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Statements of Cash Flows

From 2024-01-30 To 2024-02-28


CONTENT

  • Statements of Cash Flows
  • Note To Statements of Cash Flows

Statements of Cash Flows

Summary of Risk Factors

Our business is subject to various risks and uncertainties, including those detailed below. The most significant risks include:

  • Our total revenue largely depends on the prices of cryptocurrencies and the volume of transactions on our platform. A decline in these could negatively affect our business, operating results, and financial condition.
  • Our net revenue may be concentrated in a few areas. A significant portion comes from transactions in Bitcoin and Ethereum and interest income from USDT. If these revenue sources decline and are not replaced by new demand, our business could be negatively affected.
  • We have formed, and may form in the future, partnerships or strategic alliances with third parties. If these relationships are unsuccessful or these third parties fail to deliver certain services, our business could be negatively affected.
  • Fluctuations in interest rates could have a negative impact on us.
  • The future growth of cryptocurrency is subject to unpredictable factors. If crypto doesn't grow as we expect, our business could be negatively affected.
  • Cyberattacks and security breaches could harm our brand and reputation and negatively affect our business.
  • We operate in a complex and uncertain regulatory landscape. Any adverse changes or failure to comply with laws and regulations could negatively affect our business.
  • We operate in a highly competitive industry and compete against unregulated companies and companies with greater resources. If we can't effectively respond to our competitors, our business could be negatively affected.
  • We compete against a growing number of decentralized and noncustodial platforms. Failure to compete effectively against them could negatively affect our business.
  • As we expand internationally, our obligations to comply with various jurisdictions' laws will increase, and we may be subject to inquiries, investigations, and enforcement actions.
  • We are subject to material litigation, including individual and class action lawsuits, as well as investigations and enforcement actions. These matters can be expensive and time-consuming, and if resolved adversely, could harm our business.
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Statements of Cash Flows

  • If we can't keep pace with rapid industry changes to provide new and innovative products and services, our net revenue could decline, negatively impacting our business.
  • The status of a particular cryptocurrency as a "security" is highly uncertain. If we incorrectly characterize a cryptocurrency, we may face regulatory scrutiny, investigations, fines, and other penalties.
  • We rely on third-party service providers for certain operations. Any service interruptions from these third parties may impair our ability to support our customers.
  • Loss of a critical banking or insurance relationship could negatively affect our business.
  • Any significant disruption in our products, services, IT systems, or any of the blockchain networks we support could result in a loss of customers or funds and negatively impact our brand and reputation.
  • Our failure to safeguard and manage our and our customers' fiat currencies and cryptocurrencies could negatively impact our business.
  • The theft, loss, or destruction of private keys required to access any cryptocurrencies held in custody for our own account or for our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss, it could cause regulatory scrutiny, reputational harm, and other losses.
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Statements of Cash Flows

Statements of Cash Flows

Statements of Cash Flows - USD ($)30 Days Ended Feb. 28,
$ in ThousandsFeb. 28, 2024Jan. 30, 2024
Cash flows from operating activities
C027 Cash deposited by customers$ -$ -
C028 Cash withdrawn by customers--
C029 Purchase of cryptocurrencies--
C030 Disposal of cryptocurrencies--
C031 Cash received from customers as transaction fee--
C034 Cash paid to suppliers for expenses--
C041 Net cash provided by operating activities--
Cash flows from investing activities
C042 Net cash provided by investing activities--
Cash flows from financing activities
C043 Proceeds from issuance of common stock--
C044 Long-term debt--
C045 Short-term borrowings--
C046 Payments of dividends--
C047 Treasury Stock--
C048 Net cash used in financing activities--
C049 Net increase in cash, cash equivalents, and restricted cash--
C050 Cash, cash equivalents, and restricted cash, beginning of period--
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Statements of Cash Flows

C051 Cash, cash equivalents, and restricted cash, end of period--
Supplemental schedule of non-cash operating activities
C001 Cryptocurrencies deposited by customers--
C009 Cryptocurrencies withdrawn by customers--
C015 Cryptocurrency inflows--
C016 Cryptocurrency outflows--
C004 Cryptocurrencies received from customers as transaction fees--
C012 Cryptocurrencies paid to suppliers for expenses--
C023 Purchase of cryptocurrencies with non-cash consideration--
C024 Disposal of cryptocurrencies for non-cash consideration--
C007 Net increase in non-cash operating activities--
C025 Cryptocurrencies, beginning of period--
C008 Cryptocurrencies, end of period$ -$ -

For a crypto exchange, the distinction between cash and non-cash activities by cryptocurrencies in its cash flow statement isn't just a matter of accounting formality; it's a reflection of its operational, regulatory, and strategic imperatives. Here are the reasons why this distinction is crucial:

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Statements of Cash Flows

  1. Nature of Assets:

    • Cash Activities: These represent the traditional flow of fiat money (like USD) in and out of the business. It's a universal measure of liquidity and is used for general business operations, including paying suppliers or receiving cash from customers.
    • Non-Cash Activities: These pertain to the flow of cryptocurrencies, which are digital or virtual assets. Given the volatile nature of cryptocurrencies, their value can fluctuate significantly in short periods. By separating them, the exchange provides a clearer picture of its liquidity in terms of stable fiat money versus the more volatile cryptocurrencies.
  2. Regulatory and Reporting Requirements:

    • Cryptocurrencies are still a relatively new asset class, and regulatory frameworks around them are evolving. By separating cash and non-cash activities, the exchange ensures that it can meet specific reporting requirements that might differ between fiat and crypto assets.
  3. Risk Management:

    • Cryptocurrencies come with a unique set of risks, including price volatility, security concerns, and technological changes. By distinguishing between cash and non-cash activities, the exchange can better manage and communicate these risks to stakeholders.
  4. Investor and Stakeholder Transparency:

    • By separating these activities, the exchange offers greater transparency to its investors and stakeholders. It allows them to understand the business's health in terms of both its traditional cash holdings and its holdings in the more speculative world of cryptocurrencies.
  5. Liquidity Management:

    • Cash represents immediate liquidity, which can be used for operational needs, investments, or to cover liabilities. Cryptocurrencies, while liquid, might not be as readily convertible to cash, especially in large amounts or during market downturns. By separating the two, the exchange can better manage its liquidity position.
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Statements of Cash Flows

Note To Statements of Cash Flows

1. Nature of Operations

TideBit DeFi is a decentralized financial exchange that provides accessible financial services to a broad range of users. As a part of the burgeoning decentralized finance (DeFi) sector, TideBit DeFi leverages blockchain technology to offer financial services that are open, transparent, and free from the control of traditional financial intermediaries like banks and brokerages.

Operating on a global scale, TideBit DeFi's platform allows users to trade a variety of digital assets in a secure and decentralized manner. This means that rather than relying on a central authority to facilitate transactions, trades are executed directly between users through smart contracts on the blockchain. This not only enhances security but also increases transaction speed and reduces costs.

By harnessing the power of blockchain technology and the principles of decentralization, TideBit DeFi is democratizing access to financial services and providing users with greater control over their financial destiny.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Foundation for Presentation and Consolidation Principles

The attached financial statements of the Company are not audited. These non-audited financial statements are prepared following the United States Generally Accepted Accounting Principles ("GAAP") in the same manner as the audited financial statements. In the management's view, they include all necessary adjustments, which are only regular, recurring adjustments, for a fair representation of the Company's financial statements for the periods shown. The non-audited operational results for the 30 days ending February 28, 2024, may not necessarily predict the results for the full year or any other period.

Use of estimates

The creation of these financial statements in accordance with GAAP requires management to make estimates and assumptions. Significant estimates and assumptions include the

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Statements of Cash Flows

fair value of customer cryptocurrencies and liabilities.

User deposits

User deposits represent cryptocurrencies maintained on BOLT VAULT that are held for the exclusive benefit of customers and deposits in transit from payment processors and financial institutions. User deposits represent the obligation to return cryptocurrencies deposits held by customers on TideBit DeFi and unsettled crypto deposits and withdrawals. The Company restricts the use of the assets underlying the user deposits to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill the Company's direct obligation under user deposits. As of February 28, 2024 and January 30, 2024, the Company's eligible liquid assets were greater than the aggregate amount of user deposits.

3. P3 TECHNOLOGY

TideBit DeFi employs a "P3 (Partial Private-Key Protection)" system of BOLT to safeguard the client's cryptocurrencies, held in digital wallets, alongside essential fragments of cryptographic keys required for accessing these assets on our platform. 'P3 (Partial Private-Key Protection)' protocol allows us to safeguard the user's private key. In the event of a loss of the private key, through user authentication, a new set of authorized private key combinations can be reconstituted from other private key fragments, thereby ensuring the retrieval of the user's assets.

These assets and keys are shielded from loss, theft, or any form of misuse. The Firm diligently records cryptocurrencies owned by clients as well as corresponding client crypto liabilities, adhering to the recently enforced SAB 121. We keep track of all assets in digital wallets and parts or the entirety of private keys, including backup keys, managed on behalf of clients on our platform. Cryptocurrencies for which the TideBit DeFi can't recover a client's access to, are not recorded , as there is no related safeguarding obligation in accordance with SAB 121. TideBit DeFi regularly updates and initially recognizes the assets and liabilities at the fair value of the cryptocurrencies safeguarded for our clients.

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Statements of Cash Flows

4. Cash Flow

Below is a comprehensive overview of our cash flow activities for the 30-day periods ending February 28 in both 2024 and 2023. This table provides insights into the net cash generated from operating activities, the cash utilized in investing and financing activities, as well as the net increase in both cash and non-cash operating activities.

30 Days Ended Feb. 28,
20242023

(in thousands)

C041 Net cash provided by operating activities$ —$ —
C042 Net cash used in investing activities--
C048 Net cash used in financing activities--
C049 Net increase in cash, cash equivalents, and restricted cash$ —$ —
C007 Net increase in non-cash operating activities$ —$ —

5. ACTIVITIES ANALYSIS

To provide our investors with a comprehensive understanding of our financial activities, we have meticulously broken down our cash flow statements. This approach allows us to highlight the specific movements and operations involving cryptocurrencies. By segregating each activity, we aim to offer a clear picture of how cryptocurrencies flow in and out of our operations, ensuring that our stakeholders have a thorough grasp of our financial dynamics. The following sections delve into each category in detail:

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Statements of Cash Flows

Cash deposited by customers

This table outlines the cash deposits made by our customers, comparing the figures from February 28, 2024, to those from January 30, 2024. It includes details on the amount, cost value, and percentage of total deposits for each cash type.

C027 Cash deposited by customersFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C134, C135)$ —$ —
Total Cash deposited by customers$ —$ —

Cash received from customers as transaction fees

This table displays the transaction fees received in cash from customers, showing a comparison between the data as of February 28, 2024, and January 30, 2024. It breaks down the amount, cost value, and percentage of total fees collected.

C031 Cash received from customers as transaction feesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C136, C137)$ —$ —
Total Cash received from customers as transaction fees$ —$ —
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Statements of Cash Flows

Cash paid to suppliers for expenses

This table provides a summary of cash payments made to suppliers for expenses, comparing the amounts as of February 28, 2024, and January 30, 2024. It breaks down the amount, cost value, and percentage of total fees collected.

C034 Cash paid to suppliers for expensesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C138, C139)$ —$ —
Total Cash paid to suppliers for expenses$ —$ —

Cash withdrawn by customers

The following table illustrates the cash withdrawals made by our customers, contrasting the data from February 28, 2024, with that from January 30, 2024. It includes the amount, cost value, and percentage of total withdrawals for each cash type.

C028 Cash withdrawn by customersFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C140, C141)$ —$ —
Total Cash withdrawn by customers$ —$ —
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Statements of Cash Flows

Purchase of cryptocurrencies

This table details the purchase of cryptocurrencies by our customers, showing a comparison between February 28, 2024, and January 30, 2024. It breaks down the amount, cost value, and percentage of total purchases for each type of cryptocurrency.

C029 Purchase of cryptocurrenciesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C142, C143)$ —$ —
Total Purchase of cryptocurrencies$ —$ —

Disposal of cryptocurrencies

The final table outlines the disposal of cryptocurrencies by our customers, contrasting figures from February 28, 2024, with those from January 30, 2024. It includes the amount, cost value, and percentage of total disposals for each type of cryptocurrency.

C030 Disposal of cryptocurrenciesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
USD (C144, C145)$ —$ —
Total Disposal of cryptocurrencies$ —$ —
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Statements of Cash Flows

Cryptocurrencies deposited by customers

The following table provides a detailed breakdown of the cryptocurrencies deposited by our customers. It compares the data from February 28, 2024, to that of January 30, 2024, showcasing the amount, cost value, and percentage of total deposits for each cryptocurrency.

C001 Cryptocurrencies deposited by customersFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C054, C055)
Ethereum (C052, C053)
USDT (C002, C003)
Total Cryptocurrencies deposited by customers

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12

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Statements of Cash Flows

Cryptocurrencies withdrawn by customers

This table illustrates the cryptocurrencies that have been withdrawn by our customers. It contrasts the figures from February 28, 2024, with those from January 30, 2024, highlighting the amount, cost value, and percentage of total withdrawals for each cryptocurrency.

C009 Cryptocurrencies withdrawn by customersFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C058, C059)
Ethereum (C056, C057)
USDT (C010, C011)
Total Cryptocurrencies withdrawn by customers

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Statements of Cash Flows

Cryptocurrency inflow

Here, we present the increases of cryptocurrencies for the specified dates. This table compares the inflow data from February 28, 2024, to that of January 30, 2024.

C015 Cryptocurrency inflowFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C062, C063)
Ethereum (C060, C061)
USDT (C064, C065)
Total Cryptocurrency inflow

Cryptocurrency outflow

This table depicts the decreases of cryptocurrencies. It provides a comparison between the data from February 28, 2024, and January 30, 2024.

C016 Cryptocurrency outflowFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C068, C069)
Ethereum (C066, C067)
USDT (C070, C071)
Total Cryptocurrency outflow
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Statements of Cash Flows

Cryptocurrencies received from customers as transaction fees

Below is a representation of the cryptocurrencies we received as transaction fees from our customers. The data from February 28, 2024, is compared with that of January 30, 2024.

C004 Cryptocurrencies received from customers as transaction feesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C074, C075)
Ethereum (C072, C073)
USDT (C005, C006)
Total Cryptocurrencies received from customers as transaction fees

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15

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Statements of Cash Flows

Purchase of cryptocurrencies with non-cash consideration

The following table provides insights into the cryptocurrencies we purchased using non-cash considerations. It compares the data from February 28, 2024, to that of January 30, 2024.

C023 Purchase of cryptocurrencies with non-cash considerationFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C090, C091)
Ethereum (C088, C089)
USDT (C092, C093)
Total Purchase of cryptocurrencies with non-cash consideration

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Statements of Cash Flows

Disposal of cryptocurrencies for non-cash consideration

This table illustrates the cryptocurrencies we disposed of in exchange for non-cash considerations. It contrasts the figures from February 28, 2024, with those from January 30, 2024.

C024 Disposal of cryptocurrencies for non-cash considerationFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C096, C097)
Ethereum (C094, C095)
USDT (C098, C099)
Total Disposal of cryptocurrencies for non-cash consideration

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Statements of Cash Flows

Cryptocurrencies paid to suppliers for expenses

Below is a detailed table showcasing the cryptocurrencies we paid to our suppliers for various expenses. It compares the data from February 28, 2024, to that of January 30, 2024.

C012 Cryptocurrencies paid to suppliers for expensesFeb. 28, 2024Jan. 30, 2024
(Cost value in thousands)AmountCost ValuePercentage of TotalAmountCost ValuePercentage of Total
Bitcoin (C108, C109)
Ethereum (C013, C014)
USDT (C106, C107)
Total Cryptocurrencies paid to suppliers for expenses

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Statements of Cash Flows

6. Exchange rate

The table represents the exchange rates at 00:00 in the UTC+0 time zone. The exchange rates are used in revenue recognization.

Quoted DateBTC to USDETH to USDUSDT to USD
BuySellBuySellBuySell
2024-01-30000000
2024-01-31000000
2024-02-01000000
2024-02-02000000
2024-02-03000000
2024-02-04000000
2024-02-05000000
2024-02-06000000
2024-02-07000000
2024-02-08000000
2024-02-09000000
2024-02-10000000
2024-02-11000000
2024-02-12000000
2024-02-13000000
2024-02-14000000
2024-02-15000000
2024-02-16000000
2024-02-17000000
2024-02-18000000
2024-02-19000000
2024-02-20000000
2024-02-21000000
2024-02-22000000
2024-02-23000000
2024-02-24000000
2024-02-25000000
2024-02-26000000
2024-02-27000000
2024-02-28000000
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Statements of Cash Flows

Please note that the values are approximate and may vary slightly due to market fluctuations.

7. Market price risk of cryptocurrencies

Our revenue model primarily hinges on transaction fees, which can be a flat fee or calculated as a percentage of the transaction value. The exact fee may fluctuate depending on the payment type and the transaction value.

However, it's important to be cognizant of the risks associated with cryptocurrency price volatility, which could negatively impact our operational results. Market prices of Bitcoin, Ethereum, and other cryptocurrencies play a crucial role in determining our future profitability. These prices have shown significant fluctuation month over month, matching the pattern of our operational results, and there is no certainty that they will follow historical trends.

A downturn in the market price of Bitcoin, Ethereum, and other cryptocurrencies could negatively affect our earnings, the carrying value of our cryptocurrencies, and our projected future cash flow. It could also pose a challenge to our liquidity and capability to fulfill ongoing obligations.

In terms of accounting procedures, we record impairment charges on our cryptocurrencies when the market prices fall below the assets' carrying value.

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