UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2022

OR

 
For the quarterly period ended December 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from             to

 

Commission file number: 033-17773-NY

 

 

ROCKETFUEL BLOCKCHAIN, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada 90-1188745

(State of other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

incorporation or organization)

Identification No.)

   

201 Spear Street, Suite 1100

  

San Francisco, CA		 94105
(Address of Principal Executive Offices) (Zip Code)

 

(424) 256-8560

(Registrant’s Telephone Number, including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
None RKFL None

 

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 past 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 ☐ 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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller 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:

 

 Large Accelerated Filer ☐Accelerated Filer ☐
 

Non-Accelerated Filer ☒

 

Small Reporting Company ☒

Emerging Growth Company ☐

 

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

 

Number of shares of issuer’s common stock outstanding at February 22, 2022:March 29, 2023: 31,975,08336,297,840.

 

 

 

 

 

ROCKETFUEL BLOCKCHAIN, INC.

TABLE OF CONTENTS

 

  Page
PART IFINANCIAL INFORMATION3
  
Item 1Consolidated Financial Statements3
  
 Consolidated Balance Sheets at December 31, 20212022 and March 31, 2021 (Unaudited)2022 (unaudited)3
  
 Consolidated Statements of Operations for the three and nine months ended December 31, 2022 and 2021 and 2020 (Unaudited)(unaudited)4
  
 Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended December 31, 2022 and 2021 and 2020 (Unaudited)(unaudited)5
  
 Consolidated Statements of Cash Flows for the nine months ended December 31, 2022 and 2021 and 2020 (Unaudited)(unaudited)6
  
 Notes to Consolidated Financial Statements (Unaudited)(unaudited)7
   
Item 2Management’s Discussion and Analysis of Financial Condition and Results of Operations1517
   
Item 3Quantitative and Qualitative Disclosures About Market Risk2122
   
Item 4Controls and Procedures2122
   
PART IIOTHER INFORMATION23
   
Item 1.Legal Proceedings2223
   
Item 1A.Risk Factors2223
   
Item 2Unregistered Sales of Equity Securities and Use of Proceeds23
   
Item 3Defaults Upon Senior Securities24
Item 4Mine Safety Disclosures24
Item 5Other Information24
Item 6Exhibits2524
   
 Signatures2625

 

2

 

 

PART I FINCANCIAL INFORMATION

Item 1 Consolidated Financial Statements

 

ROCKETFUEL BLOCKCHAIN, INC.

Consolidated Balance Sheets

(Unaudited)

 

 December 31, 2021  March 31, 2021  December 31, 2022  March 31, 2022 
          
ASSETS                
Current Assets:                
Cash $3,504,914  $800,331  $392,956  $2,634,794 
Restricted Cash  -   - 
Accounts receivable  16,325   10,000   -   3,475 
Prepaid and other current assets  57,338   5,000 
Prepaid expenses and other current assets  111,593   12,350 
Total current assets  3,578,577   815,331   504,549   2,650,619 
        
Property and equipment, net of accumulated depreciation and amortization of $493,660 and $149,919, respectively  768,267   460,176 
                
Total Assets $3,578,577  $815,331  $1,272,816  $3,110,795 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable and accrued expenses $137,683  $144,830  $723,982  $487,200 
Payable to related party  22,426   35,475   24,396   11,277 
Deferred revenue  19,931   10,000   3,504   15,073 
Total current liabilities  180,040   190,305   751,882   513,550 
Total liabilities  180,040   190,305   751,882   513,550 
                
        
Stockholders’ equity:                
Preferred stock, $0.001 par value; 50,000,000 shares authorized; and 0 shares issued and outstanding as of December 31, 2021 and March 31, 2021  -   - 
Common stock, $0.001 par value; 250,000,000 shares authorized; 31,975,083 shares and 24,438,416 shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively  31,975   24,438 
Preferred stock; $0.001 par value; 50,000,000 shares authorized; and 0 shares issued and outstanding as of December 31, 2022 and March 31, 2022  -   - 
Common stock, $0.001 par value; 250,000,000 shares authorized; 36,297,840 and 31,975,083 shares issued; 36,297,840 and 31,965,083 shares outstanding as of December 31, 2022 and March 31, 2022, respectively  

36,298

   31,975 
Additional paid in capital  10,962,495   4,584,214   

13,184,365

   11,214,820 
Accumulated deficit  (7,595,933)  (3,983,626)  

(12,699,729

)  (8,646,550)
Treasury stock, at cost  

-

   (3,000)
Total stockholders’ equity  3,398,537   625,026   

520,934

   2,597,245 
                
Total Liabilities and Stockholders’ Equity $3,578,577  $815,331  $

1,272,816

  $3,110,795

 

The accompanying notes are an integral part of these consolidated financial statements

3

 

ROCKETFUEL BLOCKCHAIN, INC.

Statements of OperationsCONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

  Three Months Ended  Three Months Ended  Nine Months Ended  Nine Months Ended 
  December 31, 2021  December 31, 2020  December 31, 2021  December 31, 2020 
             
Revenue, net $9,381  $-  $21,256  $- 
                 
Expenses:                
Research and development  288,631   18,864   923,996   32,773 
General and administrative expenses  931,108   229,999   2,676,535   544,014 
Total operating expenses  1,219,739   248,863   3,600,531   576,787 
Loss from operations  (1,210,358)  (248,863)  (3,579,275)  (576,787)
Other income (expense)                
Change in fair value of derivative liability  (2,633)  -   4,128   - 
Loss on debt extinguishment  (15,076)  -   (15,076)  - 
Interest expense  (1,111)  -   (22,084)  - 
Other expense  (18,820)  -   (33,032)  - 
Net loss before provision for income taxes  (1,229,178)  (248,863)  (3,612,307)  (576,787)
                 
Provision for income taxes  -   -   -   - 
Net Loss $(1,229,178) $(248,863) $(3,612,307) $(576,787)
                 
Net loss per common share:                
Basic and diluted $(0.04) $(0.01) $(0.14) $(0.02)
                 
Weighted average common shares outstanding:                
Basic and diluted  29,455,337   23,561,493   26,461,277   23,344,000 
                 
  2022  2021  2022  2021 
  

For the Three Months Ended

December 31,

  

For the Nine Months Ended

December 31,

 
  2022  2021  2022  2021 
             
Revenue $42,408  $9,375  $92,355  $11,875 
Transaction expense  

(26,890

)  -   

(102,492

)  - 
Gross Margin  

15,518

  9,375   (10,137)  11,875 
                 
Operating expenses:                
Research and development expenses  210,342   294,326   797,006   650,762 
General and administrative expenses  1,140,603   879,355   3,269,565   1,730,010 
Total operating expense  1,350,945   1,173,681   4,066,571   2,380,772 
Loss from operations  (1,335,427)  (1,164,306)  (4,076,708)  (2,368,897)
                 
Other income (expense):                
Change in fair value of derivative liability  -   6,741   0    6,741 
Interest expense  (544)  (20,973)  (544)  (20,973)
Gain from legal settlement  -   -   540,059   - 
Others  -   -   10,023   - 
Other income (expense)  (544)  (14,232)  549,538   (14,232)
              ��  
Loss before provision for income taxes  (1,335,971)  (1,178,538)  (3,527,170)  (2,383,129)
                 
Provision for income taxes  

-

   -   -   - 
Net loss $(1,335,971) $(1,178,538)  (3,527,170) $(2,383,129)
                 
Loss per common share:                
Basic and diluted $

(0.04

) $(0.05)  (0.10) $(0.10)
                 
Weighted average common shares outstanding :                
Basic and diluted  36,297,840   24,464,625   36,297,840   24,610,390 

 

The accompanying notes are an integral part of these consolidated financial statements

4

 

 

ROCKETFUEL BLOCKCHAIN, INC.

Statements of Stockholders’ Equity (Deficit)CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three and Nine MonthsNine-Month Periods Ended December 31, 20202021 and 20212022

(Unaudited)

(Unaudited)

 

  Shares  Amount  Shares  Amount  Capital  Deficit  (Deficit) 
  Preferred Stock Outstanding  Common Stock Outstanding  

Additional

Paid-in

  Accumulated  

Total

Stockholders’ Equity

 
  Shares  Amount  Shares  Amount  Capital  Deficit  (Deficit) 
Balance at March 31, 2020  -  $-   22,809,666  $22,810  $1,534,757  $(1,620,044) $(62,477)
Issuance of common stock to consultants                            
Issuance of common stock to consultants, shares                            
Issuance of common stock in connection with exercise of investor warrant                            
Issuance of common stock in connection with exercise of investor warrant, shares                            
Stock-based compensation - employee option grants                            
Placement agent fee                            
 Issuance of common stock in connection with exercise of common stock purchase warrants                            

 Issuance of common stock in connection with exercise of common stock purchase warrants , shares

                            
Issuance of common stock and warrants, net of issuance cost                            
Issuance of common stock and warrants, net of issuance cost                            
Issuance of common stock to customer                            
Issuance of common stock to customer, shares                            
Issuance of common stock in connection with private placement  -   -   478,750   478   478,272   -    478,750 
Net loss  -    -   -    -    -    (97,360)  (97,360)
Balance at June 30, 2020  -   -   23,288,416   23,288   2,013,029   (1,717,404)  318,913 
                             
Issuance of common stock to consultants  -    -   150,000   150   161,850   -   162,000 
Net loss  -    -   -    -   -   (230,564)  (230,564)
Balance at September 30, 2020  -    -    23,438,416   23,438   2,174,879   (1,947,968)  250,349 
                             
Issuance of common stock in connection with exercise of investor warrant  -   -   400,000   400   399,600   -   400,000 
Stock-based compensation - employee option grants  -   -   -   -   164,217   -   164,217��
Placement agent fee  -   -   -   -   (50,000)  -   (50,000)
Net loss  -   -   -   -   -   (248,863)  (248,863)
Balance at December 31, 2020  -  $-   23,838,416  $23,838  $2,688,696  $(2,196,831) $515,703 
                             
Balance at March 31, 2021  -  $-   24,438,416  $24,438  $4,584,214  $(3,983,626) $625,026 
Issuance of common stock in connection with exercise of common stock purchase warrants  -   -   550,000   550   581,950   -   582,500 
Stock-based compensation - employee and consultants option grants  -   -   -   -   316,896   -   316,896 
Net loss  -   -   -   -   -   (1,204,591)  (1,204,591)
                             
Balance at June 30, 2021  -   -   24,988,416   24,988   5,483,060   (5,188,217)  319,831 
                             
Issuance of common stock in connection with exercise of common stock purchase warrants  -   -   100,000   100   99,900   -   100,000 
Issuance of common stock to customer  -   -   10,000   10   9,990   -   10,000 
Stock-based compensation - employee and consultants option grants  -   -   -   -   319,850   -   319,850 
Net loss  -   -   -   -   -   (1,178,538)  (1,178,538)
Balance at September 30, 2021  -   -   25,098,416   25,098   5,912,800   (6,366,755)  (428,857)
                             
Issuance of common stock in connection with exercise of common stock purchase warrants  -   -   200,000   200   199,800   -   200,000 
Issuance of common stock and warrants, net of issuance cost  -   -   6,666,667   6,667   4,518,334   -   4,525,001 
Issuance of common stock to customer  -   -   10,000   10   9,990   -   10,000 
Stock-based compensation - employee and consultants option grants  -   -   -   -   321,571   -   321,571 
Net loss  -   -   -   -   -   (1,229,178)  (1,229,178)
Balance as of December 31, 2021  -  $-   31,975,083  $31,975  $10,962,495  $(7,595,933) $3,398,537 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
  Preferred Stock Outstanding  Common Stock Outstanding  Treasury Stock  

Additional

Paid-in

  Accumulated  Total Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
Balance as of March 31, 2021  -  $-   24,438,416  $24,438   -  $-  $4,584,214  $(3,983,626) $625,026 
Issuance of common stock in connection with exercise of common stock purchase warrants  -   -   550,000   550   -   -   581,950   -   582,500 
Stock-based compensation - employees and consultants option grants  -   -   -   -   -   -   316,896   -   316,896 
Net loss  -   -   -   -   -   -   -   (1,204,591)  (1,204,591)
Balance as of June 30, 2021  -   -   24,988,416   24,988   -   -   5,483,060   (5,188,217)  319,831 
Issuance of common stock in connection with exercise of common stock purchase warrants  -   -   100,000   100   -   -   99,900   -   100,000 
Issuance of common stock to customer  -   -   10,000   10   -   -   9,990   -   10,000 
Stock-based compensation - employees and consultants option grants  -   -   -   -   -   -   319,850   -   319,850 
Net loss  -   -   -   -   -   -   -   (1,178,538)  (1,178,538)
Balance as of September 30, 2021  -  $-   25,098,416  $25,098   -  $-  $5,912,800  $(6,366,755) $(428,857)
                                     
Balance as of March 31, 2022  -  $-   31,975,083  $31,975   (10,000) $(3,000) $11,214,820  $(8,646,550) $2,597,245 
Stock-based compensation - employees and consultants option grants  -   -   -   -   -   -   291,382   -   291,382 
Cancellation of common stock          (3,610,394)  (3,610)  10,000   3,000   (13,440)  (526,009)  (540,059)
Net loss  -   -   -   -   -   -   -   (948,728)  (948,728)
Balance as of June 30, 2022  -   -   28,364,689   28,365   -   -   11,492,762   (10,121,287)  1,399,840 
Issuance of common stock in a private placement, net of issuance costs which included 338,983 shares issued for commissions  -   -   3,728,814   3,729   -   -   696,271   -   700,000 
Stock-based compensation - employees and consultants option grants  -   -   -   -   -   -   280,567   -   280,567 
Issuance of common stock for service  -   -   333,943   334   -   -   17,157   -   17,491 
Net loss  -   -   -   -   -   -   -   (1,242,471)  (1,242,471)
Balance as of September 31, 2022  -  $-   32,427,446  $32,428   -  $-  $12,486,757  $(11,363,758) $1,155,427 
Stock-based compensation - employees and consultants option grants  -   

-

   -   -   -   -   697,608   -     
Net loss  -   -   -   -   -   -   -   

(1,335,971

)  (1,335,971) 
Balance as of December 31, 2022  -   -   -   -   -      13,184,365  (12,699,729)  520,934 

The accompanying notes are an integral part of these consolidated financial statements

 

5

 

 

ROCKETFUEL BLOCKCHAIN, INC.

Statements of Cash FlowsCONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

  Nine Months Ended  Nine Months Ended 
  December 31, 2021  December 31, 2020 
Cash Flows from Operating Activities:        
Net loss $(3,612,307) $(576,787)
Adjustments to reconcile net loss to net cash used in operating activities:        
Stock based compensation  978,317   326,217 
Change in fair value of derivative liability  (4,128)  - 
Loss on extinguishment of convertible note payable  15,076   - 
Amortization of debt discount  22,084   - 
         
Changes in operating assets and liabilities:        
Accounts receivable  (6,325)  - 
Prepaid expenses and other current assets  (52,338)  - 
Accounts payable and accrued expenses  (7,147)   17,238 
Payable to related party  (13,049)  - 
Deferred revenue  9,931   - 
Net cash flows used in operating activities  (2,669,886)  (233,332)
         
Cash Flows from Financing Activities:        
Proceeds from issuance of common stock and warrants, net of placement agent fee  5,407,501   828,750 
Proceeds from convertible note payable, net  126,250   - 
Repayment of convertible note payable  (159,282)  - 
Net cash flows provided by financing activities  5,374,469   828,750 
Net change in cash  2,704,583   595,418 
Cash at beginning of period  800,331   7,838 
Cash at end of period $3,504,914  $603,256 
         
Supplemental disclosure of non-cash flow information        
Common stock issued to customers for early adopter $20,000  $- 
Common stock issued to consultant in lieu of cash $-  $162,000 

  Nine Months Ended  Nine Months Ended 
  December 31, 2022  December 31, 2021 
Cash Flows from Operating Activities:        
Net loss $(3,527,170) $(2,383,129)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  

493,660

   - 
Stock based compensation  

1,287,048

   646,746 
Gain from legal settlement  540,059   - 
Change in fair value of derivative liability  -   (6,741)
Amortization of debt discount      19,349 
Changes in operating assets and liabilities:        
Accounts receivable      6,600 
Prepaid expenses and other current assets  (111,593)  (13,779)
Accounts payable and accrued expenses  

723,982

   288,029 
Payable to related party  

106,645

   36,680 
Deferred revenue  

3,504

   2,500 
Net cash flows used in operating activities  

(483,865

)  (1,403,745)
         
Cash Flows from Investing Activities:        
Purchase of property and equipment  (40,022)  - 
Software development cost  (1,221,905)  - 
Net cash flows used in investing activities  (1,261,927)  - 
         
Cash Flows from Financing Activities:        
Proceeds from issuance of common stock in connection with exercise of common stock purchase warrants  -   682,500 
Proceeds from issuance of common stock, warrants and tokens, net of issuance costs  -   - 
Proceeds from convertible note payable, net  -   126,250 
Net cash flows provided by financing activities  -   808,750 
Net change in cash and restricted cash  (2,241,838)  (594,995)
Cash and restricted cash at beginning of period  

2,634,794

   800,331 
Cash and restricted cash at end of period  

392,956

  $$205,336
         
Supplemental disclosure of cash flow information:        
Cash paid for interest $

544

  $- 
Cash paid for income taxes $-  $-
Supplemental disclosure of non-cash flow information:        
Common stock issued to customer for early adopter $-  $10,000
Common stock issued to consultant in lieu of cash $-  $-

  2022  2021 
Reconciliation of cash and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above at December 31:        
         
Cash $392,956  $205,336 
Restricted cash  

-

   - 
Total cash and restricted cash $392,956  $205,336 

 

The accompanying notes are an integral part of these consolidated financial statements

6

 

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 20212022

(UNAUDITED)

1.Business

Our Corporate History

On June 27, 2018 (the “Closing Date”), RocketFuel Blockchain Company (“RBC”) and B4MC Gold Mines, Inc., a Nevada Corporation (“B4MC” or the “Purchaser”), consummated the transactions contemplated by that certain Contribution Agreement (the “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”), (such transaction, the “Business Combination”). As a result of the Business Combination, RBC became a 100% wholly owned subsidiary of B4MC. In September 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.

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 purpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and warranties in the Contribution Agreement as statements of factual information.

Business

 

We (or the “Company”) provide cryptocurrency and other 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.

 

Our corporate headquarters are located in San Francisco, California.

 

On May 12, 2022, the Company incorporated a wholly owned subsidiary, RocketFuel (BVI) Ltd., in the British Virgin Islands. The subsidiary is formed to be the issuer of digital tokens in connection with our planned loyalty program. As of March 30, 2023, no tokens had been issued. On May 17, 2022, the Company incorporated another wholly owned subsidiary, RocketFuel A/S, in Denmark. This subsidiary will engage in our B2B cross border settlement program. The subsidiary received a Virtual Asset Services Provider (VASP) license in July 2022, allowing it to offer a variety of crypto-based services in the EU. Both subsidiaries have not commenced commercial operations as of December 31, 2022.

2.Summary of Significant Accounting Policies

 Interim Financial Statements and

Other than as discussed herein, our significant accounting policies are described in Note 2 to the audited financial statements as of March 31, 2022 which are included in our Annual Report on Form 10-K as filed with the SEC on July 15, 2022.

Basis of Presentation

 

The accompanying unaudited 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 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, the accompanying unaudited financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations for the three and nine months ended December 31, 20212022 and cash flows for the nine months ended December 31, 20212022 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The March 31, 2022 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. These unaudited financial statements should be read in conjunction with our audited financial statements as of March 31, 20212022 as filed with the Securities and Exchange Commission (the “SEC”) on July 22, 2021.15, 2022.

 

7

Principles of Consolidation

 

ROCKETFUEL BLOCKCHAIN, INC.The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries in accordance with consolidation accounting guidance. The Company’s subsidiaries consist of RocketFuel Blockchain Company (RBC) (incorporated in Nevada), RocketFuel A/S (incorporated in Denmark), and RocketFuel (BVI) (incorporated in the British Virgin Islands), the latter two of which were incorporated during the quarter ended June 30, 2022. All intercompany balances and transactions have been eliminated in consolidation.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021Use of Accounting Estimates

(UNAUDITED)

 

The preparation of these consolidated 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 reported amounts reported in our unauditedof assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and accompanying notes.the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions 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.

 

7

Reclassifications

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

Reclassifications

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

Cash and Cash Equivalents

Cash includes cash on hand. We consider all highly-liquid, temporary cash investments with a maturity date of three months or less to be cash equivalents.

Restricted Cash

In relation to the Company’s incorporation of a subsidiary in Denmark, a cash deposit of $55,956 was made into an escrow account controlled by a legal firm. This cash is not available to fund immediate or general business use until it is released from escrow into an operating cash account of the Denmark subsidiary. Until this release occurs, the cash is restricted in nature and is separately disclosed on the Company’s consolidated balance sheet and consolidated statement of cash flows.

Software Development Costs

The Company accounts for software development costs in accordance with Accounting Standards Codification (“ASC”) 350-40. Research and development expensescosts are expensed as incurred, except for certain costs which are capitalized in connection with the prior quartersdevelopment of its internal-use software and website. These capitalized costs are primarily related to the current year, totaling $15,397, were reclassified toapplication software that is hosted by the Company and accessed by its customers through the Company’s website. In addition, the Company capitalizes certain general and administrative expensescosts related to more correctly report the naturecustomization and development of certainour internal business systems. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing performed to ensure the product is ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements of internal-use software when it is probable that the expenditures will result in additional functionality. Maintenance and training costs are expensed as incurred. Capitalized internal use software costs are recorded as part of property and equipment and are amortized on a straight-line basis over an estimated useful life of two years.

Property and Equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which is three years for the Company. Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating expenses.

 

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the related assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, the effects of obsolescence, demand, competition, and other economic factors.

Revenue Recognition

During March 2021 we commenced commercial operations. Our revenues are generated from (i) fees charged under software development contracts; (ii) fees charged in connection with conversion of crypto currencies to and from fiat currencies; (iii) fees charged in connection with the implementation of our ecommerce checkout solutions; and (iv) ongoing daily transactional fees derived as a negotiated percentage of the transactional revenues earned by our merchant customers. In June 2022, we conducted tests of our cross-border B2B solution, which we expect to place in commercial operations by mid-2023.

Our revenue recognition policy follows the guidance from ASC 606, “Revenue Recognition,” and Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606) which provides guidance on the recognition, presentation, and disclosure of revenue in consolidated financial statements. We determine revenue recognition through the following steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract and (v) recognition of revenue when a performance obligation is satisfied. Collectability is assessed based on a number of factors, including the creditworthiness of a client, the size and nature of a client’s website and transaction history. Amounts billed or collected in excess of revenue recognized are included as deferred revenue. An example of this deferred revenue would be arrangements where clients request or are required by us to pay in advance of delivery.

8

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

Earnings (Loss) Per Share

The CompanyEarnings (loss) per share is authorized to issue 250,000,000 sharescomputed by dividing net income (loss) by the weighted average number of common stock, $0.001 par valueshares outstanding during the reporting period. Diluted earnings per share. At December 31, 2021, there were 31,975,083 sharesshare is computed similar to basic earnings per share, except the weighted average number of common shares outstanding are increased to include additional shares from the assumed exercise of share options, if dilutive. The dilutive effect, if any, of convertible instruments or warrants is calculated using the treasury stock issuedmethod. There are no outstanding dilutive instruments as the outstanding convertible instruments, stock options and outstanding.

Forwarrants would be anti-dilutive if converted or exercised for the three and nine months ended December 31, 20212022 and 2020, only basic earnings (losses) per share are presented. The effect of the Company’s outstanding convertible note payable, options and warrants, would have been anti-dilutive.

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 our Annual Report on Form 10-K as filed with the SEC on July 22, 2021.

 

Derivative Financial InstrumentsStock-based Compensation

 

Derivative financial instruments, as definedThe Company applies the provisions of ASC 718, Compensation - Stock Compensation, (“ASC 718”) which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consistthe statements 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.operations.

 

We do not use derivative financial instrumentsFor stock options issued to hedge exposures to cash-flow, market or foreign-currency risks. However, duringemployees and members of the second quarterBoard of 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, atDirectors (the “Board) for their services, the Company estimates the grant date fair value in our financial statements (See Note 8). Duringof each option using the third quarterBlack-Scholes option pricing model. The use of fiscal 2022, these derivatives were satisfied.the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

 

When derivative treatment is determined, we estimatePursuant to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the fairCompany accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value of the bifurcated embedded conversion features using a Stock Path Monte Carlo Simulation model. Estimating fair values of derivative financial instruments requiresstock options that are in line with the development of significant and subjective estimates (such as volatility, estimated life and risk-free rates of return) that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our commonprocess for valuing employee stock which has a high-historical volatility.options noted above.

9

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

 

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.

 

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 generation 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 tax planning strategies in making this assessment.

 

8

Impact of COVID-19 on Our Business

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

(UNAUDITED)

 

4. Going ConcernThe COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption despite progress made in the development and distribution of vaccines. It disrupted global travel, supply chains and the labor market and adversely impacted global commercial activity. While the pandemic has largely subsided, considerable uncertainty still surrounds COVID-19, the evolution of its variants, its potential long-term economic effects, as well as the effectiveness of any responses taken by government authorities and businesses and of various efforts to inoculate the global population.

 

Our financial statements have been presentedSignificant uncertainty continues to exist concerning the impact of the COVID-19 pandemic on the basis that we are a going concern, which contemplates the realization of assetsour customers’ and satisfaction of liabilities in the normal course of business. We incorporated ourprospects’ business on January 12, 2018, the date of our inception, and commenced commercial operations in March 2021. Duringfuture periods. Although our total revenues for the three and nine months ended December 31, 2021,2022 were not materially impacted by COVID-19, we reported a net lossbelieve our revenues may be negatively impacted in future periods until the effects of $1,229,178 the pandemic have fully subsided and $3,612,307, respectively, which included as a componentthe current macroeconomic environment has substantially recovered. Effects of generalthe COVID-19 pandemic that may negatively impact our business in future periods include, but are not limited to: limitations on the ability of our customers to conduct their business, purchase our products and administrative expensesservices, and make timely payments; curtailed consumer spending; deferred purchasing decisions; delayed consulting services implementations; labor shortages and decreases in product licenses revenues driven by channel partners. We will continue to actively monitor the statementsnature and extent of operations a non-cash stock-based compensation charge of $331,571 the impact to our business, operating results, and $978,317, respectively, and cash flows used in operating activities during the nine months ended December 31, 2021 of $2,669,886. As a result, management believes that there is substantial doubt about our ability to continue as a going concern.financial condition.

 

We 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. During the three months ended December 31, 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 9 – Stockholders’ equity (deficit). 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 warrants, 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 concern.

5. NewRecent 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.

10

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

3. Going Concern

Our consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We incorporated our business on January 12, 2018, the date of our inception, and commenced commercial operations in March 2021. During the three and nine months ended December 31, 2022, we reported a net loss of $1,335,971 and $3,527,170, respectively, which included as a component of general and administrative expenses in the statements of operations a non-cash stock-based compensation charge of $697,608 and $1,287,048, respectively, and cash flows used in operating activities during the nine months ended December 31, 2022 of $(483,865). These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We 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 nine months ended December 31, 2022, we raised $700,000 in proceeds, net of the issuance costs, through a private placement of common stock, warrants and tokens (see Note 7). We have used and plan to continue using the net proceeds of the private placement and warrant exercise 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, 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 concern.

4. Property, Plant & Equipment

The Company’s property, plant and equipment assets are comprised of the following:

Schedule of Property Plant And Equipment

  Useful Life December 31, 2022  March 31, 2022 
Capitalized software development costs 2 years $

1,221,905

  $586,700
Computer equipment 3 years  40,022   23,395 
Less: Accumulated depreciation and amortization    

(493,660

)  (149,919)
Property and equipment, net   $

768,267

  $460,176

11

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

Capitalized software development costs represent the costs incurred during the development stage, when direct and incremental internal and external costs, are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements of internal-use software when it is probable that the expenditures will result in additional functionality.

Depreciation and amortization expenses amount to $256,659 and $493,660 for the three and nine months ended December 31, 2022. No depreciation and amortization expenses were recorded for the three and nine months ended December 31, 2021.

5. Related Party Transactions

 

During the three and nine months ended December 31, 20212022 and 2020,2021, 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 $16,952 34,569and $116,122 82,248 for the three and nine months ended December 31, 2022, respectively. We recorded legal fees paid to the Affiliate of $11,277 and $36,680for the three and nine months ended December 31, 2021, respectively. We recorded legal fees paid to the Affiliate of $13,414 and $34,877 for the three and nine months ended December 31, 2020, respectively. As of December 31, 20212022 and March 31, 2021,2022, we had $22,426 24,396and $35,475, respectively, payable to the Affiliate.

 

InOn January 18, 2023, we borrowed $200,000 from Peter M. Jensen, our CEO, pursuant to a convertible promissory note. The proceeds were to be used to support a transaction that ultimately was not consummated. On February 15, 2023, we repaid the three and nine months ended December 31, 2021, we paid an affiliateloan in full together with $1,535 representing accrued interest at a rate of our executive chairman $nil10 and $3,000, respectively, to provide website-related services.% per annum.

 

7.6. 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 nine months ended December 31, 2021, we recorded revenues ofDeferred revenue was $9,3813,504 and $21,25615,073, as of December 31, 2022 and March 31, 2022, respectively.

 

9

7. ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

(UNAUDITED)

8. Convertible Note PayableStockholders’ Equity

 

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 was 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.Private placement:

 

On November 8, 2021, we repaidSeptember 19, 2022, the convertible note in full. Using the same valuation method, the fair value of the embedded conversion feature at repayment was $116,023, resulting in a change in fair value of the derivative liability of $(2,633) and $4,128 for the three and nine months ended December 31, 2021, respectively. We also recognized a loss on debt extinguishment of $15,076 for the three and nine months ended December 31, 2021. There was no conversion prior to November 8, 2021.

9. Stockholders’ Equity (Deficit)

On January 9, 2020, we sold 10,000 shares of our common stock toCompany completed 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. All these transactions were 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 in the three months ended December 31, 2020.

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, we issued a warrant to purchase 1,500,000 shares of common stock at $1.00 per share (the “First Warrant”). The warrant was to expire on April 30, 2021. We 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 2020. 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. In the nine months ended December 31, 2021, the warrant holder exercised warrants from the Second Warrant to purchase 300,000 shares of our common stock at an exercise price of $1.00 per share. At December 31, 2021, there are 1,950,000 Second Warrants outstanding and exercisable.

On October 11, 2021, we and Triton Funds, LP, a Delaware limited partnership (“Triton”), an unrelated third party, entered into an amendment to the 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 Triton 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 funded under a purchase notice under the CSPA, as amended, is the number of shares of common stock to be purchased multiplied by the greater of (i) $1.00 (changed from $1.65) or (ii) eighty percent (80%) of the lowest closing price of the common stock within fifteen 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. In connection with the amendment to the CSPA, the Company also amended the warrants issued to Triton. As amended the warrants are to purchase, in one or more instalments, 1,300,000 shares (increased from 800,000 under the CSPA) of the Company’s common stock (the “Warrants”) at an exercise price equal to the greater of (i) $1.00 per share (changed from $1.65) and (ii) eighty percent (80%) of the average closing price of the common stock over the 90-calendar day period preceding the Warrant exercise date, subject to adjustments. The Warrants terminate on February 25, 2026. On May 5, 2021, Triton exercised 50,000 Warrants for an aggregate purchase price of $82,500 ($1.65 per share). After the amendment, 1,250,000 Warrants remain unexercised.

10

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

(UNAUDITED)

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. On October 6, 2021, we issued 10,000 shares of our common stock to another customer.

From January 1, 2018 through December 31, 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.

On November 4, 2021, we completed a public offering (the “Offering”) of 6,666,6673,389,831 shares of its common stock, par value $0.001 per share (the “Common Stock”) and warrants to purchase 6,666,6671,694,915 shares of Common Stock (the “Common Warrants”“Warrants”). In addition, in connection with the Offering, RocketFuel (BVI) Ltd., a wholly owned subsidiary of the Company, also entered into pre-launch token sale agreements with four investors for the issuance of 3,389,831 cryptographic tokens (the “Tokens”) when such Tokens are created. The Company plans to issue the Tokens in connection with a loyalty program it is developing, and these Tokens have not been issued as of December 31, 2022. The combined purchase price offor one share of Common Stock, an accompanying Warrant and accompanying Common Warranta Token was $0.750.2065. The Common Warrants are immediately exercisable at an exercise price equal to $0.750.2065 per share of Common Stock, (the “Exercise Price”), subject to adjustments as provided under the terms of the Common Warrants. The Warrants are exercisable for five and one-half years from the initial exercise date.

 

On November 1, 2021,September 19, 2022, in connection with the Offering, wethe Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutionalfour investors. The Purchase Agreement sets forth the economic terms set forth above and contains customary representations and warranties of the Company, as well as certain indemnification obligations of the Company and ongoing covenants for the Company. In addition,The Company also entered into a registration rights agreement with the investors requiring the Company to file within 90 days of closing a registration statement under the Purchase Agreement,Securities Act of 1933 covering the Company has agreed not to issue, enter into any agreement to issue or announceCommon Stock sold in the issuance or proposed issuance of anyprivate placement and the shares issuable upon exercise of the Company’s (or its subsidiaries’) Common Stock or common stock equivalents for a period of 90 days from the closing of the Offering, other than certain exempt issuances. Additionally, the Company has also agreed for a period of two years following the closing date of the Offering not to (i) issue or agree to issue equity or debt securities convertible into, or exercisable or exchangeable for, Common Stock at a conversion price, exercise price or exchange price which floats with the trading price of our Common Stock or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement, including an equity line of credit, whereby the Company may issue securities at a future-determined price. This agreement does not apply to the offer, issuance or sale by the Company of Common Stock pursuant to an at-the-market offering facility the Company may enter with the placement agent of the Offering following expiration of the 90-day lock-up period.Warrants.

 

The net proceeds to the Company from the Offering, after deducting placement agent’s fees and other Offering expenses, and excluding the proceeds, if any, from the exercise of the Common Warrants, are approximately $4.37700,000 million.

. In connection with the Offering, pursuant to an engagement letter (the “Engagement Letter”) dated as of July 9, 2021, as amended on September 20, 2021 and on October 28, 2021 between the Company and H.C. Wainwright & Co., LLC (“Wainwright”), the Company paid Wainwright (i) a total cash fee equal toissued 8.0% of the aggregate gross proceeds received by the Company from the sale of the securities in the transaction, and (ii) a non-accountable expense allowance of $75,000. Pursuant to the Engagement Letter, the Company also issued to Wainwright or its designees warrants to purchase up to an aggregate of 533,333338,983 shares of Common Stock (8.0%its common stock to one of the aggregate number of shares of Common Stock sold in the Offering) (the “Placement Agent Warrants”). The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants are exercisableinvestors for five years from the date of the Purchase Agreement and have an exercise price equal to 125% of the purchase price per share of Common Stock in the Offering, or $0.9375 per share.

As of December 31, 2021, and March 31, 2021, we had 31,975,083 shares and 24,438,416 shares of our common stock issued and outstanding, respectively.

Warrants:

The following is a summary of warrants for the nine months ended December 31, 2021:

Summary of Warrantscommission.

  Warrants  Weighted Average
Exercise Price		 
Outstanding at March 31, 2021  1,565,982  $1.00 to 1.65 
Issued  9,950,000   0.75 to 1.00 
Exercised  (850,000)  1.00 to 1.65 
Canceled  -  - 
Expired  -   - 
Outstanding and exercisable at December 31, 2021  10,665,982  $0.84 
Weighted average remaining contractual term (years)      4.37 

 

1112

 

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 20212022

(UNAUDITED)

 

Issuance of common stock:

The Company entered the marketing service agreement in July 2022 with a firm. In connection with this service agreement, the Company issued 333,943 restricted shares and recognized $17,491 of stock compensation expense for the three and nine months ended December 31, 2022. Total unrecognized stock compensation expense as of December 31, 2022 was 27,591

Cancellations of Stock:

On October 6, 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. In March 2022, in settlement of a customer dispute, we repurchased the 10,000 shares of stock issued in October 2021 for $3,000. During the three months ended June 30, 2022, the 10,000 shares were cancelled.

On June 7, 2022, we entered into a settlement agreement in the legal proceedings with Joseph Page, our former director and chief technology officer, as defendant, whereunder Page surrendered 3,600,394 shares of the Company’s common stock. In connection with this settlement, we recognized a gain of $540,059, calculated based on the Company’s share price of $0.15 per share on the date of settlement of the legal proceedings. This gain was recorded in other income for the nine months ended December 31, 2022 in the accompanying consolidated statements of operations (see Note 9). Immediately after these shares were transferred to the Company, the 3,600,394 shares were cancelled and we recorded cancellation of these treasury shares during the three months ended June 30, 2022.

As of December 31, 2022, and March 31, 2022, we had 36,297,840 and 31,965,083 shares of our common stock outstanding, respectively.

Warrants:

As of December 31, 2022 and March 31, 2022, the total outstanding warrants to purchase of the Company’s common stock were 12,360,897 and 10,665,982 with a weighted average exercise price of $0.71 and $0.84, respectively. There were 1,694,915 new warrants issued with an average exercise price of $0.21 during the three and nine months ended December 31, 2022. There were no warrants exercised, cancelled or expired during the three and nine months ended December 31, 2022. As of December 31, 2022 and March 31, 2022, the weighted average remaining contractual terms were 4.33 and 4.11 years, respectively.

10. 8. Stock-Based Compensation

 

Stock Option PlanPlan:

 

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. On May 10, 2022, the Board has approved a plan to increase the number of shares to 8,000,000 for 2018 plan. As of December 31, 20212022 and March 31, 20212022, there were 399,405918,987 shares and 502,230393,987 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.

 

Service-Based Stock Option Grants

 

From August 8, 2018 through December 31, 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 throughnine months ended December 31, 2021,2022, we utilized the Black-Scholes pricing model utilizing the following assumptions:

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

Service-Based

Options

Option exercise price per share$1.000.10 - $2.750.30
Grant date fair market value per share$1.000.14 - $2.750.21
Range of expected volatility151% - 179%
Expected term of option in years6.25
Range of risk-free interest rate6.252.5 - 4.7%
Expected volatilityDividend yield40.3% to 220.5-%
Expected dividend rate0.00%
Risk free interest rate0.42% to 2.83%

During the three months ended December 31, 2021, we granted no service-based options pursuant to the 2018 Plan. During the nine months ended December 31, 2021, we granted service-based options pursuant to the 2018 Plan to (i) one employee exercisable into 2,825 shares of our common stock at exercise prices from $1.00 per share to $2.75 per share; and (ii) one consultant exercisable into 100,000 shares of our common stock at an exercise price of $1.08 per share. In determining the fair value of the service-based options granted during the three and nine months ended December 31, 2021, we utilized the Black-Scholes pricing model utilizing the following assumptions:

 

Service-Based

Options

Option exercise price per share$1.00 - $2.75
Grant date fair market value per share$1.00 - $2.75
Expected term of option in years6.25
Expected volatility218.1% to 220.5%
Expected dividend rate0.00%
Risk free interest rate0.71% to 1.02%

1213

 

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 20212022

(UNAUDITED)

 

Activity under the 2018 Plan for all service-based stock options for the nine months ended December 31, 20212022 are as follows:

Schedule of Stock Option Activity

  

Options

Outstanding

  

Weighted-

Average Exercise

Price per Share

  

Weighted-

Average

Remaining

Contractual

Term in Years

  

Aggregate

Intrinsic Value

 
Options outstanding at April 1, 2021:  4,897,770  $1.08   9.63  $1,175,417 
Granted  102,825   1.10   9.59   - 
Exercised  -             
Cancelled or forfeited  -             
Options outstanding as of December 31, 2021  5,000,595  $1.08   7.73  $nil 
Options exercisable as of December 31, 2021  1,830,448  $1.08   7.73  $nil 
Options vested or expected to vest as of December 31, 2021  1,830,448  $1.08   7.73  $nil 

  

Options

Outstanding

  

Weighted-

Average Exercise

Price per Share

  

Weighted-

Average

Remaining

Contractual

Term in Years

  

Aggregate

Intrinsic Value

 
Options outstanding at April 1, 2022:  5,766,886  $0.21   8.00  $- 
Granted  575,000  $0.17   5.61   6,780 
Exercised  -  $-   -   - 
Cancelled or forfeited  489,127  $0.21   5.61   - 
Options outstanding as of December 31, 2022  5,852,758  $0.20   5.61  $28,099 
Options vested and exercisable as of December 31, 2022  2,784,623   0.21      $5,899 

 

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 December 31, 20212022 of $0.24 0.1455and 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 December 31, 2021.2022. There were no service-based stock options exercised under the 2018 Plan for the three and nine months ended December 31, 2021 and 2020.2022.

 

For the three and nine months ended December 31, 2022 and 2021, we recorded stock-based compensation expense for service-based stock options pursuant to the 2018 Plan in the amount of $296,167253,188 and $882,105294,446, respectively. For the three and nine months ended December 31, 2020,2022 and 2021, we recorded stock-based compensation expense for service-based stock options pursuant to the 2018 Plan in the amount of $164,217770,842 and $164,217585,939, respectively. As of December 31, 2021,2022 and March 31, 2022, we had $3,326,8522,017,192 and $3,336,948 of unrecognized stock-based compensation cost related to service-based stock options.options, respectively.

 

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 first vesting date being February 1, 2021.

 

In determining the fair value of the performance-based options granted to 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

  

Performance

-Based

Options

 
Option exercise price per share $1.08 
Grant date fair market value per share $1.08 
Expected term of option in years  6.25 
Expected volatility  240.1%
Expected dividend rate  0.00%
Risk free interest rate  0.54%

13

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021

(UNAUDITED)

  

Performance

-Based

Options

 
Option exercise price per share $1.08 
Grant date fair market value per share $1.08 
Expected term of option in years  6.25 
Expected volatility  240.1%
Expected dividend rate  0.00%
Risk free interest rate  0.54%

 

Activity under the 2018 Plan for all performance-based stock options for the nine months ended December 31, 20212022 is as follows:

Schedule of Stock Option Activity

  Options Outstanding  

Weighted- Average Exercise

Price per Share

  Weighted- Average Remaining Contractual Term in Years  Aggregate Intrinsic Value 
Balance at April 1, 2021  600,000  $1.08   9.83  $144,000 
Granted  -             
Exercised  -             
Cancelled or forfeited  -             
Options outstanding as of December 31, 2021  600,000  $1.08   8.71  $nil 
Options exercisable as of December 31, 2021  184,380  $1.08   8.71  $nil 
Options vested or expected to vest as of December 31, 2021  184,380  $1.08   8.71  $nil 

  

Options

Outstanding

  

Weighted-

Average Exercise

Price per Share

  

Weighted-

Average

Remaining

Contractual

Term in Years

  

Aggregate

Intrinsic Value

 
Options outstanding at April 1, 2022:  600,000  $0.33   8.46  $- 
Granted  -   -         
Exercised  -   -         
Cancelled or forfeited  -   -              
Options outstanding as of December 31, 2022  600,000  $0.33   7.96  $- 
Options vested and exercisable as of December 31, 2022  282,822  $0.33      $- 

14

ROCKETFUEL BLOCKCHAIN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

 

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 December 31, 20212022 of $0.24 0.1455and 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 December 31, 2021.2022. There were no performance-based stock options exercised under the 2018 Plan for the three and nine months ended December 31, 2021 and 2020.2022.

 

For the three and nine months ended December 31, 2022 and 2021, we recorded performance-basedstock-based compensation expense for performance-based stock options pursuant to the 2018 Plan in the amount of $25,404 27,148and $76,21225,404, respectively. For the three and nine months ended December 31, 2020,2022 and 2021, we recorded no performance-basedstock-based compensation expense for performance-based stock options pursuant to the 2018 Plan.Plan in the amount of $54,295 and $50,808, respectively. As of December 31, 2021,2022 and March 31, 2022, we had $321,763 233,721 and $315,164of unrecognized stock-based compensation cost related to performance-based stock options.options, respectively. There were no performance-based stock options exercised under the 2018 Plan for the three and nine months ended December 31, 2022 and 2021.

 

11.9. Commitments and Contingencies

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 has an interest adverse to us.

On October 8, 2020, the Companywe 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 the Company’sour board. After his resignation, the Companywe retained independent patent counsel to review itsour patent applications. In connection with this review, the Companywe discovered certain deficiencies in some of the applications and in their assignments to the Company.us. We determined that all of the applications had been abandoned. Based on this review, the Companywe decided to refile three of itsour applications with the U.S. Patent and Trademark Office, which the Companywe did in May 2020. It is the Company’sour belief that the three newly filed patent applications cover and/or disclose the same subject matter as the Companywe disclosed in the five original patent applications. In this case, the Company’sour rights may be subject to any intervening patent applications made after the dates of the original applications. In the lawsuit, the Company iswe were alleging that Mr. Page was aware of the abandonments when he assigned the patents to RBC,RocketFuel Blockchain Company (“RBC”), a private corporation that he controlled, and that he failed to disclose to the Companyus the abandonments when the Company acquired RBC in exchange for shares of the Company’s Common Stock. Mr. Page has filed an answer denying the Company’s clamsclaims and has asserted cross- and counterclaims against the Company and several of the Company’s shareholders alleging breach of contract and fraud. In September 2021, Mr. Page voluntarily dismissed all of the counterclaims against the shareholders.

On June 7, 2022, RBC entered into a settlement agreement in the legal proceedings between the Company as plaintiff, and Joseph Page as defendant, whereunder Page surrendered 3,600,394 shares of the Company’s common stock, and kept 1,500,000 shares. Mr. Page represents and warrants that he has not filed or assisted anyone else in filing any patent applications that would preempt or infringe upon the Company’s patent applications. Plaintiff and defendant have each released their claims against each other and covenanted not to sue the other, including related parties and stakeholders, with the exclusion of current or future claims against EGS. The Company intendsparties agreed to vigorously contest these allegations.

a Stipulated Dismissal of the Action with Prejudice filed with the court. In connection with this settlement, we recognized a gain of $540,059, calculated based on the Company’s share price of $0.15 per share on the date of settlement of the legal proceedings. This gain was recorded in other income for the nine months ended December 31, 2022 in the accompanying consolidated statements of operations (see Note 7).

 

On March 2, 2021, the Companywe filed a lawsuit in the U.S. District Court for the Southern District of New York against EllenhoffEllenoff 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 thatthe fact. We are seeking damages and the return of legal fees previously paid.

 

AtOn February 8, 2023 we entered into a settlement agreement with EGS, pursuant to which EGS agreed to pay us $750,000 in full settlement of the datelawsuit. After payment of this report,our legal fees, the Company is unablenet payment to estimateus, which was received on February 14, 2023, was $525,000. As part of the probability success or dollar amount of rulings in either of these cases,settlement (i) we have agreed to dismiss the lawsuit with prejudice and as(ii) each party has agreed to grant a result, has not accrued any potential benefitmutual general release to the Company’s balance sheet. Attorney feesother party and its affiliates, related to these proceedings are expensed as incurred.parties and agents.

15

 

12. ROCKETFUEL BLOCKCHAIN, INC.

Subsequent EventsNOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022

(UNAUDITED)

 

In order to re-incentivize and retain its employees, on January 11, 2022, the Company’s board of directors approvedCompany terminated its agreement with Scarola Schaffzib Zubatov PLLC (“SSZ”), which the Company had retained to represent it in the litigation against EGS. The reason for the termination was that the Company believed that SSZ had overcharged for legal services provided. Subsequent to the termination, SSZ sent the Company additional invoices, to which the Company also objected. In August 2022 SZZ filed a one-time stock option repricing for all stock options issued and outstanding under our 2018 Stock Incentive Plan. The effectlawsuit in the Supreme Court of the repricing will beState of New York, County of New York, claiming it is owed approximately $120,000 in legal fees. The Company disputes that this amount is owed and contends that a charge to operations over the remaining termsportion of the options and will begin tolegal fees previously paid should be recordedrefunded. Discovery has commenced; a trial date has not been set. The Company has accrued approximately $120,000 in the quarter ending March 31, 2022. The charge is noncash, is equity-neutral and in the opinion of management will have no material impact on the Company’s operating activities.accounts payable.

10. Subsequent Events

 

On January 13, 2023, we completed a private placement (the “Offering”) of $150,000 principal amount of its secured convertible promissory notes (the “Notes”). The purchase price was $150,000. There were three purchasers, including Gert Funk, the Company’s Chairman, and Peter M. Jensen, the Company’s Chief Executive Officer and a member of its Board of Directors. The third purchaser was a private investor. Each investor purchased a Note for $50,000.

The Notes bear interest at 10% per annum and mature on July 13, 2023 (the “Maturity Date”). The Notes may be prepaid by the Company at any time. If the Company shall prepay the entire outstanding principal amount of a Note on or before April 13, 2023, then there is no prepayment premium. If the Company shall prepay the entire outstanding principal amount of a Note between April 14, 2023 and the Maturity Date, then it shall also pay accrued interest on such principal amount in an amount equal to 50% of such principal amount. If the Company shall repay the outstanding principal amount of a Note on or after the Maturity Date, then it shall also pay accrued interest on such principal amount in an amount equal to 100% of such principal amount.

The Notes are convertible into shares of the Company’s Series A Preferred Stock (“Series A Preferred”) at a conversion price equal to (a) the outstanding principal amount of, plus all accrued interest on, the Note divided by (b) $0.2065. The conversion price is subject to adjustment for certain stock splits, recapitalizations and other similar events. The Notes are secured by a security interest in all of the Company’s assets.

Up to 1,000,000 shares of Series A Preferred were approved by the Board. The Series A Preferred has a 200% liquidation preference over the common stock and any other future series of preferred stock, payable in the event of a liquidation or merger of the Company. In such event, the holders of the Series A Preferred will be entitled to a priority distribution equal to 200% of the deemed issue price of $0.2065 per share, (i.e., $0.4130 per share). The Series A Preferred is convertible at the option of the stockholder into shares of common stock at a conversion price of $0.2065 per share, subject to adjustment for certain stock splits, recapitalizations and other similar events.

On January 13, 2023, in connection with the Offering, the Company entered into a Convertible Notes Subscription Agreement (the “Subscription Agreement”) with three investors. The Subscription Agreement sets forth the economic terms set forth above.

The Company intends to use the $150,000 net proceeds of the Offering for general corporate purposes and to fund ongoing operations and expansion of its business.

On February 8, 2023 we entered into a settlement agreement with EGS, pursuant to which EGS agreed to pay us $750,000 in full settlement of the lawsuit. After payment of our legal fees, the net payment to us, which was received on February 14, 2023, was $525,000. As part of the settlement (i) we have agreed to dismiss the lawsuit with prejudice and (ii) each party has agreed to grant a mutual general release to the other party and its affiliates, related parties and agents.

On January 18, 2023, we borrowed $200,000 from Peter M. Jensen, our CEO, pursuant to a convertible promissory note. The proceeds were to be used to support a transaction that ultimately was not consummated. On February 15, 2023, we repaid the loan in full together with $1,535 representing accrued interest at a rate of 10% per annum.

1416

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking” within the meaning of the federal securities laws. These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

 

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, and are not guaranties of future performance. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions. We are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ from our predictions include, without limitation:

 

 ●Market acceptance of our products and services;
 ●Competition from existing products or new products that may emerge;
 ●The implementation of our business model and strategic plans for our business and our products;
 ●Estimates of our future revenue, expenses, capital requirements and our need for financing;
 ●Our financial performance;
 ●Current and future government regulations;
 ●Developments relating to our competitors; and
 ●Other risks and uncertainties, including those listed under the section titled “Risk Factors” in our annual report filed on Form 10-K filed with the Securities and Exchange Commission on July 22, 2021.15, 2022.

 

Although we have sought to identify the most significant risks to our business, we cannot predict whether, or to what extent, any of such risks may be realized, nor can there be any assurance that we have identified all possible issues which we might face. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law. We urge readers to review carefully the risk factors described in this Quarterly Report and in our annual report filed on Form 10-K filed with the Securities and Exchange Commission on July 22, 2021.15, 2022. You can read these documents at www.sec.gov.

 

Overview

 

Our Corporate History

On June 27, 2018 (the “Closing Date”), RocketFuel Blockchain Company (“RBC”) and B4MC Gold Mines, Inc., a Nevada Corporation (“B4MC” or the “Purchaser”), consummated the transactions contemplated by that certain Contribution Agreement (the “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”), (such transaction, the “Business Combination”). As a result of the Business Combination, RBC became a 100% wholly owned subsidiary of B4MC. In September 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 information contained in this Report constitutes the information necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act.

15

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, in reliance upon the exemption from registration provided by Section 4(a)(2), which exempts transactions by an issuer not involving any public offering, and 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.

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 purpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and warranties in the Contribution Agreement as statements of factual information.

Our Business

 

We provide payment and check-out systems enabling shoppers on e-commerce sites to pay using cryptocurrencies and direct bank transfers. Currently our payment and check-out systems focus on B2C applications; we are currently developing B2B capabilities that will among other things enable businesses to receive payments on their invoices in cryptocurrencies. Our check-out systems are based upon blockchain technology and are designed to reduce costs and increase speed, security and ease of use. We believe that users of our systems enjoy a seamless check-out experience compared to current online shopping solutions, and that merchants will realize cost savings and other advantages over credit-card based payment systems.

We are developing versions of our payment systems for use for in-store purchases and other applications. Our 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 transactionstransaction information, metrics and metrics about payments received by the merchant.reports. Our systemsystems also includesinclude 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 eCommerceecommerce checkout page with no need to redirect to another website or web page.

17

 

Our merchant portal is updated instantly when a payment transaction is made on the merchantmerchant’s website. The merchant is notified of the transaction and can see the transaction details, including the customer that made the transaction, the transaction amount and the transaction items.items purchased. This information is addedavailable to the merchant on its dashboard, where various metrics are tracked and displayed to the merchant, including information about the various cryptocurrencies that are used for payments to that merchant, and the different currencies received by the merchant as payment.payment and transaction details such as the transaction hash. In addition to various metrics, merchants are able to seegenerate a variety of reports, and are able to configure various options, including settlement options.options, from their portal.

 

Customers of merchants that use the RocketFuel payment solution are able to track their payments in their own online portal. They are also able to track payments they made to all the merchants that are integrated with the RocketFuel payment technology within onea single consolidated user portal. They are currently able to connect to their accounts on Coinbase and Gemini, and in the future we plan to add connectivity to Binance, Kraken Gemini and other exchanges. TheyCustomers can also pay from any cryptocurrency wallet. Customerswallet, such as Metamask and Electrum and are able to pay from their bank accounts as well. These customers are able to make payment with any of these payment options with 1, 2, or 3 clicks from the merchant checkout page. By default, these customers can choose from dozens ofover 100 cryptocurrencies fromwith which to pay.

 

Our payment user interface allows customers to easily onboard as well as to pay for merchants’ products or services with a variety of cryptocurrencies or via bank transfers. The user interface is displayed as a stand-alone popup that allows the creation of new accounts as well as payment directly from crypto exchanges, crypto wallets, and bank accounts, with no redirects to browser tabs or pages. This can be integrated as a plugin on the merchant checkout page or as a browser extension. The plugin, which we are currently developing, will come integrated with popular eCommerceecommerce platforms including WooCommerce, Shopify, Prestashop and others. The browser extension is integrated with popular browsers including Chrome, Chromium, Opera, Firefox, and Edge. The payment interface is designed for both web and mobile checkout experiences. Merchants are able to integrate the RocketFuel payment interface to their checkout page with software development kits (SDKs) that are available via the merchant portal. Application programming interfaces (APIs) are also available to the merchant for deeper integration into backend systems, ERP platforms, and other third-party platforms.

 

The RocketFuel payment solution also includes a full partner portal. This allows various partners, including Payment Service Providers (PSP), to allow their merchants to accept payments from over 120 cryptocurrencies. These partners are provided a variety of reports, charts, and real time metrics that allow them to offer this new benefit to their merchants while being able to have real time transparency of transactions and customer interaction between the partner, merchant, and end customers.

16

RocketFuel will also be producing a full mobile app to allow in-store purchases with over 120 different cryptocurrencies. The full RocketFuel solution supports over 120 cryptocurrencies, is multicurrency (supporting a variety of fiat currencies), and is multilingual (supporting a variety of international languages).

The RocketFuel payment solution utilizes a variety of blockchains in its execution, including Bitcoin, Ethereum and others, where the payment transactions are stored. A significant benefit of this technology is that the payment transactions are stored using distributed ledger technology blockchains, making the transactions secure, transparent, and immutable, creating greater value and security to merchants and shoppers while creating greater simplicity for checkout based on the RocketFuel technology.

Our solution is designed to be implemented on an eCommerce site’s check-out page as well as in-store with mobile apps.page. The technology will also be used for different scenarios, including paying for services, paying invoices, and other payment strategies. In addition, we anticipate that a future version of our payment system will allow for advertisements in which the entire checkout process is embedded to be placed on third party websites where sales may be completely finalized. Thus, our technology will enable eCommerce strategies that can include advertisements with a fully integrated check-out process. We believe that this has never before been accomplished on any eCommerce platform. We believe that such advertisements could provide significant new sales channels to retailers that are simply not possible with legacy check-out solutions. We also believe that transactions costs on our system will be significantly less expensive than the cost of credit-card transactions.

 

The RocketFuel check-out solution is based on a streamlined one- to three-click check-out process for eCommerce purchases. The system is designed to operate identically across merchant channels with all participating merchants. eCommerce merchants are able to encode their check-out protocol to support our technology and the merchants will no longer have to administer complex check-out and payment gateways at their eCommerce websites. At the same time, consumers are able to experience enhanced data protection opportunities and significantly improved convenience.

 

With the RocketFuel check-out systems, consumers will no longer have to enter credit card information or shipping details every time they want to buy online. Payment and shipping information will be handled automatically. Using the RocketFuel payment solution, credit card data will no longer be shared or transmitted and exposed online. Rather, payments will be made via 100% secure cryptocurrency conveyance or direct bank transfer on the blockchain.

 

Our corporate headquarters are located in San Francisco, California.

 

Critical Accounting Policies

 

Our significant accounting policies are described in Note 32 to the financial statements as of March 31, 20212022 which are included in our Annual Report on Form 10-K. There were no changes to our significant accounting policies during the three and nine months ended December 31, 20212022 as compared to the significant account policies described in our Annual Report on Form 10-K for the year ended March 31, 2021.2022. Our discussion and analysis of our financial condition and results of operations are based upon these financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the past, actual results have not been materially different from our estimates. However, results may differ from these estimates under different assumptions or conditions.

 

18

Results of Operations

 

For the Three Months Ended December 31, 20212022 vs December 31, 20202021

 

Revenues

 

During the three months ended December 31, 2021,2022, we recorded revenues of $9,381$42,408, including $28,837 as a result of revenue recognized under a new software development contract, and a combined total of $13,571 of transaction fees and the recognition of $9,381amortization of deferred setup fee revenues on the amortization of deferred revenues of $41,188 recorded since March 31, 2021 in connection with the execution of contracts with customers. During the three months ended December 31, 2020,2021, we did not generate any revenuerecorded revenues of $2,500 for similar recognition of deferred revenues.

For the three months ended December 31, 2022, we recognized $26,890 in transaction costs, of which $14,268 was related to the software development contract, $7,988 in hosting fees, $2,296 in exchange fees, and had not yet commenced commercial operations.$2,338 merchant processing fees, for a net positive margin of $15,518. We anticipate that the hosting fees and processing fee structure will contribute positive gross margin as the Company grows and these expenses remain static or grow ratably with revenues.

 

We anticipate that future revenues will continue to be generated from (i) fees charged under the software development contract; (ii) fees charged in connection with conversion of crypto currencies to and from fiat currencies; (iii) fees charged in connection with the implementation of our blockchain technology;ecommerce checkout solutions; and (ii)(iv) ongoing daily transactional fees derived as a negotiated percentage of the transactional revenues earned by our merchant customers. In June 2022, we conducted tests of our cross-border B2B solution, which we expect to place in commercial operations by the end of 2022.

 

Research and Development Expenses

 

Research and development expenses for the three months ended December 31, 20212022 were $288,631$210,342, a decrease of $83,984 as compared with $18,864expenses of $294,326 for the prior year period. Research and development expenses increased due to increases in software coding and development activities during the recent quarter compared to the same period an increase of $269,767. The increase is primarily a result of the engagement of contract developers and the payroll expenses incurred in connection with the hiring of our full-time chief technology officer, all of whom were engaged in continued development of and improvements in our blockchain technology for payment processing.prior year.

 

17

General and Administrative Expenses

 

General and administrative expenses for the three months ended December 31, 20212022 were $931,108$1,140,603 as compared with $229,999$879,355 for the prior year period, an increase of $701,109.$261,248. The increase is primarily a result of (i) legalan increase in hiring expense and staffing costs for increased staffing and finance professional fees incurred in connection with certain litigation costsdesigning and public offering; (ii) payroll expenses incurred in connection with the hiring of certain key management personnel; and (ii) stock-based compensation. We had expenditures for litigation-related legal fees, payroll expenses and stock-based compensation totaling $203,332 during the comparative three months ended December 31, 2020.managing accounting systems to accommodate additional revenue stream opportunities.

 

For the Nine Months Ended December 31, 20212022 vs December 31, 20202021

 

Revenues

 

During the nine months ended December 31, 2021,2022, we recorded revenues of $21,256 as$92,355, including $60,000 resulting from the new software development contract, and a resultcombined total of $32,355 in transaction fees and the recognition of $21,256amortization of deferred setup fee revenues on the amortization of deferred revenues of $41,188 recorded since March 31, 2021 in connection with the execution of contracts with customers. During the nine months ended December 31, 2020,2021, we did not generate any revenuerecorded revenues of $11,875 for similar recognition of deferred revenues.

For the nine months ended December 31, 2022, we recognized $102,492 in transaction costs, of which $53,802 was related to the software development contract, $23,525 in hosting fees, $12,582 in exchange fees, and had not yet commenced commercial operations.$12,583 merchant processing fees, for a net negative margin of $(10,137). We anticipate that the hosting fees and processing fee structure will contribute positive gross margin as the Company grows and these expenses remain static or grow ratably with revenues.

 

We anticipate that future revenues will continue to be generated from (i) fees charged under the software development contract; (ii) fees charged in connection with conversion of crypto currencies to and from fiat currencies; (iii) fees charged in connection with the implementation of our blockchain technology;ecommerce checkout solutions; and (ii)(iv) ongoing daily transactional fees derived as a negotiated percentage of the transactional revenues earned by our merchant customers. In June 2022, we conducted tests of our cross-border B2B solution, which we expect to place in commercial operations by the end of 2022.

 

Research and Development Expenses

 

Research and development expenses for the nine months ended December 31, 20212022 were $923,996$797,006, a increase of $146,244 as compared with $32,773expenses of $650,762 for the prior year period. Research and development expenses increased year over year by approximately 22.5% due to increased staffing in software coding and development activities, but was more than offset in the current period an increase of $891,223. The increase is primarilyas a result of capitalization of software development costs, which practice was implemented after the engagementcompletion of contract developers and the payroll expenses incurred in connection withnine-month period of the hiring of our full-time chief technology officer, all of whom were engaged in continued development of and improvements in our blockchain technology for payment processing.prior year.

 

General and Administrative Expenses

 

General and administrative expenses for the nine months ended December 31, 20212022 were $2,676,535$5,398,527 as compared with $544,014$2,676,525 for the prior year period, an increase of $2,132,521.$2,722,022. The increase is primarily a result of (i)an increase in hiring expense and staffing costs for increased staffing of accounting and consultancy costs not experienced in the prior period; and increases in travel, audit and other fees. These were partially offset by a decrease in legal fees incurred in connection with certain litigation costs and public offering; (ii) payroll expenses incurred in connection with the hiring of certain key management personnel; and (ii) stock-based compensation. We had expenditures for litigation-related legal fees, payroll expenses and stock-based compensation totaling $203,332 during the comparative nine months ended December 31, 2020, all of which occurred during the final three months of the period.decreased work on business development strategies.

19

 

Liquidity and Capital Resources

 

On August 4, 2021, we entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc., an accredited investor (“Geneva Roth”), pursuant to which we sold Geneva Roth a convertible promissory note in the principal amount of $130,000 (the “Note”). The Note accrues interest at a rate of 8% per annum and has a maturity date of August 4, 2022.

We have the right to prepay the Note at any time during the first 180 days the note is outstanding at the rate of (a) 110% of the unpaid principal amount of the Note plus interest, during the first 30 days the Note is outstanding, (b) 115% of the unpaid principal amount of the Note plus interest between days 31 and 60 after the issuance date of the Note, (c) 120% of the unpaid principal amount of the Note plus interest between days 61 and 150 after the issuance date of the Note, and (d) 125% of the unpaid principal amount of the Note plus interest between days 151 and 180 after the issuance date of the Note. The Note may not be prepaid after the 180th day following the issuance date.

Geneva Roth may at its option, at any time beginning 180 days after the date of the Note, convert the outstanding principal and interest on the Note into shares of our common stock at a conversion price per share equal to 65% of the lowest daily volume weighted average price (“VWAP”) of our common stock during the 10 days trading days prior to the date of conversion. We agreed to reserve a number of shares of our common stock equal to 4.5 times the number of shares of common stock which may be issuable upon conversion of the Note at all times.

18

The Note provides for standard and customary events of default such as failing to timely make payments under the Note when due, our failure to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure to maintain a listing on the OTC Markets. The interest rate on the Note increases to 22% upon the occurrence of an event of default. The Note also contains customary positive and negative covenants. The Note includes penalties and damages payable to Geneva Roth in the event we do not comply with the terms of the Note, including in the event we do not issue shares of common stock to Geneva Roth upon conversion of the Note within the time periods set forth therein. Additionally, upon the occurrence of certain defaults, as described in the Note, we are required to pay Geneva Roth liquidated damages in addition to the amount owed under the Note (including in some cases up to 200% of the amount of the Note and in other cases the value of the shares which Geneva Roth could have been issued upon the full conversion of the Note after including default fees equal to 150% of the amount of the Note).

The Note includes a most favored nations provision which allows Geneva Roth the right to modify the Note to provide for any more favorable terms offered in any future financing transaction, subject to certain limited exceptions.

At no time may the Note be converted into shares of our common stock if such conversion would result in Geneva Roth and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.

We repaid the Geneva Roth Note in full on November 8, 2021, and the Geneva Roth Note was terminated. Using the same valuation method as at the inception, the fair value of the embedded conversion feature at repayment was $116,023, resulting in a change in fair value of the derivative liability of $(2,633) and $4,128 for the three and nine months ended December 31, 2021, respectively. We also recognized a loss on debt extinguishment of $15,076 for the three and nine months ended December 31, 2021. There was no conversion prior to November 8, 2021.

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. We will require additional financing in order 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. Any potential future sale of equity or debt securities may result in dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, or at all. If we are required to raise additional financing, but are unable to obtain such financing, we may be required to delay, reduce the scope of, or eliminate one or more aspects of our operations or business development activities.

 

On December 31, 2021,2022, we had total assets of $3,578,577$1,272,816 and total liabilities of $180,040.$751,882. This compares to total assets of $815,331$2,650,619 and total liabilities of $190,305$513,550 on March 31, 2021.2022. As of December 31, 2021,2022, our assets consisted of $3,504,914 $392,956,of cash $16,325and restricted cash, $0 of accounts receivable, and $57,338$111,593 of prepaid expenses and other current assets.assets and $768,267 of property and equipment, net of depreciation and amortization. The increasedecrease in assets compared to March 31, 20212022 is due to proceeds received from a public offering, additional customer sales contracts and increases in prepaid and other increasesthe use of cash to pay for operating costs as a result of increase business activities.activities, an increase in prepaid expenses and other current assets and the capitalization of software development costs. As of December 31, 2021,2022, our liabilities consist of $137,683$723,982 of accounts payable and accrued expenses, $22,426 of payable$24,396 due to related partyparties and $19,931$3,504 of deferred revenue. The decreaseincrease in liabilities compared to March 31, 20212022 is largely due to paymentincreases of a payableaccounts payables and accrued expenses, and an increase in amounts due to a related party, and a decrease in accounts payable and accrued expenses offset by an increase in deferred revenue from customer sales contracts.party.

 

On December 31, 2021,2022, we had working capital of $3,398,537$(247,333) and a stockholders’ equity of $3,398,537$520,934 compared to working capital of $625,026$2,137,069 and stockholders’ equity of $625,026$2,597,245 at March 31, 2021.2022. Working capital increaseddecreased during the nine months ended December 31, 20212022 largely due to cash proceeds from a public offering.paid for prepaid expenses, and cash used in operating activities to expand on the Company’s product offerings and capabilities of its software. Stockholders’ equity increaseddecreased due to the public offering, offset by an operating loss for the nine-month period ended December 31, 2021.2022, with an offset for the $700,000 additional private placement funds to offset the operating loss.

 

As of December 31, 2021,2022, we had cash and restricted cash of $3,504,914$392,956 as compared to $800,331$2,634,794 as of March 31, 2021.2022.

 

During the nine months ended December 31, 2021,2022, we had net cash of $2,669,886$483,865 used in operating activities, which was composed primarily of (i) our net loss of $3,612,307,$3,527,170 (ii) a change in fair valuegain from a legal settlement of a derivative liability of $4,128,$540,059 (iii) increases in prepaid expenses and other current assets of $52,338 which were primarily for legal fee retainers, and (iv) a decrease of $13,049 in a payable to a related party.$99,243. The cash flows used in operating activities were partially offset by (i) stock-based compensation of $978,317$1,287,048 primarily in connection with stock options granted pursuant to the 2018 Stock Option Plan, and issuance of common stock to two customers in consideration of being an early adopter of our blockchain technology, (ii) a loss on extinguishment of a convertible note payable of $15,076, (iii)depreciation and amortization of debt discount of $22,084, and (iv)$493,660, (iii) an increase of $9,931 in deferred revenue. During the nine months ended December 31, 2020, we had net cash of $233,332 used in operating activities, which was composed of our net loss of $576,787 and offset by stock-based compensation of (i) $162,000 in connection with the issuance of 150,000 shares of our common stock to a consultant in lieu of cash for services; and (ii) $164,217 in connection with employee stock option grants, and increase in accounts payable and accrued expenses of $17,238.

$435,953, (iv) an increase in a payable to a related party of $36,680, and (v) an increase in deferred revenue of $1,004. During the nine months ended December 31, 2021, we had net cash of $5,374,469 provided$483,865 used in operating activities, which was composed of our net loss of $3,527,170 and offset by financing activities as a result(i) stock-based compensation of net proceeds of $5,407,501 from the issuance of common stock$1,287,048 and warrants in public offerings, net proceeds of $126,250 from a convertible note(ii) smaller incremental increases and decreases to prepaid expenses and other current assets, accounts payable reduced by a $159,282 repayment of a convertible note payable. and accrued expenses, payables to related parties and deferred revenues.

During the nine months ended December 31, 2020,2022, we used cash of $651,832 for the purchase of property and equipment and the capitalization of software development costs. There were no such investments during the nine-month period ended December 31, 2021.

During the nine months ended December 31, 2022, we had $0 net cash of $828,750 provided by financing activities, as a result ofcompared with $808,750 net proceeds of $828,750 fromcash provided by the issuance of common stock to private investors at a pricein connection with exercise of $1.00 per share.common stock purchase warrants and issuance of convertible note payable during the nine-month period ended December 31, 2021.

 

19

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended December 31, 2021,2022, we reported a net loss of $3,612,307,$3,527,170, which included non-cash stock-based compensation of $978,317,$1,287,048 and $540,059 of gain from a legal settlement, and cash flows used in operating activities of $2,669,886. As a result, management believes that there is$483,865. These factors, among others, raise substantial doubt about ourthe ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Commitments

 

We do not have any long-term commitments as of December 31, 2021.2022.

20

 

Subsequent Events

 

In order to re-incentivizeOn January 13, 2023, we completed a private placement (the “Offering”) of $150,000 principal amount of its secured convertible promissory notes (the “Notes”). The purchase price was $150,000. There were three purchasers, including Gert Funk, the Company’s Chairman, and retainPeter M. Jensen, the Company’s Chief Executive Officer and a member of its employees, on January 11, 2022 (the “Effective Date”), our boardBoard of directors approvedDirectors. The third purchaser was a one-time stock option repricing (the “Repricing”)private investor. Each investor purchased a Note for all stock options issued and outstanding under our 2018 Stock Incentive Plan (the “Plan”) as of the Effective Date.


The board considered a number of factors in adopting the Repricing, including the following:

●Most of our competitors and companies with which we compete for employees are private companies, which are able to offer stock options with very low or nominal exercise prices. As a public company, it is impractical for us to issue stock options with an exercise price below the current market price for our common stock. Therefore, we are at a competitive disadvantage when our employees receive employment offers from our competitors.
●We believe that our employees are currently being paid compensation (including bonuses) at rates that are at the low end of market rates. Thus, we are vulnerable to our employees leaving for higher paid positions, especially when their option exercise prices exceed the current market price for our common stock.
●Because we have only six key employees, we believe that the loss of any one of them could substantially delay the implementation of our business plan to our detriment.
●Many of the options being repriced have significant portions that are currently unvested.

Pursuant to the Repricing, the exercise price of each Relevant Option (as defined below) was reduced to $0.33 per share, which was equal to the volume-weighted average closing price of our common stock for the five days prior to the Effective Date, as reported on the OTCQB Market. The Relevant Options are the 5,597,970 options (vested and unvested) outstanding as of the Effective Date, including those held by officers and directors.$50,000.

 

We will recordThe Notes bear interest at 10% per annum and mature on July 13, 2023 (the “Maturity Date”). The Notes may be prepaid by the impactCompany at any time. If the Company shall prepay the entire outstanding principal amount of a Note on or before April 13, 2023, then there is no prepayment premium. If the Company shall prepay the entire outstanding principal amount of a Note between April 14, 2023 and the Maturity Date, then it shall also pay accrued interest on such principal amount in an amount equal to 50% of such principal amount. If the Company shall repay the outstanding principal amount of a Note on or after the Maturity Date, then it shall also pay accrued interest on such principal amount in an amount equal to 100% of such principal amount.

The Notes are convertible into shares of the repricing (whichCompany’s Series A Preferred Stock (“Series A Preferred”) at a conversion price equal to (a) the outstanding principal amount of, plus all accrued interest on, the Note divided by (b) $0.2065. The conversion price is subject to adjustment for certain stock splits, recapitalizations and other similar events. The Notes are secured by a security interest in all of the Company’s assets.

Up to 1,000,000 shares of Series A Preferred were approved by the Board. The Series A Preferred has a 200% liquidation preference over the common stock and any other future series of preferred stock, payable in the event of a liquidation or merger of the Company. In such event, the holders of the Series A Preferred will be entitled to a chargepriority distribution equal to operations over the remaining terms200% of the options) beginningdeemed issue price of $0.2065 per share, (i.e., $0.4130 per share). The Series A Preferred is convertible at the option of the stockholder into shares of common stock at a conversion price of $0.2065 per share, subject to adjustment for certain stock splits, recapitalizations and other similar events.

On January 13, 2023, in connection with the quarter ending March 31, 2022.Offering, the Company entered into a Convertible Notes Subscription Agreement (the “Subscription Agreement”) with three investors. The charge is noncash, is equity neutralSubscription Agreement sets forth the economic terms set forth above.

The Company intends to use the $150,000 net proceeds of the Offering for general corporate purposes and to fund ongoing operations and expansion of its business.

On February 8, 2023 we entered into a settlement agreement with EGS, pursuant to which EGS agreed to pay us $750,000 in full settlement of the opinionlawsuit. After payment of management willour legal fees, the net payment to us, which was received on February 14, 2023, was $525,000. As part of the settlement (i) we have no material impact onagreed to dismiss the lawsuit with prejudice and (ii) each party has agreed to grant a mutual general release to the other party and its affiliates, related parties and agents.

On January 18, 2023, we borrowed $200,000 from Peter M. Jensen, our operating activities.CEO, pursuant to a convertible promissory note. The proceeds were to be used to support a transaction that ultimately was not consummated. On February 15, 2023, we repaid the loan in full together with $1,535 representing accrued interest at a rate of 10% per annum.

21

 

Off-Balance Sheet Arrangements

 

As of December 31, 2021,2022, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

 

Impact of COVID-19 on Our Business

 

The COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption despite progress made in the development and distribution of vaccines. It has already disrupted global travel, supply chains and the labor market and adversely impacted global commercial activity. ConsiderableWhile the pandemic has largely subsided, considerable uncertainty still surrounds COVID-19, the evolution of its variants, its potential long-term economic effects, as well as the effectiveness of any responses taken by government authorities and businesses and of various efforts to inoculate the global population. The travel restrictions, limits on hours of operations and/or closures of non-essential businesses, and other efforts to curb the spread of COVID-19 have significantly disrupted business activity globally and there is uncertainty as to when these disruptions will fully subside.

20

 

Significant uncertainty continues to exist concerning the impact of the COVID-19 pandemic on our customers’ and prospects’ business and operations in future periods. Although our total revenues for the three and nine months ended December 31, 20212022 were not materially impacted by COVID- 19,COVID-19, we believe our revenues may be negatively impacted in future periods until the effects of the pandemic have fully subsided and the current macroeconomic environment has substantially recovered. The uncertainty related to COVID-19 may also result in increased volatility in the financial projections we use as the basis for estimates and assumptions used in our financial statements. We have adapted our operations to meet the challenges of this uncertain and rapidly evolving situation, including establishing remote working arrangements for our employees, limiting non-essential business travel, and cancelling or shifting our customer, employee, and industry events to a virtual-only format for the foreseeable future. We have not received any government assistance from various relief packages available in countries where we operate.

Effects of the COVID-19 pandemic that may negatively impact our business in future periods include, but are not limited to: limitations on the ability of our customers to conduct their business, purchase our products and services, and make timely payments; curtailed consumer spending; deferred purchasing decisions; delayed consulting services implementations; labor shortages and decreases in product licenses revenues driven by channel partners. We will continue to actively monitor the nature and extent of the impact to our business, operating results, and financial condition.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of December 31, 20212022 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management concluded that, as of December 31, 2021,2022, our internal controlcontrols over financial reporting waswere not effective due to (i) insufficient segregation of duties in the finance and accounting functions due to limited personnel; and (ii) inadequate corporate governance policies. In the future, subject to working capital limitations, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.effective.

 

Changes in Internal Control Over Financial Reporting

 

ThereThe following changes have not been any changesmade in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We expanded the responsibilities assigned to a new accountant and an independent Controller, engaged in the quarter ended June 30, 2022, to transact and oversee the financial activities of the Company, with preparation of our public filings by an SEC Manager, each with the guidance of our SEC Director. In February 2023 we hired a full time Director of Finance to replace the accountant and independent Controller. The Director of Finance. Reports directly to our CFO.

We intend to perform additional internal control improvements, beginning with written documentation of financial processes.

 

Inherent Limitations of the Effectiveness of Internal Controls

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

2122

 

 

PART II. OTHER INFORMATION

 

Item 1. 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 arewere alleging that Mr. Page was aware of the abandonments when he assigned the patents to RBC,RocketFuel Blockchain Company (“RBC”), a private corporation that he controlled, and that he failed to disclose to us the abandonments when wethe Company acquired RBC in exchange for shares of ourthe Company’s Common Stock. Mr. Page filed an answer denying the Company’s claims and asserted cross- and counterclaims against the Company and several of the Company’s shareholders alleging breach of contract and fraud. In September 2021, Mr. Page voluntarily dismissed all of the counterclaims against the shareholders. We intend

On June 7, 2022, RBC entered into a settlement agreement in the legal proceedings between the Company as plaintiff, and Joseph Page as defendant, whereunder Page surrendered 3,600,394 shares of the Company’s common stock, and kept 1,500,000 shares. Mr. Page represents and warrants that he has not filed or assisted anyone else in filing any patent applications that would preempt or infringe upon the Company’s patent applications. Plaintiff and defendant have each released their claims against each other and covenanted not to vigorously contest these allegations.sue the other, including related parties and stakeholders, with the exclusion of current or future claims against EGS. The parties agreed to a Stipulated Dismissal of the Action with Prejudice filed with the court. In connection with this settlement, we recognized a gain of $540,059, calculated based on the Company’s share price of $0.15 per share on the date of settlement of the legal proceedings. This gain was recorded in other income for the nine months ended December 31, 2022 in the accompanying consolidated statements of operations.

 

On March 2, 2021, we filed a lawsuit in the U.S. District Court for the Southern District of New York against EllenhoffEllenoff 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 thatthe fact. We are seeking damages and the return of legal fees previously paid.

On February 8, 2023 we entered into a settlement agreement with EGS, pursuant to which EGS agreed to pay us $750,000 in full settlement of the lawsuit. After payment of our legal fees, the net payment to us, which was received on February 14, 2023, was $525,000. As part of the settlement (i) we have agreed to dismiss the lawsuit with prejudice and (ii) each party has agreed to grant a mutual general release to the other party and its affiliates, related parties and agents.

In January 2022, the Company terminated its agreement with Scarola Schaffzib Zubatov PLLC (“SSZ”), which the Company had retained to represent it in the litigation against EGS. The reason for the termination was that the Company believed that SSZ had overcharged for legal services provided. Subsequent to the termination, SSZ sent the Company additional invoices, to which the Company also objected. In August 2022 SZZ filed a lawsuit in the Supreme Court of the State of New York, County of New York, claiming it is owed approximately $120,000 in legal fees. The Company disputes that this amount is owed, and contends that a portion of the legal fees previously paid should be refunded. Discovery has commenced; a trial date has not been set. The Company has accrued approximately $120,000 in accounts payable.

 

Item 1A. Risk Factors

 

Together with the risk factors below, theThe Risk Factors identified in our Annual Report on Form 10-K for the year ended March 31, 20212022 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment.

We do not have any independent directors and may be unable to appoint any qualified independent directors.

Currently, the members of the Board of Directors are Gert Funk, Bennett Yankowitz and Peter Jensen, none of whom are “independent” as defined under national stock exchange rules. Therefore, all decisions of the Board of Directors will be made by persons who are not considered independent directors. If we seek to list our common stock on a national securities exchange, we will need to have a majority of the members of our board of directors be independent, but we may not be able to identify independent directors qualified to be on our board who are willing to serve. We do not currently have an audit committee and have not established independent oversight over our management and internal controls. Therefore, we are exposed to the risk that material misstatements or omissions caused by errors or fraud with respect to our financial statements or other disclosures may occur and not be detected in a timely manner or at all. In the event there are deficiencies or weaknesses in our internal controls, we may misreport our financial results or lose significant amounts due to misstatements caused by errors or fraud. These misstatements or acts of fraud could also cause our company to lose value and investors to lose confidence in us.

Changes in government regulation and industry standards applicable to the Internet and our business could decrease demand for our technologies and services or increase our costs.

Laws and regulations that apply to Internet communications, commerce and advertising are becoming more prevalent. These regulations could increase the costs of conducting business on the Internet and could decrease demand for our technologies and services. In the United States, federal and state laws have been enacted regarding copyrights, sending of unsolicited commercial email, user privacy, search engines, Internet tracking technologies, direct marketing, data security, children’s privacy, pricing, sweepstakes, promotions, intellectual property ownership and infringement, trade secrets, export of encryption technology, taxation and acceptable content and quality of goods. Other laws and regulations may be adopted in the future. Laws and regulations, including those related to privacy and use of personal information, are changing rapidly outside the United States as well, which may make compliance with such laws and regulations difficult, and which may negatively affect our ability to expand internationally. This legislation could: (i) hinder growth in the use of the Internet generally; (ii) decrease the acceptance of the Internet as a communications, commercial and advertising medium; (iii) reduce our revenue; (iv) increase our operating expenses; or (v) expose us to significant liabilities.

22

H.R. 3684, the infrastructure bill that passed the Senate in August 2021, contains a provision regarding reporting of cryptocurrency transactions to the Internal Revenue Service. Under the Senate version of the bill, brokers must report digital asset transactions to the Internal Revenue Service. The Senate bill also expands the definition of broker to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” The bill is being considered by the House and it is unclear if the bill will be passed by the House or otherwise signed into law. It is also unclear if the cryptocurrency reporting provision passed in the Senate bill would remain in the House bill or would be amended in some way. Should the provision become law, it is possible that RocketFuel may have obligations under the provision to report digital asset transactions to the Internal Revenue Service.

 

Item 2. Unregistered Sales of Equity Securities

 

We claimed exemption from registration under the Securities Act for themade no unregistered sales and issuances of equity securities in the following transactions under Section 4(a)(2) of the Securities Act and/or Regulations D and S promulgated thereunder, in that such sales and issuances (i) did not involve a public offering, or (ii) were made to non-U.S. Persons and otherwise complied with Rule 903 promulgated under the Securities Act, or (iii) were made pursuant to Rule 701 promulgated under the Securities Act, in that they were offered and sold either pursuant to written compensatory plans or pursuant to a written contract relating to compensation, as provided by Rule 701. All of the purchasers of unregistered securities for which we relied on Section 4(a)(2) and/or Regulation D represented that they were accredited investors as defined under the Securities Act. We claimed such exemption on the basis that (a) the purchasers in each case represented that they intended to acquire the securities for investment only and not with a view to the distribution thereof and that they either received adequate information about the registrant or had access, through employment or other relationships, to such information and (b) appropriate legends were affixed to the stock certificates issued in such transactions.

On October 11, 2021, we entered into an agreement with Triton Funds, LP, a Delaware limited partnership (“Triton”), an unrelated third party, to amend to the Common Stock Purchase Agreement (the “CSPA”) dated February 25, 2021. Under the CSPA, Triton agreed to invest up to $1,000,000 through purchases of our common stock during the commitment period (which runs throughthree months ended 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 under the CSPA, as amended, is the number of shares of common stock to be purchased multiplied by the greater of (i) $1.00 (changed from $1.65) or (ii) eighty percent (80%) of the lowest closing price of the common stock within fifteen 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.2023.

In connection with the amendment to the CSPA, we also amended the warrants issued to Triton. As amended, the warrants are to purchase, in one or more installments, 1,300,000 shares (increased from 800,000 under the CSPA) of our common stock (the “Warrants”) at an exercise price equal to the greater of (i) $1.00 per share (changed from $1.65) and (ii) eighty percent (80%) of the average closing price of the common stock over the 90-calendar day period preceding the Warrant exercise date, subject to adjustments. The Warrants terminate on February 25, 2026.

On May 5, 2021, Triton exercised 50,000 Warrants for an aggregate purchase price of $82,500 ($1.65 per share). After the amendment, 1,250,000 Warrants remain unexercised.

On November 4, 2021, we completed a public offering (the “Offering”) of 6,666,667 shares of our common stock, par value $0.001 per share (the “Common Stock”) and warrants to purchase 6,666,667 shares of Common Stock (the “Common Warrants”). The combined purchase price of one share of Common Stock and accompanying Common Warrant was $0.75. The Offering was made under an effective registration statement on Form S-1 (File No. 333-260420) initially filed with the Securities and Exchange Commission on October 22, 2021, as subsequently amended, and declared effective on October 28, 2021.

The Common Warrants are immediately exercisable at an exercise price equal to $0.75 per share of Common Stock (the “Exercise Price”), subject to adjustments as provided under the terms of the Common Warrants. The Warrants are exercisable for five and one-half years from the initial exercise date.

23

 

On November 1, 2021, in connection with the Offering, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors. The Purchase Agreement sets forth the economic terms set forth above and contains customary representations and warranties for us, as well as certain indemnification obligations of the Company and ongoing covenants for us. In addition, under the Purchase Agreement, we have agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of our Common Stock or common stock equivalents for a period of 90 days from the closing of the Offering, other than certain exempt issuances. Additionally, we have also agreed for a period of two years following the closing date of the Offering not to (i) issue or agree to issue equity or debt securities convertible into, or exercisable or exchangeable for, Common Stock at a conversion price, exercise price or exchange price which floats with the trading price of our Common Stock or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement, including an equity line of credit, whereby we may issue securities at a future-determined price. This agreement does not apply to the offer, issuance or sale by us of Common Stock pursuant to an at-the-market offering facility we may enter with the placement agent of the Offering following expiration of the 90-day lock-up period.

The net proceeds to us from the Offering, after deducting placement agent’s fees and other Offering expenses, and excluding the proceeds, if any, from the exercise of the Common Warrants, are approximately $4.37 million. we intend to use the net proceeds of the Offering for general corporate purposes and to fund ongoing operations and expansion of our business.

In connection with the Offering, pursuant to an engagement letter (the “Engagement Letter”) dated as of July 9, 2021, as amended on September 20, 2021 and on October 28, 2021 between us and H.C. Wainwright & Co., LLC (“Wainwright”), we paid Wainwright (i) a total cash fee equal to 8.0% of the aggregate gross proceeds received by us from the sale of the securities in the transaction, and (ii) a non-accountable expense allowance of $75,000. Pursuant to the Engagement Letter, we also issued to Wainwright or its designees warrants to purchase up to an aggregate of 533,333 shares of Common Stock (8.0% of the aggregate number of shares of Common Stock sold in the Offering) (the “Placement Agent Warrants”). The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants are exercisable for five years from the date of the Purchase Agreement and have an exercise price equal to 125% of the purchase price per share of Common Stock in the Offering, or $0.9375 per share.

This transaction was exempt from registration under the Securities Act of 1933 pursuant to Regulations D and S thereunder.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

24

Item 6. Exhibits

 

Exhibit

No.

 Description
3.1 Conformed copy of Articles of Incorporation of RocketFuel Blockchain, Inc., as currently in effect - incorporated by reference to Exhibit 3.1 to Amendment to Registration Statement on Form S-1 filed October 20, 2021.
   
3.2 Amended and Restated Bylaws - incorporated by reference to Exhibit 2.1 to Form 8-K filed June 9, 2018.
10.1Contribution Agreement by and among the Company, RocketFuel Blockchain Company, Joseph Page, Gert Funk, PacificWave Partners Limited, PacificWave Partners UK Ltd. and Saxton Capital Ltd, dated June 27, 2018 - incorporated by reference to Exhibit 2.1 to Form 8-K filed June 29, 2018.
10.2Securities Purchase Agreement between Geneva Roth Remark Holdings, Inc. and RocketFuel Blockchain, Inc., dated August 4, 2021 - incorporated by reference to Exhibit 10.1 to Form 8-K filed August 10, 2021.
10.3$130,000 Convertible Promissory Note between Geneva Roth Remark Holdings, Inc. and RocketFuel Blockchain, Inc., dated August 4, 2021 - incorporated by reference to Exhibit 10.2 to Form 8-K filed August 10, 2021.
10.4Amended and Restated Subscription Agreement dated September 14, 2021 between the Company and G Kapital ApS - incorporated by reference to Exhibit 10.1 to Form 8-K filed September 15, 2021.
10.5Amendment to Common Stock Purchase Agreement and Warrant dated October 11, 2021 - incorporated by reference to Exhibit 10.1 to Form 8-K filed October 14, 2021.
31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2 Certification of the Principal Financial andOfficer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3Certification of the Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxomony Extension Calculation Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2524

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 RocketFuel Blockchain, Inc.
   
 By:/s/ Peter M. Jensen
  Peter M. Jensen
  Chief Executive Officer
  (Principal Executive Officer)
   
 By:/s/ Bennett J. Yankowitz
  Bennett J. Yankowitz
  Chief Financial Officer
  (Principal Financial andOfficer)
By:/s/ Justin D. Fewell
Justin D. Fewell
Director of Finance
(Principal Accounting Officer)
   
Dated: February 22, 2022April 3, 2023  

 

2625