# Prairie Operating Co. (PROP) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Prairie Operating Co.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1162896/000149315222008275/form10-k.htm
Accession: 0001493152-22-008275
Filing date: 2022-03-31
Report date: 2021-12-31
Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Company profile: /company/PROP/
All MD&A years: /company/PROP/mda/
Next year: /company/PROP/mda/fy2022/ (FY 2022)

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary
Notice Regarding Forward-Looking Statements

The
following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2021 and 2020
should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included
elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors”
and elsewhere in this report.

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

Company
Overview

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

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

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

Cryptocurrency
Mining

We
currently generate substantially all our revenue through cryptocurrency we earn through our mining activities, which we may strategically
hold or sell at beneficial prices and times. We currently mine and hold Bitcoin exclusively 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:

[[GREPCENT_TABLE]]
[["","\u25cf","270 Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022"],["","\u25cf","270 Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022"],["","\u25cf","600 Bitmain S19XP (140 Th/s per miner, total 84 Ph/s hashing capacity) delivery expected July through December 2022"]]
[[/GREPCENT_TABLE]]

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

24

The
purchase commitments for the miners total approximately $11.5 million, of which $7,089,000 was paid as a deposit during the year ending
December 31. 2021. 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.

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:

[[GREPCENT_TABLE]]
[["","","Quantity of Bitcoin","","","US$ Amounts"],["Balance December 31, 2020","","","\u2014","","","$","\u2014"],["Revenue recognized from cryptocurrency mined","","","6.7","","","","369,803"],["Mining pool operating fees","","","(0.1",")","","","(7,396",")"],["Impairment of cryptocurrencies","","","\u2014","","","","(59,752",")"],["Balance December 31, 2021","","","6.6","","","$","302,655"]]
[[/GREPCENT_TABLE]]

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.

Competition

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

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.

25

Strategic
Initiatives

Our
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.

COVID-19

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

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

Critical
Accounting Policies and Estimates

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

Principles
of Consolidation

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

Use
of Estimates

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

Reclassification

Certain
prior period amounts have been reclassified to conform to 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.

26

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.

Cryptocurrency

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

Impairment
of Long-Lived Assets

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

Property
and equipment

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

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

27

Revenue
Recognition

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

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

[[GREPCENT_TABLE]]
[["","\u25cf","identify the contract with a customer;"],["","\u25cf","identify the performance obligations in the contract;"],["","\u25cf","determine the transaction price;"],["","\u25cf","allocate the transaction price to performance obligations in the contract; and"],["","\u25cf","recognize revenue as the performance obligation is satisfied."]]
[[/GREPCENT_TABLE]]

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.

28

Stock-Based
Compensation

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

Income
taxes

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

Discontinued
Operations

On
August 6, 2021, we entered into an Asset Purchase Agreement (the “Agreement”) with Informa 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.

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.

29

Results
of Operations

Comparison
of the Years Ended December 31, 2021 and 2020

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020","","","$ Change","","","% Change"],["Revenue:"],["Cryptocurrency mining","","$","369,804","","","$","\u2014","","","$","369,804","","","","\u2014","%"],["eCommerce","","","437,773","","","","412,325","","","","25,448","","","","6","%"],["Total revenue","","","807,577","","","","412,325","","","","395,252","","","","96","%"],["Operating costs and expenses:"],["Cryptocurrency mining costs","","","281,790","","","","\u2014","","","","281,790","","","","\u2014","%"],["eCommerce costs","","","319,490","","","","206,163","","","","113,327","","","","55","%"],["Depreciation and amortization","","","112,512","","","","24,724","","","","87,788","","","","355","%"],["Stock based compensation","","","12,338,424","","","","407,952","","","","11,930,472","","","","2,924","%"],["General and administrative","","","5,782,686","","","","2,048,183","","","","3,734,503","","","","182","%"],["Impairment of mined cryptocurrency","","","59,752","","","","\u2014","","","","59,752","","","","\u2014","%"],["Total operating expenses","","","18,894,654","","","","2,687,022","","","","16,207,633","","","","603","%"],["Loss from operations","","","(18,087,077",")","","","(2,274,697",")","","","(15,812,381",")","","","(695",")%"],["Other income (expense):"],["PPP loan forgiveness","","","183,567","","","","\u2014","","","","183,567","","","","\u2014","%"],["Interest expense","","","(1,175,217",")","","","(637,044",")","","","(538,173",")","","","(84",")%"],["Other income","","","\u2014","","","","10,000","","","","(10,000",")","","","(100",")%"],["Total other income (expense)","","","(991,650",")","","","(627,044",")","","","(364,606",")","","","(58",")%"],["Net loss from continuing operations","","","(19,078,727",")","","","(2,901,741",")","","","(16,176,986",")","","","(557",")%"],["Discontinued operations:"],["Income (loss) from discontinued operations","","","(45,145",")","","","961,340","","","","(1,006,485",")","","","(105",")%"],["Gain from sale of discontinued operations","","","1,853,169","","","","\u2014","","","","1,853,169","","","","\u2014","%"],["Net income from discontinued operations","","","1,808,024","","","","961,340","","","","846,684","","","","88","%"],["Net loss","","$","(17,270,703",")","","$","(1,940,401",")","","$","(15,330,302",")","","","(790",")%"]]
[[/GREPCENT_TABLE]]

Revenue

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020","","","$ Change","","","% Change"],["Revenue:"],["Cryptocurrency mining","","$","369,804","","","$","\u2014","","","$","369,804","","","","\u2014","%"],["eCommerce","","","437,773","","","","412,325","","","","25,448","","","","6","%"],["Total revenue","","","807,577","","","","412,325","","","","395,252","","","","96","%"]]
[[/GREPCENT_TABLE]]

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

[[GREPCENT_TABLE]]
[["Category","","Change","","","Key Drivers"],["Cryptocurrency mining","","","\u2191","","","$","369,804","","","Cryptocurrency mining operations did not begin until October 2021"],["eCommerce","","","\u2191","","","$","25,448","","","Greater order volume"]]
[[/GREPCENT_TABLE]]

30

Operating
Costs and Expenses

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020","","","$ Change","","","% Change"],["Operating Costs and Expenses:"],["Cryptocurrency mining costs","","","281,790","","","","\u2014","","","","281,790","","","","\u2014","%"],["eCommerce costs","","","319,490","","","","206,163","","","","113,327","","","","55","%"],["Depreciation and amortization","","","112,512","","","","24,724","","","","87,788","","","","355","%"],["Stock based compensation","","","12,338,424","","","","407,952","","","","11,930,472","","","","2,924","%"],["General and administrative","","","5,782,686","","","","2,048,183","","","","3,734,503","","","","182","%"],["Impairment of mined cryptocurrency","","","59,752","","","","\u2014","","","","59,752","","","","\u2014","%"],["Total operating expenses","","","18,894,654","","","","2,687,022","","","","16,207,632","","","","603","%"]]
[[/GREPCENT_TABLE]]

Our
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:

[[GREPCENT_TABLE]]
[["Category","","Change","","","Key Drivers"],["Cryptocurrency mining costs","","","\u2191","","","$","281,790","","","Cryptocurrency mining operations did not begin until October 2021"],["eCommerce costs","","","\u2191","","","$","113,327","","","Greater order volume"],["Depreciation and amortization","","","\u2191","","","$","87,788","","","Addition of cryptocurrency mining equipment"],["Stock based compensation","","","\u2191","","","$","11,930,472","","","Increased issuances of stock options and warrants"],["General and administrative","","","\u2191","","","$","3,734,503","","","Primarily greater marketing and consulting expenses."],["Impairment of cryptocurrency","","","\u2191","","","$","59,752","","","Cryptocurrency mining operations did not begin until October 2021"]]
[[/GREPCENT_TABLE]]

Net
Income (Loss)

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2021","","","2020","","","$ Change","","","% Change"],["Net Income (Loss):"],["Net loss from continuing operations","","$","(19,078,727",")","","$","(2,901,741",")","","$","(16,176,986",")","","","(557",")%"],["Net income from discontinued operations","","","1,808,024","","","","961,340","","","","846,684","","","","88","%"],["Total net loss","","$","(17,270,703",")","","$","(1,940,401",")","","$","(15,330,302",")","","","(790",")%"]]
[[/GREPCENT_TABLE]]

Net
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.

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.

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.

31

Liquidity
and Capital Resources

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020"],["Consolidated Statements of Cash Flow Data:"],["Net cash used in operating activities","","$","(6,969,723",")","","$","(1,070,718",")"],["Net cash used in investing activities","","","(9,928,726",")","","","(156,733",")"],["Net cash provided by financing activities","","","17,785,933","","","","347,500"],["Net increase (decrease) 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"]]
[[/GREPCENT_TABLE]]

Liquidity

As
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
$887,484. This increase was primarily due to cash provided by financing activities, and partially offset by cash used in operating and
investing activities.

Operating
Activities

Net
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.

Net
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.

Investing
Activities

Net
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.

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:

[[GREPCENT_TABLE]]
[["","\u25cf","270 Bitmain S19 (90 Th/s per miner, total 24.3 Ph/s hashing capacity) delivery expected March 2022"],["","\u25cf","270 Bitmain S19J Pro (100 Th/s per miner, total 27 Ph/s hashing capacity) delivery expected May 2022"],["","\u25cf","600 Bitmain S19XP (140 Th/s per miner, total 84 Ph/s hashing capacity) delivery expected July through December 2022"]]
[[/GREPCENT_TABLE]]

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.

Net
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.

Financing
Activities

Net
cash provided by financing activities was $17,785,933 for the year ended December 31, 2021 and resulted primarily from proceeds from
the issuance of common and preferred stock and warrants, net of approximately $16 million, and from proceeds from of the sale of discontinued
operations of $1.5 million.

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

32

Working
Capital (Deficit)

The
following table summarizes total current assets, liabilities, and working capital for the years ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020","","","Increase/(Decrease)"],["Current assets","","$","10,827,973","","","$","2,217,448","","","$","8,610,525"],["Current liabilities","","$","6,039,311","","","$","7,065,862","","","$","(1,026,551",")"],["Working capital (deficit)","","$","4,788,662","","","$","(4,848,585",")","","$","9,637,247"]]
[[/GREPCENT_TABLE]]

As
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.

Non-U.S.
GAAP Measure – Adjusted EBITDA

In
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
operations. 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. Non-U.S. 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.

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

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","","2020","","","$ Change"],["Net loss","","$","(17,270,703",")","","$","(1,940,401",")","","$","(15,330,302",")"],["Add (deduct):"],["Other income (expense)","","","991,650","","","","627,044","","","","364,606"],["Depreciation and amortization","","","112,512","","","","24,724","","","","87,788"],["Stock based compensation","","","12,338,424","","","","407,952","","","","11,930,472"],["Net income from discontinued operations","","","(1,808,024",")","","","(961,340",")","","","(846,684",")"],["Adjusted EBITDA","","$","(5,636,141",")","","$","(1,842,021",")","","$","(3,794,120",")"]]
[[/GREPCENT_TABLE]]

We
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:

[[GREPCENT_TABLE]]
[["","\u25cf","Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;"],["","\u25cf","Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;"],["","\u25cf","Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and"],["","\u25cf","although 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."]]
[[/GREPCENT_TABLE]]

Off-Balance
Sheet Arrangements

We
do not have any off-balance sheet arrangements.

Recently
Issued Accounting Pronouncements

For
information about recently issued accounting standards, refer to Note 3 to our Consolidated Financial Statements appearing elsewhere
in this report.