CREEK ROAD MINERS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Caution Regarding Forward-Looking Statements



The following discussion and analysis of our financial condition and results of
operations for the three months ended March 31, 2022 and 2021 should be read in
conjunction with our consolidated financial statements and related notes to
those financial statements that are included elsewhere in this report. Our
discussion includes forward-looking statements based upon current expectations
that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. Actual results and the timing of events could
differ materially from those anticipated in these forward-looking statements as
a result of a number of factors, including those set forth under "Risk Factors"
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.



We use words such as "anticipate," "estimate," "plan," "project," "continuing,"
"ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and
similar expressions to identify forward-looking statements. All forward-looking
statements included in this report are based on information available to us on
the date hereof and, except as required by law, we assume no obligation to
update any such forward-looking statements.



Company Overview



Creek Road Miners, Inc. (formerly known as Wizard Brands, Inc., Wizard
Entertainment, Inc., Wizard World, Inc., and GoEnergy, Inc.) was incorporated in
Delaware on May 2, 2001. Prior to cryptocurrency mining operations that began in
October 2021, the Company produced live and virtual pop culture conventions and
events, and sold a gelatin machine and related consumables (known collectively
as "legacy operations"). All legacy operations were discontinued during 2021.
The Company operates an eCommerce site selling pop culture memorabilia and will
evaluate whether to continue the eCommerce operations in 2022.



On August 6, 2021, we entered into an Asset Purchase Agreement (the "Agreement")
with Informa Pop Culture Events, Inc., a Delaware corporation ("Informa").
Pursuant to the Agreement, Creek Road Miners Corp. (fka Kick the Can Corp.)
sold, transferred, and assigned certain assets, properties, and rights to
Informa related to the business of operating and producing live pop culture
events. The Company released deferred revenue and other liabilities totaling
$722,429 and recognized other income of this amount.



On September 15, 2021, we sold our wholly owned subsidiary which contained our
Jevo assets and all rights to our Jevo operations for $1,500,000 and recognized
a gain on the transaction of approximately $1,130,740.



Cryptocurrency Mining


We currently generate substantially all our revenue through cryptocurrency we
earn through our mining activities, which we may strategically hold or sell at
beneficial prices and times. We currently mine and hold Bitcoin exclusively. We
plan to hold our mined Bitcoin in excess of our operating and capital
expenditure needs until the next halving event (expected to occur around March
2024), which we believe will lead to an increase in the market price of Bitcoin,
other than for such sales of Bitcoin as determine to be necessary to fund
operating or capital expenses, such as our purchase commitments for additional
miners from Bitmain. While we do not have the intention of mining any other
cryptocurrencies in the near future, we may expand our mining operations to
include additional crypto assets if, after evaluation of the financial merits of
such crypto assets based on a number of factors, including the anticipated
profitability and price stability of such crypto assets and the ability and cost
of our existing miners to mine for such digital assets, we determine that such
additional crypto assets are reasonably likely to result in better margin than
Bitcoin. Our mining operations commenced on October 24, 2021. We use special
cryptocurrency mining computers (known as "miners") to solve complex
cryptographic algorithms to support the Bitcoin blockchain and, in return,
receive Bitcoin as our reward. Miners measure their processing power, which is
known as "hashing" power, in terms of the number of hashing algorithms solved
(or "hashes") per second, which is the miner's "hash rate." We participate in
mining pools that pool the resources of groups of miners and split
cryptocurrency rewards earned according to the "hashing" capacity each miner
contributes to the mining pool.



All of the miners we operate were manufactured by Bitmain, and incorporate
application-specific integrated circuit ("ASIC") chips specialized to solve
blocks on the Bitcoin blockchains using the 256-bit secure hashing algorithm
("SHA-256") in return for Bitcoin cryptocurrency rewards. In October 2021 we put
156 Bitmain S19J Pro miners into production, and added another 84 into
production in December 2021. In March 2022 we received 270 Bitmain S19 miners
but as of March 31, 2022 they had yet to be placed into production. As of March
31, 2022, we had 240 Bitmain S19J Pro miners with 24 Ph/s of hashing capacity in
production, we had received 270 Bitmain S19 miners with 24.3 Ph/s of hashing
capacity not yet placed into production, and had deposits for an additional 870
miners with 111.1 Ph/s hashing capacity to be delivered in 2022 as follows:

? 270 Bitmain S19J Pro (100 Th/s per miner, 27 Ph/s total hash capacity)

    delivered in April
  ? 600 Bitmain S19XP (140 Th/s per miner, total 84 Ph/s hashing capacity)
    delivery expected July through December 2022




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After delivery of the above miners, we will have a total of 1,380 miners with 159.3 Ph/s of hash capacity.

The purchase commitment for undelivered miners as of March 31, 2022 totals
$9,378,300, including $6,203,100 paid as deposits as of the period ending March
31, 2022, and the remaining $3,175,200 due to be paid monthly from the proceeds
of the sale of earned Bitcoin during the year ending December 31, 2022 or, if
necessary or advisable, with earned Bitcoin to the extent that the vendor
accepts Bitcoin as a form of payment or from additional capital raising, which
may be debt or equity, or a combination thereof pursuant to a private or public
offering, with the last payment scheduled to occur on November 10, 2022.



Mobile Data Centers


We utilize mobile data centers to house our miners. Our mobile data centers are
located close to natural gas wellheads. We use natural gas to power a mobile
turbine that produces electricity that, in turn, is used to power our miners.



The Company measures its operations by the number and U.S. Dollar (US$) value of
the cryptocurrency rewards it earns from its cryptocurrency mining activities.
The following table presents additional information regarding our cryptocurrency
mining operations:



                                                Quantity of Bitcoin          US$ Amounts
Balance September 30, 2021                                        -      $                -
Revenue recognized from cryptocurrency mined                     6.7       

369,804

Mining pool operating fees                                      (0.1 )                (7,398 )
Impairment of cryptocurrencies                                    -                  (59,752 )
Balance December 31, 2021                                        6.6     $ 

302,654

Revenue recognized from cryptocurrency mined                     8.3       

343,055

Mining pool operating fees                                      (0.2 )                (6,868 )
Impairment of cryptocurrencies                                    -        
        (106,105 )
Balance March 31, 2022                                          14.7     $           532,736



Factors Affecting Profitability



Our business is heavily dependent on the market price of Bitcoin. The prices of
cryptocurrencies, specifically Bitcoin, have experienced substantial volatility.
Further affecting the industry, and particularly for the Bitcoin blockchain, the
cryptocurrency reward for solving a block is subject to periodic incremental
halving. Halving is a process designed to control the overall supply and reduce
the risk of inflation in cryptocurrencies using a Proof-of-Work consensus
algorithm. At a predetermined block, the mining reward is cut in half, hence the
term "halving". For Bitcoin the reward was initially set at 50 Bitcoin currency
rewards per block. The Bitcoin blockchain has undergone halving three times
since its inception as follows: (1) on November 28, 2012 at block 210,000; (2)
on July 9, 2016 at block 420,000; and (3) on May 11, 2020 at block 630,000, when
the reward was reduced to its current level of 6.25 Bitcoin per block. The next
halving for the Bitcoin blockchain is anticipated to occur in March 2024 at
block 840,000, when the reward will be reduced to 3.125 Bitcoin per block. This
process will reoccur until the total amount of Bitcoin currency rewards issued
reaches 21 million and the theoretical supply of new Bitcoin is exhausted. Many
factors influence the price of Bitcoin, and potential increases or decreases in
prices in advance of, or following, a future halving is unknown.



We plan to hold our mined Bitcoin until the next halving event (expected around March 2024), which we believe will cause the market price of Bitcoin to increase, except for sales of Bitcoin deemed necessary to fund operating or capital expenditures, such as our commitments to purchase additional miners from Bitmain .

Our business is heavily dependent on the market price of Bitcoin, which has
experienced substantial volatility and has recently dropped to its lowest price
since December 2020.  The market price of Bitcoin has dropped approximately 35%
since the beginning of 2022. In addition, the cost of natural gas that we use to
produce electricity to power our miners has increased substantially. The cost of
natural gas has increased approximately 120% since the beginning of 2022.These
price movements result in decreased cryptocurrency mining revenue and increased
cryptocurrency mining costs, both of which have a material adverse effect on our
business and financial results.



Competition


Our business environment is constantly evolving, and cryptocurrency miners can
range from individuals to large-scale commercial mining operations. We compete
with other companies that focus all or a portion of their activities on mining
activities at scale, including several public and private companies. We face
significant competition in every aspect of our business, including, but not
limited to, the acquisition of mining equipment, the ability to raise capital,
and the ability to obtain the lowest cost energy to power our mining operations.



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Government Regulation


Cryptocurrency is increasingly becoming subject to governmental regulation, both
in the U.S. and internationally. State and local regulations also may apply to
our activities and other activities in which we may participate in the future.
Numerous regulatory bodies have shown an interest in regulating blockchain or
cryptocurrency activities. For example, on March 9, 2022 President Biden signed
an executive order on cryptocurrencies. While the executive order does not
mandate any specific regulations, it instructs various federal agencies to
consider potential regulatory measures, including the evaluation of the creation
of a U.S. Central Bank digital currency. Future changes to existing regulations
or entirely new regulations may affect our business in ways it is not presently
possible for us to predict with any reasonable degree of reliability. As the
regulatory and legal environment evolves, we may become subject to new laws and
regulation which may affect our mining and other activities. For additional
discussion regarding our belief about the potential risks existing and future
regulation pose to our business, see the Section entitled "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021.



Strategic Initiatives



Our objective is to mine and hold select cryptocurrencies. We seek to own
multiple oil and natural gas producing assets and utilize the natural gas to
power environmentally friendly, state-of-the-art cryptocurrency mining
facilities. To achieve this aim, we are targeting between $10 million and $15
million of acquisitions of oil and natural gas producing assets in 2022. As of
the date of this report, no discussions with natural gas producers have led to
definitive agreements. We anticipate that we will fund any such acquisitions
through the proceeds of the sale of earned Bitcoin, vendor financing, a private
placement of the Company's securities or a combination thereof. By directing
income from oil and excess natural gas sales to cover operating expenses we will
have the opportunity to retain our mined cryptocurrencies as assets.



We are also seeking to scale our existing operations through the purchase of
additional miners. As of March 31, 2022, we had 240 Bitmain S19J Pro miners with
24 Ph/s of hashing capacity in production, we had received 270 Bitmain S19
miners with 24.3 Ph/s of hashing capacity not yet placed into production, and
had deposits for an additional 870 miners with 111.1 Ph/s hashing capacity that
we expect to be delivered in 2022. We anticipate paying the remaining
commitments monthly from the proceeds of the sale of earned Bitcoin during the
year ending December 31, 2022 or, if necessary or advisable, with earned Bitcoin
to the extent that the vendor accepts Bitcoin as a form of payment or from
additional capital raising, which may be debt or equity, or a combination
thereof pursuant to a private or public offering. If received in the second half
of the year, the Bitmain S19XP miners will allow us to mine more efficiently by
operating at a higher hash rate while using the same amount of energy as our
current miners.


We aim to achieve geographic diversity by installing up to six data centers in locations designed to mitigate concentration risk.


COVID-19



We are subject to risks and uncertainties as a result of the COVID-19 pandemic.
The extent of the impact of the COVID-19 pandemic on our business is highly
uncertain and difficult to predict, as the responses that we, other businesses
and governments are taking continue to evolve. Furthermore, capital markets and
economies worldwide have also been negatively impacted by the COVID-19 pandemic,
and it is possible that it could cause a local and/or global economic recession.
Policymakers around the globe have responded with fiscal policy actions to
support the healthcare industry and economy as a whole. The magnitude and
overall effectiveness of these actions remain uncertain.



The severity of the impact of the COVID-19 pandemic on our business will depend
on a number of factors, including, but not limited to, the duration and severity
of the pandemic and the extent and severity of the impact on our customers,
service providers and suppliers, all of which are uncertain and cannot be
predicted. As of the date of issuance of our financial statements, the extent to
which the COVID-19 pandemic may in the future materially impact our financial
condition, liquidity or results of operations is uncertain.


Russia – Ukrainian conflict


The Russia - Ukraine conflict is a global concern. The Company does not have any
direct exposure to Russia or Ukraine through its operations, employee base,
investments or sanctions. The Company does not receive goods or services sourced
from those countries, does not anticipate any disruption in its supply chain and
has no business relationships, connections to or assets in Russia, Belarus or
Ukraine. No impairments to assets have been made due to the conflict. We are
unable at this time to know the full ramifications of the Russia - Ukraine
conflict and its effects on our business.



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Significant Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States, or U.S. GAAP,
requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. When making these estimates and assumptions,
we consider our historical experience, our knowledge of economic and market
factors and various other factors that we believe to be reasonable under the
circumstances. Actual results may differ under different estimates and
assumptions. The accounting estimates and assumptions discussed in this section
are those that we consider to be the most critical to an understanding of our
financial statements because they inherently involve significant judgments
and
uncertainties.



Principles of Consolidation


The accompanying financial statements are consolidated and include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated on consolidation.


Use of Estimates



The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from these
estimates.



Reclassification


Certain prior period amounts have been reclassified to conform to the current period’s presentation.



Cash and cash equivalents



For purposes of the statements of cash flows, the Company defines cash
equivalents as all highly liquid debt instruments purchased with an original
maturity of three months or less. In all periods presented, cash equivalents
consist primarily of money market funds.



Fair value of financial instruments



Under Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures, fair
value is defined as the price at which an asset could be exchanged or a
liability transferred in a transaction between knowledgeable, willing parties in
the principal or most advantageous market for the asset or liability. Where
available, fair value is based on observable market prices or parameters or
derived from such prices or parameters. Where observable prices or parameters
are not available, valuation models are applied. A fair value hierarchy
prioritizes the inputs used in measuring fair value into three broad levels
as
follows:


Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs, other than quoted prices in active markets, are directly or indirectly observable.

Level 3 – Unobservable inputs based on Company assumptions.



The Company is required to use observable market data if such data is available
without undue cost and effort. The Company has no fair value items required to
be disclosed as of December 31, 2021 or 2020 under these requirements. The
carrying amounts of financial assets and liabilities, such as cash and cash
equivalents, accounts receivable and accounts payable, approximate their fair
values because of the short maturity of these instruments.



Transactions involving related parties typically cannot be presumed to be
carried out on an arm's-length basis, as the requisite conditions of
competitive, free market dealings may not exist. However, in the case of the
secured convertible debentures due to related parties, the Company obtained a
fairness opinion from an independent third party which supports that the
transaction was carried out at an arm's length basis.



32






Cryptocurrency


Cryptocurrency (Bitcoin) is included in current assets in the accompanying
consolidated balance sheets. The classification of cryptocurrencies as a current
asset has been made after the Company's consideration of the significant
consistent daily trading volume on readily available cryptocurrency exchanges
and the absence of limitations or restrictions on Company's ability to sell
Bitcoin. Cryptocurrencies awarded to the Company through its mining activities
are accounted for in connection with the Company's revenue recognition policy
disclosed below. Cryptocurrencies held are accounted for as intangible assets
with indefinite useful lives. An intangible asset with an indefinite useful life
is not amortized but assessed for impairment annually, or more frequently, when
events or changes in circumstances occur indicating that it is more likely than
not that the indefinite-lived asset is impaired. Impairment exists when the
carrying amount exceeds its fair value, which is measured using the quoted price
of the cryptocurrency at the time its fair value is being measured. In testing
for impairment, the Company has the option to first perform a qualitative
assessment to determine whether it is more likely than not that an impairment
exists. If it is determined that it is not more likely than not that an
impairment exists, a quantitative impairment test is not necessary. If the
Company concludes otherwise, it is required to perform a quantitative impairment
test. To the extent an impairment loss is recognized, the loss establishes the
new cost basis of the asset. Subsequent reversal of impairment losses is not
permitted. Cryptocurrencies awarded to the Company through its mining activities
are included within operating activities on the accompanying consolidated
statements of cash flows.



Impairment of long-lived assets



Long-lived assets are comprised of intangible assets and property and equipment.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. An estimate of undiscounted future cash flows produced by the
asset, or the appropriate grouping of assets, is compared to the carrying value
to determine whether an impairment exists, pursuant to the provisions of FASB
ASC 360-10 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". If an asset is determined to be impaired,
the loss is measured based on quoted market prices in active markets, if
available. If quoted market prices are not available, the estimate of fair value
is based on various valuation techniques, including a discounted value of
estimated future cash flows and fundamental analysis. The Company reports an
asset to be disposed of at the lower of its carrying value or its estimated
net
realizable value.



Property and equipment



Property and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives of 3 to 9 years.
Leasehold improvements are amortized over the shorter of the useful lives of the
related assets, or the lease term. Expenditures for maintenance and repairs are
charged to operations as incurred while renewals and betterments are
capitalized. Gains and losses on disposals are included in the consolidated
statements of operations.



Management assesses the carrying value of property and equipment whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable. If there is indication of impairment, management prepares an
estimate of future cash flows expected to result from the use of the asset and
its eventual disposition. If these cash flows are less than the carrying amount
of the asset, an impairment loss is recognized to write down the asset to its
estimated fair value.



Revenue Recognition



We account for revenue in accordance with ASU 2014-09, Revenue from Contracts
with Customers (Topic 606), ("ASC 606"). The underlying principle of ASC 606 is
to recognize revenue to depict the transfer of goods or services to customers at
the amount expected to be collected.



Revenues are recognized when control of the promised goods or services are
transferred to a customer, in an amount that reflects the consideration that we
expect to receive in exchange for those goods or services. We apply the
following five steps in order to determine the appropriate amount of revenue to
be recognized as we fulfill our obligations under each of our agreements:



? identify the contract with a customer;

? identify performance obligations in the contract;

? determine the price of the transaction;

? allocate the transaction price to the performance obligations of the contract; and

? recognize revenue as the performance obligation is satisfied.




The Company has entered into digital asset mining pools by executing contracts
with the mining pool operators to provide computing power to the mining pool.
The contracts are terminable at any time by either party and the Company's
enforceable right to compensation only begins when the Company provides
computing power to the mining pool operator. In exchange for providing computing
power, the Company is entitled to a fractional share of the fixed cryptocurrency
award the mining pool operator receives (less digital asset transaction fees to
the mining pool operator which are recorded as a component of cost of revenues),
for successfully adding a block to the blockchain. The Company's fractional
share is based on the proportion of computing power the Company contributed to
the mining pool operator to the total computing power contributed by all mining
pool participants in solving the current algorithm.



33






Providing computing power in digital asset transaction verification services is
an output of the Company's ordinary activities. The provision of providing such
computing power is the only performance obligation in the Company's contracts
with mining pool operators. The transaction consideration the Company receives,
if any, is noncash consideration, which the Company measures at fair value on
the date received, which is not materially different than the fair value at
contract inception or the time the Company has earned the award from the pools.
The consideration is all variable. Because it is not probable that a significant
reversal of cumulative revenue will not occur, the consideration is constrained
until the mining pool operator successfully places a block (by being the first
to solve an algorithm) and the Company receives confirmation of the
consideration it will receive, at which time revenue is recognized. There is no
significant financing component in these transactions.



Fair value of the cryptocurrency award received is determined using the market
rate of the related cryptocurrency at the time of receipt. There is currently no
specific definitive guidance under GAAP or alternative accounting framework for
the accounting for cryptocurrencies recognized as revenue or held, and
management has exercised significant judgment in determining the appropriate
accounting treatment. In the event authoritative guidance is enacted by the
FASB, the Company may be required to change its policies, which could have an
effect on the Company's consolidated financial position and results from
operations.



Cryptocurrency Mining Costs


The Company's cryptocurrency mining costs consist primarily of direct costs of
earning Bitcoin related to mining operations, including mining pool fees,
natural gas costs, turbine rental costs, and mobile data center rental costs,
but exclude depreciation and amortization, which are separately stated in the
Company's consolidated statements of operations.



Reverse Stock Split


We implemented a 1 for 20 equity consolidation of our outstanding common shares which became effective on January 23, 2020. Unless otherwise indicated, all share and related options, warrants and convertible securities information presented has been retroactively adjusted to reflect the reduced number of shares and the increase in share price that resulted from such action. .



Stock-Based Compensation



We periodically issue stock options, warrants and restricted stock to employees
and non-employees for services, in capital raising transactions, and for
financing costs. We account for share-based payments under the guidance as set
forth in the Share-Based Payment Topic 718 of the FASB Accounting Standards
Codification, which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees, officers,
directors, and consultants, including employee stock options, based on estimated
fair values. We estimate the fair value of stock option and warrant awards to
employees and directors on the date of grant using an option-pricing model, and
the value of the portion of the award that is ultimately expected to vest is
recognized as expense over the required service period in our Statements of
Operations. We estimate the fair value of restricted stock awards to employees
and directors using the market price of our common stock on the date of grant,
and the value of the portion of the award that is ultimately expected to vest is
recognized as expense over the required service period in our Statements of
Operations.



Income taxes



We account for income taxes using the asset and liability method whereby
deferred tax assets are recognized for deductible temporary differences, and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.



Discontinued Operations



On August 6, 2021, we entered into an Asset Purchase Agreement (the "Agreement")
with Informa. Pursuant to the Agreement, Creek Road Miners Corp (fka Kick the
Can Corp.) sold, transferred, and assigned certain assets, properties, and
rights to Informa related to the business of operating and producing live pop
culture events. The Company released deferred revenue and other liabilities
totaling $722,429 and recognized other income of this amount.



On September 15, 2021, we sold our wholly owned subsidiary which contained our
Jevo assets and all rights to our Jevo operations for $1,500,000 and recognized
a gain on the transaction of approximately $1,130,740.



The related assets and liabilities associated with the discontinued operations
in our consolidated balance sheets for the periods ending March 31, 2022, and
December 31, 2021, are classified as discontinued operations. Additionally, the
financial results associated with discontinued operations in our consolidated
statement of operations for the periods ending March 31, 2022 and 2021, are
classified as discontinued operations.



Results of Operations


Comparison of the three months ended March 31, 2022 and 2021


                                                      Three Months Ended March 31,
                                          2022             2021          $ Change       % Change

Revenue:
Cryptocurrency mining                 $    343,055     $         -      $  343,055              -  %
eCommerce                                   42,059          172,698       (130,639 )           (76 )%
Total revenue                              385,114          172,698        212,416             123 %

Operating costs and expenses:
Cryptocurrency mining costs
(exclusive of
depreciation and amortization shown
below)                                     386,342               -         386,342              -  %
eCommerce costs                             17,478           75,199        (57,721 )           (77 )%
Depreciation and amortization              164,520            4,955       
159,565           3,220 %
Stock based compensation                 1,923,105        1,847,556         75,549               4 %
General and administrative                 932,861        1,067,891       (135,030 )           (13 )%
Impairment of mined cryptocurrency         106,105               -        
106,105              -  %
Total operating expenses                 3,530,411        2,995,601        534,810              18 %

Loss from operations                    (3,145,297 )     (2,822,903 )     (322,394 )           (11 )%

Other income (expense):
PPP loan forgiveness                       197,662               -         197,662              -  %
Interest expense                          (148,064 )       (224,092 )       76,028              34 %
Other income                                    -                -              -               -  %
Total other income (expense)                49,598         (224,092 )      273,690             122 %

Net loss from continuing operations (3,095,699 ) (3,046,995 ) (48,704 )

            (2 )%

Discontinued operations:
Income (loss) from discontinued
operations                                   6,604          578,120       (571,516 )           (99 )%
Gain from sale of discontinued
operations                                      -                -              -               -  %
Net income from discontinued
operations                                   6,604          578,120       (571,516 )           (99 )%
Net loss                              $ (3,089,095 )   $ (2,468,875 )   $ (620,220 )           (25 )%




Revenue



                                    Three Months Ended March 31,
                          2022          2021         $ Change      % Change
Revenue:
Cryptocurrency mining   $ 343,055     $      -      $  343,055            -  %
eCommerce                  42,059       172,698       (130,639 )         (76 )%
Total revenue           $ 385,114     $ 172,698     $  212,416           123 %




34






Total revenue increased $212,416, or 123%, for the three months ended March 31,
2022 compared to the three months ended March 31, 2021, due to the following:



Category                        Change                              Key Drivers
Cryptocurrency mining                               Cryptocurrency mining operations did not
                            ?        $  343,055     begin until October 2021
eCommerce                   ?        $ (130,639 )   Lower order volume



Operating costs and expenses


                                                     Three Months Ended March 31,
                                         2022            2021          $ Change       % Change
Operating Costs and Expenses:
Cryptocurrency mining costs
(exclusive of depreciation and
amortization shown below)             $   386,342     $        -      $  386,342              -  %
eCommerce costs                            17,478          75,199        (57,721 )           (77 )%
Depreciation and amortization             164,520           4,955        159,565           3,220 %
Stock based compensation                1,923,105       1,847,556         75,549               4 %
General and administrative                932,861       1,067,891       (135,030 )           (13 )%
Impairment of mined cryptocurrency        106,105              -         106,105              -  %
Total operating expenses              $ 3,530,411     $ 2,995,601     $  534,810              18 %




Our operating costs and expenses increased $534,810, or 18%, for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021,
due to the following:



Category                           Change                          Key Drivers
Cryptocurrency mining          ?        $ 386,342      Cryptocurrency mining operations
costs (1)                                              did not begin until October 2021
eCommerce costs                ?        $  (57,721 )   Lower order volume
Depreciation and                                       Addition of cryptocurrency mining
amortization                   ?        $  159,565     equipment
                                                       Increased issuances of stock
Stock based compensation       ?        $   75,549     warrants
General and
administrative                 ?        $ (135,030 )   Primarily lower marketing expenses
Impairment of                  ?        $  106,105     Cryptocurrency mining operations
cryptocurrency                                         did not begin until October 2021



(1) excluding depreciation and amortization presented below



Net Income (Loss)



                                                     Three Months Ended March 31,
                                        2022              2021           $ Change        % Change
Net Income (Loss):
Net loss from continuing
operations                          $ (3,095,699 )    $ (3,046,995 )    $  (48,704 )             (2 )%
Net income from discontinued
operations                                 6,604           578,120        (571,516 )            (99 )%
Total net loss                      $ (3,089,095 )    $ (2,468,875 )    $ (620,220 )            (25 )%




Net loss from continuing operations increased $620,220 or 25%, for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021,
primarily due to increased operating costs and expenses as described above.

35






Going Concern Analysis



Historically, we have relied upon cash from financing activities to fund
substantially all of the cash requirements of our activities and have incurred
significant losses and experienced negative cash flow. The Company had net
losses from continuing operations of $3,095,699, and $3,046,995, for the three
months ended March 31, 2022 and 2021, respectively. We cannot predict if we will
be profitable. We may continue to incur losses for an indeterminate period of
time and may be unable to achieve profitability. An extended period of losses
and negative cash flow may prevent us from successfully operating and expanding
our business. We may be unable to achieve or sustain profitability on a
quarterly or annual basis. On March 31, 2022, we had cash and cash equivalents
of approximately $1.1 million and working capital of approximately $2.4 million.



We have evaluated the significance of these conditions in relation to our
ability to meet our obligations, which has raised substantial doubts about the
Company's ability to continue as a going concern. However, the Company believes
that the effects of the sale of its legacy operations during 2021, and the
entrance into cryptocurrency mining operations that began in October 2021, will
guide the Company in a positive direction as we continue to strive to attain
profitability, but there is no absolute certainty that profitability can be
achieved.



Additionally, if necessary, management believes that both related parties
(management and members of the Board of Directors of the Company) and potential
external sources of debt and/or equity financing may be obtained based on
management's history of being able to raise capital from both internal and
external sources. However, although there have been recent external source
financings, there is no absolute certainty that any such external source or
related-party financing can be obtained in the future. Therefore, the
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.



The consolidated financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets,
or the amounts and classification of liabilities that may result from the
matters discussed herein. While the Company believes in the viability of
management's strategy to obtain debt and/or equity financing, generate
sufficient revenue, and control costs, there can be no assurances to that
effect. The Company's ability to continue as a going concern is dependent upon
the ability to obtain debt and/or equity financing, generate sufficient
revenues, and to control operating expenses.

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