What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-31 · 135 added, 185 removed, 336 unchanged (49% of the section changed)

19 unchanged sentences

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.

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.

pop culture conventions and events, and sold a gelatin machine and related consumables that were discontinued in 2021 In addition, the

Company operated an eCommerce site selling pop culture memorabilia that was discontinued on June 30, 2022 (collectively known as “legacy

operations”).

August 6, 2021, we entered into the Informa Agreement with Informa.

Pursuant to the Informa Agreement, Creek Road Miners Corp.

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.

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.

October 24, 2022, we entered into the Merger Agreement with Creek Road Merger Sub, LLC, a Delaware limited liability company and our

wholly-owned subsidiary (“Merger Sub”), and Prairie, pursuant to which Merger Sub will merge with and into Prairie, with

Prairie surviving and continuing to exist as a Delaware limited liability company and our wholly-owned subsidiary.

Cryptocurrency

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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

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:

Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022

Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022

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

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

purchase commitments for the miners total approximately $11.5 million, of which $7,089,000 was paid as a deposit during the year ending

The remaining commitments of approximately $4.4 million are anticipated 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.

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.

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.

Since June 30,

2022 the Company is neither receiving meaningful cryptocurrency awards nor generating meaningful revenue from cryptocurrency mining.

of our miners 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

As of December 31, 2022, we had 510 Bitmain S19J Pro miners with 51.0 Ph/s of hashing capacity and 270 Bitmain S19 miners with

24.3 Ph/s of hashing capacity, none of which were in service.

December 17, 2021 the Company entered into a Non-Fixed Price Sales and Purchase Agreement (the “Bitmain Agreement”) with

Bitmain Technologies Limited (“Bitmain”) for 600 Bitmain S19XP miners with a reference price of approximately $11,250 per

The miners have a total of 84 Ph/s of hashing capacity and an initial estimated purchase commitment of $6,762,000 (the “total

reference price”), subject to price adjustments and related offsets, including potential adjustments related to the market price

As of December 31, 2022, the Company has made payments of $3,969,000 (classified as deposits on mining equipment) to Bitmain

pursuant to the Bitmain Agreement, and the remaining amount due under the Bitmain Agreement is $47,600 and presented in the table below:

July 2022 batch (100 miners)

August 2022 batch (100 miners)

September 2022 batch (100 miners)

October 2022 batch (100 miners)

November 2022 batch (100 miners)

December 2022 batch (100 miners)

Estimated total amount due

Payments made

Remaining amount due

of December 31, 2022, all 600 miners purchased from Bitmain have not been delivered to the Company, and will remain undelivered until

all fees are paid to ship the miners from the Bitmain facility to the Company.

Company measures its operations by the number and U.S.

2 unchanged sentences

The following table presents additional information regarding our cryptocurrency mining operations:

Quantity of Bitcoin

Balance September 30, 2021

Revenue recognized from cryptocurrency mined

Mining pool operating fees

Impairment of cryptocurrencies

Balance December 31, 2021

2 unchanged sentences

Impairment of cryptocurrencies

Balance March 31, 2022

Revenue recognized from cryptocurrency mined

Mining pool operating fees

Proceeds from the sale of cryptocurrency

Realized loss on the sale of cryptocurrency

Impairment of cryptocurrencies

Balance June 30, 2022 (1)

Revenue recognized from cryptocurrency mined

Mining pool operating fees

Impairment of cryptocurrencies

Balance September 30, 2022 (1)

Revenue recognized from cryptocurrency mined

Mining pool operating fees

Proceeds from the sale of cryptocurrency

Realized gain on the sale of cryptocurrency

Balance December 31, 2022 (1)

June 30, 2022 the Company is neither receiving meaningful cryptocurrency awards nor generating

meaningful revenue from cryptocurrency mining.

Affecting Profitability

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in prices in advance of, or following, a future halving is unknown.

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.

business environment is constantly evolving, and cryptocurrency miners can range from individuals to large-scale commercial mining operations.

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our business, see the Section entitled “Risk Factors” herein.

objective is to mine and hold select cryptocurrencies.

We seek to own multiple oil and natural gas producing assets, utilize the natural

gas to power environmentally friendly, state of the art cryptocurrency mining facilities.

By directing income from oil and excess natural

gas sales to cover operating expenses we will have the opportunity to retain our mined cryptocurrencies as assets.

are subject to risks and uncertainties as a result of the COVID-19 pandemic.

The extent of the impact of the COVID-19 pandemic on our

business is highly uncertain and difficult to predict, as the responses that we, other businesses and governments are taking continue

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.

severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the

duration and severity of the pandemic and the extent and severity of the impact on our customers, service providers and suppliers, all

of which are uncertain and cannot be predicted.

As of the date of issuance of our financial statements, the extent to which the COVID-19

pandemic may in the future materially impact our financial condition, liquidity or results of operations is uncertain.

Accounting Policies and Estimates

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assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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.

August 6, 2021, we entered into the Informa Agreement with Informa.

Pursuant to the Informa 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.

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.

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 that were discontinued in 2021 In addition, the Company operated an eCommerce site

selling pop culture memorabilia that was discontinued on June 30, 2022 (collectively known as “legacy operations”).

related assets and liabilities associated with the discontinued operations in our consolidated balance sheets for the years ending December

6 unchanged sentences

Cryptocurrency mining

Total revenue

Operating costs and expenses:

Cryptocurrency mining costs

eCommerce costs

Cryptocurrency mining costs (exclusive of

depreciation and amortization shown below)

Depreciation and amortization

3 unchanged sentences

Total operating expenses

Loss from operations

(10,455,832 )

Loss from operations

(18,210,464 )

Other income (expense):

Realized loss on sale of cryptocurrency

Impairment of fixed assets

Loss on sale of investment

PPP loan forgiveness

7 unchanged sentences

Gain from sale of discontinued operations

Net income from discontinued operations

$ (17,270,703 )

Net income (loss) from discontinued operations

$ (13,418,814 )

2 unchanged sentences

Cryptocurrency mining

Total revenue

revenue increased $395,252, or 96%, for the year ended December 31, 2021 compared to the prior year, due to the following:

Cryptocurrency mining

Cryptocurrency mining operations did not begin until October 2021

Greater order volume

revenue increased $147,798, or 40%, for the year ended December 31, 2022 compared to the prior year, primarily because cryptocurrency

mining operations did not begin until October 2021.

Costs and Expenses

2 unchanged sentences

Cryptocurrency mining costs

eCommerce costs

Depreciation and amortization

3 unchanged sentences

Total operating expenses

operating costs and expenses increased $16,207,632, or 603%, for the year ended December 31, 2021 compared to the prior year, due to

the following:

(10,455,832 )

operating costs and expenses decreased $10,455,832 or 56%, for the year ended December 31, 2022 compared to the prior year, due to the

Cryptocurrency mining costs

Cryptocurrency mining operations did not begin until October 2021

eCommerce costs

Greater order volume

Depreciation and amortization

1 unchanged sentence

Stock based compensation

Increased issuances of stock options and warrants

$ (9,657,223 )

Decreased issuances of stock options and warrants

General and administrative

Primarily greater marketing and consulting expenses.

$ (2,181,267 )

Primarily lesser marketing and consulting expenses.

Impairment of cryptocurrency

Cryptocurrency mining operations did not begin until October 2021

Driven by the drop in the price of Bitcoin during the year 2022

Income (Loss)

4 unchanged sentences

(19,202,114 )

$ (16,176,986 )

Net income from discontinued operations

Net income (loss) from discontinued operations

Total net loss

1 unchanged sentence

$ (17,270,703 )

$ (15,330,302 )

loss from continuing operations increased $16,176,986 or 557%, for the year ended December 31, 2021 compared to the prior year, primarily

due to increased operating costs and expenses as described above.

loss from continuing operations decreased $5,801,038 or 30%, for the year ended December 31, 2022 compared to the prior year, primarily

due to decreased stock based compensation and general and administrative expenses as described above, partially offset by an impairment

of fixed assets of approximated $5.2 million.

Concern Analysis

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for the years ended December 2022 and 2021, 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.

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.

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.

We cannot predict if we will be profitable.

We may continue to incur losses

for an indeterminate period of time and may be unable to achieve profitability.

An extended period of losses and negative cash flow may

prevent us from successfully operating and expanding our business.

We may be unable to achieve or sustain profitability on a quarterly

or annual basis.

On December 31, 2022, we had cash and cash equivalents of $246,358, a working capital deficit of approximately $8.1

million, and an accumulated deficit of approximately $61 million.

have evaluated the significance of the uncertainty regarding the Company’s financial condition in relation to our ability to meet

our obligations, which has raised substantial doubts about the Company’s ability to continue as a going concern.

While it is very

difficult to estimate our future liquidity requirements the Company believes that if it is unable close the Merger, or obtain debt and/or

equity financing, existing cash resources will be depleted in early 2023.

The Company may be able to generate cash through the sale of

fixed assets, specifically cryptocurrency miners.

However, the total cash generated would be significantly less that the total of the

Company’s liabilities.

There are no assurances that the Merger will close, that debt and/or equity financing can be obtained, or

that the sale of fixed assets, specifically cryptocurrency miners can be achieved.

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.

Company’s ability to continue as a going concern is dependent upon the Company’s ability to close the merger with Prairie,

or obtain debt and/or equity financing, and there are no assurances that either can occur.

and Capital Resources

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Cash and cash equivalents, end of period

of December 31, 2021, we had cash and cash equivalents of $2,785,187, compared to $1,897,703 as of December 31, 2020, an increase of

This increase was primarily due to cash provided by financing activities, and partially offset by cash used in operating and

investing activities.

of December 31, 2022, we had cash and cash equivalents of $246,358, compared to $2,785,187 as of December 31, 2021, a decrease of $2,538,830.

This decrease was primarily due to cash used in operating and investing activities, partially offset by cash generated by financing activities.

cash used in operating activities was $2,192,607 for the year ended December 31, 2022 and resulted primarily from a net loss of $13,418,814,

partially offset by the impairment of fixed assets of $5,231,752, an increase in accounts payable and accrued expenses of $3,371,432,

and stock based compensation of $2,870,665.

cash used in operating activities was $6,969,723 for the year ended December 31, 2021 and resulted primarily from a net loss of $17,270,703,

an adjustment for the gain on sale of discontinued operations of $1,853,169, a decrease in liabilities associated with discontinued operations

of $1,228,911, and partially offset by stock based compensation of $12,585,009.

cash used in operating activities was $1,070,718 for the year ended December 31, 2020 and resulted primarily from a net loss of $1,940,401,

partially offset by a decrease in accounts payable and accrued expenses of $1,100,458.

cash used in investing activities was $1,815,520 for the year ended December 31, 2022 and resulted primarily the purchase of property

and equipment of $5,295,478, partially offset by deposits on mining equipment, net of $2,939,550.

cash used in investing activities was $9,928,726 for the year ended December 31, 2021 and resulted primarily from deposits on mining

equipment of $7,613,230, and the purchase of property and equipment, specifically mining equipment, of $2,315,496.

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:

Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022

Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022

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

purchase commitment for these new miners totals approximately $11.5 million, including $7,089,000 paid as deposits during the year ending

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.

cash used in investing activities was $156,733 for the year ended December 31, 2020 and resulted primarily from the purchase of intangible

assets of $132,000.

cash provided by financing activities was $1,469,297 for the year ended December 31, 2022 and resulted primarily from proceeds from the

exercise of warrants of $983,330 and the issuance of a note payable for $500,000.

cash provided by financing activities was $17,785,933 for the year ended December 31, 2021 and resulted primarily from proceeds from

1 unchanged sentence

operations of $1.5 million.

cash provided by financing activities was $347,500 for the year ended December 31, 2020 and resulted from the proceeds of PPP/SBA loans.

Capital (Deficit)

1 unchanged sentence

Years Ended December 31,

Increase/(Decrease)

Current assets

Current liabilities

$ (5,777,233 )

Current liabilities

Working capital (deficit)

$ (8,117,516 )

of December 31, 2021, we had working capital of $4,788,662, compared to a working capital deficit of $4,848,414 as of December 31, 2020,

an increase of 9,637,247.

The increase was primarily due to an increase in deposits on mining equipment, property and equipment, specifically

mining equipment, and cash, and a decrease in liabilities associated with discontinued operations.

GAAP Measure – Adjusted EBITDA

addition to our U.S.

GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance.

However, Adjusted EBITDA

is not a recognized measurement under U.S.

GAAP and should not be considered as an alternative to net income, income from operations

or any other performance measure derived in accordance with U.S.

GAAP or as an alternative to cash flow from operating activities as

a measure of liquidity.

We define Adjusted EBITDA as net income (loss), plus interest expense, other income (expense), provision for

income taxes, depreciation and amortization, stock-based compensation, income from discontinued operations, and gain on sale of discontinued

Management considers our core operating performance to be that which our managers can affect in any particular period through

their management of the resources that affect our underlying revenue and profit generating operations that period.

GAAP adjustments

to our results prepared in accordance with U.S.

GAAP are itemized below.

You are encouraged to evaluate these adjustments and the reasons

we consider them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the future we may

incur expenses that are the same as or similar to some of the adjustments in this presentation.

Our presentation of Adjusted EBITDA should

not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the year ended December 31, 2021 and 2020:

Years Ended December 31,

$ (12,906,178 )

$ (1,940,401 )

$ (15,330,302 )

Add (deduct):

Other income (expense)

Depreciation and amortization

Stock based compensation

Net income from discontinued operations

Adjusted EBITDA

$ (5,636,141 )

$ (1,842,021 )

$ (3,794,120 )

present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on

a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we use Adjusted

EBITDA in developing our internal budgets, forecasts and strategic plan;

in analyzing the effectiveness of our business strategies in

evaluating potential acquisitions;

and in making compensation decisions and in communications with our board of directors concerning

our financial performance.

Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following:

EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in

the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

of December 31, 2022, we had a working capital deficit of $8,117,516, compared to a working capital of $4,788,662 as of December 31,

2021, a decrease of 12,906,178.

The decrease was primarily due to decreases in cash and deposits on mining equipment, and increases in

accounts payable and accrued expenses, accrued interest, convertible notes payable, and secured convertible debenture – related

party moving from a non-current to a current liability.

Sheet Arrangements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis