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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets and recoverability of those assets, impairment in fair value of goodwill, valuation allowances for income taxes, stock-based compensation.

Correction of Immaterial Error

Correction of Immaterial Error

Subsequent to the initial issuance of the Company’s 2021 financial statements on March 28, 2022, management discovered it did not record the accrual for dividends on its Series A Preferred Stock. The Series A Preferred Stockholders are entitled to receive cash dividends at a rate per share (as a percentage of the Stated Value per share) of 12% per annum.

In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the error and determined that the related impact did not materially misstate previously issued consolidated financial statements. Although the Company concluded that the misstatement was not material to its previously issued consolidated financial statements, the Company has determined it is appropriate to adjust its previously issued consolidated financial statements to correct for the error in the context of comparative financial statements. The following are the relevant line items from the Company’s consolidated financial statements which illustrate the effect of the corrections to the periods presented:

Balance sheet:	As Previously
December 31, 2021	Reported			Adjustments			As Revised
Total assets	$	45,529,491		$	—		$	45,529,491

Preferred dividend payable		—			824,674			824,674
Other		3,324,290			—			3,324,290
Total liabilities	$	3,324,290		$	824,674			4,148,964

Additional paid-in capital		67,810,922			(824,674	)		66,986,248
Others		(25,605,721	)					(25,605,721	)
Total stockholders’ equity	$	42,205,201		$	(824,674	)	$	41,380,527

Statement of operations	As Previously
Year ended December 31, 2021	Reported			Adjustments			As Revised
Net Loss	$	(4,978,358	)	$	—		$	(4,978,358	)
Preferred stock dividends		—			(555,960	)		(555,960	)
Net loss allocable to common shareholders		(4,978,358	)		(555,960	)		(5,534,318	)
Loss per share	$	(0.63	)				$	(0.70	)
Weighted average common shares outstanding		7,918,263						7,918,263

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”). As of December 31, 2022, the Company had no cash in excess of the FDIC’s $250,000 coverage limit.

Stock-based compensation

Stock-based compensation

We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718), which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market prices of identical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in FASB ASC Topic 718.

Property and Equipment

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are expensed as incurred.

Merchant Portfolios

Merchant Portfolios

Merchant portfolios are valued at fair value of merchant customers on the date of acquisition and are amortized over their estimated useful lives (7 years).

Accounts Receivable

Accounts Receivable

Accounts receivable represent contractual residual payments due from the Company’s processing partners or other customers. Residual payments are determined based on transaction fees and revenues from the credit and debit card processing activity of merchants for which the Company’s processing partners pay the Company. Based on collection experience and periodic reviews of outstanding receivables, management considers all accounts receivable for our residual payments to be fully collectible and accordingly, no allowance for doubtful accounts is required; however, CrowdPay has a recorded an allowance of approximately $0 and $38,000 as of December 31, 2022 and 2021, respectively.

Other Current Assets

Other Current Assets

Other current assets comprised of the following:

	December 31, 2022		December 31, 2021
Cryptocurrency at cost	$	1,030,183	$	304,004
Investment in cryptocurrency-based fund		250,000		250,000
Other current assets		456,911		175,347
Total	$	1,737,094	$	729,351

Disaggregation of Revenue

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated by revenue source:

	For the Years Ended December 31,
	2022		2021
Revenue from contracts with customers:
Wholesale contracts	$	26,424,478	$	13,336,832
Retail contracts	$	1,646,663	$	1,680,680
Other transaction and processing fees	$	1,571,659	$	1,389,243
Cryptocurrency mining fees	$	726,179	$	304,004
Total transactions and processing fees	$	30,368,979	$	16,710,759

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

	●	Identification of a contract with a customer;

	●	Identification of the performance obligations in the contract;

	●	Determination of the transaction price;

	●	Allocation of the transaction price to the performance obligations in the contract; and

	●	Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Merchant equipment sales and other

Merchant equipment sales and other

The Company generates revenue through the sale and rental of merchant equipment. The Company satisfies its performance obligation upon delivery of equipment to merchants and recognizes revenue at a point in time. The Company allows for customer returns which are accounted for as variable consideration. The Company estimates these amounts based on historical experience and reduces revenue recognized. The Company invoices customers upon delivery of the equipment to merchants, and payments from such customers are due upon invoicing. The Company offers hardware installment sales to customers with terms ranging from three to forty-eight months. The Company allocates a portion of the consideration received from these arrangements to a financing component when it determines that a significant financing component exists. The financing component is subsequently recognized as financing revenue separate from hardware revenue, within subscription and services-based revenue, over the terms of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize a financing component for hardware installment sales that have a term of one year or less.