Prairie Operating Co. 10-K

Item 8. Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM maughansullivanllc A CERTIFIED PUBLIC ACCOUNTING FIRM PCAOB REGISTERED www.maughansullivanllc.com To the Stockholders and the Board of Directors of Creek Road Miners, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Creek Road Miners, Inc. (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income, of stockholders’ equity, and of cash flows for each of the two years in period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of the Accounting for and Disclosure of Cryptocurrency Assets The focus of the Company’s business operations is exclusively mining Bitcoin cryptocurrency. The Bitcoin earned from its mining activities are presented on the balance sheet as a current asset at the fair market value as of December 31, 2021, which was approximately $302,000. The Company’s management has exercised significant judgment in their determination of how existing accounting principles generally accepted in the United States of America (“GAAP”) should be applied to the accounting for its cryptocurrency held, the presentation in the financial statements and the disclosures in the accompanying footnotes. 34 We identified the accounting for and disclosure of cryptocurrency assets as a critical audit matter due to the nature and extent of audit effort required to obtain sufficient appropriate audit evidence to address the risks of material misstatement related to the existence and rights and obligations of cryptocurrency assets. Our audit efforts involved researching accounting and disclosures by other companies in the industry, consultation with other subject matter experts and researching authoritative literature and standards. We performed the following procedures (not all inclusive) to address this critical audit matter: ● Evaluated management’s significant judgment to account for cryptocurrency held as a current asset on the balance sheet; ● Evaluated management’s disclosures of its cryptocurrency activity in the notes to the financial statements; ● Examined the Company’s process for determining impairment to its cryptocurrency; ● Examined management’s process for recording cryptocurrency earned from its mining activities as a current asset on the balance sheet. Evaluation of the Accounting for and Disclosure of Cryptocurrency Mining Revenue Recognized The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, as disclosed in Note 3. “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.” During the year ended December 31, 2021, the Company recognized net revenue from cryptocurrency mining of $369,804. The Company’s management has exercised significant judgment in their determination of how existing GAAP should be applied to the accounting for and disclosure of cryptocurrency mining revenue recognized. We identified the accounting for and disclosure of cryptocurrency mining revenue recognized as a critical audit matter due to the complexities involved in auditing completeness and occurrence of the revenue recognized by the Company. We performed the following procedures (not all inclusive) to address this critical audit matter: ● Evaluated management’s disclosures of its cryptocurrency activity in the financial footnotes; ● Compared the Company’s digital cold storage wallet records to available blockchain records publicly available; ● Evaluated management’s decision to apply ASC 606 to account for and record its cryptocurrency awards earned in the mining pool; ● Tested supporting documentation for the valuation of cryptocurrency awards earned; ● Performed substantive procedures to determine completeness and occurrence of cryptocurrency assets earned from the Company’s mining activities. /s/ MaughanSullivan LLC We have served as the Company’s auditor since 2017. Manchester, VT March 31, 2022 PCAOB Firm Number 366 PO Box 347 114 Cemetery Ave 2732 E Water Vista Way 701 Brickell Ave., Ste. 1550 48 Wall Street, 11 th Floor Manchester, VT 05254 Sandy, UT 84093 Miami, FL 33131 New York, NY 10005 802.768.8521 801-910.4221 305.728.5183 t 305.728.5183 t linda@maughansullivanllc.com heber@maughansullivanllc.com 305.728.5288 f 305.728.5288 f 35 Creek Road Miners, Inc. and Subsidiaries Consolidated Balance Sheets December 31, December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 2,785,188 $ 1,897,703 Accounts receivable, ( no allowance for doubtful accounts) 427 33,452 Prepaid expenses 107,749 53,312 Deposits on mining equipment 7,613,230 — Inventory 18,725 — Cryptocurrency 302,654 — Current assets associated with discontinued operations — 233,018 Total current assets 10,827,973 2,217,485 Other assets: Property and equipment, net of accumulated depreciation of $ 89,136 and $ 489,276 , respectively 2,226,360 9,818 Right of use asset, net of accumulated amortization of $ 299,583 and $ 182,846 respectively 127,335 244,074 Deposits and other assets 18,201 18,303 Assets associated with discontinued operations — 180,683 Total assets $ 13,199,869 $ 2,670,363 Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable and accrued expenses $ 801,747 $ 599,459 Accrued interest and expenses – related parties 2,231,558 1,617,586 Lease liability, current portion 33,977 108,718 Secured convertible debenture – related party 2,500,000 2,500,000 Current liabilities associated with discontinued operations 472,029 2,240,099 Total current liabilities 6,039,311 7,065,862 Non-current liabilities: Lease liability, long term portion 101,116 137,694 Secured convertible debenture – related party, net of unamortized debt discount of $ 0 and $ 535,784 , respectively 2,500,000 1,964,216 SBA/PPP loans payable 361,595 347,500 Total non-current liabilities 2,962,711 2,449,410 Total liabilities 9,002,022 9,515,272 Commitments and contingencies - Stockholders’ equity (deficit): Preferred stock; 5,000,000 shares authorized: Series A convertible preferred stock; $ 0.0001 par value; 500,000 shares authorized; 223,964 and 173,993 shares issued and outstanding, respectively 22 17 Series B convertible preferred stock; $ 0.0001 par value; 20,000 shares authorized; 3,720 and 0 shares issued and outstanding, respectively — — Series C convertible preferred stock; $ 0.0001 par value; 15,000 shares authorized; 7,880 and 0 shares issued and outstanding, respectively 1 — Preferred stock, value 1 — Common stock; $ 0.0001 par value; 100,000,000 shares authorized; 8,191,382 and 3,506,752 shares issued and outstanding, respectively 819 351 Additional paid-in capital 51,506,854 23,206,367 Accumulated deficit ( 47,309,849 ) ( 30,039,146 ) Non-controlling interest — ( 12,498 ) Total stockholders’ equity (deficit) 4,197,847 ( 6,844,909 ) Total liabilities and stockholders’ equity (deficit) $ 13,199,869 $ 2,670,363 See notes to consolidated financial statements 36 Creek Road Miners, Inc. and Subsidiaries Consolidated Statements of Operations Years Ended December 31, 2021 2020 Revenue: Cryptocurrency mining $ 369,804 $ — eCommerce 437,773 412,325 Total revenue 807,577 412,325 Operating costs and expenses: Cryptocurrency mining costs 281,790 — eCommerce costs 319,490 206,163 Depreciation and amortization 112,512 24,724 Stock based compensation 12,338,424 407,952 General and administrative 5,782,686 2,048,183 Impairment of mined cryptocurrency 59,752 - Total operating expenses 18,894,654 2,687,022 Loss from operations ( 18,087,077 ) ( 2,274,697 ) Other income (expense): PPP loan forgiveness 183,567 — Interest expense ( 1,175,217 ) ( 637,044 ) Other income — 10,000 Total other income (expense) ( 991,650 ) ( 627,044 ) Loss from operations before provision for income taxes ( 19,078,727 ) ( 2,901,741 ) Provision for income taxes — — Loss from continuing operations ( 19,078,727 ) ( 2,901,741 ) Discontinued operations: Income (loss) from discontinued operations ( 45,145 ) 961,340 Gain on sale of discontinued operations 1,853,169 — Net income from discontinued operations 1,808,024 961,340 Net loss $ ( 17,270,703 ) $ ( 1,940,401 ) Dividends on preferred stock ( 372,325 ) ( 85,792 ) Earnings attributable to common stockholders $ ( 17,643,028 ) $ ( 2,026,193 ) Earnings (loss) per common share: Earnings (loss) per share from continuing operations, basic and diluted $ ( 4.09 ) $ ( 0.85 ) Earnings per share from discontinued operations, basic and diluted $ 0.38 $ 0.27 Earnings (loss) per share, basic and diluted $ ( 3.71 ) $ ( 0.58 ) Weighted average common shares outstanding, basic and diluted 4,755,244 3,506,752 See notes to consolidated financial statements 37 Creek Road Miners, Inc. and Subsidiaries Consolidated Statement of Stockholders’ Equity For the Years Ended December 31, 2021 and 2020 Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Deficit Preferred Stock Par value $0.0001 Series A Preferred Stock Par value $0.0001 Series B Preferred Stock Par value $0.0001 Series C Preferred Stock Par value $0.0001 Common Stock Par value $0.0001 Additional Paid In Accumulated Non-controlling Stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Deficit Balance, December 31, 2019 288,488 $ 29 - $ - - $ - - $ - 3,506,752 $ 351 $ 21,854,134 $ ( 28,098,745 ) $ ( 12,498 ) $ ( 6,256,729 ) Stock based compensation - - - - - - - - 407,852 - - 407,852 Cancellation of preferred stock ( 288,488 ) ( 29 ) - - - - - - - - ( 709,553 ) - - ( 709,582 ) Issuance of series A preferred stock to settle accrued liabilities - - 173,993 17 - - - - - - 1,739,726 - - 1,739,743 Dividend on Series A preferred stock - - - - - - - - - - ( 85,792 ) - - ( 85,792 ) Net loss - - - - - - - - - - - ( 1,940,401 ) - ( 1,940,401 ) Balance, December 31, 2020 - $ - 173,993 $ 17 - $ - - $ - 3,506,752 $ 351 $ 23,206,367 $ ( 30,039,146 ) $ ( 12,498 ) $ ( 6,844,909 ) Stock based compensation - - - - - - - - 9,726,950 - - 9,726,950 Warrants issued for services - - - - - - - - 2,270,015 - - 2,270,015 Exercise of stock options - - - - - - 302,644 30 50,595 - - 50,625 Issuance of series A preferred stock to settle accrued liabilities and compensation 58,721 6 - - - - - - 588,044 - - 588,050 Issuance of common stock and warrants, net - - - - - - 2,933,340 293 3,924,757 - - 3,925,050 Issuance of series B preferred stock and warrants, net - - 5,000 - - - - - 4,378,995 - - 4,378,995 Issuance of series C preferred stock and warrants, net - - - - 7,880 1 - - 7,733,600 - - 7,733,601 Conversion of series A preferred stock to common ( 8,750 ) ( 1 ) - - - - 500,000 50 ( 49 ) - - - Conversion of series B preferred stock to common - - ( 1,280 ) - - - 948,646 95 ( 95 ) - - - Dividend on Series A preferred stock - - - - - - - - ( 254,322 ) - - ( 254,322 ) Dividend on Series B preferred stock - - - - - - - - ( 118,003 ) - - ( 118,003 ) Write-off of non-controlling interest - - - - - - - - - - 12,498 12,498 Net loss - - - - - - - - - - ( 17,270,703 ) - ( 17,270,703 ) Balance, December 31, 2021 - - 223,964 $ 22 3,720 $ - 7,880 $ 1 8,191,382 $ 819 $ 51,506,854 $ ( 47,309,849 ) $ - $ 4,197,847 See notes to consolidated financial statements 38 Creek Road Miners, Inc. and Subsidiaries Consolidated Statements of Cash Flows 2021 2020 Years Ended December 31, 2021 2020 Cash flow from operating activities: Net loss $ ( 17,270,703 ) $ ( 1,940,401 ) Adjustment to reconcile net loss to net cash used in operating activities: Gain from sale of discontinued operations ( 1,853,169 ) — Depreciation and amortization 112,512 24,336 Accretion of debt discount 535,784 34,952 Amortization of lease right 5,423 ( 109 ) Stock based compensation 12,585,008 407,852 Impairment of cryptocurrency 59,752 — PPP loan forgiveness ( 183,567 ) — Changes in operating assets and liabilities: Accounts receivable 33,025 ( 33,339 ) Prepaid expenses ( 54,435 ) 374,464 Inventory ( 18,725 ) ( 220,641 ) Cryptocurrency, net of mining fees ( 302,654 ) — Current assets associated with discontinued operations 233,018 — Security deposits 102 ( 8,895 ) Assets associated with discontinued operations 180,683 — Accounts payable and accrued expenses 569,459 1,100,458 Accrued and unpaid dividends on preferred stock ( 372,325 ) — Liabilities associated with discontinued operations ( 1,228,911 ) ( 809,395 ) Net cash used in operating activities ( 6,969,723 ) ( 1,070,718 ) Cash flow from investing activities: Purchase of intangibles — ( 132,000 ) Deposits on mining equipment ( 7,613,230 ) — Purchase of property and equipment ( 2,315,496 ) ( 24,733 ) Net cash used in investing activities ( 9,928,726 ) ( 156,733 ) Cash flow from financing activities: Proceeds from the issuance of common stock and warrants, net 3,925,050 — Proceeds from the issuance of series B preferred stock and warrants, net 4,378,995 — Proceeds from the issuance of series C preferred stock and warrants, net 7,733,601 — Proceeds from the exercise of stock options 50,625 — Proceeds from SBA/PPP loans payable 197,662 347,500 Proceeds from the sale of discontinued operations 1,500,000 — Net cash provided by financing activities 17,785,933 347,500 Net increase in cash and cash equivalents 887,484 ( 879,951 ) Cash and cash equivalents, beginning of period 1,897,703 2,777,654 Cash and cash equivalents, end of period $ 2,785,187 $ 1,897,703 Supplemental disclosures of cash flow information: Cash paid for income taxes $ — $ — Cash paid for interest $ — $ — Supplemental disclosures of noncash investing and financing activity: Issuance of series A preferred stock to settle accrued liabilities and compensation $ 588,044 $ 1,030,173 Dividends on preferred stock $ 372,325 $ 85,792 Right of use assets obtained in exchange for lease obligations $ — $ 173,938 Conversion of preferred stock to common stock $ 145 $ — See notes to consolidated financial statements 39 CREEK ROAD MINERS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2021 and 2020 Note 1. Organization, Nature of Business and Basis of Presentation Organization 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 . Nature of Business 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 and do not have the intention of mining any other cryptocurrencies in the near future. While we plan to hold our mined Bitcoin until the next halving event (expected to occur around March 2024), we may sell the Bitcoin we mine as necessary for operations or as dictated by market conditions. 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 (“mining pool(s)”) 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. Mining Equipment 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. As of December 31, 2021, we had 240 miners with 24 Ph/s of hashing capacity in production, and had deposits for an additional 1,140 miners with 135.3 Ph/s hashing capacity to be delivered in 2022 as follows: ● 270 Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022 ● 270 Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022 ● 600 Bitmain S19XP (140 Th/s per miner, total 84 Ph/s hashing capacity) delivery expected July through December 2022 After the delivery of the miners above we will have a total of 1,380 miners with 159.3 Ph/s of hashing capacity. The purchase commitment for these new miners totals approximately $ 11.5 million, including $ 7,089,000 paid as deposits during the year ending December 31. 2021, and the remaining $ 4.4 million 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 if 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. 40 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. Mining Results The Company measures its operations by the number and U.S. Dollar (US$) value of the cryptocurrency rewards it earns from its cryptocurrency mining activities. The following table presents additional information regarding our cryptocurrency mining operations: Schedule of Cryptocurrency Mining Operations Quantity of Bitcoin US$ Amounts Balance December 31, 2020 — $ — Revenue recognized from cryptocurrency mined 6.7 369,803 Mining pool operating fees ( 0.1 ) ( 7,396 ) Impairment of cryptocurrencies — ( 59,752 ) Balance December 31, 2021 6.6 $ 302,655 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. While we currently plan to hold our mined Bitcoin until the next halving event, we may use or sell our Bitcoin as necessary for operations or as dictated by market conditions. 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” herein. Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Note 2. 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 $ 19,078,727 , and $ 2,901,741 , for the years ended December 31, 2021 and 2020, respectively. On December 31, 2021, we had cash and cash equivalents of approximately $ 2.7 million and working capital of approximately $ 4.8 million. We have evaluated the significance of these conditions in relation to our ability to meet our obligations, which had previously raised 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. 41 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. Note 3. Summary of Significant Accounting Policies 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 in consolidation. The following table lists the Company’s wholly-owned subsidiaries as of December 31, 2021: Schedule of Company’s Wholly-owned Subsidiaries Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization Date of incorporation or formation (date of acquisition, if applicable) Attributable interest Creek Road Miners Corp. (fka Kick the Can Corp.) Nevada, U.S.A. September 20, 2010 100 % Wizard Special Events, LLC California, U.S.A. June 5, 2018 100 % ButtaFyngas, LLC (discontinued operations) Delaware, U.S.A. April 10, 2015 50 % Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest. As of December 31, 2021 and 2020, the aggregate non-controlling interest in ButtaFyngas, LLC was $ 0 , and ($ 12,498 ) , respectively. The non-controlling interest is separately disclosed on the Consolidated Balance Sheet. As of December 31, 2021, ButtaFyngas, LLC ceased operations, and was in the process of dissolution. 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. These estimates and assumptions include estimates for reserves of uncollectible accounts, accruals for potential liabilities, assumptions made in valuing equity instruments issued for services or acquisitions, and realization of deferred tax assets. Reclassification Certain prior period amounts have been reclassified to conform to current period 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. 42 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 the quoted prices in active markets, are observable either directly or indirectly. Level 3 – Unobservable inputs based on the Company’s 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. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $ 250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. 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. 43 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. Leases The Company accounts for leases in accordance with the provisions of ASC 842, Leases. This standard requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease. We determine if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Our leases consist of leaseholds on office space. We utilized a portfolio approach in determining our discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We also give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. We recognize lease expense for these leases on a straight-line basis over the lease term. We recognize variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. Revenue Recognition The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. 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. The Company applies 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 the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. 44 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. 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 reverse stock split of our outstanding shares of common stock that was effective on January 23, 2020. Unless otherwise noted, all share and related option, warrant, and convertible security information presented has been retroactively adjusted to reflect the reduced number of shares, and the increase in the share price which resulted from this action. Stock-Based Compensation The Company periodically issues stock options, warrants and restricted stock to employees and non-employees for services, in capital raising transactions, and for financing costs. The Company accounts 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. The Company estimates 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 The Company accounts 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. 45 Discontinued Operations On August 6, 2021, the Company 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, the Company 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 years ending December 31, 2021 and 2020, are classified as discontinued operations. Additionally, the financial results associated with discontinued operations in our consolidated statement of operations for the years ending December 31, 2021 and 2020, are classified as discontinued operations. Earnings (Loss) Per Common Share Basic earnings (loss) per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. Potential common shares are excluded from the computation when their effect is antidilutive. Basic and diluted earnings (loss) attributable to common stockholders is the same for the years ended December 31, 2021 and 2020, because the Company has only incurred losses and all potentially dilutive securities are anti-dilutive. Potentially dilutive securities that were not included in the computation of diluted earnings (loss) attributable to common stockholders at December 31, 2021 because their inclusion would be anti-dilutive are as follows: Schedule of Anti--dilutive Securities Excluded from Earnings Per Share Potentially Dilutive Security Quantity Stated Value Per Share (1) Total Value or Stated Value Conversion Rate (1) Resulting Common Shares Common stock options 7,651,750 $ — $ — — 7,651,750 Common stock warrants 22,460,926 — — — 22,460,926 Series A preferred stock 233,964 10 2,339,640 0.175 12,797,943 Series B preferred stock 3,720 1,080 4,017,600 1.500 2,678,400 Series C preferred stock 7,880 1,111 8,754,680 2.500 3,501,872 Series B preferred stock warrants 10,000 1,080 10,800,000 1.500 7,200,000 Secured convertible debentures – related parties — — 5,000,000 0.175 28,571,429 Total 84,862,320 (1) As of December 31, 2021 Related Parties The Company follows ASC 850-10, Related Parties, for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. 46 Recently Issued Accounting Pronouncements Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. Note 4. Deposits on Mining Equipment During the year ended December 31, 2021, the Company entered into purchase agreements with mining equipment suppliers for the acquisition of the mining equipment to be shipped and delivered during 2022 as presented below: ● 270 Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022 ● 270 Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022 ● 600 Bitmain S19XP (140 Th/s per miner, total 84 Ph/s hashing capacity) delivery expected July through December 2022 The purchase commitment for these new miners totals approximately $ 11.5 million, including $ 7,089,000 paid as deposits during the year ending December 31. 2021, and the remaining $ 4.4 million 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 if 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. Deposits on mining equipment, consisted of the following: Schedule of Mining Equipment December 31, 2021 2020 Cryptocurrency miners $ 7,089,000 $ — Mobile data centers 524,230 — Total $ 7,613,230 $ — Note 5. Cryptocurrenc y 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 Company recognized an impairment, or write down, of cryptocurrency (Bitcoin) rewards to the lowest fair market value of Bitcoin from the time the reward was earned through December 31, 2021. The impairment amounted to $ 59,752 for the year ended December 31, 2021. The following table presents additional information regarding our cryptocurrency mining operations: Schedule of Cryptocurrency Mining Operation Quantity of Bitcoin US$ Amounts Balance December 31, 2020 — $ — Revenue recognized from cryptocurrency mined 6.7 369,803 Mining pool operating fees ( 0.1 ) ( 7,396 ) Impairment of cryptocurrencies (1) — ( 59,752 ) Balance December 31, 2021 6.6 $ 302,655 (1) The Company recognized an impairment, or write down, of cryptocurrency (Bitcoin) rewards to the lowest fair market value of Bitcoin from the time the reward was earned through December 31, 2021. If the subsequent market price of Bitcoin increases, the asset balance will not be adjusted for the increase. 47 Note 6. Property and Equipment Property and equipment, excluding those associated with discontinued operations, stated at cost, less accumulated depreciation and amortization, consisted of the following: Schedule of Property and Equipment December 31, 2021 2020 Cryptocurrency miners $ 1,784,062 $ — Mobile data center 518,663 — Computer equipment 12,771 25,025 Software — — Equipment — 474,069 Total 2,315,496 499,094 Less accumulated depreciation ( 89,136 ) ( 489,276 ) Net, Property and equipment $ 2,226,360 $ 9,818 Depreciation expense, excluding that associated with discontinued operations, for the years ended December 31, 2021 and 2020 amounted to $ 112,512 and $ 24,724 , respectively. 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. As of December 31, 2021, we had 240 miners with 24 Ph/s of hashing capacity in production, and had deposits for an additional 1,140 miners with 135.3 Ph/s hashing capacity to be delivered in 2022. Note 7. Amounts Due to Related Parties Amounts due to related parties as of December 31, 2021 consisted of the following: Schedule of Due to Related Parties Bristol Capital, LLC Bristol Investment Fund, Ltd. Barlock 2019 Fund, LP Total Accrued Interest and expenses $ 93,750 $ 1,525,479 $ 612,329 $ 2,231,558 Current secured convertible debenture — 2,500,000 — 2,500,000 Non-current secured convertible debenture — — 2,500,000 2,500,000 Total $ 93,750 $ 4,025,479 $ 3,112,329 $ 7,231,558 Amounts due to related parties as of December 31, 2020 consisted of the following: Bristol Capital, LLC Bristol Investment Fund, Ltd. Barlock 2019 Fund, LP Total Accrued Interest and expenses $ 93,750 $ 1,223,835 $ 300,000 $ 1,617,585 Current secured convertible debenture — 2,500,000 — 2,500,000 Non-current secured convertible debenture, net of unamortized debt discount of $ 535,784 — — 1,964,216 1,964,216 Total $ 93,750 $ 3,723,835 $ 2,264,216 $ 6,081,801 As of December 31, 2021, the secured convertible debentures with an aggregate principal amount of $ 5,000,000 , comprised of a secured convertible debenture with a principal amount of $ 2,500,000 held by Bristol Investment Fund and a secured convertible debenture with a principal amount of $ 2,500,000 held by Barlock 2019 Fund, LLP, were convertible into an aggregate of 28,571,429 shares of common stock (exclusive of any accrued and unpaid interest), using a conversion price of $ 0.175 . Note 8. Related Party Transactions The Company has entered into transactions with the following related parties: Related Party: Bristol Capital, LLC Bristol Capital, LLC (“Bristol Capital”), is managed by Paul L. Kessler. Mr. Kessler served as Executive Chairman of the Company from December 29, 2016, through November 24, 2020, when Mr. Kessler resigned his position, but continued to serve as member of the Board of Directors. On December 1, 2021 Mr. Kessler was again appointed Executive Chairman of the Company. 48 Consulting Agreement On December 29, 2016, the Company entered into a Consulting Services Agreement with Bristol Capital. Pursuant to the Consulting Agreement, Mr. Kessler agreed to serve as Executive Chairman of the Company. The initial term of the Agreement is from December 29, 2016 through March 28, 2017. The term of the Consulting Agreement will be automatically extended for additional terms of 90-day periods, unless either the Company or Bristol Capital gives prior written notice of non-renewal to the other party no later than thirty (30) days prior to the expiration of the then current term. Upon the execution of the agreement the Company granted Bristol Capital options to purchase up to an aggregate of 30,000 shares of the Company’s common stock at an exercise price of $ 0.25 per share, as amended. During the term, the Company will pay Bristol Capital, as amended, a monthly fee $ 18,750 payable in cash or preferred stock, at the Company’s election. In addition, Bristol Capital may receive an annual bonus in an amount and under terms determined by the Compensation Committee of the Board and approved by the Board in its sole and absolute discretion. The Company shall also, in association with the uplisting of the Company’s common stock to a national exchange, issue to Bristol Capital (i) shares of common stock equal to 5 % of the fully diluted shares of common stock of the Company, calculated with the inclusion of Bristol Capital’s equity stock holdings and shares issuable upon conversion of convertible instruments, preferred stock, options, and warrants; and (ii) a onetime non-accountable expense reimbursement of $ 200,000 . On November 22, 2018, the Company agreed to issue 202,022 shares of preferred stock for settlement of $ 496,875 due under the consulting agreement as of October 31, 2018. On August 3, 2020, the Company cancelled the 202,022 shares of preferred stock previously determined to be issued, and issued 49,688 shares of Series A preferred stock for the settlement of the previous outstanding amount due. In addition, on August 3, 2020, the Company issued 38,438 shares of Series A preferred stock for the settlement of $ 384,375 due under the consulting agreement as of July 31, 2020. On March 1, 2021, the Company issued 22,500 shares of Series A preferred stock to Bristol Capital for the settlement of $ 225,000 due under the consulting agreement as of July 31, 2021. During the years ended December 31, 2021 and 2020, the Company incurred expenses of approximately $ 225,000 , for each period for consulting services provided by Bristol Capital. As of December 31, 2021, and 2020, the amount accrued to Bristol Capital for consulting services was $ 93,750 , for each period. Non-Accountable Expense Reimbursement On September 7, 2021, Bristol Capital received a one-time non-accountable expense reimbursement of $ 200,000 in consideration for significant efforts and diligence in negotiating and structuring investment transactions. Related Party: Bristol Capital Advisors, LLC Bristol Capital Advisors, LLC (“Bristol Capital Advisors”), is managed by Bristol Capital Advisors, which in turn is managed by Paul L. Kessler. Operating Sublease On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease with Bristol Capital Advisors. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016, with monthly payments of approximately $ 8,000 . During the year ended December 31, 2021 and 2020, the Company paid lease obligations of $ 83,054 and $ 108,046 , respectively, under the Sublease. On September 30, 2021, the lease term ended, and the Company vacated the premises. Related Party: Bristol Investment Fund, Ltd. Bristol Investment Fund, Ltd. (“Bristol Investment Fund”) is managed by Paul L. Kessler. 49 Securities Purchase Agreement – December 2016 On December 1, 2016, the Company entered into the Purchase Agreement with Bristol Investment Fund, pursuant to which the Company sold to Bristol Investment Fund, for a cash purchase price of $ 2,500,000 , securities comprising of: (i) a secured convertible debenture, (ii) Series A common stock purchase warrants, and (iii) Series B common stock purchase warrants. Pursuant to the Purchase Agreement, the Company paid $ 25,000 to Bristol Investment Fund and issued 25,000 shares of Common Stock with a grant date fair value of $ 85,000 to Bristol Investment Fund to cover legal fees. The Company recorded as a debt discount of $ 25,791 related to the cash paid and the relative fair value of the shares issued for legal fees. (i) Secured Convertible Debenture On December 1, 2016, the Company entered issued a secured convertible debenture with an initial principal balance of $ 2,500,000 , and a maturity date of December 30, 2018 . The secured convertible debenture will accrue interest on the aggregate unconverted and then outstanding principal amount at the rate of 12 % per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2017, (ii) on each date the purchaser converts, in whole or in part, the secured convertible debenture into common stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the secured convertible debenture (only as to that principal amount then being redeemed) and on the maturity date . Interest may be paid in cash, common stock, or a combination thereof at the sole discretion of the Company. The secured convertible debenture is convertible into shares of the Company’s common stock at any time at the option of the holder. The initial conversion price was $ 3.00 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $ 3.00 and (ii) 50 % of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. The secured convertible debenture contains anti-dilution provisions where, if the Company, at any time while the secured convertible debenture is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less that is lower than the conversion price then in effect, the conversion price shall be reduced to the lower effective price per share. On December 19, 2019, the maturity date of the secured convertible debenture was amended to December 30, 2021 . On May 1, 2020, the maturity date of the secured convertible debenture was amended to December 31, 2022 . On August 3, 2020, as a result of the anti-dilution provisions, the effect of repricing stock options held by directors and employees to $ 0.25 decreased the conversion price to $0.25. As of December 31, 2020, the secured convertible debenture held by Bristol Investment Fund was convertible into 10,000,000 shares of common stock. On October 31, 2021, in consideration for the release of senior security interest in certain of the assets, properties, and rights of discontinued operations that were sold during the year, the secured convertible debenture was amended to reduce the conversion price to $ 0.175 . As of December 31, 2021, the secured convertible debenture held by Bristol Investment Fund was convertible into 14,285,714 shares of common stock. As of December 31, 2021, and 2020, the amount of accrued interest payable to Bristol Investment Fund under the secured convertible debenture was $ 1,525,479 , and $ 1,223,835 , respectively. (ii) Series A Common Stock Purchase Warrants On December 1, 2016, the Company issued series A common stock purchase warrants to acquire up to 833,333 shares of common stock at exercise price of $ 3.00 , and expiring on December 1, 2021 . The warrants contain anti-dilution provisions where, if the Company, at any time while the warrant is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, the exercise price shall be reduced, and the number of warrant shares shall be increased such that the aggregate exercise price payable hereunder, shall be equal to the aggregate exercise price prior to such adjustment. On December 19, 2019, as a result of the anti-dilution provisions, the issuance of a senior secured convertible debenture to Barlock 2019 Fund, LP with a conversion price of $ 2.50 increased the number of shares of common stock issuable upon exercise of the series A common stock purchase warrants to 1,000,000 , and decreased the exercise price to $ 2.50 . 50 On December 19, 2019, Bristol Investment Fund assigned 300,000 series A common stock purchase warrants to Barlock Capital Management, LLC, and the expiration date of the warrants was extended to December 1, 2024 . After the assignment, Bristol Investment Fund held series A common stock purchase warrants to acquire 700,000 shares of common stock at an exercise price to $ 2.50 . On August 3, 2020, as a result of the anti-dilution provisions, the effect of repricing stock options held by directors and employees to $ 0.25 increased the number of shares of common stock issuable upon exercise of the series A common stock purchase warrants to 7,000,000 , and decreased the exercise price to $ 0.25 . As of December 31, 2020, Bristol Investment Fund held series A common stock purchase warrants to acquire 7,000,000 shares of common stock at an exercise price to $ 0.25 . On October 31, 2021, as a result of the anti-dilution provisions, the effect of reducing the conversion price of the secured convertible debenture to $ 0.175 increased the number of shares of common stock issuable upon the exercise of the series A common stock purchase warrants to 10,000,000 , and decreased the exercise price to $ 0.175 . As of December 31, 2021, Bristol Investment Fund held series A common stock purchase warrants to acquire 10,000,000 shares of common stock at an exercise price to $ 0.175 . In addition, the warrants may be exercised, in whole or in part, at any time until they expire. If at any time after the 6-month anniversary of the closing date there is no effective registration statement, or no current prospectus available for the resale of the warrant shares, then the warrants may be exercised, in whole or in part, on a cashless basis at any time until they expire. (iii) Series B Common Stock Purchase Warrants On December 1, 2016, the Company issued series B common stock purchase warrants to acquire up to 833,333 shares of Common Stock at an initial exercise price of $ 0.002 , and expiring on December 1, 2021 . The series B common stock purchase warrants were exercised immediately on the issuance date, and the Company received gross proceeds of $ 1,667 . Upon issuance of the secured convertible debenture, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $ 1,448,293 as debt discount on the consolidated balance sheet. Debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense on the consolidated statement of operations. There was unamortized debt discount of $ 0 as of December 31, 2021 and December 31, 2020. Related Party: Barlock 2019 Fund, LP Barlock 2019 Fund, LP (“Barlock”), is managed by Scott D. Kaufman who has served as Chief Executive Officer of the Company since November 24, 2020. Securities Purchase Agreement – December 2019 On December 19, 2019, the Company entered into the purchase agreement with Barlock, pursuant to which the Company sold to Barlock, for a cash purchase price of $ 2,500,000 , securities comprising of: (i) a secured convertible debenture, and (ii) Series A common stock purchase warrants assigned from Bristol Investment Fund. Pursuant to the purchase agreement, the Company paid $ 25,400 to Barlock for legal fees which was recorded as a debt discount. (i) Secured Convertible Debenture On December 19, 2019, the Company entered issued a secured convertible debenture with an initial principal balance of $ 2,500,000 , and a maturity date of December 30, 2021 . The secured convertible debenture will accrue interest on the aggregate unconverted and then outstanding principal amount at the rate of 12 % per annum. Interest is payable quarterly on (i) January 1, April 1, July 1 and October 1, beginning on January 1, 2017, (ii) on each date the purchaser converts, in whole or in part, the secured convertible debenture into common stock (as to that principal amount then being converted), and (iii) on the day that is 20 days following the Company’s notice to redeem some or all of the of the outstanding principal of the secured convertible debenture (only as to that principal amount then being redeemed) and on the maturity date . Interest may be paid in cash, common stock, or a combination thereof at the sole discretion of the Company. The secured convertible debenture is convertible into shares of the Company’s common stock at any time at the option of the holder. The initial conversion price was $ 2.50 (as converted) per share, subject to adjustment. In the event of default occurs, the conversion price shall be the lesser of (i) the initial conversion price of $ 2.50 and (ii) 50 % of the average of the 3 lowest trading prices during the 20 trading days immediately prior to the applicable conversion date. 51 The secured convertible debenture contains anti-dilution provisions where, if the Company, at any time while the secured convertible debenture is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less that is lower than the conversion price then in effect, the conversion price shall be reduced to the lower effective price per share. On August 3, 2020, as a result of the anti-dilution provisions, the effect of repricing stock options held by directors and employees to $ 0.25 decreased the conversion price to $0.25. As of December 31, 2020, the secured convertible debenture held by Barlock was convertible into 10,000,000 shares of common stock. On October 31, 2021, in consideration for the release of senior security interest in certain of the assets, properties, and rights of discontinued operations that were sold during the year, the secured convertible debenture was amended to reduce the conversion price to $ 0.175 , and the maturity date was amended to December 31, 2023 . As of December 31, 2021, the secured convertible debenture held by Barlock was convertible into 14,285,714 shares of common stock. As of December 31, 2021, and 2020, the amount of accrued interest payable to Barlock 2019 Fund, LP under the secured convertible debenture was $ 612,239 , and $ 300,000 , respectively. (ii) Series A Common Stock Purchase Warrants On December 19, 2019, Bristol Investment Fund assigned to Barlock Capital Management, LLC series A common stock purchase warrants to acquire up to 300,000 shares of common stock at exercise price of $ 2.50 , and expiring on December 1, 2024 . The warrants contain anti-dilution provisions where, if the Company, at any time while the warrant is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, the exercise price shall be reduced, and the number of warrant shares shall be increased such that the aggregate exercise price payable hereunder, shall be equal to the aggregate exercise price prior to such adjustment. On August 3, 2020, as a result of the anti-dilution provisions, the effect of repricing stock options held by directors and employees to $ 0.25 increased the number of shares of common stock issuable upon exercise of the series A common stock purchase warrants to 3,000,000 , and decreased the exercise price to $ 0.25 . As of December 31, 2020, Barlock Capital Management, LLC held series A common stock purchase warrants to acquire 3,000,000 shares of common stock at an exercise price to $ 0.25 . On October 31, 2021, as a result of the anti-dilution provisions, the effect of reducing the conversion price of the secured convertible debenture to $ 0.175 increased the number of shares of common stock issuable upon exercise of the series A common stock purchase warrants to 4,285,714 , and decreased the exercise price to $ 0.175 . As of December 31, 2021, Barlock Capital Management, LLC held series A common stock purchase warrants to acquire 4,285,714 shares of common stock at an exercise price to $ 0.175 . In addition, the warrants may be exercised, in whole or in part, at any time until they expire. If at any time after the six month anniversary of the closing date there is no effective registration statement, or no current prospectus available for the resale of the warrant shares, then the warrants may be exercised, in whole or in part, on a cashless basis at any time until they expire. Shares of common stock issuable upon exercise of warrants are subject to a 4.99% beneficial ownership limitation, which may increase to 9.99% upon notice to the Company. Upon issuance of the secured convertible debenture, the Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $ 545,336 as debt discount on the consolidated balance sheet. Debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method which approximates the interest method. The amortization of debt discount is included as a component of interest expense on the consolidated statement of operations. There was unamortized debt discount of $ 0 and $ 535,784 , as of December 31, 2021 and 2020, respectively. The unamortized debt discount on December 31, 2020, included $ 25,400 for legal fees which was recorded as a debt discount. 52 Related Party: Barlock Capital Management, LLC Barlock Capital Management, LLC, is managed by Scott D. Kaufman who has served as Chief Executive Officer of the Company since November 24, 2020. In December 2020, the Company started renting executive office space located at 2700 Homestead Road, Park City, UT 84098, for approximately $ 3,000 per month from Barlock Capital Management, LLC. The amount of rent paid to Barlock Capital Management, LLC for the years ended December 31, 2021 and 2020, amounted to approximately $ 30,600 and $ 3,000 , respectively. Related Party: American Natural Energy Corporation Scott D. Kaufman, who has served as Chief Executive Officer of the Company since November 24, 2020, is a director and shareholder of American Natural Energy Corporation (“ANEC”). In addition, Richard G. Boyce is a current director, and is also a director of ANEC. On October 22, 2021, the Company entered into an agreement with ANEC, where ANEC would: (i) allow the Company to moor a barge on the ANEC operations site with the Company’s mobile data center that houses cryptocurrency miners and a mobile turbine, and, (ii) supply natural gas to power a mobile turbine that produces electricity that, in turn, is used to power the miners. ANEC charges the Company for the amount of natural gas used based on the daily spot price of an unaffiliated third party, and a daily fee of $ 1,500 during the initial 90-day term, and $ 2,000 thereafter, for the use of their operations site to moor the barge. The agreement has an initial term of 90 days and continues on a month-to-month basis for 3 additional months. Either party may terminate the agreement at the end of the initial term, or at any time during the additional 3 months term by providing the other party 30-day notice. ANEC may terminate the agreement at any time under certain conditions. The total amount paid to ANEC under the agreement for the year ended December 31, 2021 amounted to approximately $ 150,000 . Related Party: Scott D. Kaufman, Chief Executive Officer On September 7, 2021, Scott D. Kaufman, who has served as Chief Executive Officer of the Company since November 24, 2020, received a one-time non-accountable expense reimbursement of $ 200,000 in consideration for significant efforts and diligence in negotiating and structuring investment transactions. Related Party: John D. Maatta, Director John D. Maatta is a current director, and served as Chief Executive Officer of the Company until November 24, 2020. On November 22, 2018, the Company agreed to issue 86,466 shares of preferred stock for settlement of the outstanding compensation due to Mr. Maatta of $ 212,707 , for the period June 17, 2017 through November 15, 2018. On August 3, 2020, the Company cancelled the 86,466 shares of preferred stock previously determined to be issued, and issued 21,271 shares of Series A preferred stock for the settlement of the previous outstanding amount due. In addition, on August 3, 2020, the Company issued 29,496 shares of Series A preferred stock for the settlement of $ 294,965 in additional outstanding compensation due to Mr. Maatta, and 35,100 shares of Series A preferred stock for the settlement of $ 351,000 in loans to the Company made by Mr. Matta. The non-interest-bearing loans were made as follows: during the year ended December 31, 2019, Mr. Maatta loaned $ 100,000 to the Company, during the year ended December 31, 2020, Mr. Matta loaned an additional $ 125,000 to the Company, and paid for other amounts on behalf of the Company amounting to $ 126,000 . The outstanding balance of the loan payable to Mr. Maatta as of December 31, 2021 and 2020, was $ 0 , for both periods. On March 1, 2021, 8,500 shares of Series A preferred stock were issued to Mr. Maatta in satisfaction of an aggregate of $ 85,546 due to Mr. Maatta under his separation agreement. Related Party: CONtv CONtv is a joint venture with third parties and Bristol Capital, LLC. The Company holds a limited and passive interest of 10 % in CONtv. As of December 31, 2021 and 2020, the investment in CONtv was $ 0 , for both periods. As of December 31, 2021 and 2020, the amount due to CONtv was $ 0 and $ 224,241 , respectively, and classified as a discontinued operation. Note 9. Lease Obligations Office Lease Obligation On June 16, 2016, the Company entered into a Standard Multi-Tenant Sublease with Bristol Capital Advisors, a related party. The leased premises are owned by an unrelated third party and Bristol Capital Advisors passes the lease costs down to the Company. The term of the Sublease is for 5 years and 3 months beginning on July 1, 2016, with monthly payments of approximately $ 8,000 . 53 The Company classified the lease as an operating lease and determined that the value of the lease assets and liability on January 1, 2019, the date the Company adopted ASC 842 using the modified retrospective approach, was $ 252,980 using a discount rate of 12 %. During the years ended December 31, 2021 and 2020, the Company made payments towards the lease liability of $ 83,054 and $ 108,046 , respectively. As of December 31, 2021 and 2020, the ROU assets amounted to $ 0 and $ 85,661 , respectively. As of December 31, 2021 and 2020, lease liability amounted to $ 0 and $ 79,326 , respectively. During the years ended December 31, 2021 and 2020, the Company reflected amortization of right of use asset related to this lease of $ 85,661 and $ 85,035 , respectively. The lease termed ended in September 2021. Warehouse Lease Obligation On April 18, 2020 the Company entered into a commercial lease for 3,200 square feet warehouse space at 16142 Wyandotte Street, Van Nuys, California 91405. The monthly lease payment is approximately $ 3,900 , with an approximate 2 % escalation in rent per year. The term of the lease is for five years , expiring on May 1, 2025 . The Company classified the lease as an operating lease and determined that the value of the lease assets and liability at the inception of the lease was $ 173,938 using a discount rate of 12 %. During the years ended December 31, 2021 and 2020, the Company made payments towards the lease liability of $ 47,424 , and $ 23,400 , respectively. As of December 31, 2021 and 2020, the ROU assets amounted to $ 158,411 and $ 127,335 , respectively. As of December 31, 2021 and 2020, lease liability amounted to $ 135,094 and $ 164,357 , respectively. During the years ended December 31, 2021 and 2020, the Company reflected amortization of right of use asset related to this lease of $ 72,331 and $ 15,527 , respectively. The following table presents the components of lease expense: Schedule of Components of Lease Expenses For the Years Ended December 31, 2021 2020 Operating lease $ 89,956 $ 127,545 Sublease income — ( 26,875 ) Total net lease cost $ 89,956 $ 100,670 The following table presents the maturity of the Company’s lease liabilities as of December 31, 2021: Schedule of Maturities of Operating Lease Liabilities For the years ending December 31, Amount 2022 $ 48,372 2023 49,340 2024 50,327 2025 16,886 Future minimum lease payments 164,925 Less: Imputed interest ( 29,831 ) Present value $ 135,094 Note 10. SBA/PPP Notes Payable Small Business Administration Paycheck Protection Program Loans On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the “ CARES Act ”) was enacted and included a provision for the Small Business Administration (“ SBA ”) to implement its Paycheck Protection Program (“ PPP ”). The PPP provides small businesses with funds to pay payroll costs, including some benefits over a covered period of up to 24 weeks. Funds received under the PPP may also be used to pay interest on mortgages, rent, and utilities. Subject to certain criteria being met, all or a portion of the loan may be forgiven. The loans bear interest at an annual rate of one percent ( 1 %), are due two (2) years from the date of issuance, and all payments are deferred for the first six (6) months of the loan. Any unforgiven balance of loan principal and accrued interest at the end of the six (6) month loan deferral period is amortized in equal monthly installments over the remaining 18-months of the loan term . SBA Guaranteed PPP Loan On April 30, 2020, the Company entered into an SBA guaranteed PPP loan. The Company received aggregate proceeds of $ 197,600 under the loan. The loan accrues interest at a rate of 1.00 %. On December 11, 2021, the SBA forgave $ 183,567 of loan principal. As of December 31, 2021 and 2020, the outstanding balance under the loan was $ 14,033 and $ 197,600 , respectively. 54 SBA Loan On May 31, 2020, the Company entered into a loan agreement with the SBA. The Company received aggregate proceeds of $ 149,900 under the loan. The loan accrues interest at a rate of 3.75 %, and will mature in June 2050 . As of December 31, 2021 and 2020, the outstanding balance under the loan was $ 149,900 , for both periods. Second Draw SBA Guaranteed PPP Loan On February 24, 2021, the Company entered into a Second Draw SBA guaranteed PPP loan. The Company received aggregate proceeds of $ 197,662 under the loan. The loan accrues interest at a rate of 1.00 %, and will mature in February 2026 . The Company has applied for forgiveness for the entire loan amount. As of December 31, 2021 and 2020, the outstanding balance under the loan was $ 197,662 and $ 0 , respectively. The Company received loan forgiveness of $ 197,662 from the SBA on March 10, 2022. The following table summarizes PPP/SBA loans payable: Schedule of Loans Payable As of December 31, 2021 2020 SBA Guaranteed PPP Loan $ 14,033 $ 197,600 SBA Loan 149,900 149,900 Second Draw SBA Guaranteed PPP Loan 197,662 — Total $ 361,595 $ 347,500 Note 11. Contingencies and Commitments COVID-19 The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the responses that the Company, 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 the Company’s 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 the Company’s customers, service providers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. Note 12. Common Stock Options On May 9, 2011, the Company adopted the 2016 Incentive Stock Award Plan (the “2011 Plan”), on August 12, 2016, the Company adopted the 2016 Incentive Stock Award Plan (the “2016 Plan”), on August 3, 2020, the Company adopted the 2020 Stock Plan (the “2020 Plan”), and on December 1, 2021, the Company adopted the 2021 Incentive Stock Award Plan (the “2021 Plan”), collectively (the “Plans”). The purpose of the Plans is to grant options to purchase our common stock, and other incentive awards, to our employees, directors and key consultants. The maximum number of shares of common stock that may be issued pursuant to awards granted under the 2020 Plan was 500,000 . On December 1, 2021, all prior stock award plans were retired, and the 2021 Plan was adopted. The maximum number of shares of common stock that may be issued pursuant to awards granted under the 2021 Plan is 10,000,000 . The shares of our common stock underlying cancelled and forfeited awards issued under the 2021 Plan may again become available for grant under the 2021 Plan. As of December 31, 2021, there were 3,000,000 shares available for grant under the 2021 Plan, and no shares were available for grant under the 2020 Plan, 2016 Plan, or 2011 Plan. On August 21, 2020 the Board approved the repricing of the exercise price of outstanding stock options that had been issued to directors and employees to $ 0.25 per share. 55 Stock-based compensation cost is measured at the grant date, based on the fair value of the awards that are ultimately expected to vest, and recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The following table summarizes stock option activity during the years ended December 31, 2021 and 2020: Schedule of Stock Option Activity Weighted Average Exercise Options Price Outstanding at December 31, 2019 226,000 $ 0.25 Granted 587,500 0.35 Exercised — — Forfeited/Cancelled ( 24,250 ) 0.25 Outstanding at December 31, 2020 789,250 $ 0.32 Granted 7,300,000 2.55 Exercised ( 317,500 ) 0.29 Forfeited/Cancelled ( 120,000 ) 0.30 Outstanding at December 31, 2021 7,651,750 $ 2.45 Exercisable at December 31, 2019 171,083 $ 0.25 Exercisable at December 31, 2020 451,448 $ 0.32 Exercisable at December 31, 2021 4,151,750 $ 2.28 The following table presents the assumptions used to estimate the fair values based upon a Black-Scholes option pricing model of the stock options granted during the years ended December 31, 2021 and 2020: Schedule of Assumptions Used to Estimate Fair Value of Options Assumptions Expected dividend yield 0 % Risk-free interest rate 0.11 - 0.82 % Expected life (in years) 3 - 5 Expected volatility 297 - 545 % The weighted average remaining contractual life of all options outstanding as of December 31, 2021 was 4.7 years. The weighted average remaining contractual life for options vested and exercisable at December 31, 2021 was 4.5 years. Furthermore, the aggregate intrinsic value of options outstanding as of December 31, 2021 and 2020, was $ 3,641,063 and $ 117,750 , respectively, and in each case based on the fair value of the Company’s common stock on December 31, 2021. During the year ended December 31, 2021, the Company granted to Directors and employees options to purchase a total of 7,300,000 shares of the Company’s common stock with a fair value of $ 17,850,000 , which will be amortized over the vesting period. The total fair value of options that vested during the year ended December 31, 2021 was $ 9,726,950 and was included in stock based compensation expense in the accompanying statement of operations. As of December 31, 2021, the amount of unvested compensation related to the unvested options was $ 8,925,000 which will be recorded as an expense in future periods as the options vest. During the year ended December 31, 2021, the Company issued 302,644 net shares of common stock upon the exercise of options underlying 317,500 shares of common stock, resulting in net cash proceeds of $ 50,625 . On December 1, 2021, the Company granted certain of its Directors and employees options to purchase a total of 7,000,000 shares of the Company’s common stock with an exercise price of $ 2.65 per share, a term of 5 years, and a shall vest upon a volume weighted average price (“VWAP”) of the Company’s common stock reaching the following targets: at such time as there is a VWAP equal to $2.50 of the Company’s common stock when computed over 30 consecutive trading days, 25% of each Executive’s Options shall vest; at such time as there is a VWAP equal to $3.00 of the Company’s common stock when computed over 30 consecutive trading days, 25% of each Executive’s Options shall vest; at such time as there is a VWAP equal to $3.50 of the Company’s common stock when computed over 30 consecutive trading days, 25% of each Executive’s Options shall vest; and at such time as there is a VWAP equal to $4.00 of the Company’s common stock when computed over 30 consecutive trading days, 25% of each Executive’s Options shall vest. During the year ended December 31, 2020, the Company granted to Directors and employees options to purchase a total of 587,500 shares of the Company’s common stock with a fair value of $ 885,000 , which will be amortized over the vesting period. The total fair value of options that vested during the year ended December 31, 2021 was $ 407,952 and was included in stock based compensation expense in the accompanying statement of operations. As of December 31, 2021, the amount of unvested compensation related to the unvested options was $ 441,954 which will be recorded as an expense in future periods as the options vest. 56 On May 8, 2020 the Company granted certain of our employees options to purchase a total of 150,000 shares of the Company’s common stock with an exercise price of $ 0.25 per share, as amended, a term of 5 years, and a vesting period of 2 years. On August 3, 2020 the Company granted certain of our employees options to purchase a total of 375,000 shares of the Company’s common stock with an exercise price of $ 0.50 per share, a term of 5 years, and a vesting period of 2 years. On August 3, 2020 the Company granted certain of our directors and employees options to purchase a total of 212,500 shares of the Company’s common stock with an exercise price of $ 0.25 per share, a term of 5 years, and a vesting period of 1 year. Additional information regarding stock options outstanding and exercisable as of December 31, 2021 is as follows: Schedule of Stock Option Outstanding and Exercisable Option Remaining Exercise Options Contractual Options Price Outstanding Life (in years) Exercisable $ 0.25 501,750 1.8 501,750 0.50 150,000 3.6 150,000 2.65 7,000,000 4.9 3,500,000 Total 7,651,750 4,151,750 Note 13. Common Stock Warrants During the year ended December 31, 2021, the Company granted warrants to purchase a total of 8,525,212 shares of the Company’s common stock that included warrants to purchase the following number of shares: 460,000 to directors, 1,450,000 to consultants, and 6,615,212 in connection with financings. Using the Black-Scholes model the warrants had a grant date fair value of $ 3,468,748 , which will be amortized over the vesting period. The total fair value of options that vested during the year ended December 31, 2021, was $ 2,270,015 and is included in stock based compensation expense in the accompanying statement of operations. As of December 31, 2021, the amount of unvested compensation related to the unvested options was $ 1,198,733 which will be recorded as an expense in future periods as the options vest. On March 1, 2021, the Company granted warrants to purchase shares the Company’s common stock to certain consultants as follows: two warrants to purchase 100,000 shares with an exercise price of $ 0.50 per share, a term of 5 years, and a vesting period of 2 years; and two warrants to purchase 100,000 shares with an exercise price of $ 1.00 per share, a term of 5 years, and a vesting period of 2 years. Prior to December 31, 2021, warrants to purchase 350,000 shares of the Company’s common stock were forfeited or cancelled leaving outstanding warrants to purchase 50,000 shares of the Company’s common stock at $ 0.50 per share. On March 24, 2021, the Company granted warrants to purchase shares the Company’s common stock to a consultant as follows: a warrant to purchase 300,000 shares with an exercise price of $ 1.00 per share, and a term of 5 years; and, in connection with the issuance of Series B preferred stock, a warrant to purchase 180,000 shares with an exercise price of $ 1.5278 per share, and term of 5 years. From August 2021 through October 2021, in connection with the issuance of common stock, the Company issued warrants to acquire 2,933,340 shares of common stock at an exercise price of $ 1.50 per share, which became exercisable immediately upon issuance and with a term of 5 years. The warrants contain anti-dilution provisions where, if the Company, at any time while the warrant is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, the exercise price shall be reduced, and the number of warrant shares shall be increased such that the aggregate exercise price payable hereunder, shall be equal to the aggregate exercise price prior to such adjustment. If at any time after the 6-month anniversary of the closing date there is no effective registration statement, or no current prospectus available for the resale of the warrant shares, then the warrants may be exercised, in whole or in part, on a cashless basis at any time until they expire. Shares of common stock issuable upon exercise of warrants are subject to a 4.99% beneficial ownership limitation, which may increase to 9.99% upon notice to the Company. As of December 31, 2021, in connection with the issuance of common stock, there were outstanding warrants to acquire 2,933,340 shares of common stock at an exercise price of $ 1.50 . On October 12, 2021, the Company granted certain directors warrants to purchase a total of 60,000 shares of the Company’s common stock with an exercise price of $ 1.50 per share, and a term of 3 years. 57 On October 20, 2021, the Company granted a director a warrant to purchase 400,000 shares of the Company’s common stock with an exercise price of $ 1.50 per share, a term of 3 years, and vesting as follows: 20% upon execution of the Services Agreement; 20% on January 20, 2022; 20% on April 20, 2022; 20% on July 20, 2022; and 20% on October 20, 2022. On October 31, 2021, the Company granted a consultant warrants to purchase 750,000 shares of the Company’s common stock with an exercise price of $ 1.50 per share, a term of 3 years, and vesting as follows: 40% upon execution of the Services Agreement; 20% on April 1, 2022; 20% on August 1, 2022; and 20% on December 1, 2022. During December 2021, in connection with the issuance of Series C preferred stock, the Company issued (i) warrants to acquire 1,750,936 shares of Common Stock at an exercise price of $ 2.50 per share, which became exercisable immediately upon issuance and with a term of 5 years; and (ii) warrants to acquire 1,750,936 shares of Common Stock at an exercise price of $ 2.75 per share, which became exercisable immediately upon issuance and with a term of 5 years. The warrants contain anti-dilution provisions where, if the Company, at any time while the warrant is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, the exercise price shall be reduced, and the number of warrant shares shall be increased such that the aggregate exercise price payable hereunder, shall be equal to the aggregate exercise price prior to such adjustment. If at any time after the 6-month anniversary of the closing date there is no effective registration statement, or no current prospectus available for the resale of the warrant shares, then the warrants may be exercised, in whole or in part, on a cashless basis at any time until they expire. The warrants are callable by the Company if the VWAP as calculated over 20 consecutive trading days exceeds 200% of the then exercise price, and the average daily dollar volume for such measurement period exceeds 100,000 shares per trading day. Shares of common stock issuable upon exercise of warrants are subject to a 4.99% beneficial ownership limitation, which may increase to 9.99% upon notice to the Company. As of December 31, 2021, in connection with the issuance of Series C preferred stock, there were outstanding warrants to acquire 1,750,936 shares of common stock at an exercise price of $ 2.50 , and 1,750,936 shares of common stock at an exercise price of $ 2.75 . The following table summarizes common stock warrant activity during the years ended December 31, 2021 and 2020: Schedule of Stock Warrants Activity Common Stock Warrants Weighted Average Exercise Price Outstanding at December 31, 2019 (1) 1,300,000 $ 2.62 Results of anti-dilution provisions (2) 9,000,000 ( 2 ) Granted — — Exercised — — Forfeited/Cancelled — — Outstanding at December 31, 2020 10,300,000 $ 0.26 Results of anti-dilution provisions (3) 4,285,714 ( 3 ) Granted 8,525,212 1.91 Exercised — — Forfeited/Cancelled ( 650,000 ) 1.81 Outstanding at December 31, 2021 22,460,926 $ 0.82 Exercisable at December 31, 2019 10,300,000 $ 0.26 Exercisable at December 31, 2020 10,300,000 $ 0.26 Exercisable at December 31, 2021 21,690,926 $ 0.80 (1) As of December 31, 2019, related parties Bristol Investment Fund and Barlock Capital Management, LLC, cumulatively held series A common stock purchase warrants to acquire up to 1,000,000 shares of common stock at exercise price of $ 2.50 . The warrants contain anti-dilution provisions where, if the Company, at any time while the warrant is outstanding, sells or grants any option to purchase, right to reprice, or otherwise dispose of or issue any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect, the exercise price shall be reduced, and the number of warrant shares shall be increased such that the aggregate exercise price payable hereunder, shall be equal to the aggregate exercise price prior to such adjustment. (2) On August 3, 2020, as a result of the anti-dilution provisions, the effect of repricing stock options held by directors and employees to $ 0.25 increased the common stock issuable upon the exercise of the series A common stock purchase warrants held cumulatively by related parties Bristol Investment Fund and Barlock Capital Management, LLC, to 10,000,000 , and decreased the exercise price to $ 0.25 . (3) On October 31, 2021, as a result of the anti-dilution provisions, the effect of reducing the conversion price of the secured convertible debenture to $ 0.175 increased the common stock issuable upon the exercise of the series A common stock purchase warrants held cumulatively by related parties Bristol Investment Fund and Barlock Capital Management, LLC, from 10,000,000 to 14,285,714 , and decreased the exercise price to $ 0.175 . 58 The following table presents the assumptions used to estimate the fair values based upon a Black-Scholes calculation for the common stock warrants granted during the year ended December 31, 2021: Schedule of Assumptions Used to Estimate Fair Value of Warrants Assumptions Expected dividend yield 0 % Risk-free interest rate 0.32 - 0.67 % Expected life (in years) 2 Expected volatility 291 - 296 % The weighted average remaining contractual life of all common stock warrants outstanding as of December 31, 2021 was 3.5 years. Furthermore, the aggregate intrinsic value of common stock warrants outstanding as of December 31, 2021 $ 48,875,355 , based on the fair value of the Company’s common stock on December 31, 2021. Additional information regarding common stock warrants outstanding and exercisable as of December 31, 2021 is as follows: Schedule of Stock Warrants Outstanding and Exercisable Warrant Remaining Exercise Warrants Contractual Warrants Price Outstanding Life (in years) Exercisable $ 0.18 14,285,714 2.9 14,285,714 0.50 50,000 4.2 50,000 1.00 300,000 2.2 300,000 1.50 4,143,340 4.1 3,373,340 1.53 180,000 2.7 180,000 2.50 1,750,936 5.0 1,750,936 2.75 1,750,936 5.0 1,750,936 Total 22,460,926 21,690,926 Note 14. Series B Preferred Stock Warrants From March 2021 through December 2021, in connection with the issuance of Series B preferred stock, the Company issued (i) a warrant to acquire 5,000 shares of the Series B preferred stock at an exercise price of $ 1,000 per share of Series B preferred stock, which became exercisable immediately upon issuance and which expires on March 26, 2023 ; and (ii) a warrant to acquire 5,000 shares of the Series B preferred stock at an exercise price of $ 1,000 per share of Series B preferred stock, which became exercisable immediately upon issuance and which expires on March 26, 2024 . If at any time after the 60-day anniversary of the closing date there is no effective registration statement, or no current prospectus available for the resale of the warrant shares, then the warrants may be exercised, in whole or in part, on a cashless basis at any time until they expire. The Company can force the exercise of the warrants if the VWAP exceeds $3.75 per share per share for 20 consecutive trading days and the daily average trading volume of the Common Stock exceeds $100,000 in aggregate value for such period. The Warrant holder may not be forced to exercise the warrant if such exercise would cause the holder’s beneficial ownership to exceed 4.9%. The Series B preferred stock issuable upon exercise of the Series B preferred stock warrants are automatically convertible into shares of common stock at the Series B conversion price. Each share of our Series B preferred stock is convertible into a number of shares of our common stock determined by dividing the aggregate stated value for the Series B preferred stock being converted ($1,080 per share, as amended, subject to adjustment as set forth in the currently effective Series B Certificate of Designation) by the then-applicable conversion price (initially $1.50 per share), subject to adjustment as set forth in the currently effective Series B Certificate of Designation). As of December 31, 2021, in connection with the issuance of Series B preferred stock, there were outstanding warrants to acquire 10,000 shares of Series B preferred stock at an exercise price of $ 1,000 , resulting in Series B preferred stock with a stated value of $ 10,800,000 , and convertible into 7,200,000 shares of common stock, using a conversion price of $ 1.50 . 59 The following table summarizes Series B preferred stock warrant activity during the year ended December 31, 2021: Schedule of Series B Preferred Stock Warrant Activity Series B Preferred Stock Warrants Weighted Average Exercise Price Outstanding at December 31, 2020 — $ — Granted 10,000 1,000 Exercised — — Forfeited/Cancelled — — Outstanding at December 31, 2021 10,000 $ 1,000 Exercisable at December 31, 2021 10,000 $ 1,000 The weighted average remaining contractual life of all Series B preferred stock warrants outstanding as of December 31, 2021 was 2.4 years. Note 15. Common Stock Holders of our Common Stock are entitled to one vote per share. Our Certificate of Incorporation does not provide for cumulative voting. Holders of our Common Stock are entitled to receive ratably such dividends, if any, as may be declared by our Board out of legally available funds. However, the current policy of our Board is to retain earnings, if any, for our operations and expansion. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities. The holders of our Common Stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our Common Stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue. We implemented a 1-for-20 reverse stock split of our outstanding shares of common stock that was effective on January 23, 2020. Unless otherwise noted, all share and related option, warrant, and convertible security information presented has been retroactively adjusted to reflect the reduced number of shares, and the increase in the share price which resulted from this action. From August 2021 through October 2021, we consummated the transactions contemplated by the securities purchase agreement with the investors party thereto, pursuant to which, we generated net cash proceeds of $ 3,925,050 , and issued in a private placement: (i) 2,933,340 shares of common stock for $ 1.50 per share and (ii) warrants to acquire 2,933,340 shares of common stock at an exercise price of $ 1.50 per share, which became exercisable immediately upon issuance and with a term of 5 years. The issuance generated net cash proceeds of approximately $ 3.9 million. Note 16. Preferred Stock Under the terms of the Certificate of Incorporation, our Board is expressly granted authority to authorize the issuance from time to time of shares of preferred stock in one or more series, for such consideration and for such corporate purposes as our Board may from time to time determines, and by filing a certificate pursuant to applicable law of the State of Delaware to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent permitted by the Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights and redemption rights thereof. 60 Series A Preferred Stock Holders of our Series A Preferred Stock are entitled to the number of votes per share equal to 2,000 shares of Common Stock. Holders of our Series A Preferred Stock are entitled to receive a cumulative dividend on each share of Series A Preferred Stock issued and outstanding at the rate of twelve percent ( 12 %) per annum on the Aggregate Stated Value (as defined in the Certificate of Designation and Restatement of Rights, Preferences and restrictions of Series A Preferred Stock, the “Series A Certificate of Designation”) then in effect, payable quarterly on January 1, April 1, July 1 and October 1. Such dividend is payable in cash but may be paid in shares of Common Stock in our sole discretion if the shares of Common Stock are listed on a national securities exchange. In the event of any liquidation, dissolution or winding up of our company, whether voluntary or involuntary, holders of our Series A Preferred Stock are entitled to receive, prior and in preference to any distribution of any of our assets to the holders of Common Stock by reason of their ownership thereof, for each share held, an amount equal to the Stated Value (as defined in the Series A Certificate of Designation), plus unpaid dividends, if any. The Series A Preferred Stock is convertible, at the option of the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Aggregate Stated Value (initially $ 10.00 per share, subject to adjustment as set forth in the currently effective Series A Certificate of Designation) by the Conversion Price (as defined in the Series A Certificate of Designation), in effect on the date the certificate is surrendered for conversion, initially set at $ 0.25 , and $ 0.175 as of December 31, 2021. Each share of Series A Preferred Stock is redeemable at the option of the holder for the payment of cash by us to the holder equal to the Aggregate Stated Value of the shares that the holder elects to redeem. The Series A Preferred Stock is entitled to certain protective provisions and we may not take certain actions without the written consent of at least a majority of the Series A Preferred Stock, including, without limitation, amend, alter or repeal any provision of the Series A Certificate of Designation to change the rights of the Series A Preferred Stock, create or authorize additional class or series of stock senior to the Series A Preferred Stock or create, authorize the creation of, issue or authorize the issuance of, any debt security which is convertible into or exchangeable for any equity security, if such equity security ranks senior to the Series A Preferred Stock as to dividends or liquidation rights. On March 1, 2021, we issued shares of our Series A preferred stock as follows: 8,500 shares to Mr. Maatta in satisfaction of an aggregate of $ 85,546 due and owing to Mr. Maatta under his Separation Agreement; 22,500 shares to Bristol Capital, LLC in satisfaction of $ 225,00 0 due and owing to Bristol Capital, LLC for additional consulting services rendered by Mr. Kessler from July 1, 2020 through April 1, 2021; and 8,300 shares to Scott D. Kaufman, our Chief Executive Officer, in satisfaction of $ 83,332 of compensation payable to Mr. Kaufman under his Employment Agreement from November 24, 2020 through March 31, 2021. On June 30, 2021, we issued 6,249 shares of our Series A preferred stock to Scott D. Kaufman, our Chief Executive Officer, for settlement of $ 62,490 of compensation payable to Mr. Kaufman under his employment agreement from April 1, 2021 through June 30, 2021. On September 30, 2021, we issued 6,249 shares of our Series A preferred stock to Scott D. Kaufman, our Chief Executive Officer, for settlement of $ 62,490 of compensation payable to Mr. Kaufman under his employment agreement from July 1, 2021 through September 30, 2021. On December 31, 2021, we issued 6,250 shares of our Series A preferred stock to Scott D. Kaufman, our Chief Executive Officer, for settlement of $ 62,500 of compensation payable to Mr. Kaufman under his employment agreement from October 1, 2021 through December 31, 2021. In addition, on December 31, 2021 we issued 673 shares of our Series A preferred stock to Paul L. Kessler, our Executive Chairman, for settlement of $ 6,730 of compensation payable to Mr. Kessler under his employment agreement from December 23, 2021 through December 31, 2021. During the year ended December 31, 2021, 8,750 shares Series A preferred stock had been converted into 500,000 shares of common stock. As of December 31, 2021, there were 233,964 shares of Series A preferred stock resulting in Series A preferred stock with a stated value of $ 2,339,640 , and convertible into 12,797,943 shares of common stock, using a conversion price of $ 0.175 . 61 Series B Preferred Stock Holders of our Series B Preferred Stock have no voting rights. Holders of our Series B Preferred Stock are entitled to receive a cumulative dividend on each share of Series B Preferred Stock issued and outstanding at the rate of five percent ( 5 %) per annum, in cash or at the Holder ’ s option, in fully paid and non-assessable shares of Series B Preferred Stock, at the Dividend Conversion Rate (as defined in the Series B Certificate of Designation). Such dividends are payable quarterly on January 1, April 1, July 1 and October 1. In the event of any liquidation, dissolution or winding up of our company, whether voluntary or involuntary, holders of our Series B Preferred Stock are entitled to receive, prior and in preference to any distribution of any of our assets to the holders of Common Stock and Common Stock Equivalents (as defined in the Series B Certificate of Designation, and which includes the Series A Preferred Stock and the Series C Preferred Stock) by reason of their ownership thereof, for each share held an amount equal to the Stated Value (as defined in the Series B Certificate of Designation), plus unpaid dividends or liquidated damages, if any. The Series B Preferred Stock is convertible, at the option of the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Stated Value, currently $ 1,080 as amended, by the Series B Conversion Price, subject to a minimum of $ 1.00 , but not to exceed $ 1.50 , subject to further adjustment in the event that the Company, subject to certain exemptions, disposes of or issues any Common Stock or securities convertible into, exercisable, or exchangeable for Common Stock for no consideration or for consideration less than the applicable Series B Conversion Price in effect immediately prior to such issuance. We are entitled to redeem some or all of the outstanding shares of Series B Preferred Stock for cash in an amount equal to the Optional Redemption Amount (as defined in the Series B Certificate of Designation). The Series B Preferred Stock is entitled to certain protective provisions and we may not take certain actions without the written consent of at least fifty one percent ( 51 %) in Stated Value of the outstanding shares of the Series B Preferred Stock, including, without limitation, amend, alter or repeal any provision of the Series B Certificate of Incorporation or the Bylaws that materially and adversely affects the rights of the Series B Preferred Stock, pay cash dividends or distributions on Junior Securities (as defined in the Series B Certificate of Designation), or repay, repurchase or offer to repay, or otherwise acquire more than a de minimis number of shares of Common Stock, Common Stock Equivalents (as defined in the Series B Certificate of Designation) or Junior Securities. Shares of common stock issuable upon the conversion of Series B Preferred Stock are subject to a 9.99 % beneficial ownership limitation. From March 2021 through December 2021, we consummated the transactions contemplated by the securities purchase agreement with Leviston Resources LLC, pursuant to which, we generated net cash proceeds of $ 4,378,995 , and issued in a private placement: (i) 5,000 shares of Series B preferred stock, convertible by dividing the stated value, currently $ 1,080 , as amended, by the Series B conversion price; and (ii) a warrant to acquire 5,000 shares of the Series B preferred stock at an exercise price of $ 1,000 per share of Series B preferred stock, which became exercisable immediately upon issuance and which expires on March 26, 2023 ; and (iii) a warrant to acquire 5,000 shares of the Series B preferred stock at an exercise price of $ 1,000 per share of Series B preferred stock, which became exercisable immediately upon issuance and which expires on March 26, 2024 . The Series B preferred stock issuable upon exercise of the Series B preferred stock warrants are automatically convertible into shares of common stock at the Series B conversion price. During the year ended December 31, 2021, 1,280 shares Series B preferred stock had been converted into 946,646 shares of common stock. As of December 31, 2021, there were 3,720 shares of Series B preferred stock resulting in Series B preferred stock with a stated value of $ 4,017,600 , and convertible into 2,678,400 shares of common stock, using a conversion price of $ 1.50 . Series C Preferred Stock Holders of our Series C Preferred Stock have no voting rights. Holders of our Series C Preferred Stock are entitled to receive dividends on Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to any dividends paid on Common Stock. In the event of any liquidation, dissolution or winding up of our company, whether voluntary or involuntary, holders of our Series C Preferred Stock are entitled to receive, prior and in preference to any distribution of any of our assets to the holders of Common Stock and Common Stock Equivalents (as defined in the Certificate of Designation) by reason of their ownership thereof, for each share held an amount equal to the Stated Value (as defined in the Certificate of Designation), plus fees, if any. The Series C Preferred Stock ranks junior to the Series B Preferred Stock as to rights upon a liquidation, dissolution or winding up of the Company. The Series C Preferred Stock is convertible, at the option of the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Stated Value, currently $1,111, by the Series C Conversion Price, subject to further adjustment in the event that the Company, subject to certain exemptions, disposes of or issues any Common Stock or securities convertible into, exercisable, or exchangeable for Common Stock for no consideration or for consideration less than the applicable Series C Conversion Price in effect immediately prior to such issuance. We are entitled to redeem some or all of the outstanding shares of Series C Preferred Stock for cash in an amount equal to the Optional Redemption Amount (as defined in the Certificate of Designation). The Series C Preferred Stock is entitled to certain protective provisions and, without the written consent of at least 50.1% in Stated Value of the outstanding shares of the Series C Preferred Stock, we may not (or permit any of our subsidiaries to) enter into, create, incur, assume, guarantee or suffer to exist any indebtedness, other than Permitted Indebtedness (as defined in the Certificate of Designation). Shares of common stock issuable upon the conversion of Series C Preferred Stock are subject to a 4.99% beneficial ownership limitation, which may increase to 9.99% upon notice to the Company . 62 During December 2021, we consummated the transactions contemplated by the securities purchase agreement with the investors party thereto, pursuant to which we generated net cash proceeds of $ 7,733,601 , and issued in the Private Placement: (i) 7,880 shares of Series C preferred stock, convertible by dividing the stated value, currently $ 1,111 , by the Series C Conversion Price; and (ii) warrants to acquire 1,750,936 shares of Common Stock at an exercise price of $ 2.50 per share, which became exercisable immediately upon issuance and with a term of 5 years; and (iii) warrants to acquire 1,750,936 shares of Common Stock at an exercise price of $ 2.75 per share, which became exercisable immediately upon issuance and with a term of 5 years. As of December 31, 2021, there were 7,880 shares of Series C preferred stock resulting in Series C preferred stock with a stated value of $ 8,754,680 , and convertible into 3,501,872 shares of common stock, using a conversion price of $ 2.50 . Note 17. Income Taxes At December 31, 2021 and 2020, the Company had federal net operating tax loss (“NOL”) carryforwards of approximately $ 18,590,000 and $ 13,170,000 , respectively. Federal NOLs incurred prior to 2018 can be carried forward indefinitely with some limitations, and NOLs generated after 2018 could, if unused, completely expire in 2037. The provision for income taxes amounted to $ 0 for the years ended December 31, 2021 and 2020. The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Schedule of Reconciliation of Federal Statutory Income Tax Rate 2021 2020 Years Ended December 31, 2021 2020 Federal income tax rate 21.0 % 21.0 % Temporary differences ( 15.1 )% ( 4.4 )% Permanent differences 0.7 % 0.4 % Change in valuation allowance ( 6.6 )% ( 17.0 )% Effective income tax rate 0 % 0 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows: Schedule of Deferred Tax Assets and Liabilities 2021 2020 December 31, 2021 2020 Deferred tax assets: Federal net operating loss carryforward $ 324,072 $ 1,787,848 Stock based compensation 3,593,881 992,312 Other — — Total deferred tax assets 3,917,953 2,780,160 Less valuation allowance ( 3,917,953 ) ( 2,780,160 ) Net deferred tax assets $ — $ — The Company has provided a valuation allowance on the deferred tax assets at December 31, 2021 and 2020 to reduce such asset to zero, since there is no assurance that the Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted. The net change in the valuation allowance for the year ended December 31, 2021 was an increase of $ 1,137,793 . 63 Note 18. Discontinued Operations On August 6, 2021, the Company 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 recorded a gain from sale of discontinued operations of this amount. On September 15, 2021, the Company 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 from sale of discontinued operations on the transaction of approximately $ 1,130,740 . The gain from sale of discontinued operations consists of the following: Schedule of Gain from Sale of Discontinue Operation Description Amount Net cash paid on the closing date $ 1,500,000 Less: Current assets 36,060 Inventory 193,300 Fixed assets, net 16,700 Intangible assets, net 123,200 Total 369,260 Gain from sale $ 1,130,740 CONtv is a joint venture with third parties and Bristol Capital, LLC. The Company holds a limited and passive interest of 10 % in CONtv. As of December 31, 2021 and 2020, the investment in CONtv was $ 0 , for both periods. As of December 31, 2021 and 2020, the amount due to CONtv was $ 0 and $ 224,241 , respectively, and classified as a discontinued operation. The related assets and liabilities associated with the discontinued operations in our consolidated balance sheets for the years ending December 31, 2021 and 2020, are classified as discontinued operations. Additionally, the financial results associated with discontinued operations in our consolidated statement of operations for the years ending December 31, 2021 and 2020, are classified as discontinued operations. The assets and liabilities related to discontinued operations consists of the following: Schedule of Discontinued Operation of Balance Sheet and Operation Statement December 31, December 31, 2021 2020 Assets Current assets: Prepaid expenses $ — $ 12,377 Inventory — 220,641 Total current assets — 233,018 Other assets: Property and equipment, net — 48,683 Intangible assets, net — 132,000 Total assets $ — $ 180,683 Liabilities Current liabilities: Accounts payable and accrued expenses $ 472,029 $ 1,257,011 Deferred revenue — 758,847 Due to CONtv — 224,241 Total liabilities $ 472,029 $ 2,240,099 64 In addition, revenue and expenses from discontinued operations were as follows: 2021 2020 Years Ended December 31, 2021 2020 Revenue $ 390,460 $ 4,105,838 Operating costs and expenses: Cost of revenue 454,896 2,800,413 General and administrative 790,171 347,746 Total operating expenses 1,245,067 3,148,159 Loss from operations ( 854,607 ) 957,679 Other income (expense): Other income 827,884 — Interest income — 3,661 Loss on disposal of fixed assets ( 18,422 ) — Total other income (expense) 809,462 3,661 Income (loss) from discontinued operations $ ( 45,145 ) $ 961,340 Note 19. Subsequent Events Issuance of Warrants On January 1, 2022, the Company granted warrants to purchase shares the Company’s common stock to a consultant in connection with the issuance of Series C preferred stock as follows: a warrant to purchase 400,000 shares with an exercise price of $ 1.50 per share, and a term of 5 years; a warrant to purchase 250,000 shares with an exercise price of $ 2.50 per share, and term of 5 years; and a warrant to purchase 250,000 shares with an exercise price of $ 2.75 per share, and term of 5 years. Issuance of Series A Preferred Stock On January 1, 2022, the Company granted an officer 7,722 shares Series A preferred stock for settlement of $ 77,216 in compensation under his employment agreement for services provided through March 31, 2022. Conversion of Series A Preferred Stock On February 22, 2022, 14,549 shares of Series A preferred stock were converted into 8 31,371 shares of common stock. Conversion of Series B Preferred Stock On January 7, 2022, 650 shares of Series B preferred stock were converted into 468,000 shares of common stock, on February 17, 2022, 420 shares of Series B preferred stock were converted into 342,857 shares of common stock, and on March 9, 2022, 462 shares of Series B preferred stock were converted into 397,895 shares of common stock. Issuance of Common Stock On January 25, 2022, the Company granted an officer 30,000 shares of common stock as compensation under his employment agreement for services provided through December 31, 2021. Exercise of Stock Options In January 2022, the Company issued 185,215 net shares of common stock upon the exercise of options underlying 217,500 shares of common stock. Forgiveness of Second Draw SBA Guaranteed PPP Loan On March 10, 2022 the SBA forgave $ 197,662 of loan principal and all accrued interest under the Second Draw SBA guaranteed PPP loan. Exercise of Warrants On March 29, 2022, the Company offered 16 warrant holders replacement warrants with an exercise price of $1.50 per common share, in exchange for any warrants exercised at this time at the exercise price of $1.50 per common share. The issuance of replacement warrants has the effect of resetting the conversion price of all outstanding shares of preferred stock to $1.50 per common share and resetting the exercise price of all outstanding warrants to $1.50 per common shares in instances where those conversion and exercise prices are above $1.50. If all 16 warrant holders exercise applicable warrants at this time, the Company will raise approximately $4,400,000 and issue replacement warrants to purchase 2,933,340 shares of the Company’s common stock. As of March 30, 2022, warrants to purchase 600,000 shares of the Company’s common stock have been exercised by one warrant holder and replacement warrants to purchase 600,000 shares of the Company’s common stock have been issued resulting in $ 900,000 in cash proceeds being received by the Company. Dilution to equity due to the reduction in conversion and exercise prices is equivalent to the Company issuing 2,334,581 common shares. 65 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with our accountants on accounting and financial disclosure during the last two fiscal years.