| 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 Company prepares its consolidated financial
statements in accordance with accounting principles generally accepted in the United States (“GAAP”) as determined by the
Financial Accounting Standards Board (“FASB”) and pursuant to the accounting and disclosure rules and regulations of the SEC.
The Company’s reporting currency is the U.S. Dollar. The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of consolidated financial statements
in conformity with 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 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 consolidated
financial statements include, but are not limited to, those related to the valuation of digital assets, impairment for the note receivable,
estimates of interest payable on the token sale liability, and the valuation of current and deferred income taxes 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. Cash and Cash Equivalents The Company considers all highly liquid investments
with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company’s cash equivalents
consist of funds held in a money market account. The Company had approximately $4.0 million and $3.3 million in cash equivalents as of
September 30, 2023 and 2022, respectively. Restricted Cash The Company is required to maintain restricted
cash deposits as collateral for the Company’s credit cards by the issuing bank. These funds are restricted and have been classified
in noncurrent assets on the Company’s consolidated balance sheets. As of both September 30, 2023 and 2022, the Company’s restricted
cash balance was $0.3 million. Concentration of Credit Risk Financial instruments that potentially subject
the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. Periodically, the Company may
maintain deposits in financial institutions in excess of government insured limits. The Company has not experienced any losses on these
deposits. Fair Value of Financial Instruments The Company’s financial assets and liabilities
are accounted for in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures
Level 1— Observable inputs, such
as quoted prices in active markets for identical assets or liabilities. Level 2—Inputs
other than Level 1 inputs that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the instrument’s anticipated life. Level 3—Unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. To the extent the valuation is based on models
or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement. Accordingly,
the degree of judgement exercised by management in determining fair value is greatest for instruments categorized as Level 3. A financial
instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. 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):
September 30, 2023
Level 1 Level 2 Level 3 Fair Value
Assets included in:
Cash equivalents
Money market fund $ 4,012 $ - $ - $ 4,012
$ 4,012 $ - $ - $ 4,012
September 30, 2022
Level 1 Level 2 Level 3 Fair Value
Assets included in:
Cash equivalents
Money market fund $ 3,259 $ - $ - $ 3,259
$ 3,259 $ - $ - $ 3,259 The carrying values reported in the Company’s
consolidated balance sheets for cash and cash equivalents, accounts payable, and accrued expenses are reasonable estimates of their fair
values due to the short-term nature of these items. Digital Assets Digital assets, consisting entirely of ether,
are included in current assets on the Company’s consolidated balance sheets. Digital assets held by the Company 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. 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. The Company has elected to bypass the optional
qualitative impairment assessment and to track its digital asset activity daily for impairment assessment purposes. The Company determines
the fair value of its digital assets on a nonrecurring basis in accordance with ASC 820, based on the lowest intra-day market price of
the digital asset. The Company performs an analysis each day to identify whether events or changes in circumstances, principally decreases
in the quoted price of the digital asset on the active trading platform, indicate that it is more likely than not that its digital assets
are impaired. 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. The Company did not recognize impairment charges on its digital assets during the years ended September
30, 2023 and 2022, respectively. The proceeds from sales and exchanges of digital
assets received from the token sale are included within financing activities in the consolidated statements of cash flows and any realized
gains from such sales and exchanges are included in operating expenses (income), net in the consolidated statements of operations. The
Company accounts for its sales of digital assets in accordance with the first in first out method of accounting. Prepaid Expenses and Other Current Assets As of September 30, 2023 and 2022, respectively,
prepaid expenses and other current assets totaled approximately $0.04 million and $0.07 million and consisted primarily of amounts paid
for software subscriptions and insurance. Intangible Assets The Company’s intangible
assets consist of web-site domains with an estimated useful life of 15 years. The definite-lived intangible assets are being amortized
on a straight-line basis over their useful life as follows (in thousands):
Beginning balance - October 1, 2021 $ 34
Amortization expense (3 )
Ending balance - September 30, 2022 31
Amortization expense (3 )
Ending balance - September 30, 2023 $ 28 The estimated future amortization expense associated with intangible
assets is as follows (in thousands):
Future
Amortization
Year ended September 30, 2024 $ 3
Year ended September 30, 2025 3
Year ended September 30, 2026 3
Year ended September 30, 2027 3
Year ended September 30, 2028 3
Thereafter 13
$ 28 Impairment of Long-lived
Assets The Company evaluates its long-lived assets for
impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and
circumstances exist, the recoverability of the assets is measured by comparing the projected undiscounted future cash flows associated
with the related asset or group of assets over their estimated useful lives against their respective carrying amount. If the carrying
amount of the asset or group of assets is not recoverable, the impairment, if any, is measured as the excess of the carrying value over
the fair value, based on market value when available, or discounted expected cash flows of the asset or asset group, and is recorded in
the period in which the determination is made. There were no indicators of impairment during the years ended September 30, 2023 and 2022. Property and Equipment Property and equipment consist of computer equipment
and is stated at cost and depreciated using the straight-line method over the estimated useful life of the assets (dollar amounts in thousands):
Useful life September 30,
(Years) 2023 2022
Computers 3 $ 21 $ 21
Less accumulated depreciation (21 ) (17 )
Property and equipment, net $ (0 ) $ 4 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 represents 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 short-term obligation
on its consolidated balance sheets as of September 30, 2023 and as of long-term obligation on its consolidated balance sheet as of September
30, 2022. The change from long term to short term obligation is due to the final claim date set at August 4, 2023. 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 was
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. The claim form included 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 $4.8 million as of September 30, 2023 and long term accrued interest payable of $3.6 million as of September 30, 2022 on its
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 4.11% and 3.14% per annum for September 2023 and September 2022,
respectively. The Company is unable to reasonably estimate or record the amount for expected damages prior to the claims process. Claims
will be settled in cash. 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 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 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. General and Administrative Expenses General and administrative expenses consist primarily
of salary and other employee costs, legal expenses, contractor expenses, uncapitalized software and hardware expenses, insurance, professional
fees, including accounting and audit and marketing expenses, and other expenses. Share-based Compensation Share-based
compensation includes compensation expense for restricted stock unit (“RSU”) and phantom stock unit (“PSU”) awards
granted to employees, consultants and advisors and is measured on the grant date based on the fair value of the award. The fair value
of RSU and PSU awards is measured based upon the estimated fair value of the Company’s membership shares on the date of grant. The
assumptions used in calculating the fair value of the Company’s membership shares are management’s best estimates and involve
inherent uncertainties and the application of management’s judgment. The Company accounts for forfeitures as they occur. The Company’s
RSU and PSU awards are subject to two vesting requirements that must both be satisfied in order for the awards to vest, the first of which
is a service-based condition, and the second vesting condition is contingent upon a liquidity event. Management has determined that a
liquidity event is not probable. Due to the presence of a vesting condition for all of the Company’s issued RSU and PSU awards that
is contingent upon a liquidity event not considered probable by management, the Company has recognized no compensation expense for its
issued share-based compensation awards. Income Taxes The Company records a provision for income taxes
for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income taxes
are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future
realization is uncertain. The Company accounts for uncertain tax positions in accordance with
the provisions of ASC 740, Income Taxes Note 7 - Income Taxes 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. As of September 30,
2023, 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 loss per membership share is computed
by dividing net loss allocated to members by the weighted average number of membership shares outstanding during the period. Diluted net
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 and as such, the unvested RSUs
and PSUs must be excluded from the computation of diluted net (loss) income per share. There were a total of 609 and 679 unvested RSUs
and PSUs as of September 30, 2023 and 2022, respectively, that were excluded from the computation of diluted net (loss) income per
membership share. Risks Associated with Digital Assets Significant information and risks related to digital
assets includes, but is not necessarily limited to the following: Digital Currencies have Risks of Ownership As of the date of these consolidated financial
statements, the regulatory landscape continues to evolve and while digital assets have public keys (e.g., account numbers) of virtual
wallets the holding of digital assets reside on distributed networks and can be viewed publicly, the ownership of the wallets are not
registered and therefore, anonymous. Ownership in the digital assets residing in any wallet are evidenced only by demonstrating knowledge
of both the public key of the virtual wallet holding the digital assets and the underlying private key of the digital assets residing
within the virtual wallet. Knowledge of both of these keys is required in order to demonstrate possession of the digital assets and therefore,
ownership. Accordingly, prior to investing, investors who are directly or indirectly invested in such digital assets should carefully
evaluate and understand all relevant internal controls put in place by companies holding such digital assets on their behalf to understand
how their investments are being protected and how inappropriate transfers of such digital assets are prevented. Risks Related to Maintaining Private Key Security Digital assets require the execution of the aforementioned
confidential encrypted private key in order to initiate a transfer of the digital asset to another party. If the private key were to become
lost, the Company would not be able to access the digital assets, thereby deeming the asset worthless to the Company. In addition, if
another party were to gain access to the private key, along with the public key of the wallet holding the digital assets, the other party
could demonstrate ownership of the digital assets and could either execute a transfer of the digital asset or inappropriately utilize
the digital assets as collateral for unauthorized financing. Risks Related to Current and Continued Market
Acceptance Digital assets are virtual currencies that have
become significant in the marketplace and utilize blockchain technology in order to account for the transfer of such assets. These virtual
assets have significant market volatility, which can significantly vary in a short period of time and can potentially vary between various
pricing sources. These virtual assets are highly speculative in nature, and have potentially significant risks of ownership, which include,
but are not necessarily limited to risks identified herein. Regulatory Oversight and Considerations As of the date of these consolidated financial
statements, the SEC has expressed concerns regarding the adequacy and accuracy of marketplace information of digital assets, which could
impact individual state blue sky laws, potentially impacting the exchange of such assets for more widely accepted currencies, such as
the U.S. Dollar. In the event that regulations were implemented to address these concerns, such regulations could potentially have a significant
adverse effect on the realization of these digital assets. Financial Reporting Risks Related to Digital
Asset Valuation Certain non-authoritative sources have concluded
that digital assets should be accounted for as intangible assets, where the digital asset should be recorded at the lower of its original
cost or fair value, whereby any recorded write-downs could not be recovered in the future. The Company’s management has concluded
that its digital assets should be valued at cost and reduced for any identified impairment charges, which is consistent with current practices.
In the event that specific authoritative accounting guidance were to be issued after the release of these consolidated financial statements
and such guidance was inconsistent with management’s current accounting for its digital assets and a restatement would be determined
to be required, any resulting restatement could have a significant impact on the Company’s financial position, results of operations,
and cash flows. The timing of any such authoritative guidance, if issued at all, is not determinable as of the date of these consolidated
financial statements. Risks Related to Transaction Authentication As of the date of these consolidated financial
statements, the transfer of digital assets from one party to another currently typically relies on an authentication process by an outside
party known as a miner (or another authenticating party). In exchange for compensation, the miner will authenticate the transfer of the
digital asset through the solving of a complex algorithm known as a proof of work, or will vouch for the transfer through other means,
such as a proof of stake. Effective transfers of and therefore realization of digital assets is dependent on interactions from these miners.
In the event that there was a shortage of miners to perform this function, that shortage could have an adverse effect on either the fair
value or realization of the digital assets. As discussed herein, holdings in digital assets
are subject to current, emerging and potentially significant risks, including, but not necessarily limited to legal, regulatory, market
valuation and proof of ownership risks. Users of financial statements for entities that are associated with or hold digital assets should
carefully understand, consider and evaluate these and other risks related to digital assets, when making investing decisions in such entities. Recently Issued and Adopted Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards
Update ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses Effect of New Accounting Pronouncements
to be Adopted in Future Periods The Company reviewed all other recently issued
accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on its consolidated
financial statements. |
