What changed in this filing

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Item 1. Business

2020-12-17 compared with 2019-12-16 · 339 added, 556 removed, 112 unchanged (89% of the section changed)

Organization Overview

As used in this Annual Report

on Form 10-K, the terms “we”, “us”, “our”, the “Company”, “CleanSpark, Inc.”

and “CleanSpark” mean CleanSpark, Inc.

and its consolidated subsidiaries, unless otherwise indicated.

CleanSpark, Inc.

(“CleanSpark”,

“we”, “our”, the "Company") was incorporated in the State of Nevada on October 15, 1987, as SmartData

SmartData conducted a 504-public offering in the State of Nevada in December 1987, and began trading publicly in January

Due to a series of unfortunate events, including the untimely death of the founding CEO, SmartData discontinued active business

operations in 1992.

On March 25, 2014, we began operations

in the alternative energy sector.

In December 2014, the Company changed

its name to Stratean Inc.

through a short-form merger in order to better reflect its business plan.

On July 1, 2016, the Company entered

into an Asset Purchase Agreement, as amended (the “Purchase Agreement”), with CleanSpark Holdings LLC, CleanSpark LLC,

CleanSpark Technologies LLC and Specialized Energy Solutions, Inc.

(together, the “Seller”).

Pursuant to the Purchase

Agreement, the Company acquired CleanSpark, LLC and all the assets related to the Seller and its line of business and assumed $200,000

in liabilities.

In October 2016, the Company changed

its name to CleanSpark, Inc.

through a short-form merger in order to better reflect the brand identity.

On January 22, 2019, CleanSpark entered

into an Agreement with Pioneer Critical Power, Inc., whereby it acquired certain intellectual property assets and a customer list.

As consideration the Company issued to its sole shareholder (i) 175,000 of the common stock of CleanSpark, (ii) a five-year warrant

to purchase 50,000 shares of CleanSpark common stock at an exercise price of $16.00 per share, and (iii) a five-year warrant to

purchase 50,000 shares of CleanSpark common stock at an exercise price of $20.00 per share.

As a result of the transaction Pioneer

Critical Power Inc.

became a wholly owned subsidiary of CleanSpark Inc.

On February 1, 2019, Pioneer Critical Power, Inc.

to CleanSpark Critical Power Systems, Inc.

On December 10, 2019, the

Financial Industry Regulatory Authority (“FINRA”) approved the Company’s 1:10 reverse stock split of the Company’s

common stock.

The reverse stock split took effect on December 11, 2019.

Unless otherwise noted, impacted amounts and share information

in this annual report and included in the audited financial statements and notes thereto as of and for the fiscal years ended September

30, 2019 and 2018, have been adjusted for the stock split as if such stock split occurred on the first day of the first period

We are in the

business of providing advanced energy software and

control technology that enables a plug-and-play

enterprise solution to modern energy challenges.

Our services consist of intelligent

energy monitoring and controls, microgrid

design and engineering and consulting

Our software allows energy users to obtain resiliency and

economic optimization.

Our software is uniquely

capable of enabling a microgrid to

be scaled to the user's specific needs and can

be widely implemented across commercial,

industrial, military and municipal deployment.

to our business is our mPulse and

mVSO software platforms (the “Platforms”).

When the Platforms are implemented on

a customer’s power system, they are able to control the

distributed energy resources on site to provide secure,

sustainable energy often at significant cost savings

for our energy customers.

The Platforms

allows customers to efficiently manage

renewable energy generation, other distributed

energy generation technologies including energy generation assets, energy storage assets, and

energy consumption assets.

autonomous control over the distributed facets of energy

usage and energy storage, customers are

able to reduce their dependency on utilities,

thereby keeping energy costs relatively constant

The overall aim is to transform energy

consumers into energy producers by supplying power that anticipates their routine

instead of interrupting it.

patented gasification technologies.

Our technology converts any organic

material into SynGas.

SynGas can be used

as clean, renewable, environmentally friendly, warming

fuel for power plants, motor vehicles,

and as feedstock for the generation of

DME (Di-Methyl Ether).

previously disclosed, we plan to continue

our focus on the Distributed energy and

microgrid side of the business in 2020, as opposed to expending

significant efforts on the Gasifier side of the

We plan to continue our efforts

to better our technology, service existing customers and

market our System (defined below) to

prospective clients.

We feel that this focus

would provide the best opportunity

for our shareholders.

CleanSpark, LLC, the Company provides microgrid solutions to military, commercial and residential properties.

services offered consist of, microgrid design and engineering, project development consulting services.

The work is performed under

fixed price bid contracts and negotiated price contracts.

is a Nevada corporation.

are in the business of providing advanced software and controls technology solutions to solve modern energy challenges.

a suite of software solutions that provide end-to-end microgrid energy modeling, energy market communications and energy management

Our offerings consist of intelligent energy monitoring and controls, intelligent microgrid design software, middleware

communications protocols for the energy industry, energy system engineering and software consulting services.

The software platforms (the “Platforms”)

which are integral to our business are summarized as follows:

· mVSO Platform:

Energy modeling software for microgrid design and sales

· mPulse Platform:

Patented, proprietary controls platform that enables integration and optimization of multiple energy sources.

used by Grid Operators and Aggregators to administrate load shifting programs.

used by Controls and IoT Product Companies to participate in load shifting programs

The Platforms are designed to allow customers

to design, build, and operate distributed energy systems and microgrids which efficiently manage energy generation assets, energy

storage assets, and energy consumption assets.

Our software products enable users to implement software solutions to execute on

these strategies.

These strategies are generally targeted to operate distributed energy assets in a manner that provides resiliency

and economic optimization and/or revenue generation through wholesale market activities.

We also offer digital agency services through

p2kLabs, Inc.

including creative design, marketing/digital content, technical development, and engineering.

We also own patented gasification technologies.

Our technology converts any organic material into SynGas which can be used as fuel for a variety of applications and as feedstock

for the generation of DME (Di-Methyl Ether).

As previously disclosed, we plan to continue to focus on our other product offerings,

as opposed to expending significant efforts on the Gasifier side of the business.

Business Segment

CleanSpark, LLC, the Company provides microgrid engineering, design and software solutions to military, commercial and residential

Our services consist of distributed energy microgrid system engineering and design, and project consulting services.

CleanSpark Critical Power Systems, Inc., the Company provides custom hardware solutions for distributed energy systems that serve

military and commercial residential properties.

The equipment is generally sold under negotiated fixed price contracts.

Our Distributed Energy Management

to our business is our Distributed Energy

Management Business (the “DER Business”).

The main assets of our

DER Business include our propriety software

systems (“Systems”) and also

our engineering and methodology

trade secrets.

The Distributed Energy

systems and Microgrids that

utilize our Systems are capable of providing

secure, sustainable energy with significant

cost savings for its energy customers.

The Systems allows customers to

design, engineer, and then

efficiently manage renewable energy generation,

storage and consumption.

autonomous control over the multiple facets of energy

usage and storage, customers are

able to reduce their dependency on utilities,

thereby keeping energy costs relatively

constant over time.

The overall aim is to transform

energy consumers into intelligent energy producers by supplying and

managing power in a manner

that anticipates their routine instead of interrupting

the world, the aging grid is becoming unstable and

unreliable due to increases in

loads and lack of new large-scale

generation facilities.

This inherent instability is compounded

by the push to integrate a growing

number and variety

of renewable but intermittent energy

generators and advanced technologies into

outdated electrical systems.

Simultaneously,

defense installations, industrial complexes, communities,

and campuses across the

world are turning to virtual power plants

and microgrids as a means

to decrease their reliance from the grid,

reduce utility costs, utilize cleaner

power, and enhance energy security and

GridFabric, LLC the Company provides Open Automated Demand response (“OpenADR”) and other middleware communication

protocol software solutions to commercial and utility customers.

Agency Segment

p2kLabs, Inc., the Company provides design, software development and other technology-based consulting services.

Distributed Energy Management and Microgrid Industry

to our business is our Distributed Energy Management Business (the “DER Business”).

The main assets of our DER Business

include our propriety software systems (“Systems”) and also our engineering and methodology trade secrets.

The Distributed

Energy systems and Microgrids that utilize our Systems are capable of providing secure, sustainable energy with significant cost

savings for its energy customers.

The Systems allows customers to design, engineer, and then efficiently communicate with and manage

renewable energy generation, storage and consumption.

By having autonomous control over the multiple facets of energy usage and

storage, customers are able to reduce their dependency on utilities, thereby keeping energy costs relatively constant over time.

The overall aim is to transform energy consumers into intelligent energy producers by supplying and managing power in a manner

that anticipates their routine instead of interrupting it.

the world, the aging grid is becoming unstable and unreliable due to increases in loads and lack of new large-scale generation

This inherent instability is compounded by the push to integrate a growing number and variety of renewable but intermittent

energy generation assets and advanced technologies into outdated electrical grid systems.

Simultaneously, defense installations,

industrial complexes, communities, campuses and other aggregators across the world are turning to virtual power plants and microgrids

as a means to decrease their reliance from the grid, reduce utility costs, utilize cleaner power, and enhance energy security and

The convergence

of these factors is creating a

“perfect storm”

in the power supply

optimization and energy

management arena.

Efficiently building

and operating the distributed energy management

systems and microgrids of tomorrow,

while maximizing the use of sustainable

energy to produce affordable, stable, predictable, and reliable power

on a large scale, is a significant opportunity

that first-movers can leverage to capture a large

share of this emerging global industry.

is comprised of any number

of generation, energy storage, and smart

distribution assets that serve a single or multiple

loads, both connected to the utility

grid and separate from the utility grid

“islanded.”

In the past, distributed

energy management systems and microgrids

have consisted of off-grid generators organized with

controls to provide power where utility

of these factors is creating significant opportunities in the power supply optimization and energy management industry.

operating and managing the distributed energy management systems and microgrids of tomorrow, while maximizing the use of sustainable

energy to produce affordable, stable, predictable and reliable power on a large scale, is a significant opportunity that early-movers

can leverage to capture a large share of this emerging global industry.

is comprised of any number of energy generation, energy storage, and smart distribution assets that serve a single or multiple

loads, both connected to the utility grid and separate from the utility grid “islanded”.

In the past, distributed energy

management systems and microgrids have consisted of off-grid generators organized with controls to provide power where utility

lines cannot run.

Today, modern distributed energy management

systems and microgrids integrate renewable

energy generation systems (REGS) with

advanced energy storage devices and interoperate

with the local utility

Advanced autonomous cyber-secure

microgrids controls relay information between intelligent hardware and

localized servers to make decisions

in real-time that deliver optimum power where

Today, modern distributed energy management systems and microgrids integrate renewable energy generation systems

(REGS) with advanced energy storage devices and interoperate with the local utility grid.

Advanced autonomous cyber-secure microgrids

controls relay information between intelligent hardware and servers to make decisions in real-time that deliver optimum power where

it is needed, when it is needed.

create an integrated distributed energy management control platform that

seamlessly integrates all forms of energy

generation with energy storage devices and controls facility loads

to provide energy security in real time free

of cyber threats.

Able to interoperate with the local utility grid, the Systems bring users

the ability to choose when to buy or sell power

to and from the grid, enabling what

we believe is the most cost-effective power

solution that exists on the current market.

Systems are ideal for commercial, industrial,

mining, defense, campus and

residential users and ranges

in size from 4KW to 100MW and beyond and

can deliver power at or below the current

cost of utility power.

services consist of distributed energy microgrid system engineering and design, and

project consulting services.

is performed under fixed price bid contracts

and negotiated price contracts.

software is an integrated distributed energy management control platform that seamlessly integrates and controls all forms of energy

generation with energy storage devices to provide energy security in real time free of cyber threats to service facility loads.

DER systems are able to interoperate with the local utility grid, and bring users the ability to choose when to buy or sell power

to and from the utility grid.

mPulse is ideal DER systems for commercial, industrial, defense, campus and residential users and

ranges in size from 4KW to 100MW and beyond.

mPulse Software Suite

is a modular platform that

enables fine-grained control of a Microgrid

based on customer operational goals,

equipment and forecasts of load

and generation.

mPulse performs high-frequency

calculations, threshold-based alarming, execution of domain-specific business rules,

internal and external health monitoring,

historical data persistence, and system-to-operator

notifications.

The modular design increases system flexibility and

extensibility.

In addition, the deployment

of the mPulse system follows a security-conscious

posture by deploying hardware-based firewalls as well

as encryption across communication channels.

mPulse allows configuration for site-specific equipment and

operation and provides a clean, informative

user interface to allow customers to monitor

and analyze the data streams

that describe how their microgrid is operating.

supports our innovative fractal approach to microgrid

design, which enables multiple microgrids

on a single site to interact in

a number of different ways,

including as peers, in a parent-child relationship,

and in parallel or completely disconnected.

Each grid can have different operational

objectives, and those operational objectives

can change over time.

Any microgrid can

be islanded from the rest of the

microgrid as well as the larger utility

The mPulse software can control

the workflow required in both the islanding

steps as well as the reconnecting steps

of this maneuver and

coordinate connected equipment such that connections are only made

when it is safe to do so.

Microgrid Value Stream Optimizer

is a modular platform that provides intelligent control of a Microgrid based on a systems operational goals, energy assets and

forecasted energy load and generation.

mPulse performs high-frequency calculations, threshold-based alarming, execution of domain-specific

business rules, internal and external health monitoring, historical data persistence, and system-to-operator notifications.

modular design increases system flexibility and extensibility.

In addition, the deployment of the mPulse system follows a security-conscious

posture by deploying hardware-based firewalls as well as encryption across communication channels.

mPulse allows configuration

for site-specific equipment and operation and provides a clean, informative user interface to allow customers to monitor and analyze

the data streams that describe how their microgrid is operating.

supports our innovative fractal approach to microgrid design, which enables multiple microgrids on a single site to interact in

a number of different ways, including as peers, in a parent-child relationship, and in parallel or completely disconnected.

grid can have different operational objectives, and those operational objectives can change over time.

Any microgrid can be islanded

from the rest of the microgrid as well as the larger utility grid.

The mPulse software can control the workflow required in both

the islanding steps as well as the reconnecting steps of this maneuver and coordinate connected equipment such that connections

are only made when it is safe to do so.

Microgrid Value Stream Optimizer (mVSO)

The Microgrid

Value Stream Optimizer (mVSO) tool provides a robust distributed energy and

microgrid system modeling solution.

takes utility rate data and load

data for a customer site and helps automate

the sizing and analysis of potential

microgrid solutions as well as providing

a financial analysis around each grid

configuration.

mVSO uses historical data

to generate projected energy generation assets

and models how storage

responds to varying operational modes

and command logics

based upon predicted generation and load

mVSO analyzes

multiple equipment combinations and operational situations

to determine the optimal configuration for a site

based on the financials, equipment outlay, utility cost savings,

etc., to arrive at payback and IRR values.

This ultimately provides the user with

data to design a distributed energy and/or

microgrid system that will meet

the customers’

performance benchmarks.

When mPulse originally

was developed, a main focus of the platform and the industry was resiliency of microgrid operation, specifically in military contexts.

Since that time, the microgrid landscape has continued to evolve, and there is growing opportunity within the commercial and industrial

space as the markets in these spaces desire microgrids capable of obtaining the highest economic advantage.

Further, this growing focus

on economic advantage is in line with the continued market evolution toward an open energy market at regional levels.

be well positioned to enter into this market at each step of its availability, from responding to demand response requests all

the way through participating in ancillary grid service markets and fully open transactive energy markets as regulation matures.

To position ourselves, the mPulse platform implements internal markets at each level of the system.

In these internal markets,

energy producing assets are modeled as sellers, and energy consuming assets are modeled as buyers, with the market playing matchmaker

between the two and virtually “selling”

available energy to the highest bidder, thereby satisfying the energy loads

at the highest economic advantage for both participants at any given moment.

The internal energy market

running at our customers’

sites take daily feeds of production and load forecasts from the platform to set up the daily market

parameters, then ingest a stream of current positions of both buyers and sellers as well as their individual pricing information,

which is calculated based on the details of the energy rate under which those consumers operate.

Consumers bid into the market

along the schedule of the specific rate structure under which those loads operate, with bids including the calculated value of

energy and power based on that rate and the predicted total use and power profile during the time period of that bid.

the predicted generation profile and the other active bids currently being satisfied, the market either fills or cannot fill the

newly received bid, and based on the market’s feedback, the consumer’s operation mode and setpoint will change, which

will determine the actual control commands sent to related equipment.

This market scenario is

mirrored at every level, from an individual node potentially consisting of only one producer and one consumer (power source and

meter, respectively), to a higher-level node, in which other nodes participate as either net producers or net consumers, to the

site level, and even up to regional level, when sites are allowed to participate in the market directly.

At each level, details

of the level below are aggregated and abstracted away, so each level operates in a simple and self-similar way, mirroring the physical

construction of the FractalGrid.

These markets shine in optimization scenarios, especially in times of just enough supply or even

slight scarcity, which generally allows the system to reap the maximum economic value for our customers even in the case of undersized

In addition, this flexibility allows for ease of integration for new market participants at each level as regulation matures

to support further Demand Response programs, ancillary service markets, and eventually peer-to-peer transactive energy.

We employ a quality-first

mindset in all aspects of our software design.

From a software architecture point of view, this translates in designing for the

maintainability, extensibility, scalability, availability, accessibility, and deployability of the system.

This design plan paired

with our design and engineering methods and experience are intended to help keep us on the leading edge of the microgrid industry.

Patent Protection

We were granted a United States Patents

on April 10, 2018 protecting our software systems.

The patent, "Establishing Communication and Power Sharing Links Between

Components of a Distributed Energy System, US 9,941, 696 B2,"

is a patent that specifically addresses our engineering and

data-analytics technologies, processes and procedures.

The patent covers our ability to receive data from a plurality of sources

within a microgrid, which is then analyzed to forecast power needs across the microgrid, or a combination of multiple 'fractal'

microgrids, and then determining whether or when to share power with the requesting module.

Material Agreements

International Land Alliance,

On November 5, 2019, CleanSpark entered into a binding Memorandum

of Understanding (the “MOU”) with International Land Alliance, Inc., a Wyoming corporation (“ILAL”), in

order to lay a foundational framework where the Company will deploy its energy solutions products and services to ILAL, its energy

projects, and its customers.

Pursuant to the terms of the MOU, the parties will work

in good faith and pursue the following priorities over the next twelve (12) months:

The Company will perform feasibility studies to outline the details and scope of developing microgrid energy solutions to support ILAL projects.

ILAL will (a) exclusively sell the Company’s products and services as part of ILAL’s power solution for its offering of off-grid properties, and (b) include the Company’s mPulse DER Energy Manager within the off-grid energy project bids;

The Company will provide on-site testing, training, and support services to ILAL’s projects and operations

In connection with the MOU, and in order to support the

power and energy needs of ILAL’s development and construction of certain projects, the Company entered into a Securities

Purchase Agreement, dated as of November 6, 2019, with ILAL (the “SPA”).

Pursuant to the terms of the SPA, ILAL sold, and the Company

purchased 1,000 shares of Series B Preferred Stock (the “Preferred Stock”) of ILAL for an aggregate purchase price

of US $500,000.00 (the “Stock Transaction”), less certain expenses and fees.

In connection with the Stock Transaction,

ILAL will issue 350,000 shares of its common stock to the Company as commitment shares.

ILAL may issue additional shares of its

common stock to the Company if certain conditions are not satisfied.

Our Gasifier Business

Value Stream Optimizer (mVSO) software platform provides a robust distributed energy and microgrid system modeling solution.

takes utility rate data and load data for a customer site and helps automate the sizing and analysis of potential microgrid solutions

as well as providing a financial analysis around each grid configuration.

mVSO uses historical data to generate projected energy

performance of generation assets and models how storage responds to varying operational modes and command logics based upon predicted

generation and load curves.

mVSO analyzes multiple equipment combinations and operational situations to determine the optimal configuration

for a site based on the financial and economic results, equipment outlay, utility cost savings, etc., to arrive at payback and

This ultimately provides the user with data to design a distributed energy and/or microgrid system that will meet the

customers’ performance benchmarks.

The system also provides users with business development and proposal generation tools

to more efficiently present the results to end-customers.

Critical power switchgear and hardware solutions –

CleanSpark Critical Power Systems, Inc.

Through the Company’s wholly owned subsidiary,

CleanSpark Critical Power Systems, Inc.

we provide parallel switchgear, automatic transfer switches and related control and circuit

protective equipment solutions for commercial, industrial, defense, campus and residential

We utilize Pioneer Power Solutions, Inc.

for contract manufacturing, of our parallel switchgear, automatic transfer

switches and related control and circuit protective equipment.

OpenADR and communication protocol software

solutions – GridFabric

Through the Company’s wholly owned subsidiary,

GridFabric, LLC we offer Open ADR solutions to commercial and utility customers.

GridFabric provides middleware software solutions

for utilities and IoT (Internet of Things) products that manage energy loads.

OpenADR 2.0b is now the basis for the standard

to be developed by the International Electrotechnical Commission.

GridFabric's core products are Canvas and Plaid.

Canvas is an OpenADR 2.0b Virtual

Top Node ('VTN') built for testing and managing Virtual End Nodes ('VENs') that are piloting and running load shifting programs.

Canvas is offered to customers in the Cloud as a SaaS solution or as a licensed software.

Plaid is a licensed software solution that

allows any internet connected product that uses energy (i.e.

Solar, Storage & Inverters, Demand Response, EV Charging, Lighting,

Industrial controls, Building Management Systems, etc.) to add load shifting capabilities by translating load shifting

protocols into their existing APIs.

Companies that implement Plaid through GridFabric get a Certified OpenADR 2.0b Virtual

End Node (VEN) upon completion of the implementation process.

Digital Agency Segment – p2kLabs

Through the Company’s wholly owned subsidiary,

p2kLabs, Inc.

we provide a suite of digital services from creative design to technical development for products and services through

the entire product/service lifecycle.

P2k is made up of “labs” whereas each lab contains its own unique offering including

design, marketing/digital content, engineering & SalesForce development, and strategy services.

Legacy Gasifier Business

Our Gasification technologies

and prototype will need to undergo

further additional testing to further

establish its commercial capability of producing large

volumes of clean, renewable energy from any

carbon compound (Municipal Solid Waste (MSW), Coal, Sewage

Sludge) into clean Synthesis Gas(“ SynGas”) .

Our prototype Gasifier is still under development

and a commercially viable Gasifier is

not expected to be sellable until we expend

additional resources on its testing and

A third-party consulting

firm has independently tested the Gasifer's

performance and certified the results

of its performance.

Upon completion of

the testing, an initial white

paper was published outlining the results

and suggested improvements for commercialization.

We anticipate that the investment to complete

these improvements would b e between approximately

Upon completion of the improvements,

we would be required to conduct an extended

test run with an independent

third party to verify the results needed to prove its commercial viability, at

which time we could begin to actively market

our Gasifier units.

9,890,340B2, 9,359,567, 8,518,133 8,105,401 and

1 unchanged sentence

technology and process for using feedstock

comprising gaseous fuel.

Our technology is capable of converting any

organic material into SynGas.

be used as clean, renewable, environmentally

friendly, warming fuel for power

plants, motor vehicles, and as feedstock for the

generation of DME (Di-Methyl Ether).

Our process involves

comprising gaseous fuel Our patented process involves

the grinding, drying, separating, mixing, and

1 unchanged sentence

pellets constitute the feedstock for the Gasifier.

Gasifying the pellets produces

Gasifying feedstock using our technology

converts waste and organic material into

SynGas can be converted into multiple

forms of energy including motor vehicle and

The SynGas produced

is sufficently clean that it generally does

not require hot-gas cleanup.

mostly hydrogen and carbon monoxide.

Hydrogen and carbon monoxide are

primary building blocks for fuels and

SynGas is a clean burning

fuel suitable for use in duel-fuel diesel

engines, gas turbines,

and steam boilers.

As discussed above, we

do not anticipate deploying significant resources on the gasification business at this time.

As opportunities arise we intend to

utilize the gasification assets and intellectual properties through licensing or sales agreements.

The technologies

and prototype will need to undergo

additional clinical lab testing to

further establish its capability of producing

large volumes of clean, renewable energy

from any carbon compound (Municipal Solid

Waste (MSW), Coal, Sewage Sludge) into

clean Synthesis Gas.

Our Gasifier is

still under development and a commercially

viable Gasifier is not expected to be sellable until we

are able to expend additional resources on its testing

and development.

of 2014, we executed an agreement

with a third party to independently

test our production model prototype.

third party was engaged to independently

test the Gasifer's performance and certify

the results of its performance.

Upon completion

of the testing, an initial white

paper was published outlining the results

and suggested improvements.

anticipate that the cost to complete these improvements

would b e between $250,000 and

Upon completion of the improvements,

we would conduct an extended test

run with an independent

third party to verify the results needed to prove its commercial viability, at

which time we would begin to actively market

our Gasifier units.

forms of fuel for power plants, motor

vehicles, jets, duel-fuel diesel engines, gas

turbines, and steam boilers and

as feedstock for the generation of DME (Di-Methyl

The SynGas produced is mostly

hydrogen and carbon monoxide which are

primary building blocks for many fuels and

Syngas is sufficiently clean that

it if processed directly it generally does not require costly hot-gas

As discussed above, we do not anticipate deploying

significant resources on the gasification business at this time.

As opportunities arise, we intend to utilize the gasification

assets and intellectual properties through licensing or sales agreements.

not engaged in any significant

1 unchanged sentence

major customers.

We face significant

competition in the alternative energy and

microgrid markets.

Some of our competitors

have substantially larger financial and other resources.

Factors that could affect our ability

increase sales of our System may include resource limitations,

available information and our standards

established for projected return on

Distributed Energy Management

Business Competition

Markets, Geography and Major Customers

Company’s products and services predominantly serve the North American and Latin American energy markets, and primarily

the commercial and industrial space.

Based on recent market experience, it appears there may be some seasonality with deliveries

decreasing in November and December each year, likely as a result of the US holiday season and as a result of varied customer

appropriation cycles;

however, we believe these market factors will continue to

evolve and the Company’s insight to these trends will improve with continued commercial success and time.

For the year ended September 30, 2020 and 2019,

respectively 58.3% and 34.8% of our total consolidated revenues were associated primarily with one customer.

A loss or decline

in business with this customer, could have an adverse impact on our business, financial condition, and results of operations.

We provide our

hardware products under contract manufacturing agreements.

we provide our software and services at customer locations and from

our offices located in Utah, Nevada and California .

Working Capital Items

We do not maintain significant inventory.

Our inventory levels are currently adequate for our short-term needs based upon present levels of demand.

We consider the

component parts of our different products to be generally available and current suppliers to be reliable and capable of satisfying

anticipated needs.

Distribution, Marketing and Strategic Relationships

We have developed strategic relationships with

well-established companies in key areas including distribution and manufacturing.

We sell our products worldwide, with a primary

focus on North America and Latin America, through our direct product sales force, and partner networks.

Materials and Suppliers

Although most components essential to our

business are generally available from multiple sources.

We believe there are component suppliers and manufacturing vendors whose

loss to us could have a material adverse effect upon our business and financial condition.

The Company currently engages a contract

manufacturer, whereby they exclusively manufacture parallel switchgear, automatic transfer switches and related control and circuit

protective equipment for us.

Historically, we have not experienced significant

delays in the supply or availability of our key materials or components provided by our suppliers, nor have we experienced a significant

price increase for materials or components.

We do not anticipate any such delays or significant price increases in our fiscal year

Environmental Issues

No significant pollution or other types of

hazardous emission result from the Company’s operations and it is not anticipated that our operations will be materially

affected by federal, state or local provisions concerning environmental controls.

Our costs of complying with environmental,

health and safety requirements have not been material.

We do not believe that existing or pending

climate change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in

the foreseeable future on our business or markets that we serve, nor on our results of operations, capital expenditures or financial

We will continue to monitor emerging developments in this area.

experience competition in all areas of our business.

The markets we address for alternative energy and microgrid markets, energy

controls and communications systems are characterized by the presence of both new start-ups and well-established product providers.

We believe the principal competitive factors in the markets in which we operate include product features, including scalability,

relative price and performance, lifetime operating cost, including any maintenance and support, product quality and reliability,

safety, ease of use, rapid integration with new and existing distributed energy assets, customer support, design innovation, marketing

and distribution capability, service and support and corporate reputation.

of our competitors have substantially larger financial and

other resources.

Factors that could affect

our ability increase sales of our System

may include resource limitations, available information and

our standards established for projected

return on investment.

Distributed Energy Management Business

DER Business and software

platforms are set up to compete against larger companies.

Our integrated microgrid

control platform seamlessly integrates

energy generation with energy storage

devices and controls facility loads

to provide energy security in real time.

The systems are able to interoperate with

the local utility grid and

allows users the ability to obtain the

most cost-effective power for a facility.

are technology agnostic and can

incorporate into multiple vendors and manufacturers

products and legacy systems.

The systems are ideal for commercial,

industrial, mining, defense, campus and

community users ranging from 4

kw to 100 MW and beyond and

can deliver power at or below the current

cost of utility power.

All of these attributes

contribute to our ability to compete

with the larger, more established competitors

that have rely on their own manufactured products and

hardware solutions.

We offer an end-to-end suite

of software solution that enables microgrids from design through operations and communication .Our integrated microgrid control

platform seamlessly integrates energy generation

with energy storage devices and

controls facility loads to provide energy

security in real time.

The platforms are

able to interoperate with the

local utility grid and allows

users the ability to obtain the most cost-effective power for a facility.

The systems are technology agnostic and

can incorporate into multiple vendors and

manufacturers products and legacy

The systems are ideal for

commercial, industrial, mining, defense,

campus and community users

ranging from 4 kw to 100 MW and beyond

and can deliver power at or below

the current cost of utility power.

these attributes contribute to our ability to

compete with the

larger, more established competitors that have rely on their own manufactured products

and hardware solutions.

The principal advantages of our Platforms are:

Technology agnostic approach allows customers to leverage aged legacy systems reducing implementation costs.

The automated process is user friendly and does not require highly qualified engineers to operate.

We believe our project proposal tool is more accurate than any other option on the market.

Energy and Microgrid control technologies

are new to the market and

are fairly new to the market and

can be deployed in various formats.

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been extensively studied are:

§ Virdity (Control Platform)

§ Lotus (Power monitoring)

§ GridBridge (Power monitoring)

§ Schnider (Intelligence and automation)

§ Spirae (Intelligence and automation and

Project Proposal Tool)

§ Energy Toolbase (Project Proposal Tool)

§ Homer (Project Proposal Tool)

§ Growing Energy Labs Inc.

(Modeling and Control)

These current technologies of our competitors

have a number of inherent problems:

§ Operational sensitivity to specific hardware solutions potentially increasing the cost

of implementations

§ Non-automated systems require constant monitoring increasing operating costs.

The principal advantages of our System

§ Technology agnostic approach allows customers

to leverage aged legacy systems reducing implementation costs.

§ The automated process is user friendly and

does not require highly qualified engineers to operate.

§ We believe our project proposal tool is more

accurate than any other option on the market.

Schneider Electric

Energy Modeling Business Competition

Energy Toolbase

Gasifier Business Competition

Gasifier system is set up to compete against larger gasification projects.

Our modular concept allows for parallel

processing so a facility could be easily

expanded or reduced without risk

or changing the basic structure by simply

adding or removing module units;

it also allows

for multiple end product processing,

system is expected to compete against larger gasification projects.

modular concept allows for parallel processing

so a facility could be easily expanded

or reduced without risk or changing the

basic structure by simply adding

or removing module units;

it also allows for

multiple end product processing,

producing electricity, ethanol, and

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maintenance costs.

This design factor

solves repair and maintenance

problems by simply shutting down the unit(s) to be repaired and

bringing the reserve unit(s) online.

We expect a ll of these

attributes contribute to our ability to compete

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significant downtime for maintenance

technologies can incorporate any one of a number

of Gasifiers.

Eight gasification technologies that are predominantly

used in commercial applications and/or have

been extensively studied are:

Entrained Flow (Downflow)

E-Gas Entrained Flow

Shell Entrained Flow

KRW Fluidized-Bed Gasifier

Transport Reactor Gasifier Lurgi Dry Ash Gasifier

Gas/Lurgi Fixed Bed

Gasifier Plasma Gasification

These current technologies of our competitors have a number

of inherent problems:

§ Large footprint plants and high operating

§ Operational sensitivity to properties of

different feedstock especially moisture content.

§ Tendency to caking and bridging.

§ Produces a dirty gas, expensive to clean

or only suitable for low efficiency conversion in a steam-boiler turbine generator (10% electrical efficiency).

§ Inefficient usage of created energy to power

plasma conversion.

The principal advantages of our Gasifier are:

§ Modular concept allows for parallel processing

so a facility could be easily expanded or reduced without risk or changing the basic structure by simply adding or removing module

it also allows for multiple end product processing, producing electricity, ethanol, and fuels simultaneously, and for universal

parts, which reduces maintenance costs.

§ Pollutant absorbing binder aids in efficiency,

cracking hydrocarbons acting as a catalyst, and absorbs the pollutants, oxidizes carbon eliminating water vapor and all but 5 –

10% carbon dioxide, which in the Company’s estimation will eliminate the need for carbon sequestration.

As previously disclosed, we plan to continue to focus on our other

product offerings, as opposed to expending significant efforts on the Gasifier side of the business.

Intellectual Property

In relation to our microgrid

business, we own the following patents:

9,941,696 B2 "Establishing

relation to our microgrid business, we own

the following patents:

9,941,696 B2 "Establishing

Communication and Power

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the requesting module.

In relation to our Gasifier business,

we own the following patents:

9,359,567 ‘Gasification Method Using Feedstock Comprising Gaseous Fuels’;

8,518,133 ‘Parallel Path, Downdraft Gasifier Apparatus and Method’;

In relation to our legacy gasifier

business, we own the following patents:

9,359,567 ‘Gasification Method Using Feedstock Comprising Gaseous Fuels’;

8,518,133 ‘Parallel Path, Downdraft Gasifier Apparatus and Method’;

and Patent No.

8,105,401 ‘Parallel

Path, Downdraft Gasifier Apparatus and Method.’

8,105,401 ‘Parallel

Path, Downdraft Gasifier Apparatus and Method.’ ;

8,347,829 Electrolytic Reactor and Related Methods for Supplementing

the Air Intake of an Internal Combustion Engine.

The second Patent, "Parallel Path Downdraft Gasifier Apparatus and Method,

US 9,890, 340 B2", awarded February 13, 2018, further enhances CleanSpark's patent portfolio surrounding its proprietary

The second Patent, "Parallel Path Downdraft Gasifier Apparatus and Method,

US 9,890, 340 B2", awarded February 13, 2018, further enhances CleanSpark's patent portfolio surrounding its proprietary

gasification and waste-to-energy technologies.

Government Regulation

Our patents begin to expire between 2028 and 2035.

We are subject to federal,

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authorities including the Environmental Protection Agency

(“EPA”).

This regulation has

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federal Occupational Safety and Health

Act (“OSHA”) and comparable

state statutes.

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set forth in OSHA workplace standards.

Other than the above regulations

and maintaining our good standing in the State of Nevada, complying with applicable local business licensing requirements, complying

Other than the above regulations and

maintaining our good standing in the State of Nevada, complying with applicable local business licensing requirements, complying

with all state and federal tax requirements, preparing our periodic reports under the Securities Exchange Act of 1934, as amended,

and complying with other applicable securities laws, rules, and regulations, we do not believe that existing or probably governmental

and complying with other applicable securities laws, rules, and regulations, and our discussion related to our newly acquired

ATL Data Centers LLC subsidiary regarding bitcoin mining operations, we do not believe that existing or probably governmental

regulations will have a material effect on our operations.

1 unchanged sentence

or affiliated program for our operations.

Employees, Consultants and Contractors

We currently have

20 employees, and also contract the services of consultants in the various areas of expertise as required.

The way in which our

business currently operates is as follows:

Chief Executive Officer, Zachary K.

Bradford , currently manages our day-to-day

He is responsible for the

negotiation of contracts, oversees the

design, marketing and implementation of

the products and processes, and

manages licenses, patents, and other

intangible assets.

In addition to daily management

Bradford also researches

financing and potential investors.

Chief Financial Officer, Lori Love , is responsible for implementing

our strategic goals and objectives.

She is also in charge of managing our

financial risks, financial planning, accounting records, SEC

filings, reviewing financial data,

reporting financial performance, preparing budgets,

and monitoring expenditures and

Chief Operating Officer, Anthony Vastola , is responsible for implementing

and overseeing our general

operations, sales efforts and research and

development activities.

Our Chief Innovation Officer,

Bryan Huber, is responsible for identifying and developing new products, services and business models.

In addition, he is responsible

for creating new organizational capabilities to provide product differentiation and build long term value.

Our Chief Technology Officer,

Amanda Kabak, is responsible for outlining the Company’s technological vision, implementation of technology strategies and

ensuring technology resources are aligned with the company’s business needs.

In addition, she is responsible

for determining the feasibility and marketability

of our technology and future

software technologies that we may acquire.

The amount of time

devoted to us currently by officers may be limited by the resources we have available.

However, we feel the time devoted to operations

is enough to cover our current operational requirements.

Company Website

We maintain a corporate

Internet website at:

www.cleanspark.com

The contents of this

website are not incorporated in or otherwise to be regarded as part of this Annual Report.

We file reports with the SEC which are

available on our website free of charge.

These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current

reports on Form 8-K, “Section 16”

filings on Form 3, Form 4, and Form 5, and other related filings, each of which is

provided on our website as soon as reasonably practical after we electronically file such materials with or furnish them to the

In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other

information regarding issuers that file electronically with the SEC, including the Company.

Product Development

Because the distributed energy and

related software industry is still in an early state of adoption, our ability to compete successfully is heavily dependent upon

our ability to ensure a continual and timely flow of competitive products, services, and technologies to the marketplace.

to develop new products and technologies and to enhance existing products in order to drive further commercialization.

expand the range of our product offerings and intellectual property through licensing and/or acquisition of third-party business

and technology.

Human Capital Resources;

We believe that our future success will

depend, in part, on our ability to continue to attract, hire, and retain qualified personnel.

As of December 14, 2020, we had 62

staff members with 56 full time salaried employees.

We continue to seek additions to our staff, although the competition for such

personnel in our segments is significant.

None of our employees are represented by a labor union, and we have never experienced

a work stoppage.

We believe that our relations with our employees are good.

Company Websites

We maintain a corporate Internet

www.cleanspark.com and informational websites for our subsidiaries at www.p2klabs.com and www.gridfabric.io.

The contents of these websites are

not incorporated in or otherwise to be regarded as part of this Annual Report.

We file reports with the SEC which are available on our website

free of charge.

These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,

“Section 16” filings on Form 3, Form 4, and Form 5, and other related filings, each of which is provided on our website

as soon as reasonably practical after we electronically file such materials with or furnish them to the SEC.

In addition, the SEC

maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers

that file electronically with the SEC, including the Company.

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 1. Business