What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-13 compared with 2021-05-14 · 113 added, 66 removed, 206 unchanged (46% of the section changed)

24 unchanged sentences

Key Business Metrics

Our management regularly monitors certain financial measures to track the progress of its business against internal goals and targets.

Our management regularly monitors certain financial measures to track the progress of our business against internal goals and targets.

We believe that the most important of these measures include backlog and deferred revenue.

4 unchanged sentences

We expect backlog to fluctuate up or down from period to period for several reasons, including the timing and duration of customer contracts, varying billing cycles and the timing and duration of customer renewals.

We reasonably expect approximately half of our backlog as of March 31, 2021 will be invoiced during the subsequent 12-month period, primarily due to the fact that our contracts are typically one to three years in length.

We reasonably expect approximately 40% of our backlog as of June 30, 2021 will be invoiced during the subsequent 12-month period, primarily due to the fact that our contracts are typically one to three years in length.

In addition, our deferred revenue consists of amounts that have been invoiced but that have not yet been recognized as revenues as of the end of a reporting period.

Together, the sum of deferred revenue and backlog represents the total billed and unbilled contract value yet to be recognized in revenues, and provides visibility into future revenue streams.

The following table sets forth the backlog and deferred revenue:

March 31, 2021 December 31, 2020

The following table sets forth our backlog and deferred revenue:

June 30, 2021 December 31, 2020

(in thousands)

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The following table sets forth the non-GAAP financial measures we monitor.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2021 2020 2021 2020

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We believe Adjusted EBITDA provides helpful information with respect to operating performance as viewed by management, including a view of our business that is not dependent on (i) the impact of our capitalization structure and (ii) items that are not part of day-to-day operations.

We define adjusted EBITDA as net loss plus (i) interest expense, (ii) income tax expense, (iii) depreciation, (iv) amortization, and further adjusted for (v) one-time adjustments and (vi) stock-based compensation expense.

We define adjusted EBITDA as net loss plus (i) interest expense, (ii) income tax expense, (iii) depreciation, (iv) amortization, and further adjusted for (v) non-cash impairment and valuation adjustments and (vi) stock-based compensation expense.

Reconciliation of Non-GAAP Financial Measures

The following tables set forth a reconciliation of the most directly comparable GAAP financial measure to each of the non-GAAP financial measures discussed above.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2021 2020 2021 2020

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Adjusted gross margin 44.4 % 68.4 % 58.6 % 64.3 %

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

5 unchanged sentences

Loss on extinguishment of debt 2,184 81 7,952 81

Loss on change in fair value of warrant liability 885 —

Impairment of digital currencies 776 — 776 —

(Less) Add back:

(Gain) Loss on change in fair value of warrant liability (663) — 222 —

Adjusted EBITDA $ (2,743) $ (1,817) $ (5,146) $ (4,994)

45 unchanged sentences

Results of Operations

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

4 unchanged sentences

Application transactions as a percentage of net revenues 17.8 % 8.6 %

Net revenues decreased $1.0 million, or (37.7)%, for the three months ended March 31, 2021 compared to the corresponding period in 2020.

Platform subscriptions and services revenue decreased $0.9 million, or (36.4)%, primarily driven by development, licensing and support services provided to a customer during 2020.

This customer is identified as " Customer F" in Note 3, Revenue in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.

Application transaction revenue decreased $0.1 million, or (49.8)%, for the three months ended March 31, 2021, compared to the corresponding period in 2020, primarily due to a decrease in app store revenue.

Six Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

Platform subscriptions and services $ 2,701 $ 4,414 $ (1,713) (38.8) %

Application transaction 381 439 (58) (13.2) %

Net revenues $ 3,082 $ 4,853 $ (1,771) (36.5) %

Platform subscriptions and services as a percentage of net revenues 87.6 % 91.0 %

Application transactions as a percentage of net revenues 12.4 % 9.0 %

Net revenues decreased $0.8 million, or 35.1%, for the three months ended June 30, 2021 compared to the corresponding period in 2020.

Platform subscriptions and services revenue decreased $0.8 million, or 41.7%.

Greater revenues derived in 2020 were primarily driven by development, licensing and support services provided to a customer during 2020.

This customer is identified as " Customer E" in Note 3, Revenue in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.

Application transaction revenue increased $0.1 million, or 34.7%, for the three months ended June 30, 2021, compared to the corresponding period in 2020, primarily due to PhunToken sales.

Net revenues decreased $1.8 million, or 36.5%, for the six months ended June 30, 2021 compared to the corresponding period in 2020.

Platform subscriptions and services revenue decreased $1.7 million, or 38.8%.

Greater revenues derived in 2020 were primarily driven by development, licensing and support services provided to a customer during 2020.

This customer is identified as " Customer E" in Note 3, Revenue in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.

Application transaction revenue decreased $0.1 million, or 13.2%, for the six months ended June 30, 2021, compared to the corresponding period in 2020, primarily due to a decrease in app store revenue.

This decrease was partially offset by PhunToken sales.

Cost of Revenues, Gross Profit and Gross Margin

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

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Total gross margin 21.7 % 65.3 %

Total gross profit decreased $0.6 million, or (38.4)% for the three months ended March 31, 2021, when compared to the corresponding period of 2020, due to the revenue items described above.

Six Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

Cost of Revenues

Platform subscriptions and services $ 1,726 $ 1,795 $ (69) (3.8) %

Application transaction 90 64 26 40.6 %

Total cost of revenues $ 1,816 $ 1,859 $ (43) (2.3) %

Platform subscriptions and services $ 975 $ 2,619 $ (1,644) (62.8) %

Application transaction 291 375 (84) (22.4) %

Total gross profit $ 1,266 $ 2,994 $ (1,728) (57.7) %

Platform subscriptions and services 36.1 % 59.3 %

Application transaction 76.4 % 85.4 %

Total gross margin 41.1 % 61.7 %

Total gross profit decreased $1.1 million, or 78.4% and $1.7 million, or 57.7% for the three and six months ended June 30, 2021, respectively, when compared to the corresponding period of 2020.

In addition to the revenue items described above, we recorded approximately $0.5 million in labor costs during the second quarter of 2021 related to a customer project, for which we have yet to deliver against.

We expect to fulfill at least some of the performance obligations against this contract the third quarter of 2021.

Furthermore, stock-based compensation increased $0.2 million and $0.4 million during the three and six months ended June 30, 2021, respectively.

Operating Expenses

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

4 unchanged sentences

Total operating expenses $ 4,506 $ 4,415 $ 91 2.1 %

Six Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

Operating expenses

Sales and marketing $ 1,195 $ 882 $ 313 35.5 %

Sales and marketing expense decreased $0.05 million, or (8.1)% for the three months ended March 31, 2021 compared to the corresponding period of 2020, primarily due to reduced employee compensation costs as a result of lower headcount of $0.1 million.

This is partially offset with an increase in stock-based compensation expense.

General and administrative 5,779 7,705 (1,926) (25.0) %

General and administrative expense decreased $1.2 million, or (30.1)% for the three months ended March 31, 2021 compared to the corresponding period of 2020, due to a decrease of $0.5 million in headcount related costs, a decrease of $0.5 million in legal fees mainly related to our previous litigation with Uber, which was settled in October 2020 and $0.2 million in bad debt recovery.

Research and development 1,898 1,239 659 53.2 %

Research and development expense increased $0.2 million, or 22.2%, for the three months ended March 31, 2021, compared to the corresponding period of 2020, primarily due to increases of $0.1 million for headcount dedicated to research and development projects and $0.1 million in stock-based compensation expense.

Total operating expenses $ 8,872 $ 9,826 $ (954) (9.7) %

Sales and Marketing

Sales and marketing expense increased $0.4 million, or 130.7% for the three months ended June 30, 2021 compared to the corresponding period of 2020, primarily due to an increase of employee compensation costs resulting from a higher headcount of $0.2 million and an increase in stock-based compensation expense.

Sales and marketing expense increased $0.3 million, or 35.5% for the six months ended June 30, 2021 compared to the corresponding period of 2020, primarily due to an increase of employee compensation costs resulting from a higher headcount of $0.1 million, a $0.2 million increase in stock-based compensation expense and $0.1 million lead generation programs.

This increase is partially offset by $0.1 million related to marketing expenditures and travel.

General and Administrative

General and administrative expense decreased $0.7 million, or 19.7% for the three months ended June 30, 2021 compared to the corresponding period of 2020, due to a decrease of $0.5 million in legal fees mainly related to our previous litigation with Uber, which was settled in October 2020, $0.3 million in stock-based compensation, $0.2 million in payroll related items and $0.1 million in other information technology costs such as server and software expenses.

This decrease was partially offset by $0.4 million in expenses related to investor relations.

General and administrative expense decreased $1.9 million, or 25.0% for the six months ended June 30, 2021 compared to the corresponding period of 2020, due to a decrease of $1.0 million in legal fees mainly related to our previous litigation with Uber, $0.7 million in payroll related items, $0.3 million in stock-based compensation expense and $0.2 million in other information technology costs such as server and software expenses.

This decrease was partially offset by additional expenses related to investor relations.

Research and Development

Research and development expense increased $0.5 million, or 123.8%, for the three months ended June 30, 2021, compared to the corresponding period of 2020, primarily due to payroll related items of $0.2 million and $0.2 million in stock-based compensation expense.

Research and development expense increased $0.7 million, or 53.2%, for the six months ended June 30, 2021, compared to the corresponding period of 2020, primarily due to increases of $0.3 million for increased headcount dedicated to research and development projects and $0.4 million in stock-based compensation expense.

Other expense

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

2 unchanged sentences

Loss on extinguishment of debt (2,184) (81) (2,103) 2,596.3 %

Impairment of digital currencies (776) — (776) 100.0 %

Gain on change in fair value of warrant liability 663 — 663 100.0 %

Other income 43 — 43 100.0 %

Total other expense $ (4,099) $ (541) $ (3,558) 657.7 %

Six Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

Other expense

Interest expense $ (4,064) $ (561) $ (3,503) 624.4 %

Loss on extinguishment of debt (7,952) (81) (7,871) 9,717.3 %

Impairment of digital currencies (776) — (776) 100.0 %

Loss on change in fair value of warrant liability (222) — (222) 100.0 %

Other income (expense) (79) — (79) 100.0 %

Other expense (36) — (36) 100.0 %

Total other expense $ (13,050) $ (642) $ (12,408) 1,932.7 %

Other expense increased $8.9 million for the three months ended March 31, 2021, compared to the corresponding period of 2020, primarily due to losses on extinguishment of debt and interest related to our debt borrowings as further described in Note 5 " Debt" in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other expense increased $3.6 million and $12.4 million for the three and six months ended June 30, 2021, compared to the corresponding period of 2020, respectfully, primarily due to losses on extinguishment of debt and interest related to our debt borrowings as further described in Note 5 " Debt" in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other (increases) and decreases were related to impairment charges for our digital currencies and adjustments related to the fair value of the warrants outstanding that were issued in conjunction with our 2020 senior convertible notes.

Liquidity and Capital Resources

As of March 31, 2021, we held total cash (including restricted cash) of $23.6 million, all of which was held in the United States.

As of June 30, 2021, we held total cash (including restricted cash) of $2.8 million, all of which was held in the United States.

We have a history of operating losses and negative operating cash flows.

As we continue to focus on growing our revenues, we expect these trends to continue into the foreseeable future.

On October 9, 2020, we entered into a settlement agreement with Uber Technologies, Inc.

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We recorded a charge in the third quarter of 2020 related to the settlement agreement.

As of March 31, 2021, we owe $3 million related to the settlement, which will be paid in various installments ending no later than September 30, 2021.

As of June 30, 2021, we owe $1.5 million, which will be paid no later than September 30, 2021.

For further information related to the Uber settlement agreement, refer to Note 9 " Commitments and Contingencies" of the notes to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K filed with the SEC on March 31, 2021.

As of March 31, 2021, the principal balance of our debt was approximately $15.1 million from various debt, including a Paycheck Protection Program ("PPP") loan and convertible debt offerings.

As of June 30, 2021, the principal balance of our debt was approximately $4.0 million from various debt, including a Paycheck Protection Program ("PPP") loan and other debt offerings.

The debt we believe will have the most significant impact on our future liquidity and capital resources is discussed below.

For further information on all our debt outstanding as of March 31, 2021, refer to Note 5 “ Debt ” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For further information on all our debt outstanding as of June 30, 2021, refer to Note 5 “ Debt ” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In April 2020, we received a PPP loan of approximately $2.85 million, which bears interest at a rate of 0.98% per annum.

The Paycheck Protection Flexibility Act of 2020, extended the deferral period for loan payments.

The Company currently anticipates its first PPP loan payment will be made in the third quarter of 2021.

Although we intend to apply for forgiveness, as currently provided for under terms of the PPP loan and the CARES Act, there can be no assurance that any part of our PPP loan will be forgiven.

The principal amount of our PPP loan is subject to forgiveness under the PPP.

On July 7, 2021, we submitted our request to the Small Business Administration ("SBA") to forgive the full principal amount of the loan.

The SBA is currently reviewing our forgiveness application.

Although we currently anticipate the loan to be forgiven, there can be no assurance that any part of the PPP loan will be forgiven.

The PPP loan matures in April 2022.

During 2020, we issued a series of convertible notes to an institutional investor.

As of March 31, 2021, the unrestricted principal balance of our Series A Convertible Note and Series B Convertible Note (collectively, the "2020 Convertible Notes") was $0 as we had paid the Series A Convertible Note in full during the first quarter of 2021 and $11.1 million, respectively.

The 2020 Convertible Notes were issued with an original issue discount of 8% and each bear an interest rate of 7% per annum, which further includes a make-whole of interest (for unrestricted principal amounts) from the date of issuance through the maturity date of December 31, 2021.

Outstanding principal on the 2020 Convertible Notes was subject to monthly installment payments in cash of 107% of the installment amount due.

The noteholder had various redemption rights, such as the right to redeem an amount equal to 40% of the net proceeds from a qualified capital raise, or upon change of control or company default.

The noteholder could also convert 2020 Convertible Notes into shares of our common at a current adjusted conversion price of $2.25 per share.

Upon consummation of the issuance of the 2020 Convertible Notes, we also issued the note holder a warrant for the purchase of up to 2,160,000 shares of our common stock, which has a current adjusted exercise price of $2.25 per share.

We also had the right to redeem the full amount of the outstanding principal under the 2020 Convertible Notes.

In January 2021, we issued 2,670,121 shares of common stock for aggregate proceeds of $5.1 million, net of $0.2 million of commissions (and before noteholder redemption payment) pursuant to the terms of an at-the-market offering, which has concluded.

In February 2021, we also issued 11,761,111 shares of our common stock for aggregate proceeds at closing of $24.7 million in an underwritten public offering, net of $1.7 million of underwriter commissions and other underwriter costs.

As a result of the fundraising events above, the holder of our 2020 Convertible Notes elected to require us to use forty percent (40%) of the net proceeds satisfy obligations under the 2020 Convertible Notes, pursuant to which we paid approximately $11.5 million to the noteholder.

Upon issuance of the 2020 Convertible Notes, the noteholder issued an investor note to us, which offset the combined restricted balances of the 2020 Convertible Notes.

In March 2021, the noteholder voluntarily prepaid an aggregate of $10.3 million pursuant to the terms of the investor note.

As a result, we received cash proceeds of $10.3 million and the corresponding amount of principal of the Series B Note, representing the entire remaining amount remaining of restricted principal as of that date, along with $0.8 million of original issue discount became unrestricted and outstanding.

As of March 31, 2021, the restricted principal balance of both the Series A Convertible Note and Series B Convertible Note was $0 and the balance of the corresponding investor note was $0.

On March 25, 2021, we delivered a Company Optional Redemption Notice to the holder of our Series B Note exercising our right to redeem and fully satisfy all obligations under the Series B Note on April 5, 2021.

On April 5, 2021, we paid $13,902 in cash to the noteholder in full satisfaction of all obligations under our Series B Note, which amounted to $11,718 of principal, interest and make-whole and $2,184 for the loss on extinguishment of debt.

Given the financings achieved above, we believe our current cash position to be sufficient to meet our projected operating requirements for at least the next twelve months from the filing of this Report on Form 10-Q.

We have a history of operating losses and negative operating cash flows.

As we continue to focus on growing our revenues, we expect these trends to continue into the foreseeable future.

On April 7, 2021, we entered into an At Market Issuance Sales Agreement with B.

Riley Securities, Inc.

Riley"), pursuant to which we may offer and sell, from time to time, shares of our common stock for an aggregate offering price of up to $25 million.

Although we are not obligated to sell shares under the sales agreement with B.

Riley, we currently anticipate future sales of our common stock will be necessary to fund operations.

As of June 30, 2021, we sold 691,584 shares of our common stock under the sales agreement, which generated aggregate net cash proceeds of approximately $1.0 million.

As of the filing date of this Quarterly Report on Form 10-Q, we sold an additional 1,691,572 shares of our common stock for aggregate net proceeds of approximately $1.8 million and may sell additional shares for an aggregate offering price of approximately $22 million under our sales agreement with B.

While our liquidity risk continues as a result of the continuing and evolving effects of the COVID-19 pandemic, which resulted in smaller backlog and larger negative working capital than originally anticipated, management believes our cash on-hand, along with our ability to obtain financing through our at-the-market offering described above, will be adequate to support the capital needs for the next 12 months.

Refer to " Going Concern, Liquidity and Management's Plan" , under Note 1, " The Company and Basis of Presentation" of the notes to the condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

Our future capital requirements will depend on many factors, including our pace of growth, subscription renewal activity, the timing and extent of spend to support development efforts, the expansion of sales and marketing activities and the market acceptance of our products and services.

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The following table summarizes our cash flows for the periods presented:

Three Months Ended March 31, Change

Six Months Ended June 30, Change

(in thousands, except percentages) 2021 2020 Amount %

1 unchanged sentence

Net cash used in operating activities $ (14,371) $ (4,750) $ (9,621) 202.5 %

Net cash provided by investing activities (1,098) — (1,098) 100.0 %

Net cash provided by (used in) financing activities 27,916 2,543 25,373 997.8 %

Net cash used in investing activities (1,497) — (1,497) 100.0 %

Net cash provided by financing activities 14,626 4,712 9,914 210.4 %

Operating Activities

1 unchanged sentence

The primary uses of cash from operating activities are payments to employees for compensation and related expenses, publishers and other vendors for the purchase of digital media inventory and related costs, sales and marketing expenses and general operating expenses.

We utilized $7.3 million of cash from operating activities during the three months ended March 31, 2021, primarily resulting from a net loss of $12.4 million, as adjusted $1.1 million for stock-based compensation $0.2 million for bad debt recovery, $1.6 million for amortization of debt discount and deferred financing costs, $0.9 million for loss on the change in fair value of warrants and $5.8 million for loss on extinguishment of debt related to our 2020 Convertible Notes.

In addition, certain changes in our operating assets and liabilities resulted in significant cash increases (decreases) as follows:

$(0.7) million from a decrease in accounts payable, $(2.3) million from a decrease in accrued expenses, $(0.8) million from a decrease in deferred revenue and $0.5 million from an increase in prepaid and other assets.

We utilized $1.9 million of cash from operating activities during the three months ended March 31, 2020, primarily resulting from a net loss of $4.0 million, as adjusted $0.6 million for stock-based compensation.

We utilized $14.4 million of cash from operating activities during the six months ended June 30, 2021, primarily resulting from a net loss of $20.7 million.

The net loss included non-cash charges of $14.3 million, primarily consisting of the loss on the extinguishment and amortization of debt issuance costs related to our 2020 Convertible Notes, as well as stock-based compensation.

In addition, certain changes in our operating assets and liabilities resulted in significant cash (decreases) as follows:

$(6.1) million from a decrease in accounts payable, accrued expenses and an installment payment to Uber related to the settlement of our lawsuit, as well as $(1.9) million from other working capital changes, primarily a decrease in deferred revenue.

We utilized $4.8 million of cash from operating activities during the six months ended June 30, 2020, primarily resulting from a net loss of $7.5 million, as adjusted $1.8 million for stock-based compensation, $0.2 million for amortization of debt discount and deferred financing costs and $0.1 million for loss on extinguishment of debt.

In addition, certain changes in our operating assets and liabilities resulted in significant cash increases (decreases) as follows:

$0.9 million from an increase in accounts payable, $0.6 million from an increase in accrued expenses, $0.8 million from an increase in account receivable and $(0.8) million from an decrease in deferred revenue.

$0.4 million from an increase in accounts payable, $0.9 million from an increase in accrued expenses, $0.8 million from an increase in account receivable, $(1.3) million from an decrease in deferred revenue and $(0.2) million from an decrease in prepaid and other assets.

Investing Activities

Investing activities for the three months ended March 31, 2021 consisted of the purchase of digital currencies.

Investing activities for the six months ended June 30, 2021 consisted of the purchase of digital currencies.

Financing Activities

Our financing activities during the three months ended March 31, 2021 consisted of proceeds from equity financings and debt borrowings offset by payments on debt.

We acquired $27.9 million of cash from financing activities resulting from $29.7 million in proceeds from the sale of our common stock and $10 million in proceeds from our Series B Convertible Note.

Our financing activities during the six months ended June 30, 2021 consisted of proceeds from equity financings and debt borrowings offset by payments on debt.

We acquired $14.6 million of cash from financing activities resulting primarily from $29.7 million in proceeds from the sale of our common stock and $10 million in proceeds from our Series B Convertible Note.

These sources of financing were partially offset by $25.1 million of payments on debt, a majority of which were payments on the 2020 Convertible Notes.

Refer to the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Report on Form 10-Q for information on the Company's financing activities.

Our financing activities during the three months ended March 31, 2020 consisted of proceeds derived from debt borrowings offset by net repayments on our financing factoring agreement.

We acquired $2.5 million of cash from financing activities, resulting from $3.2 million in proceeds from new issuances of debt (inclusive of $0.6 million from related parties), partially offset of $(0.6) million in net repayments on our factoring financing agreement.

Our financing activities during the six months ended June 30, 2020 consisted of proceeds from various debt borrowings offset by net repayments on our financing factoring agreement.

We acquired $4.7 million of cash from financing activities, as a result of $6.0 million from new issuances of debt (inclusive of $0.6 million from related parties), partially offset of $0.7 million of payments on debt (inclusive of $0.2 million to related parties) and $0.7 million in net repayments on our factoring financing agreement.

Off-Balance Sheet Arrangements

Through March 31, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.

Through June 30, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.

Indemnification Agreements

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Actual results may differ from these estimates under different assumptions or conditions.

Except for the changes described in Note 2, " Summary of Significant Accounting Policies ," in the notes to the condensed consolidated financial statements related to the adoption of ASU 2016-02 and our disclosure of our accounting policy related to our digital currencies purchsed during the current quarter, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 31, 2021.

Except for the changes described in Note 2, " Summary of Significant Accounting Policies ," in the notes to the condensed consolidated financial statements related to the adoption of ASU 2016-02 and our disclosure of our accounting policy related to our digital currencies, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 31, 2021.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis