Note 5. Cryptocurrency Assets

The Company transacts business with cryptocurrency assets. The Company records cryptocurrency assets as an intangible asset with infinite life. We classify cryptocurrency assets that have a market value and substantial liquidity as current intangible assets. The following chart shows our cryptocurrency assets (in thousands):

In May 2023, PulseChain (“Pulse”) and PulseX were launched. Pulse is a layer 1 blockchain that is a fork of Ethereum. PulseX is a fork of the Uniswap digital exchange platform (“DEX”) and is the native DEX of the Pulse ecosystem. During the year ended January 31, 2022, we invested $0.1 million in each of Pulse and PulseX. In May 2023, we received 2.3 billion Pulse tokens and 3.0 billion PulseX tokens.

Also in May 2023, Overwatch Partners, Inc. (“Overwatch”), an entity controlled by Michael Hawkins, distributed to us Pulse and PulseX tokens of 12.3 billion each. As a result of this transaction, the Company distributed to Epic Industry Corp (“Epic”), a wholly owned company of Michael Hawkins, 2.5 billion Pulse tokens. The receipt of Pulse and PulseX also earned Epic 50,000 shares of Series A Preferred Stock, which were issued to Epic during the quarter ended July 31, 2021 and recorded as a prepaid expense of $2.0 million.

For the quarter ended July 31, 2023, the Company recorded in other income (expense), net fair market value expense adjustments of $1.3 million related to PulseX.

During the three and six months ended July 31, 2022, the Company recorded in other income (expense), net fair market value expense adjustments of $2.1 million and $2.2 million, respectively.