UNITED STATES

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM Form 10-Q

 X.  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934(Mark One)

For the quarterly period ended September 30, 20152021

. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 033-17773-NY

B4MC GOLD MINES, INC.

(Exact name of registrant as specified in its charter)

For the transition period from to

Commission File No. 033-17773-NY

3651 Lindell Road, Suite D565

Las Vegas, Nevada 89103

 (Address of principal executive offices)

(424) 256-8560

(Registrant’sIssuer’s telephone number including area code)(424) 256-8560

Not applicableSecurities registered under Section 12(b) of the Exchange Act:

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X. ☒ No .☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ☒ No ☐

Yes     .  No X.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, (as definedsmaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Yes X.  No     .

As of October 31, 2015, the Company had 5,665,485 November 16, 2021, there were 31,975,083 shares of common stock, $0.001 par value, issued andthe registrant’s Common Stock were outstanding.

Documents incorporated by reference: None

ROCKETFUEL BLOCKCHAIN, INC.

B4MC GOLD MINES, INC.

TABLE OF CONTENTS

Forward-Looking StatementsROCKETFUEL BLOCKCHAIN, INC.

Balance Sheets

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. For example, statements regarding the Company’s financial position, business strategy and other plans and objectives for future operations, and related assumptions and predictions, are all forward-looking statements. These statements are generally accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “potential(ly),” “continue,” “forecast,” “predict,” “plan,” “may,” “will,” “could,” “would,” “should,” “expect” or the negative of such terms or other comparable terminology. The Company believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to it on the date hereof, but the Company cannot provide assurances that these assumptions and expectations will prove to have been correct or that the Company will take any action that the Company may presently be planning. However, these forward-looking statements are inherently subject to known and unknown risks and uncertainties. Actual results or experience may differ materially from those expected, anticipated or implied in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, available cash, competition, and market and general economic factors. This discussion should be read in conjunction with the condensed financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The Company does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.(Unaudited)

PART I - FINANCIAL INFORMATION

ITEM 1.CONDENSED FINANCIAL STATEMENTS

B4MC GOLD MINES, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

SeeThe accompanying notes to condensedare an integral part of these financial statements.

ROCKETFUEL BLOCKCHAIN, INC.

Statements of Operations

(Unaudited)

B4MC GOLD MINES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

SeeThe accompanying notes to condensedare an integral part of these financial statements.

5

B4MC GOLD MINES, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(Unaudited)ROCKETFUEL BLOCKCHAIN, INC.

Statement of Stockholders’ Equity (Deficit)

Nine MonthsFor the Three and Six Month Periods Ended September 30, 20152020 and 2021

(Unaudited)

See

The accompanying notes to condensedare an integral part of these financial statements.

ROCKETFUEL BLOCKCHAIN, INC.

Statements of Cash Flows

(Unaudited)

B4MC GOLD MINES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

SeeThe accompanying notes to condensedare an integral part of these financial statements.

ROCKETFUEL BLOCKCHAIN, INC.

B4MC GOLD MINES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)SEPTEMBER 30, 2021

(UNAUDITED)

Three Months

1. Business

Our Corporate History

On June 27, 2018 (the “Closing Date”), RocketFuel Blockchain Company (“RBC”) and Nine Months Ended September 30, 2015 and 2014

1. Basis of Presentation

The condensed financial statements of B4MC Gold Mines, Inc., a Nevada corporationCorporation (“B4MC” or the “Purchaser”), consummated the transactions contemplated by that certain Contribution Agreement (the “Company”“Contribution Agreement”) made and entered into as of June 27, 2018 by and among RBC, the Purchaser and Gert Funk, Joseph Page, PacificWave Partners Limited, PacificWave Partners UK Ltd. and Saxton Capital Ltd (collectively referred to herein as the “Sellers”, individually each a “Seller”).

Pursuant to the Contribution Agreement the Sellers contributed, transferred, assigned and conveyed to B4MC all right, title and interest in and to one hundred percent (100%) of the issued and outstanding Common Stock of RBC for an aggregate of 17,001,312 shares of Common Stock, par value $0.001 per share, of B4MC (the “Purchaser Common Stock”), at(such transaction, the “Business Combination”). As a result of the Business Combination, RBC became a 100% wholly owned subsidiary of B4MC. In September 30, 2015,2018 B4MC changed its name to RocketFuel Blockchain, Inc.

Prior to the Business Combination, B4MC was a “shell company,” as such term is defined in Rule 12b-2 under the Exchange Act. As a result of the Business Combination, we have ceased to be a “shell company.”

The Business Combination was treated as a “reverse acquisition” of RBC for financial accounting purposes. RBC was considered the acquirer for accounting purposes, and the historical financial statements of B4MC before the Business Combination were replaced with the historical financial statements of RBC before the Business Combination in all future filings with the SEC. The Purchaser Common Stock issued to the Sellers in connection with the Business Combination have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(a)(2), which exempts transactions by an issuer not involving any public offering, Regulation D and/or Regulation S promulgated by the SEC under that section. These shares may not be offered or sold in the United States absent registration or an applicable exemption from registration. In this report, references to RocketFuel, the “Company,” “we” and similar terms are to B4MC following the consummation of the reverse acquisition. In September 2018 B4MC changed its name to RocketFuel Blockchain, Inc.

The foregoing description of the Contribution Agreement does not purport to be complete. For further information, please refer to the copy of the Contribution Agreement included as Exhibit 2.1 to the Current Report on Form 8-K which was filed with the SEC on June 29, 2018. There are representations and warranties contained in the Contribution Agreement that were made by the parties to each other as of the date of execution. The assertions embodied in these representations and warranties were made solely for purposes of the Contribution Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, some representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality that is different from certain standards generally applicable to shareholders or were used for the three monthspurpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and nine months ended Septemberwarranties in the Contribution Agreement as statements of factual information.

Business

We provide check-out and payment systems that securely automate and simplify the way online payment and shipping information is received by merchants from their customers. Our “one click” checkout solution is modeled on the “buy now” button on leading eCommerce sites. Our check-out systems are designed to enhance customers’ data protection, enabling consumers to pay for goods and services using cryptocurrencies or by direct transfers from their bank accounts without exposing spending credentials such as credit card data. At the same time, our check-out systems are designed to increase the speed, security and ease of use for both customers and merchants and include a merchant portal that provides detailed transactions and metrics about payments received by the merchant. Our system also includes a customer portal where shoppers are able to track their payments, configure payment defaults and connect with various cryptocurrency exchanges and banks to facilitate payment to merchants. Merchants are able to integrate a unique pop-up user interface that allows customers to pay directly from their eCommerce checkout page with no need to redirect to another website or web page.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 20152021

(UNAUDITED)

Our corporate headquarters are located in San Francisco, California.

2. Interim Financial Statements and 2014, are unaudited.Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information pursuant to Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, of the Company,accompanying unaudited condensed financial statements include all adjustments (including(consisting only of normal recurring adjustments) have been made that are, which we consider necessary, to present fairly thefor a fair presentation of those financial position of the Company as of September 30, 2015, and thestatements. The results of its operations for the three months and ninesix months ended September 30, 20152021 and 2014, and its cash flows for the ninesix months ended September 30, 2015 and 2014. Operating results for the interim periods presented are2021 may not necessarily be indicative of the results tothat may be expected for a fullany succeeding quarter or for the entire fiscal year. TheThese condensed balance sheet at December 31, 2014 has been derived from the Company’s audited financial statements at such date.

The condensed financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with our audited financial statements as of March 31, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on July 22, 2021.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an ongoing basis, and that affect the amounts reported in our unaudited condensed financial statements and accompanying notes. Management bases its estimates on historical experience and on various other informationassumptions that it 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 amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments.

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

3. Summary of Significant Principles

Other than as discussed herein, our significant accounting policies are described in Note 3 to the audited financial statements as of March 31, 2021 which are included in the Company’sour Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC.SEC on July 22, 2021.

On July 15, 2015,Derivative Financial Instruments

Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying variables (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

We do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, during fiscal 2022 we issued financial instruments including convertible promissory notes payable with embedded conversion features that do not afford equity classification. As required by ASC 815, these embedded conversion options are required to be carried as derivative liabilities, at fair value, in our financial statements.

We estimated the Company filed an amendmentfair value of its bifurcated embedded conversion features using a Stock Path Monte Carlo Simulation model. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates (such as volatility, estimated life and risk-free rates of return) that may, and are likely to, its Articles of Incorporation withchange over the Secretary of Stateduration of the State of Nevada providing for a one-for-fifty reverse split of its outstanding shares of common stock effective August 21, 2015. All shareinstrument with related changes in internal and per share amounts includedexternal market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the accompanying financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. The authorized shares of the Company’s common stock were not adjusted as a result the reverse stock split.

2. Organization and Business Operations

Change-in-Control Transaction

On May 12, 2015, the Company sold 4,979,524 newly issued shares of its common stock, par value $0.001 per share, to PacificWave Partners Limited, a Gibraltar Company (“PacificWave”), at atrading market price of $0.05 per share, representing aggregate gross proceeds of $248,976. Of this amount, $225,000 was paid to certain creditors and claimants of the Company in exchange for releases of such outstanding claims, and the remaining $23,976 was placed in escrow and was subject to release pending the fulfillment of certain conditions.

Simultaneous with the purchase of the above described shares of common stock, PacificWave purchased from Elwood Shepard, the Company's principal shareholder at the time, 520,476 shares of the Company’s outstanding shares of common stock, representing 75.9% of the outstanding shares prior to the issuance of the newly issued shares. The purchase price of such shares was $26,024, which amount was deposited into escrow and will be disbursed in the same manner and under the same conditions as the amount deposited into escrow from the purchase price of the Company's newly issued common shares.

In that all conditions were met, all amounts deposited into escrow were disbursed pursuant to the terms of the escrow in July 2015.

At the closing of the purchase of the above described shares, PacificWave contributed $175,000 in cash to the capital of the Company, which was recorded as a credit to additional paid-in capital.

At the closing of the transaction on May 12, 2015, PacificWave transferred 1,000,000 of the Company’s common shares acquired as described herein to three non-U.S. resident accredited investors at a price of $0.50 per share ($500,000 in aggregate). These funds were utilized to effectuate the change-in-control transaction. The Company was not a party to any of these transactions.

At the closing on May 12, 2015, PacificWave transferred 2,698,334 shares to certain persons and entities providing services in connection with the transaction as follows: (i) 466,667 shares (constituting 8.2% of the outstanding shares) to Allan Kronborg, a citizen of Denmark; (ii) a total of 966,667 shares (constituting 17.1% of the outstanding shares) split among PacificWave Partners Europe sarl, PacificWave Partners UK Europe Ltd., Richway Finance Ltd. and Anarholl Ltd., all of which are entities affiliated with Henrik Oerbekker, a citizen of Denmark; and (iii) a total of 1,265,000 shares (constituting 22.3% of the outstanding shares) to nine non-U.S. resident persons and entities.  Effective September 10, 2015, Anarholl Ltd. gifted 126,667 shares to two unaffiliated purchasers in a private transaction, reducing the number of shares beneficially owned by Mr. Oerbekker to 840,000 shares (constituting 14.8% of the outstanding shares).  The Company was not a party to any of these transactions.

Effective May 12, 2015, Elwood Shepard, the Company’s sole officer and director at that time, resigned, and Bennett J. Yankowitz was appointed as the Company’s sole director and as its President, Secretary and Treasurer. In conjunction with the aforementioned transactions with PacificWave, on May 12, 2015, Mr. Yankowitz purchased from PacificWave 800,000 shares of common stock for an aggregate purchase price of $40,000 ($0.05 per share), reflecting approximately 14.1% of the outstanding shares of the Company’s common stock at that time. The purchase price was evidenced by a promissory note due May 12, 2019 with interest at 3% per annum and secured by the purchased shares. The Company was not a party to this transaction. Mr. Yankowitz does not have any interest in or contract with Pacific Wave. PacificWave and Mr. Yankowitz did not have any relationship with the Company prior to the aforementioned change-in-control transaction. On May 15, 2015, Mr. Yankowitz sold 10,000 shares at a purchase price of $0.50 per share ($5,000) to an unaffiliated purchaser.

At the conclusion of all of these transactions, PacificWave and its Managing Director and sole owner, Henrik Rouf, were the beneficial owners of an aggregate of 1,001,666 shares of the Company’sour common stock, which constituted 17.7% of the outstanding shares of common stock.has a high-historical volatility.

Business

ROCKETFUEL BLOCKCHAIN, INC.

The Company was organized under the laws of the State of Delaware, on April 2, 1987, as BK Ventures. The Company was organized to create a corporate vehicle to seek and acquire a business opportunity. In June 2000, the Company reincorporated under the laws of the State of Nevada. On October 10, 2013, the Company amended its articles of incorporation to change its name to B4MC Gold Mines, Inc. The Company is engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction that would likely result in a change in control of the Company. As the Company’s planned principal operations have not yet commenced, the Company activities are subject to significant risks and uncertainties, including the need to obtain additional financing, as described below.NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

Henrik Rouf is Managing Director of PacificWave and also serves as Assistant Secretary of the Company. While PacificWave does not have a formal contract with the Company, it is expected to continue to provide consulting and investment banking services to the Company, in particular with respect to raising capital for the Company and in identifying and evaluating potential acquisition candidates. PacificWave has indicated that it intends to use the Company as a platform for the acquisition of an operating company, and that it was currently in the process of evaluating potential acquisition target companies in the global environmental remediation and other market sectors. It is anticipated that any such acquisition, when consummated, would involve one or more of the following: (1) the issuance of additional common stock or other equity securities of the Company to the owners of the acquired company, resulting in a change of control; (2) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company; (3) a change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (4) a material change in the present capitalization or dividend policy of the Company; (5) a material change in the present capitalization or dividend policy of the Company; (6) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; or (7) actions similar to any of those enumerated above.(UNAUDITED)

4. Going Concern

The Company’s condensedOur financial statements have been presented on the basis that it iswe are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. AtWe incorporated our business on January 12, 2018, the date of our inception, and commenced commercial operations in March 2021. During the three and six months ended September 30, 2015,2021, we reported a net loss of $1,178,538 and $2,383,129, respectively, which included as a component of general and administrative expenses in the Company did not have any business operations. The Company has experienced recurring operating losses statement of operations a non-cash stock-based compensation charge of $329,850 and negative operating$646,746, respectively, and cash flows and has financed its recent working capital requirements throughused in operating activities during the issuance of equity securities, as well as borrowings from related parties. As ofsix months ended September 30, 2015, the Company had working capital2021 of $48,939, primarily as a result of the May 12, 2015 transactions as described herein, and an accumulated deficit of $2,614,100.$1,403,745. As a result, management believes that there is substantial doubt about the Company’sour ability to continue as a going concern.

The Company’sWe will require additional financing to continue to develop our product and execute on our business plan. However, there can be no assurances that we will be successful in raising the additional capital necessary to continue operations and execute on our business plan. During the six months ended September 30, 2021 we raised $682,500 through the exercise by certain investors of common stock purchase warrants. On November 4, 2021, we completed a public offering of 6,666,667 shares of Common Stock and accompanying warrants to purchase 6,666,667 shares of Common Stock and raised $5,000,000 in gross proceeds. See Note 14 – Subsequent Events. We have used and plan to continue using the net proceeds of the private placement, warrant exercise and public offering to recruit key management and operational personnel, to retain software and blockchain developers and to develop our blockchain based check-out solution. Management believes the funding from the private placement, the exercise of the common stock purchase warrant, the public offering and the growth strategy actions executed and planned for execution could contribute to our ability to mitigate any substantial doubt as to our ability to continue as a going concernconcern.

5. New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on our accounting and reporting. We believe that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on our accounting or reporting or that such impact will not be material to our financial position, results of operations and cash flows when implemented.

6. Related Party Transactions

During the three and six months ended September 30, 2021 and 2020, our chief financial officer was affiliated with legal counsel who provided us with general legal services (the “Affiliate”). We recorded legal fees paid to the Affiliate of $75,009 and $99,170 for the three and six months ended September 30, 2021, respectively. We recorded legal fees paid to the Affiliate of $15,959 and $21,463 for the three and six months ended September 30, 2020, respectively. As of September 30, 2021 and March 31, 2021 we had $72,155 and $35,475, respectively, payable to the Affiliate.

In May 2021, we paid an affiliate of our executive chairman $3,000 to provide website-related services.

7. Deferred Revenue

We enter into certain contracts typically having initial one-year terms which define the scope of services to be provided. These contracts can include agreed-upon setup fees during the initial one year term which setup fees are recorded as deferred revenue and amortized ratably over the initial one-year term. During the three and six months ended September 30, 2021, we recorded revenues of $5,000and $12,500, respectively, as a result of the amortization of $20,000 of deferred revenues recorded in connection with the execution of contracts with two customers. The contracts with these customers have one-year terms from the date of execution (the “Contract Term”), that provided for the payment of $10,000 in the aggregate in connection with the implementation of our blockchain technology. In addition, the Contract Term provided for transaction processing using our blockchain technology with no fees during the Contract Term as an inducement to adopt our blockchain technology. As of September 30, 2021 and March 31, 2021, we recorded total deferred revenue of $12,500and $10,000, respectively. As of September 30, 2021 and March 31, 2021 there was $0 and $10,000, respectively receivable from these two customers.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

8. Convertible Note Payable

On August 4, 2021, we entered into a securities purchase agreement with a lender pursuant to which we sold a convertible note payable in the principal amount of $130,000 for cash proceeds of $126,250. The convertible note is due one year from issuance, pays interest at the rate of 8% per annum, unless in default, upon which the interest rate would increase to 22% and the principal balance would increase by 150% or 200% depending upon the nature of the default. The convertible note gives us the right to prepay the note within the first 180 days from issuance at prepayment rates ranging from 110% to 125% of the then outstanding principal and interest balance. At any time during the period beginning 180 days from the origination date to the maturity date or date of default, the holder can convert all or any part of the outstanding balance into common stock at a conversion price per share equal to 65% of the lowest daily volume weighted average price of our common stock during the 10 trading days prior to the date of conversion.

We evaluated the embedded conversion feature and concluded that it required to be bifurcated and accounted for as a derivative liability due to the lack of explicit limit on the number of shares that may be required to be issued to settle the instrument. Accordingly, the fair value of the embedded conversion feature at inception was reflected as a derivative liability in the balance sheet, with a resulting discount applied to the note payable. At inception, the fair value of the conversion feature was deemed to be $120,151 as determined using a Stock Path Monte Carlo Simulation model. The key assumptions used in this valuation included: (1) dividend yield of 0%, (2) expected volatility of 197.41%, (3) risk-free interest rate of 0.07%, (4) expected life of 1 year, and (5) the quoted market price of $1.01 for our common stock.

At September 30, 2021, the embedded conversion feature had a fair value of $113,410, resulting in the recognition of other income of $6,741 in the income statement. The key assumptions used in this valuation included: (1) dividend yield of 0%, (2) expected volatility of 168.92%, (3) risk-free interest rate of 0.09%, (4) expected life of 0.84 year, and (5) the quoted market price of $1.10 for our common stock.

A rollforward of the embedded conversion feature derivative liability for the six months ended September 30, 2021 is as follows:

Schedule of Roll-forward Conversion Feature Derivative liability

At inception, the convertible note had a debt discount of $123,901 which will be amortized to interest expense over the life of the note. The remaining debt discount at September 30, 2021 related to the convertible note was $104,552.

9. Income Taxes

We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain tax positions”) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. 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. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company’s ability to raise additional capitalgeneration of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and to ultimately acquire or develop a commercially viable business.tax planning strategies in making this assessment.

We had no income tax credits for the three and six months ended September 30, 2021 and 2020. The Company’s condensed financial statements do not include any adjustments that might result from the outcome of these uncertainties.

3. Summary of Significant Accounting Policies

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company limits its exposure to credit loss by investing its cash with high credit quality financial institutions.

Pending Transaction Costs

Due to the inherent uncertainty associated with the successful completion of a potential acquisition transaction, transaction costs, consisting primarily of fees to professionals, are expensed as incurred. Pending transaction costs were $79,053effective tax rates for the three months and ninesix ended September 30, 2021 was 21.0%. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing but have kept the full valuation allowance.

10. Stockholders’ Equity (Deficit)

On January 9, 2020, we sold 10,000 shares of our common stock to a private investor, resulting in cash proceeds of $10,000. On February 13, 2020, we sold 11,250 shares of our common stock to a private investor, resulting in cash proceeds of $11,250.

On April 29, 2020, we entered into a subscription agreement with a private investor for the purchase of 478,750 shares of our common stock, at a purchase price of $1.00 per share, resulting in cash proceeds of $478,750. This transaction was a part of a private placement of 500,000 shares of common stock. We paid a placement fee of $50,000 in connection with these transactions.

On August 24, 2020, we issued 150,000 shares of our Common Stock to a consultant in lieu of cash for services. The common stock was valued at $162,000, or $1.08 per share, based on an independent appraisal.

On May 1, 2020, the Company issued a warrant to purchase 1,500,000 shares of common stock at $1.00 per share (the “First Warrant”). The warrant expired on April 30, 2021. The Company also agreed that upon the full and timely exercise of the First Warrant, it would issue a second warrant for an additional 1,500,000 shares of common stock at a purchase price of $1.50 per share having a term of 12 months from the date of issue (the “Second Warrant”). The First Warrant was transferred to an affiliate of the original holder in November 2021. During the three-month period ended March 31, 2021, the warrant holder exercised warrants from the First Warrant to purchase 1,100,000 shares of our common stock of which (i) 1,000,000 shares of our common stock were issued in consideration of gross proceeds of $1,000,000 prior to March 31, 2021; and (ii) 100,000 shares of our common stock, for which we received notice of exercise on March 31, 2021, were issued in April 2021 in consideration of gross proceeds of $100,000. Additionally, the warrant holder exercised the First Warrant for the remaining 400,000 shares of our common stock in April 2021 in consideration of gross proceeds of $400,000. On April 26, 2021 we issued the Second Warrant to the holder. On August 6, 2021, we agreed to amend the terms of the Second Warrant to increase the number of shares purchasable to 2,250,000 and to reduce the exercise price to $1.00 per share. On August 19, 2021, the warrant holder exercised warrants from the Second Warrant to purchase 100,000 shares of our common stock at an exercise price of $1.00 per share.

On February 25, 2021, we entered into a common stock purchase agreement (the “Stock Purchase Agreement”) with Triton Funds, LP, a Delaware limited partnership (“Triton” or the “Selling Stockholder,” which term also includes Triton’s successors and assigns under the Stock Purchase Agreement and the Warrant). Under the Stock Purchase Agreement Triton, which is an unrelated third party, agreed to invest up to $1,000,000 through purchases of our Common Stock during the commitment period (which runs through December 31, 2022). During the commitment period, we may, in our sole discretion, deliver purchase notices to Triton stating the dollar amount of shares which we intend to sell to Triton, not to exceed $500,000 per purchase notice. The amount to be funded under a purchase notice will be the number of shares of Common Stock to be purchased multiplied by the greater of (i) $1.65 or (ii) 80 percent of the lowest closing price of our Common Stock within 15 business days prior to the closing date for the purchase. The closing date for each purchase is five business days following the date of the corresponding purchase notice. As of September 30, 2021, we have not issued any purchase notices pursuant to the Stock Purchase Agreement. In connection with these transactions, we paid Triton an administrative fee of $15,000.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

Triton’s obligation to purchase Common Stock is conditioned on certain factors including, but not limited to, our having an effective S-1 registration statement in effect for resale of the Common Stock being purchased and Triton’s ownership not exceeding 4.99% of our issued and outstanding shares at any time.

In connection with the Stock Purchase Agreement, we also issued to Triton warrants to purchase, in one or more instalments, 800,000 shares of our Common Stock (the “Warrants”) at an exercise price equal to the greater of (i) $1.65 per share or (ii) 80 percent of the average closing price of our Common Stock over the 90-calendar day period preceding the Warrant exercise date, subject to adjustments. The Warrants terminate on February 25, 2026. If, at any time after the initial effective date of the S-1 registration statement filed in connection with the Stock Purchase Agreement and during the exercise period of the Warrants, there is no effective registration statement covering the Selling Stockholder’s immediate resale of the shares underlying the exercise of the Warrants (the “Warrant Shares”), then Selling Stockholder may elect to receive Warrant Shares pursuant to a cashless exercise of the Warrants. On May 5, 2021, Triton exercised 50,000 Warrants for an aggregate purchase price of $82,500.

On March 31, 2021, we entered into a contract with one customer having a one-year term from the date of execution that provided for (1) the payment of $10,000 in connection with the implementation of our blockchain technology and (2) the issuance of 10,000 shares of our common stock valued at $1.00 per share in consideration of being an early adopter of our blockchain technology. On August 4, 2021, we issued such 10,000 shares of our common stock to the customer.

From January 1, 2018 through September 30, 2021, we granted stock options under our 2018 Stock Incentive Plan, as amended, to issue up to an aggregate of 5,600,595 shares of our common stock to our employees, directors, and consultants, at a weighted average exercise price of $1.08 per share.

On February 15, 2021, we issued a warrant to purchase 265,982 shares of our common stock to our chief executive officer at an exercise price of $1.00 per share.

All of these transactions were exempt from registration under the Securities Act of 1933 pursuant to Regulations D or S, or Rule 701, thereunder.

As of September 30, 2021, and March 31, 2021, we had 25,098,416 shares and 24,438,416 shares of our common stock issued and outstanding, respectively.

11. Employment Agreements

Gert Funk

Mr. Funk has received a grant of options to purchase 500,000 shares of our Common Stock. The options will be issued under our 2018 Stock Incentive Plan (the “2018 Plan”). The options will (i) be incentive stock options, (ii) have an exercise price equal to $1.08 per share, which is the fair market value per share of our Common Stock on March 15, 2021, as determined by an independent valuation by a qualified appraiser, (iii) have a term of 10 years, (iv) vest and become exercisable as to 1/48th of the shares subject to the options on the 15th day of each calendar month during the term of his employment agreement, commencing on April 15, 2021, (v) be subject to the exercise, forfeiture and termination provisions set forth in the 2018 Plan and (vi) otherwise be evidenced by and subject to the terms of our standard form of stock option agreement. Vesting of the options will be accelerated upon a change of control.

He will also receive a cash bonus equal to 2.5% of the net proceeds (i.e., adjusted for our costs) of any initial exchange offering (IEO), token generation event (TGE) or similar financing (a “Token Transaction”) completed on or before the date that is 12 months after the formal acceptance by the Board of a proposal for a Token Transaction (including a start date, milestones and responsibilities). In the event the Board decides to cancel the Token Transaction, Mr. Funk and the Board shall agree upon a mutually acceptable bonus structure in lieu of the foregoing.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

Peter M. Jensen

Mr. Jensen’s employment agreement initially provided for a base salary of $7,500 per month, which was to increase to $20,000 per month once we had received gross proceeds of at least $2,000,000 in subsequent equity round financings. Our Board determined that the conditions for the salary increase occurred on February 1, 2021. He is also entitled to a performance bonus of $25,000 per calendar quarter based on his achieving quarterly financial and business objectives and milestones to be determined by our board of directors. During the fiscal year ended March 31, 2021, we recorded bonus expense for Mr. Jensen in the amount of $37,500 of which $12,500 was paid in March 2021 and $25,000 was paid in May 2021.

Mr. Jensen also received a grant of options to purchase 2,393,842 shares of our Common Stock. The options will be issued under our 2018 Plan. The options will (i) be incentive stock options, (ii) have an exercise price equal to $1.08 per share, which is the fair market value per share of our Common Stock on September 15, 2020, as determined by an independent valuation by a qualified appraiser, (iii) have a term of 10 years, (iv) vest and become exercisable as to 1/48th of the shares subject to the options on the 15th day of each calendar month during the term of his employment agreement, commencing on October 15, 2020, (v) be subject to the exercise, forfeiture and termination provisions set forth in the 2018 Plan and (vi) otherwise be evidenced by and subject to the terms of our standard form of stock option agreement. Vesting of the options will be accelerated upon a change of control.

Bennett J. Yankowitz

Mr. Yankowitz’s employment agreement provides for a base salary of $5,833 per month on the basis of a commitment of 20 hours per week. He is also entitled to a performance bonus of $7,500 per calendar quarter based on his achieving quarterly business objectives and milestones. In March 2021 he also received a grant of options to purchase 500,000 shares of our Common Stock. The options will be issued under our 2018 Plan. The options will (i) be incentive stock options, (ii) have an exercise price equal $1.08 per share, which is the fair market value per share of our Common Stock on March 1, 2001, as determined by an independent valuation by a qualified appraiser, (iii) have a term of 10 years, (iv) vest and become exercisable as to 1/48th of the shares subject to the options on the 1st day of each calendar month during the term of his employment agreement, commencing on April 1, 2021, (v) be subject to the exercise, forfeiture and termination provisions set forth in the 2018 Plan and (vi) otherwise be evidenced by and subject to the terms of our standard form of stock option agreement.250,000 of the options will become fully vested and exercisable upon the achievement of business objectives and milestones. In addition, vesting of the options will be accelerated upon a change of control.

12. Stock-Based Compensation

Stock Option Plan

On August 8, 2018, the Board and stockholders holding a majority of our voting power approved the RocketFuel Blockchain, Inc., 2018 Plan, which plan enables us to make awards that qualify as performance-based compensation. Under the terms of the 2018 Plan, the options will (i) be incentive stock options, (ii) have an exercise price equal to the fair market value per share of our common stock on the date of grant as determined by an independent valuation by a qualified appraiser, (iii) have a term of 10 years, (iv) vest and become exercisable pursuant to the terms set forth in the grantees stock option agreement, (v) be subject to the exercise, forfeiture and termination provisions set forth in the 2018 Plan and (vi) otherwise be evidenced by and subject to the terms of our standard form of stock option agreement. We initially reserved 2,000,000 shares of our common stock for issuance in connection with awards under the plan. On September 15, 2020 and March 18, 2021, our board of directors unanimously resolved to amend the 2018 Plan to increase the number of shares of our common stock available for grant to 4,000,000 shares and 6,000,000 shares, respectively. As of September 30, 2021 and March 31, 2021 there were 399,405 shares and 502,230 shares, respectively, of our common stock available for grant pursuant to the 2018 Plan. As of the date of the filing of this Quarterly Report on Form 10-Q, we had not yet solicited votes from our stockholders to approve the increase in the number of shares of our common stock available for grant pursuant to the 2018 Plan.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

Service-Based Stock Option Grants

From August 8, 2018 through September 30, 2021, we granted service-based options to employees and consultants, pursuant to the 2018 Plan, exercisable into a total of 5,000,595 shares of our common stock. In determining the fair value of the service-based options granted during the period from August 8, 2018 through September 30, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

During the three months ended September 30, 2015.

Income Taxes

The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets2021, we granted service-based options pursuant to the amount that is more likely than not2018 Plan to be realized. In(i) one employee exercisable into 1,010 shares of our common stock at exercise prices from $1.00 per share to $1.11 per share; and (ii) one consultant exercisable into 100,000 shares of our common stock at an exercise price of $1.08 per share. During the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustmentsix months ended September 30, 2021, we granted service-based options pursuant to the deferred tax assets would be credited2018 Plan to operations in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part(i) one employee exercisable into 2,825 shares of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made.

The Company’s effective tax rate is different from the federal statutory rate of 35% due primarily to operating losses that receive no tax benefit as a result of a valuation allowance recorded for such losses.

As of December 31, 2014, the Company had federal tax net operating loss carryforwards of approximately $154,000. The federal tax loss carryforwards will begin to expire in 2020, if not previously utilized.

Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within any three-year period since the last ownership change. The Company may have a change in control under these Sections. However, the Company does not anticipate performing a complete analysis of the limitation on the annual use of the net operating loss and tax credit carryforwards until the time that it projects it will be able to utilize these tax attributes.

As of December 31, 2014, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters.

Stock-Based Compensation

The Company has in the past issued grants ofour common stock which are measured at the grant date fair valueexercise prices from $1.00 per share to $2.75 per share; and charged to operations over(ii) one consultant exercisable into 100,000 shares of our common stock at an exercise price of $1.08 per share. In determining the vesting period (if any).

The Company may in the future issue stock options to officers, directors and consultants for services rendered. Options will vest and expire according to terms established at the grant date.

The Company will account for stock-based payments to officers and directors by measuring the cost of services received in exchange for equity awards based on the grant date fair value of the awards,service-based options granted during the three and six months September 30, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

Activity under the 2018 Plan for all service-based stock options for the six months ended September 30, 2021 are as follows:

Schedule of Stock Option Activity

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

As of September 30, 2021 and March 31, 2021 there were 399,405 shares and 502,230 shares, respectively, of our common stock available for grant pursuant to the 2018 Plan.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2021 of $1.10 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. There were no service-based stock options exercised under the 2018 Plan for the three and six months ended September 30, 2021 and 2020.

For the three and six months ended September 30, 2021, we recorded stock-based compensation expense for service-based stock options pursuant to the 2018 Plan in the amount of $294,446 and $585,939, respectively. For the three and six months ended September 30, 2020, we recorded no stock-based compensation expense for service-based stock options pursuant to the 2018 Plan. As of September 30, 2021, we had $3,623,019 of unrecognized stock-based compensation cost related to service-based stock options.

Performance-Based Stock Option Grants

We also granted performance-based options pursuant to the 2018 Plan to Rohan Hall, our chief technology officer, which are exercisable into 600,000 shares of our common stock subject to certain designated milestones. On March 18, 2021, our Board of Directors determined that Mr. Hall earned all of the performance-based options effective February 1, 2021. The Board of Directors also entered into a resolution whereby 75,000 shares of our common stock underlying the performance-based options would vest immediately and 525,000 shares of our common stock underlying the performance-based option would vest ratably over a 48 month period with the cost recognized as compensation expense infirst vesting date being February 1, 2021.

In determining the Company’s financial statements on a straight-line basis over the vesting period of the awards.

The Company will account for stock-based payments to consultants by determining thefair value of the performance-based options granted Mr. Hall on September 14, 2020 and earned effective February 1, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

Activity under the 2018 Plan for all performance-based stock options for the six months ended September 30, 2021 is as follows:

Schedule of Stock Option Activity

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2021 of $1.10 and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. There were no performance-based stock options exercised under the 2018 Plan for the three months ended September 30, 2021.

For the three and six months ended September 30, 2021, we recorded performance-based compensation based uponexpense for performance-based stock options pursuant to the measurement2018 Plan in the amount of $25,404 and $50,808, respectively. For the three and six months ended September 30, 2020, we recorded no performance-based compensation expense for performance-based stock options pursuant to the 2018 Plan. As of September 30, 2021, we had $347,167 of unrecognized stock-based compensation cost related to performance-based stock options.

13. Legal Proceedings

Other than as set forth below, we are not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against us by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any party has an interest adverse to us.

On October 8, 2020, we filed a lawsuit in the U.S. District Court for the Central District of California against Joseph Page, our former director and chief technology officer. On January 13, 2021, the case was transferred to the U.S. District Court for the District of Nevada, Las Vegas Division. The causes of action include securities fraud under Federal and California law; fraud, breach of fiduciary duty, negligent misrepresentation and unjust enrichment under California law; and violation of California Business and Professions Code §17200 et seq.

We are seeking injunctive and declaratory relief as well as damages of at least $5.1 million. On May 29, 2019, Mr. Page resigned from our board. After his resignation, we retained independent patent counsel to review our patent applications. In connection with this review, we discovered certain deficiencies in some of the applications and in their assignments to us. We determined that all of the applications had been abandoned. Based on this review, we decided to refile three of our applications with the U.S. Patent and Trademark Office, which we did in May 2020. It is our belief that the three newly filed patent applications cover and/or disclose the same subject matter as we disclosed in the five original patent applications. In this case, our rights may be subject to any intervening patent applications made after the dates of the original applications. In the lawsuit, we are alleging that Mr. Page was aware of the abandonments when he assigned the patents to RBC, a private corporation that he controlled, and that he failed to disclose to us the abandonments when we acquired RBC in exchange for shares of our Common Stock. Mr. Page has filed an answer denying our clams and has asserted cross- and counterclaims against us and several of our shareholders alleging breach of contract and fraud. In September 2021, Mr. Page voluntarily dismissed all of the counterclaims against the shareholders. We intend to vigorously contest these allegations.

On March 2, 2021, we filed a lawsuit in the U.S. District Court for the Southern District of New York against Ellenoff Grossman & Schole LLP (“EGS”) for negligence and legal malpractice, breach of contract and breach of fiduciary duty. EGS had represented RBC prior to the Business Combination and represented us after the closing of the Business Combination through August 2019. In the litigation against Mr. Page, he has alleged that he provided information to an EGS partner that the patent applications had been abandoned and that EGS failed to inform RBC and us of that fact. We are seeking damages and the return of legal fees previously paid.

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(UNAUDITED)

14. Subsequent Events

We evaluated all events or transactions that occurred after the balance sheet date at either (a)through the date at whichwhen we issued these financial statements and, other than the matters discussed below, we did not have any other material recognizable subsequent events during this period.

Issuance of Common stock to a performance commitment is reached or (b) atCustomer

In April 2021, we entered into a contract with one customer having a one-year term from the date of execution that provided for (1) the payment in installments of $10,000 in connection with the implementation of our blockchain technology and (2) the issuance of 10,000 shares of our common stock valued at $1.00 per share in consideration of being an early adopter of our blockchain technology. On October 6, 2021, we issued such 10,000 shares of our common stock to the customer.

Geneva Roth Convertible Note Transaction

On November 8, 2021, we repaid in full the convertible note issued to Geneva Roth, described in Note 8. There were no conversions on the convertible note prior to November 8, 2021 repayment date.

G Kapital Convertible Note Transaction

On September 9, 2021, we entered into Subscription Agreement (the “Subscription Agreement”) with G Kapital AsP, an accredited investor (the “Investor”), pursuant to which the necessary performanceInvestor agreed to earnpurchase a convertible promissory note in the equity instruments is complete.principal amount of $1,500,000 (the “Note”). On September 14, 2021, we amended and restated the Subscription Agreement (as so Amended and Restated, the “A&R Subscription Agreement”) to, among other things, provide that the closing date will be the earlier of October 15, 2021 or such earlier date as agreed between the parties (subject to the terms and conditions of the A&R Subscription Agreement), and that we may terminate the A&R Subscription Agreement at any time prior to the Investor’s payment for the Note. G Kapital did not consummate the purchase of the Note by the closing date, and the Note was not issued.

Options grantedAmendment of Triton Funds Stock Purchase agreement and Warrants

On October 11, 2021, we and Triton Funds, LP, a Delaware limited partnership (“Triton”), an unrelated third party, entered into an amendment to outside consultants will be revalued each reportingthe Common Stock Purchase Agreement (the “CSPA”) dated February 25, 2021. Under the CSPA, Triton agreed to invest up to $1,000,000 in the Company through purchases of common stock during the commitment period (which runs through December 31, 2022). During the commitment period, the Company may, in its sole discretion, deliver purchase notices to determineTriton stating the dollar amount of shares which the Company intends to sell to Triton, not to exceed $500,000 per purchase notice. The amount to be recordedfunded under a purchase notice under the CSPA, as an expense inamended, is the respective period. As the options vest, they will be valued on each vesting date and an adjustment will be recorded for the difference between the value already recorded and the then current value on the date of vesting.

The fair value of stock options granted will be estimated using the Black-Scholes option-pricing model.

Earnings Per Share

The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (such as common shares issuable pursuant to convertible debt, options and/or warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding duringto be purchased multiplied by the respective periods. Basic and diluted loss per common share are the same for all periods presented, as there were no convertible debt, optionsgreater of (i) $1.00 (changed from $1.65) or warrants outstanding during any(ii) eighty percent (80%) of the periods presented.