2021, respectively.
Other income(expense)
During the six months ended June 30, 2022, other income was $81,765 compared to
$955,508 during the six months ended June 30, 2021. The decrease is attributable
to cryptocurrency investments that had previously been written off became
valuable during the 2021 period and the Company liquidated the extent of its
holdings at that time for cash.
Interest expense
During the six months ended June 30, 2022, interest expense was $1,624,200
compared to $7,949 during the six months ended June 30, 2021. The increase is
primarily attributed to debt discount calculated on the issuance of warrants,
and the issuance of notes payable during the period.
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Liquidity and Capital Resources
The ability to continue as a going concern is dependent upon us generating
profitable operations in the future and/or obtaining the necessary financing to
meet our obligations and repay our liabilities arising from normal business
operations when they come due. Management is evaluating different strategies to
obtain financing to fund our expenses and achieve a level of revenue adequate to
support our current cost structure. Financing strategies may include but are not
limited to, private placements of capital stock, debt borrowings, partnerships,
and/or collaborations. There can be no assurance that any of these
future-funding efforts will be successful. The consolidated financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities that
might result from the outcome of this uncertainty.
The following table summarizes the primary sources and uses of cash for the
periods presented below:
Six months ended
June 30,
2022 2021
Net cash provided by (used in) operating activities $ (897,458 ) $ 872,191
Net cash used in investing activities
(1,033,500 ) (1,349,457)
Net cash provided by financing activities 1,874,473 993,265
Net increase (decrease) in cash and cash equivalents $ (56,485) $ 515,999
Operating Activities
Net cash used in operating activities was $897,458 for the six months ended June
30, 2022, compared to net cash provided by operating activities of $872,191 for
the six months ended June 30, 2021. The increase in net cash used in operating
activities was primarily due to increases in general and administrative expenses
of $1,188,647 for the six months ended June 30, 2022, compared to $678,860 for
the six-month period ended June 30, 2021.
Investing Activities
Net cash used in investing activities was $1,033,500 for the six months ended
June 30, 2022, compared to 1,349,457 for the six months ended June 30,2021. The
decrease in cash used in investing activities was primarily due to the BTA
acquisition having closed in the 2021 period, but partially offset by the
acquisition of bitcoin mining equipment in February 2022.
Financing Activities
Net cash from financing activities for the six months ended June 30, 2022, was
$1,874,473, compared to $993,265 for the six months ended June 30, 2021. The
increase in net cash from financing activities was mainly due to the resulting
issuance of promissory notes during the six months ended June 30, 2022.
Trends, Events, and Uncertainties
The blockchain technology market is dynamic and unpredictable. Although we will
undertake compliance efforts, including efforts with commercially reasonable
diligence, there can be no assurance that there will not be a new or unforeseen
law, regulation or risk factor which will materially impact our ability to
continue our business as currently operated or raise additional capital to
foster our continued growth.
Other than as discussed elsewhere in this Quarterly Report and our 2021 Annual
Report, we are not aware of any trends, events, or uncertainties that are likely
to have a material effect on our financial condition.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements requires us to make
estimates that affect the reported amounts of assets, liabilities, revenue and
expenses, and the related disclosure of contingent liabilities. We base our
judgments on our historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the
basis for making estimates about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. We have no material
changes to our Critical Accounting Policies and Estimates disclosure as filed in
our 2021 Annual Report.
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Recent Accounting Pronouncements
See Note 3 to the consolidated financial statements for a discussion of recent
accounting pronouncements.
Off-Balance Sheet Transactions
We do not have any off-balance sheet transactions.
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