Page 1 EXHIBIT A-76Page 2 BAM Management US Holdings Inc.
Communication with Those
Charged with Governance
December 31,
armanino*
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000136Page 3 Armanino LLP
50 West San Femando Street
Suite 500 i
San Jose, CA 95113-2438 8 a
4c8 2006401 fax. armanino
armaninoLLP.com
May 20,
To the Board of Directors and Management of
BAM Management US Holdings Inc.
San Francisco, California
We have audited the consolidated financial statements of BAM Management US Holdings Inc. (the "Company")
as of and for the year ended December 31, 2021 and have issued our report thereon date May 6, 2022.
Professional standards require that we provide you with information about our responsibilities under generally
accepted auditing standards, as well as certain information related to the planned scope and timing of our audit.
Professional standards also require that we communicate to you the following information related to our audit.
Our Responsibility under Generally Accepted Auditing Standards
As communicated in our engagement letter dated October 12, 2021, our responsibility, as described by
professional standards, is to form and express an opinion about whether the consolidated financial statements that
have been prepared by management with your oversight are presented fairly, in all material respects, in
conformity with accounting principles generally accepted in the United States of America. Our audit of the
consolidated financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable,
rather than absolute, assurance about whether the consolidated financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, as
part of our audit, we considered the internal controls of the Company solely for the purpose of determining our
audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our professional
judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not
required to design procedures for the purpose of identifying other matters to communicate to you.
We have provided our comments regarding significant control deficiencies and other matters noted during our
audit in a separate letter to you dated May 20, 2022.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you. The
following is an overview of the planned scope and timing of the audit:
Obtain an understanding of the industry and business
Obtain an understanding of the internal control environment and process level control activities
Perform a risk assessment
Adopt a primarily substantive audit approach for all significant audit areas
Perform audit procedures on accounts over assessed materiality
bx} MOORE
An incopendent firm
associated with Moore
Global Network Limited
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000137Page 4 Qualitative Aspects of the Company's Significant Accounting Practices
Significant Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Company are described in Note 2 to the consolidated financial statements.
We noted there is currently no authoritative guidance on the accounting for digital asset denominated balances
and transactions. We discussed the accounting for these transactions with management and believe that the
accounting methods selected are appropriate in the circumstances. All significant transactions have been
recognized in the financial statements in the proper period.
Significant Accounting Estimates
Accounting estimates are an integral part of the consolidated financial statements prepared by management and
are based on management's knowledge and experience about past and current events and assumptions about future
events. Certain accounting estimates are particularly sensitive because of their significance to the consolidated
financial statements and because of the possibility that future events affecting them may differ significantly from
those expected. Significant items subject to such estimates and assumptions include:
Valuation of digital assets;
Provision for transaction losses;
Incremental borrowing rate used in assessing the present value of lease liabilities;
Impairment of long-term investments and other long-lived assets; and
Provision for income taxes and valuation of deferred tax assets and liabilities
Assumptions utilized in valuation models to calculate stock-based compensation expense
eoeoeee@
These estimates are based on various factors including historical trends, specific circumstances, and existing
economic conditions. We evaluated the key factors and assumptions used to develop the estimates in determining
that they are reasonable in relation to the consolidated financial statements taken as a whole.
Financial Statement Disclosure
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. The most sensitive disclosures affecting the consolidated financial statements were:
Note 2 - Risks and uncertainties
Note 2 - Digital assets held
Note 2 - Revenue recognition
Note 6 - Customer digital asset wallets
Note 8 - Stock option plan
Note 9 - Income taxes
Note 10 - Related party transactions
eeeeeee@
The consolidated financial statement disclosures are neutral, consistent, and clear.
Significant Difficulties Encountered During the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000138Page 5 Uncorrected and Corrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit,
other than those that are trivial, and communicate them to the appropriate level of management.
Corrected Misstatements
The following material misstatements detected as a result of audit procedures were corrected by management:
1. A $613,124 adjustment to reclassify short-term portion of right-of-use asset from long-term
2. A $1,708,835 adjustment to record a provision for transaction loss
3. A $541,916 adjustment to correct over-accrued medical premiums
A $11,953,479 adjustment to true-up cash balances, customer advance receivable, and customer fund
liability to be consistent with digital asset balances presentation under UTC timing
$5. A $535,125 adjustment to capture all revenue transactions for withdrawal fee income
6. A $6,215,261 adjustment to correct overstated debit card deposit fee income
Uncorrected Misstatements
The following summarizes uncorrected misstatements of the consolidated financial statements. Management has
determined that their effects are immaterial, both individually and in the aggregate, to the consolidated financial
statements taken as a whole.
1. A $388,939 adjustment to accrue for Coley severance settlement
nN
A $256,741 adjustment to true up cash balances in order to present on UTC timing
3. An $8,232,352 adjustment to collect fee expenses in order to correct for the over recording of trading
network fees with a corresponding reduction of $7,561,357 to unrealized gains and $670,995 increase in
digital assets held. This also resulted in a $2,140,411 reduction of tax expense and tax liability.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to
the consolidated financial statements or the auditor's report. We are pleased to report that no such disagreements
arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation
letter dated May 6 2022.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion” on certain situations. If a consultation involves application of an
accounting principle to the Company's consolidated financial statements or a determination of the type of auditor's
opinion that may be expressed on those statements, our professional standards require the consulting accountant
to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000139Page 6 Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Company's auditors. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition to our
retention.
This report is intended solely for the information and use of the Board of Directors and Management of BAM
Management US Holdings Inc. and is not intended to be and should not be used by anyone other than these
specified parties. Jymani
Armanino™”
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000140Page 7 Pocusign Envelope ID Case 1:23-Cy ULSI ABS Pstument 19-12 Filed 06/06/23 Page 7 of
May 6,
Armanino LLP
50 W San Fernando Street
San Jose, California
This representation letter is provided in connection with your audit of the consolidated financial statements
of BAM Management US Holdings Inc. (the "Company"), which comprise the consolidated balance sheets
as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’
equity, and cash flows for the years then ended, and the related notes to the financial statements, for the
purpose of expressing an opinion as to whether the consolidated financial statements are presented fairly,
in all material respects, in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission or misstatement. An
omission or misstatement that is monetarily small in amount could be considered material as a result of
qualitative factors.
We confirm, to the best of our knowledge and belief, as of May 4, 2022, the following representations made
to you during your audit.
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
October 12, 2021, including our responsibility for the preparation and fair presentation of the
consolidated financial statements.
2. The consolidated financial statements referred to above are fairly presented in conformity with U.S.
GAAP.
3. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-0001 41Page 8 DocuSign Envelope 1D: CAP TOPO PEGR ABS t8tument 19-12 Filed 06/06/23 Page 8 of
4. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5. Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
6. Related party relationships and transactions have been appropriately accounted for and disclosed in
accordance with the requirements of U.S. GAAP.
7. Allevents subsequent to the date of the consolidated financial statements and for which U.S. GAAP
requires adjustment or disclosure have been adjusted or disclosed. We have disclosed to you all
impacts on our business and operations of the current COVID-19 pandemic of which we are aware.
Those impacts include the following:
a the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b due to widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot be
reasonably estimated at this time.
8. The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to
the consolidated financial statements as a whole. A list of the uncorrected misstatements is attached
to the representation letter. In addition, we acknowledge the projected misstatement you identified
for fiscal 2020 from your testing related to chargeback expense in the amount of $150,000 does not
materially impact the consolidated financial statements.
9. The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
10. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
J1. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the consolidated balance sheets as of
December 31, 2021 and 2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the consolidated balance sheets
as of December 31, 2021 and 2020 is complete and accurate.
15. All intercompany transactions and balances have been properly eliminated in consolidation.
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16. We agree all common stock and preferred stock outstanding as of December 31, 2021 and 2020 is
complete and accurate. We have excluded from option exercises and common stock outstanding
early exercised common stock that was issued in connection with substance non-recourse
promissory notes and for which the promissory note has not yet been repaid or forgiven. With
respect to certain employees, we continue to investigate our options for legal recourse.
17. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts
18. Weare responsible for developing all assumptions, including but not limited to: volatility, forfeiture
rate, expected term and risk-free rates, used in calculating ASC 718, Compensation - Stock
Compensation.
19. We believe the values attributed to our grants represent the fair value of our common stock on the
date of issuance.
20. We confirm that all options granted, exercised, and cancelled/forfeited during the year ended
December 31, 2021 were complete and recorded in the proper period. With respect to certain
employees we continue to investigate our options for legal recourse. We confirm that the Board
grant to former CEO, Catherine Coley, was never duly executed and therefore does not meet the
accounting definition of a grant.
21. We have evaluated our investments in privately held companies and determined there were no
events or circumstances that would indicate any of our investments were impaired as of December
31, 2021.
Information Provided
22. We have provided you with:
a Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the consolidated financial statements, such as records, documentation, and other
matters.
b Additional information that you have requested from us for the purpose of the audit.
c Unrestricted access to persons within the Company from whom you determined it necessary to
obtain audit evidence.
23. All material transactions have been recorded in the accounting records and are reflected in the
consolidated financial statements
24. We have disclosed to you the results of our assessment of the risk that the consolidated financial
statements may be materially misstated as a result of fraud.
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25. We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a Management,
b Employees who have significant roles in internal control, or
c Others where the fraud could have a material effect on the consolidated financial statements.
26. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
consolidated financial statements communicated by employees, former employees, analysts,
regulators, or others.
27. We have no knowledge of any instances of noncompliance or suspected noncompliance with laws
and regulations whose effects should be considered when preparing consolidated financial
statements.
28. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the consolidated financial statements.
29. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
30. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
consolidated financial statements.
31. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
32. We believe our accounting for digital assets and consolidated financial statement disclosures are
complete and accurate.
33. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all custodial
digital assets.
34. We are not aware of any security breach, corruption, destruction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
35. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
36. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
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37. Alltransactions and balances not related to the Company have been properly identified and excluded
from the consolidated financial statements.
38. We acknowledge the customer custodial cash deposits recorded on the consolidated balance sheets
as of December 31, 2021 and 2020 is complete and accurate.
39. The Company acknowledges that prior to listing a new digital asset, the Company evaluates the
digital asset for viability of the digital asset's use-cases, protocol security, and compliance with all
local laws and regulations.
40. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the years ended December 31, 2021 and 2020.
41. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts with
Customers. All revenue transactions represent valid transactions with our customers. All contracts
with underlying revenue recognized in the financial statements have commercial substance and have
been approved by appropriate parties, and we have considered side agreements, implied promises,
and unstated business conventions in identifying performance obligations in the contracts. We have
sufficient and appropriate documentation supporting all estimates and judgments underlying the
amount and timing of revenue recognized in the financial statements. We believe the revenue
recognized during the years ended December 31, 2021 and 2020 is complete and accurate.
42. We have adequately considered the impact of the COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
43. During the year ended December 31, 2021, we issued promissory notes to certain employees in
connection with the early exercise of their stock options. We do not intend to enforce the recourse
provisions of the notes and therefore have accounted for these as in substance non-recourse
notes. With respect to certain employees we continue to investigate our options for legal recourse. .
44. Except as disclosed in the footnotes to the consolidated financial statements, no events have
occurred subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the consolidated financial statements.
DocuSigned by:
brian Sluoder
T . .
roder, Chief Executive Officer
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Schedule of Passed Audit Differences
As of and for the year ended December 31,
Account No Account Name Debit Credit
101000 4563 - BAM Mgmt Operating $ 256,
221002 Customer Fund - Silvergate $ 256,To adjust Silvergate cash account to UTC timing
231000 Payroll expense - severance $ 388,
231000 Accrued liabiliites $ 388,To record Coley severance settlement accrual
191012 Gas fee wallet (ETH) $ 670,
430001 Unrealized gain/loss $ 7,561,
520001 Collect fee expense $ 8,232,
685005 Tax expense $ 2,140,
233001 = Tax liability $ 2,140,
To correct for trading network fees, net of taxes
Confidential Treatment Requested by Armanino LLP
Armanino-BAM-000146
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PlainSite Cover Page
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Case 1:23-cv-01599-ABJ Document 19-12 Filed 06/06/23 Page 1 of 12
EXHIBIT A-76
PDF Page 3
BAM Management US Holdings Inc.
Communication with Those
Charged with Governance
December 31, 2021
armanino*
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000136
PDF Page 4
Case 1:23-cv-01599-ABJ Document 19-12 Filed 06/06/23 Page 3 of 12
Armanino LLP
50 West San Femando Street
Suite 500 i
San Jose, CA 95113-2438 8 a
4c8 2006401 fax. armanino
armaninoLLP.com
May 20, 2022
To the Board of Directors and Management of
BAM Management US Holdings Inc.
San Francisco, California
We have audited the consolidated financial statements of BAM Management US Holdings Inc. (the "Company")
as of and for the year ended December 31, 2021 and have issued our report thereon date May 6, 2022.
Professional standards require that we provide you with information about our responsibilities under generally
accepted auditing standards, as well as certain information related to the planned scope and timing of our audit.
Professional standards also require that we communicate to you the following information related to our audit.
Our Responsibility under Generally Accepted Auditing Standards
As communicated in our engagement letter dated October 12, 2021, our responsibility, as described by
professional standards, is to form and express an opinion about whether the consolidated financial statements that
have been prepared by management with your oversight are presented fairly, in all material respects, in
conformity with accounting principles generally accepted in the United States of America. Our audit of the
consolidated financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable,
rather than absolute, assurance about whether the consolidated financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, as
part of our audit, we considered the internal controls of the Company solely for the purpose of determining our
audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our professional
judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not
required to design procedures for the purpose of identifying other matters to communicate to you.
We have provided our comments regarding significant control deficiencies and other matters noted during our
audit in a separate letter to you dated May 20, 2022.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you. The
following is an overview of the planned scope and timing of the audit:
Obtain an understanding of the industry and business
Obtain an understanding of the internal control environment and process level control activities
Perform a risk assessment
Adopt a primarily substantive audit approach for all significant audit areas
Perform audit procedures on accounts over assessed materiality
bx} MOORE
An incopendent firm
associated with Moore
Global Network Limited
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000137
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Case 1:23-cv-01599-ABJ Document 19-12 Filed 06/06/23 Page 4 of 12
Qualitative Aspects of the Company's Significant Accounting Practices
Significant Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Company are described in Note 2 to the consolidated financial statements.
We noted there is currently no authoritative guidance on the accounting for digital asset denominated balances
and transactions. We discussed the accounting for these transactions with management and believe that the
accounting methods selected are appropriate in the circumstances. All significant transactions have been
recognized in the financial statements in the proper period.
Significant Accounting Estimates
Accounting estimates are an integral part of the consolidated financial statements prepared by management and
are based on management's knowledge and experience about past and current events and assumptions about future
events. Certain accounting estimates are particularly sensitive because of their significance to the consolidated
financial statements and because of the possibility that future events affecting them may differ significantly from
those expected. Significant items subject to such estimates and assumptions include:
Valuation of digital assets;
Provision for transaction losses;
Incremental borrowing rate used in assessing the present value of lease liabilities;
Impairment of long-term investments and other long-lived assets; and
Provision for income taxes and valuation of deferred tax assets and liabilities
Assumptions utilized in valuation models to calculate stock-based compensation expense
eoeoeee@
These estimates are based on various factors including historical trends, specific circumstances, and existing
economic conditions. We evaluated the key factors and assumptions used to develop the estimates in determining
that they are reasonable in relation to the consolidated financial statements taken as a whole.
Financial Statement Disclosure
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. The most sensitive disclosures affecting the consolidated financial statements were:
Note 2 - Risks and uncertainties
Note 2 - Digital assets held
Note 2 - Revenue recognition
Note 6 - Customer digital asset wallets
Note 8 - Stock option plan
Note 9 - Income taxes
Note 10 - Related party transactions
eeeeeee@
The consolidated financial statement disclosures are neutral, consistent, and clear.
Significant Difficulties Encountered During the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000138
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Case 1:23-cv-01599-ABJ Document 19-12 Filed 06/06/23 Page 5 of 12
Uncorrected and Corrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit,
other than those that are trivial, and communicate them to the appropriate level of management.
Corrected Misstatements
The following material misstatements detected as a result of audit procedures were corrected by management:
1. A $613,124 adjustment to reclassify short-term portion of right-of-use asset from long-term
2. A $1,708,835 adjustment to record a provision for transaction loss
3. A $541,916 adjustment to correct over-accrued medical premiums
4
A $11,953,479 adjustment to true-up cash balances, customer advance receivable, and customer fund
liability to be consistent with digital asset balances presentation under UTC timing
$5. A $535,125 adjustment to capture all revenue transactions for withdrawal fee income
6. A $6,215,261 adjustment to correct overstated debit card deposit fee income
Uncorrected Misstatements
The following summarizes uncorrected misstatements of the consolidated financial statements. Management has
determined that their effects are immaterial, both individually and in the aggregate, to the consolidated financial
statements taken as a whole.
1. A $388,939 adjustment to accrue for Coley severance settlement
nN
A $256,741 adjustment to true up cash balances in order to present on UTC timing
3. An $8,232,352 adjustment to collect fee expenses in order to correct for the over recording of trading
network fees with a corresponding reduction of $7,561,357 to unrealized gains and $670,995 increase in
digital assets held. This also resulted in a $2,140,411 reduction of tax expense and tax liability.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to
the consolidated financial statements or the auditor's report. We are pleased to report that no such disagreements
arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation
letter dated May 6 2022.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion” on certain situations. If a consultation involves application of an
accounting principle to the Company's consolidated financial statements or a determination of the type of auditor's
opinion that may be expressed on those statements, our professional standards require the consulting accountant
to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000139
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Case 1:23-cv-01599-ABJ Document 19-12 Filed 06/06/23 Page 6 of 12
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Company's auditors. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition to our
retention.
This report is intended solely for the information and use of the Board of Directors and Management of BAM
Management US Holdings Inc. and is not intended to be and should not be used by anyone other than these
specified parties. Jymani
Armanino™”
Confidential Treatment Requested by Armanino LLP Armanino-BAM-000140
PDF Page 8
Pocusign Envelope ID Case 1:23-Cy ULSI ABS Pstument 19-12 Filed 06/06/23 Page 7 of 12
May 6, 2022
Armanino LLP
50 W San Fernando Street
San Jose, California 95113
This representation letter is provided in connection with your audit of the consolidated financial statements
of BAM Management US Holdings Inc. (the "Company"), which comprise the consolidated balance sheets
as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’
equity, and cash flows for the years then ended, and the related notes to the financial statements, for the
purpose of expressing an opinion as to whether the consolidated financial statements are presented fairly,
in all material respects, in accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission or misstatement. An
omission or misstatement that is monetarily small in amount could be considered material as a result of
qualitative factors.
We confirm, to the best of our knowledge and belief, as of May 4, 2022, the following representations made
to you during your audit.
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
October 12, 2021, including our responsibility for the preparation and fair presentation of the
consolidated financial statements.
2. The consolidated financial statements referred to above are fairly presented in conformity with U.S.
GAAP.
3. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Confidential Treatment Requested by Armanino LLP Armanino-BAM-0001 41
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4. We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5. Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
6. Related party relationships and transactions have been appropriately accounted for and disclosed in
accordance with the requirements of U.S. GAAP.
7. Allevents subsequent to the date of the consolidated financial statements and for which U.S. GAAP
requires adjustment or disclosure have been adjusted or disclosed. We have disclosed to you all
impacts on our business and operations of the current COVID-19 pandemic of which we are aware.
Those impacts include the following:
a the Company has experienced minimal operational effects due to being a decentralized
software platform in a decentralized market;
b due to widespread uncertainty over the macroeconomic factors and sovereign monetary
policies which could impact consumer demand for our services, the financial impact cannot be
reasonably estimated at this time.
8. The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to
the consolidated financial statements as a whole. A list of the uncorrected misstatements is attached
to the representation letter. In addition, we acknowledge the projected misstatement you identified
for fiscal 2020 from your testing related to chargeback expense in the amount of $150,000 does not
materially impact the consolidated financial statements.
9. The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
10. Significant estimates and material concentrations have been properly disclosed in accordance with
U.S. GAAP.
J1. Guarantees, whether written or oral, under which the Company is contingently liable, have been
properly recorded or disclosed in accordance with U.S. GAAP.
12. The Company believes the assumptions and estimates used to value the provision for transaction
losses to be complete and accurate.
13. We acknowledge the customer funds payable recorded on the consolidated balance sheets as of
December 31, 2021 and 2020 is complete and accurate.
14. We acknowledge the token indemnity customer deposit recorded on the consolidated balance sheets
as of December 31, 2021 and 2020 is complete and accurate.
15. All intercompany transactions and balances have been properly eliminated in consolidation.
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16. We agree all common stock and preferred stock outstanding as of December 31, 2021 and 2020 is
complete and accurate. We have excluded from option exercises and common stock outstanding
early exercised common stock that was issued in connection with substance non-recourse
promissory notes and for which the promissory note has not yet been repaid or forgiven. With
respect to certain employees, we continue to investigate our options for legal recourse.
17. We are in agreement with the adjusting journal entries you have proposed. All audit adjustments
proposed by you have been posted to the Company's accounts
18. Weare responsible for developing all assumptions, including but not limited to: volatility, forfeiture
rate, expected term and risk-free rates, used in calculating ASC 718, Compensation - Stock
Compensation.
19. We believe the values attributed to our grants represent the fair value of our common stock on the
date of issuance.
20. We confirm that all options granted, exercised, and cancelled/forfeited during the year ended
December 31, 2021 were complete and recorded in the proper period. With respect to certain
employees we continue to investigate our options for legal recourse. We confirm that the Board
grant to former CEO, Catherine Coley, was never duly executed and therefore does not meet the
accounting definition of a grant.
21. We have evaluated our investments in privately held companies and determined there were no
events or circumstances that would indicate any of our investments were impaired as of December
31, 2021.
Information Provided
22. We have provided you with:
a Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the consolidated financial statements, such as records, documentation, and other
matters.
b Additional information that you have requested from us for the purpose of the audit.
c Unrestricted access to persons within the Company from whom you determined it necessary to
obtain audit evidence.
23. All material transactions have been recorded in the accounting records and are reflected in the
consolidated financial statements
24. We have disclosed to you the results of our assessment of the risk that the consolidated financial
statements may be materially misstated as a result of fraud.
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25. We have no knowledge of any fraud or suspected fraud that affects the Company and involves:
a Management,
b Employees who have significant roles in internal control, or
c Others where the fraud could have a material effect on the consolidated financial statements.
26. We have no knowledge of any allegations of fraud or suspected fraud affecting the Company's
consolidated financial statements communicated by employees, former employees, analysts,
regulators, or others.
27. We have no knowledge of any instances of noncompliance or suspected noncompliance with laws
and regulations whose effects should be considered when preparing consolidated financial
statements.
28. We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the consolidated financial statements.
29. We have disclosed to you the identity of the Company's related parties and all the related party
relationships and transactions of which we are aware.
30. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral, except as disclosed in the notes to the
consolidated financial statements.
31. We believe the reports generated from our system used to support the digital asset balances and
transactions are complete and accurate, including both market and cost basis.
32. We believe our accounting for digital assets and consolidated financial statement disclosures are
complete and accurate.
33. We confirm, through our Wallet Custody Agreement with Binance Holdings Limited (BHL), the
Company has right of ownership of all corporate digital assets and right of control over all custodial
digital assets.
34. We are not aware of any security breach, corruption, destruction or loss of private keys that would
prevent our custodian, BHL, from exerting control over any digital wallet holding either corporate
or custodial digital assets held on our behalf.
35. The Company believes there are no contingent liabilities or grounds for compensation owed to any
customers as it relates to non-supported forked assets and airdrops.
36. We do not have (a) asserted and unsettled income tax contingencies, or (b) unasserted income tax
contingencies caused by uncertain tax positions taken in our income tax returns filed with the
Internal Revenue Service and state, and local tax authorities that are probable of assertion by such
tax authorities under the provisions of ASC 450. Furthermore, we have not received either written
or oral tax opinions that are contrary to our assessment.
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37. Alltransactions and balances not related to the Company have been properly identified and excluded
from the consolidated financial statements.
38. We acknowledge the customer custodial cash deposits recorded on the consolidated balance sheets
as of December 31, 2021 and 2020 is complete and accurate.
39. The Company acknowledges that prior to listing a new digital asset, the Company evaluates the
digital asset for viability of the digital asset's use-cases, protocol security, and compliance with all
local laws and regulations.
40. We confirm that expenses incurred or obligations due for services between the Company and BHL
under any of its arrangements with BHL, including the Software License Agreement, Master
Services Agreement, Trademark License Agreement and Wallet Custody Agreement are properly
recorded and disclosed as of and for the years ended December 31, 2021 and 2020.
41. Revenue from contracts with customers has been appropriately accounted for and disclosed in
accordance with FASB Accounting Standards codification Topic 606, Revenue from Contracts with
Customers. All revenue transactions represent valid transactions with our customers. All contracts
with underlying revenue recognized in the financial statements have commercial substance and have
been approved by appropriate parties, and we have considered side agreements, implied promises,
and unstated business conventions in identifying performance obligations in the contracts. We have
sufficient and appropriate documentation supporting all estimates and judgments underlying the
amount and timing of revenue recognized in the financial statements. We believe the revenue
recognized during the years ended December 31, 2021 and 2020 is complete and accurate.
42. We have adequately considered the impact of the COVID-19 pandemic and determined that we are
not aware of any specific event or circumstance that would require an update to our estimates or
judgments or a revision of the carrying value of our assets or liabilities. We have disclosed to you
all impact on our business and operations of the current COVID-19 pandemic of which we are
aware.
43. During the year ended December 31, 2021, we issued promissory notes to certain employees in
connection with the early exercise of their stock options. We do not intend to enforce the recourse
provisions of the notes and therefore have accounted for these as in substance non-recourse
notes. With respect to certain employees we continue to investigate our options for legal recourse. .
44. Except as disclosed in the footnotes to the consolidated financial statements, no events have
occurred subsequent to the balance sheet date and through the date of this letter that would require
adjustment to, or disclosure in, the consolidated financial statements.
DocuSigned by:
brian Sluoder
T . .
roder, Chief Executive Officer
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Schedule of Passed Audit Differences
As of and for the year ended December 31, 2021
Account No Account Name Debit Credit
101000 4563 - BAM Mgmt Operating $ 256,741
221002 Customer Fund - Silvergate $ 256,741
To adjust Silvergate cash account to UTC timing
231000 Payroll expense - severance $ 388,939
231000 Accrued liabiliites $ 388,939
To record Coley severance settlement accrual
191012 Gas fee wallet (ETH) $ 670,995
430001 Unrealized gain/loss $ 7,561,357
520001 Collect fee expense $ 8,232,352
685005 Tax expense $ 2,140,411
233001 = Tax liability $ 2,140,411
To correct for trading network fees, net of taxes
Confidential Treatment Requested by Armanino LLP
Armanino-BAM-000146
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