Filing summary: Creek Road Miners, Inc. — Q1 2022
Entity-name discrepancy: The request identifies Prairie Operating Co., but the supplied Form 10-Q is for Creek Road Miners, Inc. This summary reflects the filing provided, not Prairie Operating Co.
Business context and reporting period
The unaudited quarter ended March 31, 2022. Creek Road had discontinued its legacy live-events and Jevo operations in 2021 and began Bitcoin mining in October 2021. It also operated a pop-culture memorabilia eCommerce business, whose future continuation was under evaluation. Mining was the principal revenue source in Q1 2022.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $385,114 | $172,698; up 123% |
| Mining revenue | $343,055 | No mining revenue in Q1 2021 |
| eCommerce revenue | $42,059 | $172,698; down 76% |
| Operating loss | $(3,145,297) | $(2,822,903) |
| Continuing-operations loss | $(3,095,699) | $(3,046,995) |
| Net loss | $(3,089,095) | $(2,468,875) |
| Adjusted EBITDA, non-GAAP | $(1,057,672) | $(970,392) |
| Cash used in operating activities | $(1,145,134) | $(1,185,040) |
| Cash used in investing activities | $(1,404,122) | No investing outflow reported |
| Cash provided by financing activities | $885,967 | $1,922,662 |
Mining costs, excluding depreciation and amortization, were $386,342, exceeding mining revenue by $43,287 before depreciation and other operating expenses. Total operating expenses increased 18% to $3.53 million, including $1.92 million of stock-based compensation, $164,520 of depreciation and amortization, and $106,105 of Bitcoin impairment. PPP loan forgiveness contributed $197,662 of other income. Discontinued-operations income fell to $6,604 from $578,120, contributing to the larger total net loss; the continuing-operations loss increased by $48,704.
Cash was $1.12 million at quarter-end, down from $2.79 million at December 31, 2021. Working capital was $2.38 million, down from $4.79 million. Current assets included $6.91 million of mining-equipment deposits and $532,736 of cryptocurrency. Total liabilities were $9.10 million. Related-party secured convertible debentures totaled about $4.99 million, with $2.44 million of related-party accrued interest and expenses reported separately; SBA/PPP loans payable were $149,900. Stockholders’ equity was $3.95 million.
Material changes and developments
- Mining revenue began to replace eCommerce revenue as the company’s primary source of sales; eCommerce revenue declined 76% year over year.
- Property and equipment, net, increased to $4.17 million from $2.23 million, primarily reflecting mining equipment. The company had 240 miners in production and 270 delivered but not yet in production at March 31.
- Equipment commitments totaled $9.38 million, including $6.20 million paid as deposits and $3.18 million remaining. The company expected further deliveries in 2022, with final payment scheduled for November 10, using Bitcoin-sale proceeds, Bitcoin if accepted by the vendor, or additional financing.
- Warrant exercises generated $900,000 of cash. Common shares outstanding were 11,439,805 at quarter-end and 12,205,408 on May 9, 2022. The filing lists 86.6 million potentially dilutive common shares excluded from diluted EPS as anti-dilutive.
- The company reported $197,662 of PPP loan forgiveness in Q1. It also reported $149,900 of SBA loan balance outstanding at quarter-end.
Outlook, risks, and unusual items
- Going concern: Management stated that recurring losses and negative operating cash flow raise substantial doubt about the company’s ability to continue as a going concern. Continued operations depend on financing, revenue generation, and cost control; future financing is not assured.
- Bitcoin and energy exposure: The company said Bitcoin’s market price had fallen about 35% since the start of 2022, while natural-gas costs had risen about 120%, adversely affecting mining revenue and costs. Cryptocurrency impairment losses cannot be reversed under the company’s stated accounting policy.
- Subsequent Bitcoin sale: In May 2022, the company liquidated all of its Bitcoin holdings—about 17 Bitcoin—for approximately $532,000. This is after quarter-end and is not reflected in the March 31 balance sheet.
- Expansion plans: Management targeted $10–15 million of oil and natural-gas asset acquisitions in 2022, but said no discussions had resulted in definitive agreements as of the report date. Plans also included scaling mining capacity and seeking up to six data-center locations.
- Related-party operations: American Natural Energy Corporation (ANEC), connected to the CEO and a director, supplied natural gas and site access for mining. Payments to ANEC were approximately $230,000 in Q1, plus about $9,000 in office rent. The related-party agreement was extended through May 24, 2022, without further extension or renewal option.
- Other subsequent events: The company amended a warehouse lease to end April 30, 2022, for a $20,450 payment. It cited cryptocurrency regulation, competition, COVID-19, and market uncertainty as risks; it reported no direct Russia–Ukraine exposure and no material litigation known to it.
- Management reported disclosure controls and procedures were effective at a reasonable-assurance level as of March 31, 2022, and no material change in internal control over financial reporting occurred during the quarter.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing is Creek Road Miners, Inc., not Prairie Operating Co.
- Review the going-concern disclosure, near-term cash needs, and ability to fund the remaining $3.18 million equipment commitment and planned acquisitions.
- Verify the post-quarter Bitcoin liquidation, use of its proceeds, and the company’s Bitcoin and cash balances after the sale.
- Assess mining economics against Bitcoin prices, natural-gas costs, equipment deployment, and the related-party ANEC arrangement.
- Review the potential dilution from convertible related-party debt, preferred stock, options, and warrants, including the filing’s stated conversion terms and share counts.
- Reconcile reported figures and narrative disclosures where they differ; the filing’s MD&A contains an apparent inconsistency in its description of the change in continuing-operations loss.