Quarterly report pursuant to Section 13 or 15(d)

REVISION OF CERTAIN PRIOR PERIOD AMOUNTS

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REVISION OF CERTAIN PRIOR PERIOD AMOUNTS
9 Months Ended
Sep. 30, 2022
Accounting Changes and Error Corrections [Abstract]  
REVISION OF CERTAIN PRIOR PERIOD AMOUNTS

NOTE 12 –REVISION OF CERTAIN PRIOR PERIOD AMOUNTS

 

We have revised amounts reported in previously issued financial statements for the periods presented in this Quarterly report on Form 10-Q related to an immaterial error. The error relates to the non-consolidation of an investment fund as described below. We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Annual Reports on Form 10-K for the years ended December 31, 2021, or for any quarterly periods included therein or through our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.

 

On January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (“Fund”) whereas the Fund purchased approximately 4,812.66 bitcoin at an aggregate purchase price of $150 million. On June 10, 2022 the company withdrew approximately 4,768.5 bitcoin from the investment fund and the Fund was subsequently terminated. During the period of time when the company held its investment in the Fund, it accounted for the results of the Fund, in their entirety, as a single line item on the balance sheet (“Digital currencies held in fund”), statements of operations and statements of cash flows (“Change in fair value of digital currencies held in fund”). Subsequent to the termination of the Fund, the Company concluded that this accounting was incorrect and that it must consolidate the Fund, showing any assets, liabilities and expenses of the Fund as separate components of its financial statements.

 

The correction of this error has resulted in revisions to certain line items on the balance sheet as of December 31, 2021, the statements of operations for the three and nine months ended September 30, 2021, and the statement of cash flows for the nine-month period ended September 30, 2021. A reconciliation of the various financial statement captions that have been revised from the previous period presentation follows:

 

                         
Balance Sheet as of December 31, 2021   As reported     Revision     Revised  
Cash and cash equivalents     268,522,019       33,818       268,555,837  
Digital currencies held in fund     -       223,915,761       223,915,761  
Investment fund    

223,778,545

      (223,778,545 )     -  
Prepaid expenses and other current assets     8,148,016       100       8,148,116  
Accounts payable     10,772,523      

94,880

      10,867,403  
Accrued expenses    

2,154,616

     

76,254

     

2,230,870

 

 

      (1)                       (1)                  
Statements of Operations   Three months ended September 30, 2021     Nine months ended September 30, 2021  
      As reported / reclassified (1)       Revision       Revised       As reported / reclassified (1)       Revision       Revised  
General and administrative expenses           (98,996,339 )     (239,645 )     (99,235,984 )         (158,763,196 )     (648,208 )     (159,411,404 )
Change in fair value of investment in NYDIG fund     41,850,203       (41,850,203 )     -       58,765,274       (58,765,274 )     -  
Realized and unrealized gains (losses) on digital currencies held in fund     -       42,086,907       42,086,907       -       59,410,028       59,410,028  
Operating loss     (64,283,755 )     41,847,262       (22,436,493 )     (106,717,049 )     58,761,820       (47,955,229 )

 

                         
Statement of Cash Flows   Nine months ended September 30, 2021  
      As reported       Revision       Revised  
Realized and unrealized gains on digital currencies held in fund     -       (59,410,028 )      (59,410,028 ) 
Change in fair value of investment securities     (58,765,274 )     58,765,274       -  
Accounts payable and accrued expenses     2,374,766       144,039     2,518,805  
Net cash used in operating activities     (43,914,493 )     (442,677 )     (44,357,170 )
Sale of digital currencies in investment fund     -       500,715       500,715  
Net cash used in investing activities     (372,223,134 )     442,677       (371,780,457)  

 

(1) See reclassifications in Note 2