What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-12-01 compared with 2022-12-15 · 61 added, 53 removed, 188 unchanged (38% of the section changed)

2 unchanged sentences

In connection with the preparation of this Annual Report on Form 10-K, our management conducted an assessment of the effectiveness of our internal controls over financial reporting as of the end of the period covered by this report (under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)).

Based on that assessment, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were effective.

Based on that assessment, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective due to a material weakness in internal control over financial reporting, as described below.

Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting include policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our Board and management;

and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Under the supervision and participation of our management, including our CEO, we evaluated the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this evaluation under the criteria established in Internal Control –

Integrated Framework, our management concluded that our internal control over financial reporting was effective as of September 30, 2022.

This Annual Report does not include an attestation report by MaloneBailey, LLP, our independent registered public accounting firm, regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report.

As part of our assessment of the effectiveness of our internal control over financial reporting as of September 30, 2023, management identified the following material weakness:

the Company did not adequately design and maintain effective general information technology controls over third-party information systems and applications that are relevant to the preparation of the Company’s financial statements:

Information and Technology Controls:

Certain individual control deficiencies related to information technology (“IT”) general controls and report reviews aggregate into a material weakness, as follows:

o Controls were not fully documented responding to all of the Complementary User Entity Controls forwarded through Software as a Service (SaaS) vendor audit reports in the design and implementation of suggested controls.

o There were not always appropriate IT controls related to information produced by the entity (IPE), including spreadsheets, that are relevant to the preparation of our consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

This material weakness did not result in any identified material misstatements to the financial statements, and there were no changes to previously released financial results.

Based on this material weakness, management concluded that at September 30, 2023, internal control over financial reporting was not effective.

Our independent registered public accounting firm, MaloneBailey, LLP, has issued an adverse audit report on the effectiveness of internal control over financial reporting as of September 30, 2023, which appears on page F-2.

Following identification of the material weakness and prior to filing this Annual Report on Form 10-K, we completed substantive procedures for the year ended September 30, 2023.

Based on these procedures, management believes that our consolidated financial statements included in this Form 10-K have been prepared in accordance with U.S.

Our CEO and CFO has certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of CleanSpark as of, and for, the periods presented in this Form 10-K.

MaloneBailey, LLP has issued an unqualified opinion on our financial statements, which appears on page F-1.

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.

The remediation actions include the following:

establish more specific controls to respond to Complementary User Entity Controls forwarded through SaaS vendor audit reports in the design and implementation of suggested controls;

expand the management and governance over IT system controls;

establish more specific controls to gain additional comfort over the completeness and accuracy of IPE, including data used in spreadsheets used in the preparation of consolidated financial statements;

implement enhanced process controls around internal user access management including provisioning, removal, and periodic review.

We believe that these actions will remediate the material weakness, once management has performed its assessment of our internal controls over financial reporting including the remedial measures described above.

The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We expect that the remediation of this material weakness will be fully completed prior to the end of fiscal year 2024.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal year 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Except for the material weakness identified during the quarter, as of September 30, 2023, and except for the remedial measures described above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal year 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

INHERENT LIMITATIONS ON INTERNAL CONTROLS

3 unchanged sentences

Other Information

None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended September 30, 2023.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10 –

Directors, Executive Officers, and Corporate Governance

Information required by Item 10 is incorporated by reference from the Company’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report.

Item 11 –

Executive Compensation

The information required by Item 11 is incorporated by reference from the Company’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report.

Item 12 –

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is incorporated by reference from the Company’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report.

Item 13 –

Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated by reference from the Company’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report.

Item 14 –

Principal Accounting Fees and Services

14 unchanged sentences

December 10, 2020

Articles of Incorporation, dated October 9, 1987

November 17, 2008

Amendment to Articles of Incorporation, dated October 9, 1987

November 17, 2008

Bylaws, dated October 15, 1987

November 17, 2008

Amended Bylaws, dated February 5, 2013

February 12, 2013

Certificate of Change, dated February 26, 2013

Agreement and Plan of Merger, dated as of February 23, 2021, by and among CleanSpark, Inc., CLSK SWS Merger Sub, Inc., Solar Watt Solutions, Inc., and the Sellers.

February 24, 2021

Article of Merger, dated November 14, 2021

December 1, 2014

Certificate of Amendment, dated April 15, 2015

April 16, 2015

Certificate of Designation, dated April 15, 2015

April 16, 2015

Certificate of Change, dated May 6, 2015

Article of Merger, dated October 31, 2016

November 14, 2016

Certificate of Designation, dated April 16, 2019

Conformed Copy of First Amended and Restated Articles of Incorporation of CleanSpark, Inc., as amended through March 8, 2023

April 6, 2023

Certificate of Amendment to Articles of Incorporation, dated August 9, 2019

July 12, 2019

Amendment to Certificate of Designation, dated October 9, 2019

October 9, 2019

Certificate of Change, dated December 4, 2019

December 10, 2019

Certificate of Withdrawal of Series B Preferred Stock Certificate of Designation, dated March 10, 2020

March 10, 2020

Certificate of Amendment to Articles of Incorporation of CleanSpark, Inc., dated October 2, 2020

July 28, 2020

Certificate of Amendment to Articles of Incorporation of CleanSpark, Inc., dated March 16, 2021 .

March 18, 2021

First Amended and Restated Articles of Incorporation of CleanSpark, Inc., dated September 17, 2021

September 17, 2021

First Amended and Restated Bylaws of CleanSpark, Inc., 2017 Incentive Plan, dated September 17, 2021

First Amended and Restated Bylaws of CleanSpark, Inc., dated September 17, 2021

September 17, 2021

24 unchanged sentences

October 28, 2020

Agreement and Plan of Merger, dated as of February 23, 2021, by and among CleanSpark, Inc., CLSK SWS Merger Sub, Inc., Solar Watt Solutions, Inc., and the Sellers.

February 24, 2021

Non-Fixed Price Sales and Purchase Agreement between CleanSpark, Inc.

22 unchanged sentences

Lease Agreement, by and between CleanSpark, Inc.

and ANC Corporate

and ANC Corporate Center & Paseo Verde, LLC, dated August 26, 2021

December 14, 2021

Center & Paseo Verde, LLC, dated August 26, 2021

Employment Agreement with Chief Financial Officer dated December 15, 2021

19 unchanged sentences

Sales and Purchase Agreement entered into by and between the CleanSpark, Inc.

September 7, 2022

and Crypt Solutions, Inc.

on September 1, 2022

September 7, 2022

Purchase and Sale Agreement, dated as of September 8, 2022, by and among CSRE Properties Sandersville, LLC, Luna Squares LLC, Mawson Infrastructure Group, Inc.

25 unchanged sentences

December 14, 2022

Sales and Purchase Agreement entered into by and between CleanSpark, Inc.

and Crypt Solutions, Inc.

on February 15, 2023

February 16, 2023

Amendment to 2017 Incentive Plan, dated March 8, 2023

March 9, 2023

Future Sales and Purchase Agreement entered into by and between CleanSpark, Inc.

and Bitmain Technologies Delaware Limited on April 6, 2023

April 11, 2023

Future Sales and Purchase Agreement entered into by and between CleanSpark, Inc.

and Bitmain Technologies Delaware Limited on May 26, 2023

Membership Interest Purchase Agreement, dated June 16, 2023, by and among Coinmaker Miners LLC, CleanSpark, Inc., Coinmaker Miners Limited and Makerstar Capital, Inc.

June 21, 2023

Future Sales and Purchase Agreement entered into by and between CleanSpark, Inc.

and BITMAIN TECHNOLOGIES DELAWARE LIMITED on October 6, 2023

October 11, 2023

Amendment, dated October 24, 2023, to Employment Agreement, by and between CleanSpark, Inc.

and Zachary K.

October 27, 2023

Amendment, dated October 24, 2023, to Employment Agreement, by and between CleanSpark, Inc.

Matthew Schultz

October 27, 2023

Amendment, dated October 24, 2023, to Employment Agreement, by and between CleanSpark, Inc.

and Gary Vecchiarelli

October 27, 2023

List of Subsidiaries

4 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

CleanSpark, Inc.

Executive Officer Incentive Compensation Recoupment (Clawback) Policy

Inline XBLR Instance Document

40 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures