| BASIS OF PRESENTATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2 – BASIS OF PRESENTATION, SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) and pursuant to the accounting and disclosure
rules and regulations of the SEC. In the opinion of management, these financial statements contain all adjustments, consisting of only
normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. Certain information or footnote
disclosure normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted,
pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, these unaudited condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which contain
a description of the Company’s significant accounting policies. Except as disclosed herein, there have been no material changes
in the information disclosed in the notes to the Company’s audited consolidated financial statements. The Company’s reporting currency is the
U.S. Dollar. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany balances and transactions have been eliminated. Results for interim periods are not necessarily
indicative of results to be expected for a full year or any future period. 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 disclosure
of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported
amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company’s unaudited
consolidated financial statements include, but are not limited to, that related to the valuation allowance for the note receivable and
estimates of interest payable on the token sale liability, among others. These estimates and assumptions are based on the Company’s
historical experience, and on various other factors that management believes are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. To the extent there
are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Fair Value of Financial Instruments The following tables present the Company’s
fair value hierarchy for its money market securities measured at fair value on a recurring basis (in thousands):
June 30, 2023
Level 1 Level 2 Level 3 Fair Value
Assets included in:
Cash and cash equivalents
Money market fund $ 3,976 $ - $ - $ 3,976
$ 3,976 $ - $ - $ 3,976
September 30, 2022
Level 1 Level 2 Level 3 Fair Value
Assets included in:
Cash and cash equivalents
Money market fund $ 3,259 $ - $ - $ 3,259
$ 3,259 $ - $ - $ 3,259 The carrying values reported in the Company’s
unaudited condensed consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis),
accounts payable and accrued expenses are reasonable estimates of their fair values due to the short-term nature of these items. Token Sale Liability The Company sold BLT in a token sale that raised
approximately $32.3 million of capital to develop the VC technology and Platform. Management of the Company evaluated the terms of the
BLT sold and concluded that the amounts raised represent a liability; specifically, a demand loan, due to the lack of a stated maturity
date and stated interest rate related to the outstanding liability. The Company has reflected the amounts raised as a current obligation
on its condensed consolidated balance sheets as of June 30, 2023 (unaudited), and as a long-term obligation as of September 30, 2022.
Pursuant to the SEC Order, the Company has undertaken steps to register the BLT with the SEC and conduct a claims process to compensate
purchasers of BLT who purchased them directly from the Company. To satisfy the SEC’s recovery requirement, through the claims process,
purchasers of BLT that still own the securities are entitled to submit a claim for their consideration paid plus interest and less any
income received, while any BLT purchasers that no longer own BLT may submit a claim for damages. A notice about the SEC Order along with
a claim form will be distributed to potential claimants by electronic means within 60 calendar days after the filing of the Company’s
1934 Act Registration (“Effective Date”), meaning by August 4, 2023 (see Note 7). The claim form will include a link to the
Company’s filing page on EDGAR, informing all persons and entities that purchased tokens from the Company before and including January
2, 2018, of their potential claims under Section 12(a) of the Securities Act upon the tender of such security, or for damages if the purchaser
no longer owns the security. Claimants will have until the earlier of three months from the date the SEC Division of Corporation Finance
notifies the Company that their review of the Form 10 has been concluded or six months from the Effective Date to submit a claim of their
rights under Section 12(a) of the Securities Act (the “Claim Form Deadline”). As such, the Company estimated and recorded
a current accrued interest payable of approximately $4.5 million and $3.6 million as of June 30, 2023 (unaudited) and September 30, 2022,
respectively, on its unaudited condensed consolidated balance sheets. The Company calculated the estimated interest for the total outstanding
liability using the applicable federal rates published by the Internal Revenue Service (“IRS”) of 3.91% and 3.14% per annum
for June 2023 and September 2022, respectively. The Company is unable to reasonably estimate or record an amount for expected damages
prior to the claims process. Claims will be settled in cash. No claims will be paid prior to the Claim Form
Deadline. Subsequent to the Claim Form Deadline, the Company will begin to pay all valid refund claims. If the Company has a sufficient
amount of cash on hand, all valid refund claims will be paid in full. If the Company does not have a sufficient amount of cash on hand
to pay all valid refund claims, depending on the cash shortfall, the Company intends to seek funding from outside investors (either through
the sale of additional equity or otherwise) or seek debt financing from third-party lenders. In this case, all valid refund claims will
be partially paid, on a pro rata basis, until we can obtain additional financing, and all unpaid amounts will continue to accrue interest
until paid in full. Such additional financing (whether debt or equity) may not be available on favorable terms, or at all, and could increase
the Company’s debt balance and result in significant expense to the Company. As amounts are claimed by BLT purchasers and repaid
by the Company, the amounts paid will reduce the balances of the token sale liability and accrued interest on the Company’s unaudited
condensed consolidated balance sheet, with no gain or loss recognized at repayment. Upon completion of the claims process, any amounts
of the token sale liability that are not claimed will be retired or extinguished and removed from the unaudited condensed consolidated
balance sheet. As part of the SEC Order, the Company has certain
reporting obligations to the Staff. These obligations are described below. Beginning thirty (30) days after the Claim Form
Deadline, the Company will submit to the Staff a monthly report of the claims received and the claims paid, including (a) identifying
information about each claimant; (b) the amount of each claim; (c) the resolution of each claim, including the amount of each payment;
(d) identification of all claims not paid and the reasons for all non-payment of claims; and (e) a list of all complaints received (if
any) and the manner in which the Company addressed each complaint. The Company will provide the Staff with any related additional information
or documentation reasonably requested by the Staff, such as documentation submitted by the claimant and documentation supporting the Company’s
decision regarding the claim. In response to any objections by the Staff to the Company’s handling of one or more claims, the Company
will reconsider its decision(s) in light of the objection and will provide a written explanation to the Staff of its decision following
such reconsideration. Within four (4) months of the Claim Form Deadline,
the Company will submit to the Staff a final report of its handling of all claims, including all information required in the monthly reports
(the “Final Report”). The Company will certify, in writing, compliance
with the undertakings set forth above within sixty (60) days of final completion of all such undertakings. The certification will identify
the undertaking, provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate
compliance. Segments Operating segments are defined as components of
an entity for which discrete financial information is available that is regularly reviewed by the chief operating decision maker, or decision-making
group, in deciding how to allocate resources to an individual segment and in assessing performance. The chief operating decision maker,
or decision-making group, reviews financial information for the purposes of making operating decisions, allocating resources, and evaluating
financial performance of the business of the reportable operating segments, based on discrete financial information. For the periods ended
June 30, 2023 and 2022, the Company views its operations and manages its business as one segment and, accordingly, no further segment
disclosures have been presented herein. Net Loss Per Membership Share Basic net income (loss) per membership share
is computed by dividing net income (loss) allocated to members by the weighted average number of membership shares outstanding
during the period. Diluted net income (loss) per membership share reflects the potential dilution that could occur if securities or
other contracts to issue membership shares were exercised or converted into membership shares or resulted in the issuance of
membership shares that then shared in the earnings of the entity. Dilutive potential membership shares include the Company’s
unvested RSUs and unvested PSUs. As mentioned above, the RSUs and PSUs have a second vesting condition that is contingent upon a
liquidity event that did not occur during the reported periods and as such, the unvested RSUs and PSUs must be excluded from the
computation of diluted net income (loss) per share because inclusion of the options in the calculation would be antidilutive.
There was a total of 609 and 679 unvested RSUs and PSUs as of June 30, 2023 and 2022, respectively, that were excluded from the
computation of diluted net income (loss) per membership share. Recently Issued Accounting Pronouncements The Company reviewed all recently issued accounting
pronouncements and concluded that they were either not applicable or not expected to have a significant impact on its unaudited condensed
consolidated financial statements. |
